Just in Time VS Just in Case

What Is a Just-in-Time (JIT) Supply Chain?

The just-in-time supply chain aims to reduce timing delays and costs by perfecting the timing of ordering materials. The goal is to have no more materials on hand—and no fewer—than you need at that moment. This streamlines processes, reduces storage costs, and forces a business to have an intimate understanding of its supply chain. The concept was popularized by the productivity of Japanese industry in the early 1970s within the Toyota manufacturing plants that would meet consumer demands with minimum delays using an approach focused on people, plants and systems. The prime goal of JIT is for zero inventories across the organization and its supply chain. By reducing the amount of materials held in stock, JIT delivery can help improve profits. Just-In-Time services involve the process of producing and delivering finished goods at the time they are required for sale, partly finished goods at the time needed for assembly into finished goods, parts and components required for partly finished goods, or materials that are needed to be made into those parts.

Features of JIT

Focus on time demand and less reliable on forecasting

As JIT production will be based on real-time demand businesses are able to operate without a heavy reliance on forecasting.

Lower Warehousing cost

Due to reduced inventory storage JIT will reduce cost of handling charge and storage cost.

Less damage/spillage/theft

Warehouse issues like theft, spillage, accident and damages are greatly reduced on JIT based production.

Lower Freight cost

As products are manufactured on on-demand organization not required procure and transport huge volume of materials.

What is Just in Case?

Just in Case, often referred to as Just in Case Manufacturing or (JIC), is the traditional production model in which finished goods are created in advance and in greater quantities than expected demand. The excess is produced and stocked ‘just in case’ demand suddenly rises or the supply of raw materials and components dries up. JIC is also an inventory management strategy – inventory levels are kept as high as possible.

The JIC strategy is more common in less industrialized countries where poor transportation infrastructure, natural disasters, poor quality control, and vulnerability to other suppliers' production problems are concerns. Such instabilities in the supply chain could lead to costly production inefficiencies. Therefore, a manufacturer may decide to pay for excess inventory to avoid production shutdowns.

For JIC, manufacturers reorder stock before it reaches the minimum level to continue to sell inventory while the suppliers are supplying the goods. The time from when the firm reorders the stock to the time the supplier provides the new stock is known as lead time. A JIC inventory system tries to keep a minimum level of inventory in case of emergencies. JIC is typically more costly than JIT because it can lead to waste if not all of the inventory is sold and there are additional storage costs due to the additional inventory.

www.digitalsupplychaintoday.com