Just In Time Stock Control
Improve efficiency and reduce wastage at every step with our JIT stock control services
It is crucial for a business to learn how to efficiently manage the materials they stock. Just in time stock control is an excellent stock control method that enables us to help companies that choose not to store raw materials.
Maybe you want to make sure your stock is always fresh, or you simply don’t have the storage space for raw materials. Whatever the reason may be, Meteor Space can help by taking care of your warehousing needs and using the JIT approach of inventory management.
What Is Just In Time Stock Control?
A lot of companies are still using the traditional method for controlling their stock levels. This involves going through their stock levels every month. Then deciding what products need to be ordered. Then waiting for the stock to arrive before they can sell to their customers.
This method is outdated and needs to be improved. There is a better way of doing things. It’s called just-in-time stock control. It’s a method of stock control that allows your business to reduce waste and save money. It involves making sure your stock is just right for your business.
Just in time (JIT) inventory management and stock control are words that are becoming more common in the supply chain industry with each passing day. Businesses choose the JIT stock control method to increase profits and improve their bottom lines.
Just in time stock control is a management strategy that minimises the amount of money, time, and resources that go to waste on the excess stock. It was first developed in the manufacturing industry but can be applied in any business that purchases and sells goods.
Just in time, also referred to as JIT, is a subset of the broader lean manufacturing strategy. To understand the concept of just-in-time, you must first understand the two different types of inventory a business can have:
- Raw Materials: These are the goods in their original form that have not yet been processed into something that can be sold to customers. These goods are generally referred to as work-in-progress (WIP) or work-in-process (WIP).
- Finished Goods: Goods that have been processed and are ready to be sold to customers. These goods are also referred to as finished-goods inventory (FG).
Just in time stock control is the stock control method in which a business does not store raw materials. Instead, it depends on receiving regular deliveries of the materials that are required before the stock runs out.
Businesses that opt for just in time inventory management have to work closely with suppliers and trust them to send raw materials before the production process starts. The key purpose of using the JIT stock control method is to have only the required amount of inventory to meet customer demands and avoid buffer stock.
What Is Just In Time Stock Control?Just In Time Inventory Management: A Brief History
Just-in-time (JIT) inventory management is a stock control method of determining the exact quantity of each item and product to maintain in inventory based on customer demand. It aims to deliver the right quantity of products to the customer at the right time without wasting materials, labour, and storage facilities.
JIT was first conceived in the manufacturing industry and later it was adopted by service and knowledge economy industries. It is widely used in electronics, information technology, food, and retail industries.
Just in time (JIT) was first introduced in Japan. The limited amount of natural resources in Japan made it crucial for companies operating in the country to avoid wastage at all costs.
The just in time stock control system was developed and implemented by Taiichi Ohno in the Toyota manufacturing plants. He worked on perfecting the stock control method and was referred to as the father of JIT.
After World War II, the automobile industry in Japan was struggling to meet customer demand. Taiichi Ohno developed the just in time stock control system to ensure Toyota has all the materials to manufacture various car models that are in demand. The JIT stock control method also led to a reduction in waste from Toyota’s manufacturing plants.
Soon, other Asian companies also adopted the just in time stock control method. James Womack wrote the book “The Machine That Changed The World” to make the JIT concept more accessible to the western world, and businesses all over the globe were using this stock control method to boost their inventory turnover.
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How Just In Time Stock Control Works
Just in time (JIT) stock control provides businesses with stock only when it is required. This stock control method ensures there is no excess stock, and you get frequent deliveries so you can always meet customer demand. The main objective of JIT is to reduce the cost of inventory holding and increase inventory turnover.
JIT inventory management is a concept that has been used in manufacturing since the 1980s. In the past decade, the concept has been adopted by many businesses, especially online businesses, as a way to reduce waste and improve efficiency.
It’s a simple idea: if you only order the goods you need, when you need them, you won’t be left with a whole warehouse full of products that you can’t sell. The customer is unaffected by the time it takes to re-stock your shelves as they can still shop online while you’re busy getting your business back on track.
To follow the JIT stock control method, businesses need to be in close contact with suppliers so that their stock reaches before they run out. It is also better to enter into long contracts with the suppliers to ensure there is no compromise on the quality of materials you receive.
Just in time stock control system is a lean management process, and all parts of the management system, including people, are connected with each other. For the JIT inventory management system to be successful, everyone in the company has to be equally involved.
It is always beneficial if everyone involved in the system keeps others informed and can work towards success together. From the assembly line workers to the business CEO, every person should be aware of the goal and how to achieve it efficiently.
Steps That Form The Just In Time Stock Control System
Step 1: Review And Planning
The just in time stock control system starts with an in-depth review of all the crucial elements of the manufacturing process. You need to make sure the design of the products and the planning and execution of the process are all streamlined. It is also important that you develop and execute plans that will eliminate the possibility of disruptions. Minimising waste is also an essential aspect of these plans. Overall, you should be working towards building a just in time stock control system that is efficient and flexible.
Step 2: Managing Total Quality Control
Conducting a review of total quality management is a crucial part of the just in time stock control cycle. It is essential that you ensure the entire process is constantly improving and that all the workers are aware of what their roles and responsibilities are. A quality control management review also helps with: Stabilising schedules Defining statistical quality control Measuring statistical quality control Keeping a check on load and capacity levels
Step 3: Pull Using Kanban
The Kanban method was also widely used by Toyota in Japan. They placed cards on all the manufacturing parts, and once the process was complete, the cards would be taken off the material and handed back to the start of the line. Using such methods can streamline the workflow and make it more efficient. It is essential that you inform and educate all your workers about any techniques you use and review the lot size policies.
Step 4: Establish Relationships
Establishing vendor relationships is a crucial aspect that ensures the success of the just in time stock control system. You can carry out the following actions to create and develop your vendor relationships: Review your vendor lists Choose the supplier you will be working with Negotiate the contract with your vendor Go over delivery expectations and lead times Discuss the usage of metrics
Step 5: Fine Tune The Inventory
It is important that you are aware of your inventory needs and develop plans and strategies accordingly. You should ensure that everyone involved in the just in time inventory management process is mindful of the policies regarding your inventory. Fine-tuning your inventory can help you streamline everything and know when you will require to re-stock. Being aware of when you will need restocking is crucial, especially if you are following JIT stock control. You also need to determine controls in your inventory and reduce movements.
Step 6: Build The Team
If you are not working on improving the skills and knowledge of everyone on your team, the JIT stock control system cannot be successful for your business. It is essential that you guide all your workers through the process and educate them regarding the various aspects involved in JIT. All the employees on your team should know the capabilities they need for their work and build their skill sets accordingly. You should focus on carrying out team empowerment and education sessions, as well as focus on everyone’s individual growth.
Step 7: Refine The Production Process
Having a refined production process is incredibly beneficial for your business. It is important that you go over the entire process and determine which steps and parts need to be improved or eliminated altogether. You must review the production process to ensure it follows the standards set by authorities in your industry. If not, you can make the changes that are required and make sure the practices your business is following are legitimate.
Step 8: Review Metrics And KPIs
To improve the just in time inventory management system you are using, you should always define the KPIs and metrics you are tracking. With the help of these metrics, you can review how well the process is working out for your business and determine which aspects still need improvement. If you are facing any problems with the JIT stock control method, it is always beneficial to analyse the root cause to help you find the perfect solution. It is also important that you keep a check on all the latest industry trends and use them to improve all aspects of the JIT stock control method.
Elements Of The Just In Time Stock Control System
For just in time stock control, you need to have small lot sizes. Smaller lots ensure less warehouse space, decrease in excess inventory, and reduced labour.
Increase in quality leads to a decrease in defective products. Attention to detail is required.
For the JIT stock control method to be successful, you need to have flexible changeovers so that setups can adjust in time to meet customer demand.
Balancing the workflow ensures that there is an even distribution of energy and labour throughout the team and no one is being overburdened.
Levelling should be used to ensure there is a stable daily schedule that is being followed closely.
Using tools like Kanban can enable everyone in the workforce to be aware of inventory levels and the progress being made.
Keeping an eye on all the tools and equipment being used every day can ensure there is a low risk of accidents or any other problems related to production.
It is crucial to use the system of getting rid of materials only after they have been used in the production process.
Having strong, trusting relationships with suppliers is the key to ensuring the effectiveness and success of just in time inventory management.
Just In Time Stock Control Advantages and Disadvantages
Let’s dive into the just in time stock control advantages and disadvantages!
Advantages Of Just In Time Inventory Management
It Reduces Waste
One of the biggest advantages of just-in-time stock control is that it reduces waste. Any company that sells products in large quantities uses up a lot of raw materials and inventory. Just-in-time stock control helps to reduce waste by harvesting raw materials as they are needed, rather than stockpiling them.
For example, most companies buy in bulk to save money. However, this means that they will often have a lot of stock on hand that will not be needed for a long period of time. If that company were to switch to a just-in-time stock control system, it would not buy in bulk, but instead would buy only enough materials to meet its immediate demand.
This would mean that it would not have to throw away excess stock or hold on to materials for an extended period of time. With the JIT inventory management method, it is also easier to identify which items are defective and repair them, reducing scrap costs.
It Improves Efficiency
Just in time (JIT) stock control has the advantage of lowering costs through reducing the amount of raw materials, work in process inventory and finished goods inventory that are present in a production process.
It is a production philosophy that focuses on delivering just the right amount of products or components as they’re needed. It is a stock control method of inventory management that relies on receiving parts and materials only as they are needed in production instead of having large amounts of parts and materials on hand.
In doing so, JIT reduces carrying costs. When you have too much in inventory, you will have to carry the costs of storing, handling, and insuring the materials. When inventories are too high, you tend to lose money because inventory incurs costs in the form of carrying costs.
Just in time inventory management also reduces working capital due to the minimal inventory. It also allows businesses to invest less money in raw materials as it does not require large amounts of stock on hand. By incorporating the just in time stock control system, you can save money and invest it in more valuable endeavours.
JIT Increases Productivity
One of the biggest advantages of just-in-time stock control is that it reduces waste. Any company that sells products in large quantities uses up a lot of raw materials and inventory. Just-in-time stock control helps to reduce waste by harvesting raw materials as they are needed, rather than stockpiling them.
For example, most companies buy in bulk to save money. However, this means that they will often have a lot of stock on hand that will not be needed for a long period of time. If that company were to switch to a just-in-time stock control system, it would not buy in bulk, but instead would buy only enough materials to meet its immediate demand.
This would mean that it would not have to throw away excess stock or hold on to materials for an extended period of time. With the JIT inventory management method, it is also easier to identify which items are defective and repair them, reducing scrap costs.
It Lowers Costs
Just in time (JIT) stock control has the advantage of lowering costs through reducing the amount of raw materials, work in process inventory and finished goods inventory that are present in a production process.
It is a production philosophy that focuses on delivering just the right amount of products or components as they’re needed. It is a stock control method of inventory management that relies on receiving parts and materials only as they are needed in production instead of having large amounts of parts and materials on hand.
In doing so, JIT reduces carrying costs. When you have too much in inventory, you will have to carry the costs of storing, handling, and insuring the materials. When inventories are too high, you tend to lose money because inventory incurs costs in the form of carrying costs.
Just in time inventory management also reduces working capital due to the minimal inventory. It also allows businesses to invest less money in raw materials as it does not require large amounts of stock on hand. By incorporating the just in time stock control system, you can save money and invest it in more valuable endeavours.
It Streamlines The Production Flow
The just in time stock control system directly affects the smoothness of your production process. This is because JIT stock control is a system that encourages smooth production flow. It is also a system that promotes a minimal inventory. It is good for your business because it helps you to avoid the pitfalls that bloated inventory can bring.
Streamlined and smooth production flow is really the main benefit of using the just-in-time stock control. JIT allows production to run smoothly and efficiently, and there is less chance of any disruptions. Let’s look at what happens when you have a large stockpile of raw materials and finished goods.
When you have a large amount of both, there is an increased probability of stock-outs and of delays in production. For example, if you have a large amount of raw materials, but you don’t have enough of the final product, you will have to wait until the raw materials are finished and then shipped to you.
In the meantime, you are not producing and making money. It is better to have just enough of everything that is needed for production at any given time.
JIT Improves Product Quality
Just in time stock control is a system that ensures you don’t have excess inventory and the labour is reduced. When your workers don’t have to spend large amounts of time managing inventory, they can focus on the product and make sure it is of the highest quality. Having a flexible workforce allows you to lower defects in your products.
JIT is an excellent stock control method that allows you to improve customer satisfaction significantly. It also lowers production time, ensuring that your customers get their products faster. Since the inventory is not large, there is a lower possibility of accidents happening that lead to defective products.
Businesses that use the just in time stock control system also have the resources to work with certified, high-quality suppliers. When the inventory is excellent in quality, it helps you produce goods that exceed expectations. With less items moving around on the shop floor, your team can focus on creating the best and providing it to your customers.
Using a reliable 3PL service like Meteor Space can also help reduce the time and effort you put in warehousing and inventory management, so you can invest more in creating the best customer experience for your business, and increase customer satisfaction. We can take care of your warehousing for you, so you can focus on other aspects of your business, and have more opportunities to grow and reach your full potential.
Potential Risks Of Just In Time Stock Control
Just in time (JIT) stock control is one of the most effective inventory management systems for all businesses, whether big or small. It helps businesses to be more flexible and responsive to new orders and changes in demand. However, there are some potential risks of using this stock control method.
If your suppliers are unreliable, you may face problems due to stock shortages. And the longer you run this business, the bigger the chances are that you will be affected by it. When you use the JIT stock control system, you need to find suppliers who are reliable and provide you with high-quality materials.
JIT is a stock control method that relies mainly on accurate forecasting and strong supplier relationships. If you don’t have adequate backups for either of those, there are more chances of you facing problems. For example, if your key supplier fails to supply you with goods for a period of time, it can disrupt your entire operation.
Let’s take a look at some of the other potential risks of just in time stock control.
Lack Of Backups
To shift to the JIT inventory management system, you need to make changes to the entire workflow of your business. These changes in the framework can affect the supply chain and your organisation.
If one element of this lean framework fails, it can disrupt the entire workflow and production process of your business. Some companies are underprepared for such circumstances and don’t have adequate backups in place, which can be detrimental.
With Meteor Space, you don’t have to worry about these problems! We have the flexibility and resources to cope with any changes in the framework. By outsourcing your warehousing to Meteor Space, you can set up a JIT inventory system that has all the adequate backups.
Undisciplined Workers
Undisciplined staff is not a potential risk limited to just in time inventory management and stock control. However, since the JIT stock control method is extremely time-sensitive, having workers that are not onboard with the method can lead to a decrease in efficiency and productivity.
It can also lead to a decrease in quality. If you are not manufacturing high-quality goods, you will not be able to provide customer satisfaction. It is crucial that you educate and inform your workers about all aspects of JIT stock control before you incorporate it.
However, Meteor Space can help with that! We provide the best JIT warehousing service that is accurate and enables you to increase your product quality. We understand the requirements of a strong JIT stock control system, and ensure you don’t have to worry about order delays ever again.
Unexpected Changes In Costs
One key aspect of just in time stock control that makes it efficient is that the cost of parts you acquire is constant. When there is a sudden increase in the cost, your profit margin is bound to decrease.
Overly Reliant On Forecasts
When you become overly reliant on forecasts, it can be difficult for you to adjust and adapt to sudden changes in the supply chain or workflow. Since forecasting is such a crucial aspect of JIT stock control, the possibility of this happening is higher.
Missed Opportunities
With just in time stock control, you do not have excess raw materials and inventory. If there is a sudden increase in demand for your goods, there is a possibility that you will not be able to meet it. It can lead to more missed opportunities for your business. It can also cause delays as you have to wait to receive the materials you need to meet the demand.
Disruptions In Supply
When you are using the JIT inventory management system, you are relying on your suppliers to meet your requirements on time. If there are any delays or issues from your supplier’s end, it can cause disruptions in your production process. Sometimes, it can lead to a complete halt in the production process, which is why you need to be prepared and have backups.
Costs Of Local Sourcing
The cost of local sourcing is always higher in comparison. When you follow the just in time stock control system, you have to opt for local sourcing because it is more reliable for your business. However, in this pursuit of reliability, there is a possibility that you compromise on the profitability of your business.
Dependence On Suppliers
Businesses that use the just in time stock control method have to rely heavily on their suppliers being on time and providing high-quality products. If the supplier causes any delays or does not provide material that is up to the mark, it can cause disruptions in the manufacturing process.
Acts Of Nature
One thing no one has any control over is nature. If there are any natural disasters, it can cause a disruption in the supply and chain and halt production for your business. When following the JIT stock control method, you don’t have a large inventory or backup material that you can use to keep production going for your business.
Time Pressure
Following a fixed schedule is an incredibly important aspect of the just in time inventory management system. It is crucial that you receive materials before you run out of them and maintain your small inventory. It also poses the risk of getting unfair quotes from your vendors without having the choice to negotiate as you are trying to meet a deadline.
With years of industry experience using the JIT approach in inventory management, Meteor Space can ensure that you get your materials delivered on time. Our excellent warehouse management system Canary7 enables all parties to have a 360 degree view of all operations and inventory. You can receive notifications regarding inventory levels, enabling you to stay ahead of any potential stock-outs.
Pros And Cons Of Just In Time Stock Control
Many companies have adopted the just in time approach in inventory management knowing the risks that come with it. If you look at the just in time inventory management advantages and disadvantages. you can see that the pros significantly outweigh the cons.
| Pros Of JIT Stock Control | Cons Of JIT Stock Control |
|---|---|
| Lower costs overall | Time pressure |
| Low cash investment in inventory | Acts of nature |
| Reduced working capital | Lacks of backups |
| Reduced waste | $Dependence of suppliers |
| Less chances of inventory obsolescence | Disruptionsnin supply |
| Decreased defective products | Higher costs of local sourcing |
| Increased inventory turnover | Missed opportunities |
| improved efficiency and productivity | Reliance on forecasts |
| Easier order changes | Sudden changes in prices |
| Short production run | Undisciplined workers |
| Smaller quantity of deliveries | issue with orders |
| Quick product turnaround | |
| Short production cycles | |
| Smoother flow of production | |
| Functional production cells | |
| Lesser raw material spends | |
| Decreased process problems |
Why You Should Choose Just In Time Stock Control
Stock management is a difficult task, but just-in-time stock control is the perfect system to keep your business in check. Just-in-time (JIT) inventory management is a stock control method that strives to reduce or eliminate wasted resources at each stage of the production process.
The idea behind JIT is that you make only what you need when you need it. This saves money and keeps business flowing smoothly. Imagine if you had a whole warehouse full of products that you’ll never sell. This is the image that JIT strives to suppress. It aims to eliminate the waste caused by overproduction, which translates to wasted time, materials, and money.
JIT also helps eliminate waste by reducing the time between when you order materials and when you get them. This minimises the risk of running out of stock and losing customers. It has countless benefits that can help your business flourish.
Benefits Of Just In Time Stock Control
Outsourcing Meteor Space’s pick and pack warehouse means your business will increase efficiency and fulfil orders more accurately through greater operational visibility. Our warehouse pick and pack specialists will pick and pack your orders with 100% accuracy.
Things To Consider Before You Shift To Just In Time Stock Control
Before you make the move and start implementing the just in time stock control method, here are a few questions you need to ask:
- Do I trust my sales forecast to be accurate at all times?
- Can my products be supplied or manufactured in a short amount of time?
- Do I have complete trust in my vendors and is it safe to rely on them?
- Is there enough agility in my supply chain to adapt to supplier disruptions or natural disasters?
- Does the inventory management service I use include JIT inventory management?
- Will my workforce adapt to JIT stock control and understand the process completely?
- Do I need to outsource my warehousing and fulfilment to a qualified 3PL service like Meteor Space?
Which Businesses Should Use Just In Time Inventory Management?
Meteor Space has years of experience with businesses in various industries. We can help you stock your raw materials with us and deliver them to you using the JIT approach.
Businesses in a host of different industries use the just in time stock control system. Some of these include:
Aerospace
There is a higher risk of delays and cost overruns in Aerospace, which is why they can use JIT stock control to minimise these risks.
Construction
These businesses can use just in time inventory management to reduce waste from inventory storing, moving components frequently, and waiting.
Apparel
Using JIT can help reduce the cost of stocking inventory in apparel. It helps businesses keep up with customer demand and carry inventory in various sizes, materials, styles, etc.
Fast Food
Businesses operating in the fast food industry can use JIT inventory management as it helps them ensure all the ingredients they use are fresh. It is also suitable because they only have to provide their product when a customer places an order.
Manufacturers
In the manufacturing industry, using JIT can help increase the speed of the production process and manufacturers can market their products faster to keep up with customer demand. Here at Meteor Space, we work with numerous clients in the manufacturing industry to store their raw inventory. We deliver the raw materials to them using the JIT approach, enabling them to free up their warehouse space and reduce their holding costs, without compromising on the production speed.
Retailers
Retailers operating on a tight budget can use the JIT stock control method to meet customer demand more efficiently. It enables retailers to stock no inventory till a customer places an order for a specific product.
Health Care
Health care organisations can use the just in time stock control system to ensure their inventory is lean. It can help reduce expenses as the profit margins in health care are already low.
Automotive
Just in time stock control was introduced by the automotive industry. It can be used to decrease storage costs and keep up with the competitiveness of the industry.
Publishing
Publishing is an industry where inventory expenses are usually high due to unsold products. Businesses operating in this industry can use just in time inventory management to assemble books on an as-needed basis.
Famous Companies That Use Just In Time Stock Control
Tesla
Despite its massive growth, Tesla still practically manufactures on-demand. It avoids keeping excess inventory, giving it more capital to invest in other operations.
Apple
Apple has one central warehouse in the U.S. and around 150 global suppliers. It outsources its production and keeps most of the stock in retail stores, reducing overstocking and extra expenses.
Amazon
Amazon uses a variation of the just in time inventory management method. It has a dedicated space inside the P&G warehouse and gets products directly from there. This technique enables Amazon to meet the 24-hour delivery window with P&G products.
Motorola
Motorola shows inventory levels in real-time by following the just in time stock control system. It has used JIT to reduce the average time to resolution to just hours instead of weeks.
Toyota
Toyota has been the pioneer when it comes to JIT inventory management. When a client places an order, only then Toyota begins the manufacturing process by acquiring the parts needed for the automobile.
Nike
Nike started implementing the just in time stock control system in 2012 to improve the productivity in its facilities all across Southeast Asia. Since 2012, Nike has significantly increased productivity, and can introduce new models in record time.
Which Businesses Should Use Just In Time Inventory Management?
If you are looking to reduce your overheads and expenses, you can outsource your warehousing and fulfilment. Doing this can help you ensure your business is flexible and always ready to expand or contract to adjust.
With Meteor Space, you can get a secure warehouse without the hassle of managing it yourself. We also provide quick and reliable order fulfilment services for businesses who are looking to improve their customer service.
Contact us today to find out more about our warehousing and JIT delivery services!
Just in Time Stock Control FAQs
The just in time stock control system is a process that ensures production is aligned with the time of delivery or raw inventory from suppliers.
JIT manufacturing and JIT inventory have the same principle that they follow. JIT inventory management is a method through which a company only receives inventory when required and JIT manufacturing is the process in which companies only manufacture products when there is a demand. Both processes work by receiving or producing products only when it is required.
The main difference between just in case and just in time manufacturing is that JIC relies on stocking excess inventory, whereas JIT eliminates the need for large inventories.
Meteor Space works with a vast array of clients in different industries who outsource their warehousing to us. We deliver raw inventory to them through JIT delivery; a process through which they receive the materials on time and only when they need it.