Just-in-Time (JIT) and Just-in-Case (JIC)
Meeting customer demands needs operational efficiency. A non-negotiable in operational efficiency is effective inventory management. In this guide by Dropslab, we shall understand strategies like Just-in-Time (JIT) and Just-in-Case (JIC)- two contrasting approaches to inventory control, which can help with inventory management. So, what do these terms represent? Here is how it can be defined briefly:
JIT focuses on minimising waste by producing only what is needed, when it is needed. JIC prioritises preparedness by maintaining surplus inventory to handle unexpected fluctuations. Both strategies have their merits and challenges, and their application varies across industries. JIT has emerged as a cornerstone of lean manufacturing, enabling companies to streamline operations and reduce costs.
Conversely, JIC ensures supply chain resilience by safeguarding against disruptions, such as sudden demand surges. In the sections to follow, we shall unpack more on this.
Just-in-Time, the Modern Standard
Over the past few years, Just-in-Time has become a standard practice for manufacturing industries. If one searches Just-in-Time, you will get unlimited results on why it is beneficial compared to Just-in-Case. This strategy is favored by big name companies all around the globe. The big-name companies include Burger King, Apple Inc., On-Demand Publishing and more.
Just-in-Time is on top because it has helped organisations in reducing their costs and eliminating the non-value-added steps in their supply chain tactics. This has enabled organisations to predict customer demands and optimise their assembly line so inventory costs can be decreased.
Therefore, the cost of the inventory space, production time, and labor can be decreased as over-processing and overproduction is decreased. Now, quality control, R&D, and product development all can get financial support as the resources will be available. But, when there are unexpected challenges, the Just-in-Time strategy has some vital flaws.
Just-in-Case, the Traditional Method
Just-in-Case is the old strategy. In this method you keep an inventory of both finished goods and raw materials. This is done so that if there is an unexpected increase in demand then you can handle it with ease.
If an organisation uses this strategy, it will have to pay high inventory costs instead of facing low sales due to sold-out inventory. The Just-in-Case method works great for goods which have quick and easy alternatives. Organisations can stay in the increasing competition as they will be able to ship-out their products fast.
Just-in-Time and Just-in-Case Approaches Compared
Unavoidable Problems During Crises
Even though forecasting where and when the issues will appear is good for production planning. It can only happen when everything is ideal. If there are some unexpected problems that cannot be avoided then there is no solution. In such times, the Just-in-Time strategy does not provide any solution and the organizations have to face losses.
The best example can be the COVID-19 wave. In that situation there were many gaps in the supply chains and specific products were high in demand. Organizations that were operating on Just-in-Time strategy faced a lot of issues which were not easy to manage.
According to the Atlantic, The Institute for Supply Management discovered that approximately 75% of organisations it reached toward the end of February and starting of March, experienced supply chain delay because of the coronavirus. Further, 44% of organisations did not have a strategy in place to cope with this type of problem.
The fact is that such incidents happen, and they will continue to do so. Supply chains can never stay ideal.
This is not the first time an emergency has interfered with manufacturing. “The identical event took place in the automobile industry 9 years ago, when the tsunami struck Japan. Scott Tong of Marketplace commented, “Now it’s electronic equipment and the virus from China.”
As a result, rather than avoiding such disturbances totally. The emphasis should be on developing a proactive strategy to cope with them.
There is No One Solution
A perfect solution might be a hybrid model of Just-in-Time and Just-in-Case. Just-in-Case can allow organizations to have enough response times to change their production operations. While Just-in-Time will allow them to work under lean manufacturing methods. However, this model would vary depending on an organization needs, capabilities, supply chain, and their existing production.
The preferred solution for now can be to use digital technologies. This can help in building quick responses and flexibility into tasks. Tools like Dropslab Sense can help in changing decisions through its decision nodes in such cases. Moreover, technologies like additive manufacturing can allow teams to print or create product parts if there are any issues.
Another option is to simply branch out areas where goods are manufactured. This can help in reducing the risk of supply chain interruption. This may be simpler for few organizations based on the availability of raw materials and the supply chain required to manufacture items in a specific country.
If something, the pandemic has taught us to explore all choices and create a good balance between ideal and realistic. In short, the global crisis has provided us with a chance to once more learn and evaluate old industrial practices.
FAQs
1. What is the main distinction between JIT and JIC inventory strategies?
Just-in-Time aims to acquire and consume inventory only when it is actually needed for production, and Just-in-Case always holds a buffer stock to help cope with unexpected demand.
2. What are the primary benefits of the Just-in-Time strategy?
JIT enables organisations to minimise the cost of inventory, eliminate non-value-added steps in supply chains, and free up resources for R&D and quality control. It also makes manufacturing more efficient by minimising wastes such as overproduction and waiting.
3. Why do some organizations still prefer the Just-in-Case strategy?
JIC avoids stockouts by ensuring availability for sudden spikes in demand. This approach is very useful for companies with quick turnaround requirements or for companies where alternatives are available.
4. What problems does a Just-in-Time strategy encounter when unexpected crises occur?
In cases of major events such as the present pandemic triggered by COVID-19 or natural disasters, JIT strategies can break down and lead to delays in production and losses. JIC may be more robust.
5. Is there a hybrid approach that combines the strengths of both strategies?
Yes, a hybrid model integrates JIT’s efficiency with JIC’s resilience. This approach might include digital tools for flexibility, additive manufacturing for on-demand production, and diversification of manufacturing locations to mitigate risks.
