Just-in-Time Delivery: Reducing Inventory Costs with 3PL 

The COVID-19 pandemic shook the foundations of just-in-time (JIT) supply chains, as empty shelves revealed the potential pitfalls of keeping minimal inventory.  

But with retailers now grappling with overstocked warehouses, is the lean operating model poised for a resurgence? 

Jason Miller, an associate professor of supply chain management, says that JIT is not dead but evolving. The pandemic prompted the reevaluation of safety inventory levels, with companies holding more inventory to cope with demand and supply uncertainties. As supply chains stabilize, safety inventory levels are expected to adjust to the new normal. 

In this blog, we delve into what JIT delivery can do for supply chains. Then, we’ll share how you can adopt this method in your logistical operations to meet customer demand and keep costs under control. 

What is Just-in-Time (JIT) Delivery?  

Just-in-Time (JIT) delivery is a supply chain and inventory management strategy that aims to minimize inventory holding costs while ensuring that materials or products are available when needed for production or distribution.  

The core principle of JIT delivery is to receive and use materials or goods just in time to meet production or customer demand, without the need for excess inventory storage. 

5 Key Features of JIT Delivery  

  1. Demand-Driven: JIT relies on accurate demand forecasting and aims to produce or procure goods only in response to customer orders or immediate production needs.  
  1. Reduced Lead Times: Suppliers are expected to deliver materials or components quickly when requested, allowing for a more responsive and efficient production process. 
  1. Small Batch Sizes: JIT systems favor small batch sizes to reduce the risk of overproduction and minimize the need for extensive warehousing. 
  1. Quality Control: JIT emphasizes high-quality products and materials to ensure that defects, disruptions, and waste are minimized.  
  1. Close Supplier Relationships: Building trust and collaboration with suppliers helps ensure timely and reliable deliveries and can lead to cost savings. 

JIT delivery has been widely adopted in various industries to reduce carrying costs, improve operational efficiency, and enhance overall competitiveness. However, it can make supply chains vulnerable to disruptions if not managed carefully, such as when suppliers face unexpected delays or shortages. 

This is where working with outsourced experts becomes strategic. 

Why Do 3PLs Use Just-in-Time Delivery?  

Third-party logistics (3PL) providers often use Just-in-Time (JIT) delivery as a strategic approach for their clients, as it offers several advantages that align with the goals of efficient supply chain management and cost optimization.  

Here are the key reasons why 3PLs use JIT delivery: 

By finding a reliable 3PL and partnering with them, you can benefit from the specialized shipping and logistics required to successfully implement JIT strategies, reducing costs and improving overall supply chain performance.  

Examples of Just-in-Time Delivery 

Here are some examples of Just-in-Time (JIT) implementation in various industries, including companies where JIT has been a significant part of their operations: 

These examples demonstrate how JIT principles are applied across various industries to streamline operations, reduce waste, and improve overall efficiency. Still, JIT delivery remains to be a complex method to implement if you’re not a logistics expert. 

Looking for a reliable 3PL company to work with? 

At San Legend, we help eCommerce businesses scale their brands and break into new markets by providing customized, agile, and forward-thinking third-party logistics solutions. Reach out today to see how we can help.