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
- 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.
- Reduced Lead Times: Suppliers are expected to deliver materials or components quickly when requested, allowing for a more responsive and efficient production process.
- Small Batch Sizes: JIT systems favor small batch sizes to reduce the risk of overproduction and minimize the need for extensive warehousing.
- Quality Control: JIT emphasizes high-quality products and materials to ensure that defects, disruptions, and waste are minimized.
- 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:
- Expertise and Specialization: Because 3PLs have the knowledge, experience, and infrastructure, they can optimize routes, reduce lead times, and handle the intricacies of JIT effectively.
- Cost Efficiency: 3PLs have established networks of carriers and warehouses, which can lower transportation and storage costs. They can also offer shared warehousing solutions that help you save on storage expenses.
- Scalability and Flexibility: 3PL providers can adjust transportation and warehousing resources as needed, allowing businesses like yours to meet varying JIT requirements without making significant capital investments.
- Risk Mitigation: By having diverse carrier networks and contingency plans to manage potential supply chain disruptions, 3PL companies can provide a safety net to minimize risks. This is especially crucial when you’re relying on JIT delivery, as disruptions in the supply chain can have significant consequences.
- Geographic Reach: Whether you’re sourcing materials locally or globally, working with a 3PL for JIT delivery allows you to reach diverse markets and respond to customer demand effectively. They can also help with customs clearance.
- Technology and Visibility: Many 3PL providers invest in advanced logistics technology, including transportation management systems (TMS) and 3PL warehouse management systems (WMS). These systems enhance visibility and control over the supply chain, which is essential for JIT delivery to ensure accurate timing and minimize lead times.
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:
- Toyota: Toyota is often cited as the pioneer of JIT manufacturing. Its Toyota Production System (TPS) is based on JIT principles, where it aims to produce vehicles in response to customer orders, minimizing inventory and waste.
- Zara: The fast-fashion retailer Zara is known for its JIT approach to clothing manufacturing. Zara designs, produces, and distributes fashion items quickly in response to changing customer preferences, which is what makes the company successful.
- McDonald’s: The fast-food giant McDonald’s utilizes JIT principles in its food supply chain. It maintains relatively low inventory levels and uses advanced ordering and inventory management systems to ensure that ingredients arrive at the restaurants just in time for preparation.
- Amazon: Amazon uses JIT principles in its fulfillment centers to ensure that products are shipped to customers quickly. It employs sophisticated inventory management systems to minimize storage time and reduce order-to-delivery lead times.
- Boeing: The aerospace company Boeing has implemented JIT manufacturing in its aircraft production. Boeing works closely with suppliers to ensure timely delivery of parts and components, reducing production lead times.
- Apple: Apple’s supply chain management emphasizes JIT principles for its products, such as iPhones and iPads. The massive company coordinates with suppliers to ensure that components arrive just in time for assembly.
- FedEx: FedEx, a global courier and logistics company, relies on JIT for its package sorting and delivery operations. The famous delivery company optimizes its sorting processes to minimize handling time and ensure timely deliveries.
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.