How Just-In-Time Delivery Affects Supply Chain Management
The speed of order delivery is an increasingly examined aspect of supply chain management, particularly with constantly expanding consumer demands for same- and next-day delivery and other features. Just-In-Time (JIT) delivery is an inventory management strategy that helps facilitate speedier order fulfillment with particular applications in raw materials orders and manufacturing.
Since production for just in time delivery happens only for specific customer orders, just-in-time services are somewhat backward from normal supply chain fulfillment in the way that goods are pulled through the supply chain versus pushed through. So, the production process only begins when a customer placed an order, and inventory stock is only delivered as-needed.
What Does JIT Delivery Require?
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.
Characteristics of
Just-In-Time Delivery
Supply chain assembly and packaging operations don’t store the materials in on-site warehouses; the materials are received only when they are ready to be implemented into outgoing orders. Therefore, just in time logistics allows supply chain management companies to save on inventory costs and allow more usable space in their warehouses for components that are ordered more variably.
While just in time delivery enables supply chain companies to reduce their costs for inventory storage and management, it does present an alternative challenge of accurately forecasting demand.
Demand forecasting is secondary to meeting customer expectations, and today’s customers (be they the end consumer or business customers that serve the end consumer) value flexibility and responsiveness to a remarkable degree. It’s not enough to make processes more efficient when working to reduce costs. For example, many customers appreciate the just in time inventory company’s ability to send additional supplies on tight deadlines (particularly when a delivery wasn’t scheduled ahead) or accommodate rapid demand changes.
In order for it to be successful, just-in-time delivery requires a highly responsive, flexible supply chain. The level of responsiveness is defined by how quickly the supply chain can adjust to accommodate the four primary areas of flexibility in response to an external stimulus such as a customer order:
1. PRODUCT
2. COMPONENT MIX
3. VOLUME
4. DELIVERY
To achieve optimum responsiveness and meet the classification of JIT, just-in-time services must have the following characteristics:
Zero inventory
Defect-free production
Batch size one
Perfect quality
Continuous flow of production (high simplicity)
Producing only as needed
Techniques for Successful
Just-In-Time Services
Successful just-in-time logistics are centered on peak efficiency, accuracy and speed. These objectives are achieved through a series of techniques that help drive success and minimize costs:
- Systems design for streamlined manufacturing
- Reduced complexity through focused, transparent operations
- General practices that support continuous improvement and the elimination of waste
- Enhancing process flows with strategic production line arrangement
- Use of robust and flexible machines that are also relatively small and easy to use
- Involving staff in operational improvements and problem-solving
- Expanding flexibility capacity by minimizing setup and changeover timelines
- Encouraging and sustaining reliability by employing total productive maintenance
Those are some general just-in-time logistics techniques that successful supply chain managers will employ, however, there are some additional techniques for planning and control to increase the opportunities for success with just-in-time services:
- Pull scheduling for make-to-order and engineer-to-order products helps ensure that resources are available, that the company has the capability to produce efficiently, minimize lead times and prevent delivery issues
- Use tools such as cards or other signals (also known as -òKanban’ control, a Japanese invention to facilitate pull-based planning) to trigger actions and optimize supply chain function
- Implementing leveled scheduling to plan for each customer’s demand to be built on the same day it will ship out
- Synchronizing the flow of production and shipment to optimize operations and prevent holdups
- Developing and integrating multiple schedules to enable mixed-model scheduling in order to achieve a full day’s production each day without downtime
First Steps to Successful Implementation
of JIT in the Supply Chain
At the end of the day, the smooth flow of goods through the supply chain is the ultimate goal when utilizing JIT delivery, followed by the objectives of maintaining minimal inventory and delivering orders on-time. In order to achieve these goals, the transparent and intensive flow of information between buyers and sellers is crucial. This relationship is only achieved by selecting suppliers carefully, then maintaining a good relationship between them and the customer.
The key to maintaining good supplier-customer relationships is unlimited inter-company information sharing since limitations will hinder the optimization of JIT between internal and external parties. Therefore, the concept of just-in-time delivery may be a positive step for less progressive supply chains, enabling them to take on the more responsive and collaborative operations required to sustain successful just-in-time services.
With decades of proven excellence in third-party logistics services, Hollingsworth is an ideal partner for specialized just-in-time delivery services. Our partnerships span a wide range of industries, including automotive and consumer electronics, two areas of trade where JIT brings especial value for optimizing fulfillment operations and maximizing profit potential.
