With the pandemic causing disruptions to supply chains worldwide, businesses are rethinking their delivery strategies. The “just in time” approach has been popular for several years, but recent events have highlighted the importance of having a “just in case” contingency plan. So, which delivery strategy should you use in 2023? Let’s take a look at the pros and cons of each approach.
If you work in supply chain management, you probably learned the principles of just-in-time (JIT) early on. Inspired by the work of Taiichi Ohno at Toyota Motor Co., JIT revolutionized production by coupling it tightly with demand, resulting in little or no work-in-process inventory. JIT changed how supply chains ran by fostering demand-driven, agile, and lean processes. JIT also contributed to breaking down functional silos inside an organization that caused inefficiencies.
Define “Just in Time” Delivery and “Just in Case” Delivery
Just In Time (JIT) delivery and just in case (JIC) delivery are two terms that businesses use to make sure they have the right amount of materials and supplies. JIT is a system where a business orders just enough materials when needed. They don’t keep extra materials, just in case. This way, the business can limit its costs and inventory size.
In contrast, Just In Case is when a business maintains additional stock “just in case” it’s needed – providing more security to prevent shortages and give the company flexibility. This can be helpful if a product or material becomes difficult to obtain but can also lead to an inflated inventory cost if not managed carefully.
Examples of When Each Strategy Would Be Most Effective
Knowing when to use just in case and just in time strategies can be critical for ensuring success.
Just In Case is a strategy where preparation is done before a potential need. This could involve stocking up on certain items in case they are necessary later. Just In Case strategy can be applied to any business and is especially beneficial for those with tight resources and unpredictable or seasonal demand. Companies such as technology firms, hospitality services, healthcare providers, and many others can benefit from this approach.
Just In Time strategy is best suited for businesses that need to manage their inventory efficiently, such as manufacturing and retail companies. JIT helps these businesses reduce costs by avoiding overstocking and reducing the investment in raw materials, components, and finished products. It also helps ensure that the production flow is more efficient and streamlined.
Identify Potential Disruptions and Industry Competitors for 2023 and Beyond
With the ever-changing landscape, we must be proactive in approaching supply chains. Three areas of change will enable us to succeed.
Prepare for the best but expect the worst
Probabilistic modeling is a technique used to identify potential events or actions and their probability of occurring. Probabilistic planning helps estimate future outcomes and plan for desirable costs and benefits.
Discover more options
In order to be an effective planner, you should be able to construct a variety of different scenarios that explore diverse possibilities. Some scenarios model real-life business events, while others are fictionalized explorations. While riskier plans usually have higher expected outcomes, most of us would rather choose a lower-risk option. Planning software should offer the ability to repeat potential sampling outcomes so that users can evaluate the expected likelihood and rewards. We usually like plans that have less risk, even if they probably won’t work out as well. Consider all the possibilities and their potential outcomes before settling on anything.
Predict disruptions
Businesses should have processes to identify any supply issues that could scuttle their plans. It’s vital to detect early indications of interruption, for example, late supplier shipments. Not all late orders will cause problems, so it’s important to focus on the alerts that truly matter to the business.
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