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Risky Business vs. Risk Management: JIT vs. JIC in the Warehouse

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Just-In-Time (JIT) inventory control is well known in the warehouse management industry. Most recently, JIT has become quite a challenge for many industries due to supply chain uncertainty. This has resulted in manufacturing and warehouse distribution paralysis worldwide. Was your company prepared for the crisis? If not, it's time to consider a Just-in-Case (JIC) approach.

JIT was an effective inventory control method until 2020. Then COVID-19 shook the world, straining the economy and closing down businesses everywhere. Beyond the travel and hospitality industries, schools and hospitals, the pandemic affected manufacturers, logistics, and distributors. The resulting shut-downs left customers with constant low order fill rates and no relief in sight, continuing to this day. Risky Business

 

First incorporated by Japanese manufacturing companies in the 1970s, the JIT management strategy aligns raw-material orders from suppliers directly with production schedules. The strategy was then adopted in the U.S. to improve manufacturing, operations, and inventory control. Later, the technique became prevalent in warehouses and distribution centers to improve efficiency and inventory overhead.

 

Recent supply chain delays have given rise to raw materials and inventory not arriving as scheduled, impacting production capabilities and halting the flow of goods to and from warehouses. While companies are battling to meet order-fill, consider implementing Just-In-Case (JIC) for your 3rd party logistics warehouse (3PL).

 

What is Just-in-Case?

JIC approaches forecasting from another angle, encompassing careful planning and some risk-taking. According to a December 2021 article by Inbound Logistics, "Businesses are transitioning from Just-in-Time to what has become known as a 'Just-in-Case' strategy. Just-in-Case refers to the practice of holding larger amounts of 'safety' stock, enabling a company to avoid stockouts.

 

While some 3PL warehouses may be wary of taking risks, JIC incorporates risk management. Businesses must rely on their warehouse management system (WMS) software for complete and accurate reporting to provide accurate information to determine which products are, and will remain, in high demand, to prevent excessive shipping delays for the foreseeable future. It’s pretty simple – make the investment now so you can assure better order-fill for your customers. 

 

The idea of JIC goes against lean inventory control in every way since it affects up-front investment, risk management, warehouse space, and inventory overload. At first look, JIC doesn’t seem like an efficient business practice. But does it hurt? If you can meet customer demands by having inventory on hand to meet order fill, it’s a win-win for everyone in the chain. In the end, it provides a competitive advantage to your customers in the marketplace.

 

If you need help addressing supply chain issues with your WMS software or implementing Just-In-Case inventory control in your warehouse, click here to find out how Logimax can help!

 

Topics: 3PL, Warehouse Software, Best WMS, supply chain management, WMS Buying Process, warehouse management, JIT, JIC, risk management, supply chain crisis, Just In Time, Just in Case

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