If you’re looking for a way to keep business costs down and manageable, you may have heard of just-in-time supply chain. A just-in-time supply chain is a supply chain that moves material just before it’s needed in the manufacturing process. It takes out the necessity of storing excessive materials in a warehouse.
What is Just-in-time Supply Chain?
The just-in-time supply chain is a strategy that lines up supply orders directly with production schedules. Companies that use this inventory strategy can increase efficiency and decrease waste because they only receive goods when they need them for the production process. This method reduces inventory costs, but it also requires producers to forecast their production demands accurately.
One of the first businesses to employ the just-in-time action method is Toyota. This manufacturer adopted the system in the 1970s. However, even though it was instituted in the 70s, it still took twenty years to perfect the system.
The just-in-time supply chain has several advantages, including short production runs and cost reduction. This method also reduces costs by minimizing the need for a large warehouse. Because they are not storing raw materials, they only buy enough resources to make the ordered products.
On the other hand, the just-in-time supply chain system has a few disadvantages. The major drawback is the potential for disruptions in the supply chain. If a supplier cannot deliver material, it could freeze the entire production line, leading to late orders and potentially unhappy customers. Another drawback is the fluctuation of consumer demand. If an item explodes in popularity, the just-in-time supply chain method may not have the materials on hand to complete the orders.
The just-in-time supply chain is a supply chain that moves materials just before they’re needed in the manufacturing process. This becomes even more complicated when materials need to be maintained at a certain temperature. If you are looking for assistance in this area, you can learn more about our conditioning services and cold storage locations available nationwide. With a good inventory system and ordering process, the just-in-time supply chain can be a great solution for your business.[1]
