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How Does JIT Delivery Help You Make a Profit?

How does JIT delivery help stores make a profit?

Just-in-time (JIT) delivery, a method of delivering raw materials, components and products exactly when they are needed, is an important part of the mutual success of vendors and customers. JIT is a logistics system proven to reduce inventory costs by reducing warehousing and minimizing transit waste. 

 

Companies using a just-in-time philosophy in supply chain management minimize friction points by only holding necessary inventory while still ensuring that goods are delivered on time. Any business looking to create a more efficient supply chain can benefit from implementing just-in-time strategies.  A variety of industries, such as trucking, construction, remanufacturing, eCommerce, electric vehicles, agriculture, aerospace, marine, mining, government and retail, can benefit from efficient strategies by only carrying inventory that customers want to buy. 

 

What JIT Delivery Requires

What is needed to implement this supply strategy? First, JIT delivery requires accurate demand forecasts by producers and/or logistics providers. It is also important that suppliers, contractors, vendors, warehouses, distributors, wholesalers and retailers are in alignment and that supply chain management personnel have sufficient just-in-time delivery experience. Successful JIT implementation requires vendors that have a standardized operation, reliable equipment, full production capability, single-piece flow and a focus on continual quality improvements. 

 

How Just-in-time Delivery Helps You Make a Profit

How do you benefit from a just-in-time approach? Quite simply, JIT delivery helps companies make a profit by avoiding having items in inventory that no one wants to buy. The businesses save money by requiring less physical storage space and/or warehouse rental costs. 

In addition, by reducing unneeded items, there is less of a risk of stock going out of date, obsolete, out of fashion or dwindling in demand. In addition, because JIT delivery is so efficient, delays in receiving, and the resulting missed sales opportunities, can be reduced. 

Plus, because just-in-time delivery leads to lower in-store inventory levels, there can be an added benefit of having a lower risk of loss or damage. What’s more, money that isn’t tied up in inventory can be used in other places including reinvesting in the business or increasing marketing outreach. 

 

Ultimately, a JIT strategy can help a company:

  • Minimize markdowns
  • Reduce warehouse storage space costs
  • Reduce delays in receiving
  • Have lower upfront inventory costs
  • Decrease the risk of inventory loss or damage
  • Improve quality control measures
  • Better utilize demand forecasting
  • Improve processes

It’s not always easy for companies to reach financial stability and make a consistent profit, let alone grow and expand. JIT supply practices are especially important for retailers and wholesalers today as transactions are becoming more diverse than before. With all the purchasing channels available to buyers, you need to be as efficient as possible to stay competitive. 

As markets increasingly move to eCommerce, ever-faster order fulfillment by companies like Amazon and services like overnight shipment to consumers, companies can’t afford to fill physical shelves or eCommerce warehouse storage with inventory that doesn’t sell. JIT delivery is a solution for both physical and eCommerce storefronts that provide inventory only when it’s in demand. 

JIT delivery helps increase profits by minimizing on-hand stock while simultaneously ensuring adequate inventory to meet demands. Various industries benefit from just-in-time delivery, and large, innovative and successful companies like Nike, Toyota and Dell all utilize JIT methods. 

 

If you’re looking to implement a JIT delivery system for your physical or eCommerce storefront, you’ll need to start with a logistics and inventory management strategy. Contact us today and we can discuss your needs and develop a customized solution for your business. 



Tagged: Just-In-Time Delivery

Mar 25, 2020 9:15:00 AM