Just-in-time (JIT) delivery refers to a supply chain management strategy that coordinates supplier orders with production or delivery schedules. JIT delivery is intended to improve efficiencies and reduce costs. For example, a company that sells automotive parts but doesn’t manufacture them will only order a part from the manufacturer when a customer makes a purchase.
What Does a JIT Delivery System Require?
Companies using a just-in-time delivery system require that producers are able to forecast demand accurately. JIT delivery is also a main component of a lean manufacturing system. A lean manufacturing system is a methodology in manufacturing that looks to maximize productivity and minimize waste. Because the two are linked, just-in-time delivery should be implemented to fit into the bigger picture of lean manufacturing. The following items are needed for successful JIT implementation:
- Standardized Operations
- Quality Improvements
- Pull Production
- Single Piece Flow
- Reliable Equipment/Machinery
- Well-designed Work Cells
Industries Using Just-In-Time Delivery Services
- Nike implemented a just-in-time delivery system to improve their disconnected production facilities across southeast Asia. The goal was to apply lean inventory techniques and just-In-time production. Since then, studies show that the company reduced lead times by 40%, increased productivity 20%, and new model introductions are 30% faster.
- Popular among independent publishers and self-publishing businesses, just-in-time delivery allows books to be printed and assembled only as needed. This reduces costs due to unsold inventory.
- Retailer Zara enjoys the benefits of just-in-time delivery to keep sales and production aligned geographically to ensure each store only receives inventory they need. Zara can respond quickly to the changing fashion markets easier in the era of fast-fashion.
- Toyota is one of the most famous examples of large companies using a just-in-time delivery service. Only when orders are received from a client and a car is ready to be built, then does Toyota receive raw materials on their production floor. In doing so, holding inventory is minimized which leads to lower costs.
- Luxury watchmaker Grayton uses JIT delivery as a competitive edge in their industry. Becoming the first implementer of lean manufacturing strategies in the watch industry, Grayton increase their cash flow by 70%.
- Dell succeeded early on because they were running a lean operation. In the 1980s when Dell started selling directly to consumers, they only placed orders for parts as customers made purchases. Rather than stock a warehouse full of pre-assembled computers, Dell reduced their costs and cut lead times and eventually became a well-known name in their industry.
- Burger King franchises uses the principles of just-in-time delivery everyday in their kitchen. Although they keep stock of the ingredients they need, food is only cooked when ordered. Here, the concept of JIT delivery is applied to food ordering where food is kept fresh and waste is reduced
Shipping, product, logistics or purchasing managers looking to optimize the supply/buy/ship lifecycle and improve on KPIs should look into JIT delivery no matter what industry they are in. Just-in-time delivery increases transparency between supplier and sellers in an effort to create a seamless supply chain process.
Unsold stock sitting on shelves increases inventory holding costs and takes up space. Any company looking for cost reduction inventory strategies can benefit from just-in-time delivery.
No matter what industry you are in, if you are holding inventory on site, start talking to a just-in-time service provider to see what they can do for you. At NewStream Enterprises, LLC, we work to improve your current stock control strategies so you can remain responsive to customers and improve upon your key competencies. Talk to one of our experts about our facilities, infrastructure, capabilities to see if just-in-time delivery is right for you.