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What Is Just-in-Time (JIT)?

JIT is an inventory management strategy that syncs raw material orders from vendors, such as 5 Star Packaging, with a customer's production schedule. This strategy reduces material costs by allowing customers to order in bulk, while only receiving the materials as needed. This strategy not only opens up warehouse space, but it also reduces waste caused by unwanted inventory left over from a production run. However, this strategy does require accurate long term forecasts of material needs; as there are limits to how long inventory can be held on a vendors warehouse floor (Usually ~60 days).

Here is an example of a usage case where JIT is useful:

One of our customers recently launched a new online direct to consumer sales platform for vitamins and supplements. They had no existing data about how their product was going to sell, so we warehoused surplus packaging to be released as needed.

By managing a JIT program for this customer, we were able to maintaining a constant supply of materials for their production line, in spite of unpredictable needs. This allowed our customer to dedicate valuable warehouse space to production rather than storage, keep their customers orders on schedule, and translate material cost savings directly to a healthier bottom line.

 


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