For shipping and logistics managers, controlling every aspect of the supply/buy/ship lifecycle requires extensive attention to detail and metrics. While many industrial suppliers and manufacturers are leveraging technology to streamline logistics and shipping, Supply Chain Visibility (SCV) is a whole different beast. Often, supply chain operations involve varying locations, organizations and individuals, so industrial suppliers can’t always keep a steady pulse on the day-to-day outcomes of SCV.
The concept of Just In Time (JIT) delivery directly addresses this lack of transparency and strives to create a seamless logistics lifecycle. Although not a new strategy (JIT delivery is even the subject of a 1986 Harvard Business Review article), many industrial manufactures instead tend to go with more traditional supply chain techniques. In this post, we’ll take a look at what JIT delivery means for industrial organizations, the pros and cons of this concept and how trade compliance and export leaders can put it into practice.
Defining Just In Time Delivery
Just In Time (JIT) delivery refers to a supply chain concept wherein a manufacturer or shipping organization only keeps as much product on hand as it needs for that moment in time. This means that instead of a paper manufacturer keeping tens of thousands of tons of paper on hand ready for shipping at any given time, it now only produces as much paper as it will ship out every week. In many cases, a product isn’t even manufactured until the customer orders it, so Just In Time delivery takes into account the manufacturing time, the carrier lead time and holidays or weekends that may skew the delivery date.
Although the time span in question can vary between industries and organizations, the concept remains the same: With JIT delivery, there is no excess product sitting in a warehouse or storeroom—it is all assigned to orders and shipments.
Why Does JIT Work?
In order for JIT delivery strategies to go off without a hitch, every facet of the logistics process must be fine-tuned to minimize any possibility of a bottleneck. JIT delivery does, however, present several advantages over traditional SCV methods that make it worth the effort. For organizations with high-maintenance or expensive inventory, JIT methods can keep overhead costs in check. Less raw or high-cost materials are kept on-site, reducing spend and limiting risk.
With the introduction of JIT delivery, industrial manufacturers can gain an average of 70% reduction in inventory, a 50% reduction in labour costs and an 80% reduction in space requirements within 5 years. This goes to show that JIT delivery methods are ideal for established manufacturers looking to make long-term adjustments to maximize revenue—not just quick fixes.
And what about the shipping and logistics managers that are tasked with calculating schedules manually? With a JIT process integrated across multiple carriers, they can now report against service levels to ensure all deliveries are made on time, every time. Managers can also benefit from demand forecasting to avoid making too much of a certain product, saving the company addition manufacturing costs and employees’ time.
What Are Some Possible Cons?
While the advantages are many, there are a few cons to JIT delivery that industrial manufacturers must take into consideration. JIT delivery relies on a seamless supply chain to ensure there is the correct amount of inventory ready to be made into products at any given moment.
Suppliers, shippers and logistics managers must all be on the same page with inventory amounts, movement schedules and other critical steps in the process. Logistics managers overseeing the JIT delivery process must have a clear picture of supply and demand—a SCV concept that can sometimes get lost in more traditional “full warehouse” logistics methods.
How To Do It Right
Industrial manufacturing and logistic providers, like other traditional industries, are taking advantage of technological innovations and are relying more on cloud-based solutions to help run successful SCV and JIT delivery programs. Industry-specific solutions (including multi carrier shipping, global trade management, and delivery exception management) combine necessary business intelligence and analytics with a transparent look into every shipment, account and warehouse to help logistics managers understand, manage and prepare for JIT delivery.
Ideal JIT delivery and SCV programs should also providing the following:
Visibility across the entire logistics process: Every step of the process, from sourcing to manufacturing to shipping to delivery, should be tracked and managed in a single solution. This gives all key stakeholders a way to stay on top of orders and any possible delays. Many industrial manufacturers are still working off of manual processes, word of mouth and paper trails, which can cause a pile-up in JIT delivery.
A way for customers to stay on top of issues: Today’s customers are used to complete visibility into all facets of the consumer process, and logistics is no different. Customers must be able to track shipment prep, transportation and delivery in a clear, easy way. This level of transparency is now imperative to maximize the customer experience.
Full integration with other solutions: Just like other industries, industrial manufacturing and shipping have a multitude of online solutions available to them that track various aspects of the supply chain and delivery cycles. Without complete integration between these solutions, logistics managers never have a full picture of SCV or JIT processes, and can’t report on-the-spot against carrier service levels.
A complete online experience: Although it may be hard to fathom, the shipping and manufacturing industries are heading for a completely cloud-based or online experience. If all key stakeholders have online access to critical touch points across multiple carriers like purchase orders, shipping alerts and delivery notifications, the delivery process can run that much smoother, without unnecessary errors.
Real-time insight into delays & issues: With online platforms that track every aspect of the shipping, logistics and supply chain process, logistics managers are afforded a live look at any delays, issues and emergencies. The availability of this data helps shipping managers better understand supply and demand and act on any JIT delivery issues or problems in real-time. By the sheer virtue of JIT shipping, you need to ensure that your logistic processes and systems are geared for automation and reduction of errors and delays in the supply chain.
A high-level view of all logistics activities: Organizational leaders and executives need high-level access into all logistics activities, processes and engagements, alongside any issues or problems that need executive input. Easy reports and dashboards give leaders a clear view into SCV and JIT delivery activities for optimization and better execution.
Integrated SCV tools like Precision Software can help industrial managers better manage inventory, reap the benefits of JIT delivery and forecast supply and demand.
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