On average, inventory holding costs represent 25% of the value of the goods. Supply management represents a major profitability challenge for any company. To minimize storage and the costs it generates, some companies use a method that originated in Japan. It's called just-in-time logistics. While this concept is highly beneficial to the supply chain, its constraints can jeopardize a company's supply chain. Let's take a look at how to get around these obstacles and makejust-in-time a springboard for your business.
Just-in-time or flux tendu: what is it?
Also known as "just-in-time" (JIT) or "zero-delay", just-in-time is a logistics flow management method that originated in the Japanese automotive industry. It involves supplying raw materials or goods at the precise moment when the supply chain needs them.
Whether in production or logistics, the aim of just-in-time production is to minimize storage costs. This type of organization also aims to reduce manufacturing and delivery times.
JIT is particularly well-suited to production sectors requiring very large numbers of components, such as aeronautics. It enables us to stock at lower cost. It's also a winning strategy for businesses where fluctuations in demand are stable and predictable.
Example: In the retail sector, the warehouses that regulate a hypermarket chain meticulously organize the arrival of goods. Within a few hours, they have to group them together and dispatch them to the supermarkets. Coordination with all suppliers and carriers is essential. It ensures that no goods are missing from any order, and that shipments are made on time.
The benefits of just-in-time logistics: advantages and constraints for your supply chain
As you can see, the main advantage of just-in-time production is that it boosts your company's profitability. This management method optimizes supplies and production, reduces inventories, and does not require capital to store unnecessary goods. It limits the costs associated with overstocking and wastage.
When used in production, just-in-time production speeds up the manufacturing process. Sales forecasts enable optimized sourcing, thus improving efficiency.
Despite all these advantages, the JTA method can be dangerous if not properly mastered. Managed flow implies a number of constraints. The slightest flaw in the organization can result in stock-outs, production stoppages or delivery delays. So it's important to get this strategy right.
Read also: Why and how to outsource your logistics?
Implementing just-in-time logistics: 4 key points to optimize performance
In the supply chain, the success of a strategy depends on the study of each component of the supply chain. Implementing just-in-time delivery in this type of process demands rigor and synchronization between all players. This is based on 4 main pillars.
1. Sales forecasting
In just-in-time production, supply depends on forecast demand tables. The more precise this planning, the better the company can meet demand, while optimizing its physical flows. This avoids having too much stock, or running out in the event of an unexpected increase in orders.
2. Information synchronization between all players in the supply chain
This involves sharing data with suppliers, carriers, subcontractors and BtoB customers. The IT tools used by these players must be interconnected. This enables information to be updated in real time and synchronized for all. The aim is to be able to react quickly to meet demand.
3. Transparent delivery strategy
All links in the supply chain need to be aware of delivery times and shipping conditions. In this way, each player can anticipate the actions to be taken to fulfill his role on time and avoid delaying the process.
4. Internal coordination
Good coordination between suppliers, carriers and customers is essential, but not sufficient. Within the company, all departments (management, purchasing, marketing, accounting, etc.) must coordinate their actions. Good internal communication guarantees the smooth operation of just-in-time logistics. Every player in the organization has a role to play.
5. Optimizing logistics management
To successfully implement just-in-time production, it is essential to invest in software such as ERP(Enterprise Resource Planning) or WMS(Warehouse Management System). These tools are essential for a global view of the supply chain. They can also be used to analyze multiple data sets in a short space of time, automate certain tasks and speed up the processing of different types of logistics flows: physical, IT and financial.
Find out why you should choose a 4PL service provider.
Just-in-time logistics: what you need to know
The just-in-time logistics strategy guarantees continuity of supply while minimizing inventory. It reduces operating costs and minimizes waste. On the other hand, it generates a lot of constraints and puts the company at risk.
To reap the benefits of just-in-time logistics, you need to take concrete action. Logistical digitization, effective coordination between internal and external players, data sharing and sales forecasting are fundamental to optimizing just-in-time performance.
Is your business growing fast? Your logistics processes need to keep pace with your orders! Our experts can help you implement just-in-time logistics. D&figroupe can also help yououtsource your supply chain for greater control. To design your customized project, contact your dedicated D&figroupe contact now.
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