The concept of Just-in-Time, has revolutionised how many big and even smaller companies operate. It is a system whereby manufacturers and companies no longer carry huge amounts of stock or inventory, but rather they keep a very small supply and then order more supplies when they need them and the supplies get there ‘just-in-time’ (JIT).
JIT means that there are no resources wasted storing stock, there is no need to keep moving stock which could damage it and there is less staff time used in keeping track of large amounts of stock; so it saves companies considerable amounts of money.
But given that suppliers have to deliver JIT and not too early and not too late, how do they manage this?
Good Relationship With Customer
Any JIT supplier has to have a good relationship with the customer. This is not a relationship that will allow discretions in terms of supply; supplies have to be JIT, if they are too early or late, the supplier will have to pay penalties. Rather the supplier and customer have to have clear communication and the price that the JIT supplier requires for their supplies has to be sufficient to ensure that the flexibility required for JIT supplies can be maintained.
JIT for suppliers is not easy. They have logistical demands to meet and in order for them to be able to cope with JIT, the process has to make financial sense, so there will be a beneficial relationship established, that will ensure the supplier is rewarded adequately.
Often JIT means that customers dramatically reduce the number of suppliers that they have. This means that they can work closely with their suppliers and from the supplier’s perspective it usually means that their contract to supply is quite valuable, so there is a keen interest to meet the needs of JIT.
Analysis of Demand
Some JIT suppliers use analytic methods to be able to ‘roughly’ anticipate demand. For example they analyse previous years supply records to ascertain when demand was high and when low. However, this can only be a rough indication of demand since JIT cannot be forecast accurately, the variables are simply too great.
Quality As A Supply Method
Supplies that have been quality tested and assured are integral to JIT supply methods. Consistently delivering products that meet the customers needs means that goods are accepted and not rejected by the customer. When goods are rejected the supplier fails to meet JIT requirements.
Flexible Manufacturing Systems
For suppliers to be able to meet the exacting demands of JIT, they are dependent on flexible manufacturing systems that will meet the sudden rush for demand with ease. These systems can often be more expensive than traditional systems, but they ensure peaks in demand can be catered for.
The supplier needs a workforce with the will and the capacity to be flexible, often at quite short notice. This means that the workforce can accommodate any demands that are made without too much disruption. This flexibility can be a vital element in the supply chain and should not be underestimated.
Flexible Transport System
Basic as it may sound there is a real need for a flexible transport system to transport goods quickly and efficiently. To meet the requirements of JIT there may be a need to use various methods of distribution so that there can be a quick response time when necessary.
Some suppliers ensure that they have distribution centres close to where their customers are. They retain the stock and have it close by so that it can be distributed to their customers with ease and with the minimum of time.