The business environment is always the most active and competitive player in the global economy. As there is always a desire to increase profitability while decreasing investment, businesses tend to employ the Cross-docking and Just-in-Time approach, which brings yet another layer of efficiency into the manufacturing business.
What is JIT, and what are its benefits for every business dealing with warehousing? Let’s explore the details.
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What is a Just-In-Time Inventory?
Just-In-Time Inventory (JIT) is a relatively new approach to supply chain organization. A traditional approach is based on anticipation of customer demand, and keeping the pre-defined amount of inventory in the warehouse. JIT, however, promotes a more efficient vision of the process – instead of keeping the inventory in the warehouse, it is produced and/or delivered on demand.
Such a shift in an organization helps to produce and sell just the right amount of inventory, avoiding the overstock going obsolete and wasting the initial investments.
What is Cross-Docking?
Cross-docking is a constituent part of Just-in-time inventory. The incoming goods and products are sorted instantly at a cross-docking facility and taken to the outgoing trucks for further shipment. Such a timely product distribution reduces the cost of storing goods and focuses on shipping them straight to the customers.
JIT and Cross-docking take inventory management to a new level, as they eliminate the need to maintain a large storing space, as well as prevent the risk of overstocking.
How does JIT function?
JIT supply follows a standardized algorithm:
- The customer places the order for a certain product
- The supplier instantly receives the request and starts producing relevant products, which meet the expectations of the customers.
- Right after the products are ready for transportation, they undergo the cross-docking procedure, and then it is transported to the customer.
Such an end-to-end on-demand delivery of goods ensures the accuracy of inventory and its financing.
How Can You Implement a Just-in-Time Inventory Approach?
Just-in-TIme supply provides an exact quantity of the produce at an exact time. Such precision can only be provided by tech solutions like the SAP modular system, provided by LeverX.
SAP modular system is an all-encompassing environment, which brings structure and organization into every sphere of a company’s functioning. It targets the financial and human flow, as well as coordinates every part of the end-to-end manufacturing process.
As JIT is part of a supply chain, there is an SAP module fully dedicated to its functioning – warehouse management with SAP EWM – which brings integrity and clarity into every interaction of a supply chain. SAP Extensive Warehouse Management lets businesses organize, maintain and control the JIT supply, as well as benefit from a fully-automated process. However, such functionality can only be accessible when EWM is embedded in SAP S/4HANA.
For more detailed information, contact the LeverX specialists, who will provide comprehensive guidance into the way SAP modules work, and what are the other benefits you can get when implementing the SAP ecosystem into the structure of your company.
Benefits of JIT Manufacturing
Enhanced efficiency
Just-in-time delivery allows the production of an exact amount of produce, helping to avoid under- or overstocking of goods. This, in turn, reduces the cost of warehouse maintenance, inventory control, and insurance, benefits space usage, and helps to be more fine-tuned with the customer demands.
Flexibility
The commercial market has an ever-changing nature, thus, manufacturers and retailers need to adjust to it with minimal financial losses. Implementation of the JIT system into SAP EWM helps to be flexible with the demands and meet the current needs of the customers.
Quality
As long as all the products and details are used on-demand, there is no risk of outdated products being used in the production process.
Regulated stock
The usage of JIT helps to prevent all the ‘overs’ in the supply chain – overaccumulation of stock, overproduction, and overspending.
Automated business structure
As long as JIT is best to be controlled with an SAP module, it is also worth considering other modules, which will help to regulate the whole structure of the business and all the interactions within like SAP BTP, SAP S/4HANA, etc. It is best to outline all the business needs to the specialists from LeverX, who will recommend the most viable solutions.
Which industries can benefit from JIT?
Initially, JIT manufacturing was introduced by the Japanese auto industry within Toyota manufacturing plants, yet now, there is a wider choice of companies to benefit from JIT approach:
- Automotive – the trailblazers in JIT manufacturing still use this approach. The details for the car to be built are only received after the order is placed.
- Apparel – the usage of the JIT approach helps to leverage the production and make it more relevant to customer demand. Besides, it allows the refill of the inventory according to local requests, considering the needs of every specific store.
- Food industry– the usage of JIT in the food industry is rather a necessity than a commodity. JIT ensures a high quality of the meals to deliver and cuts costs on overstocking perishable foods. When the clients place the order, everything is cooked, packaged, and freshly delivered.
- Retail – the usage of JIT lets businesses streamline production and sales, thus, increasing profits. The produce is refilled according to the current needs of the customers, not just vague anticipated numbers.
- Publishing – publishers implement JIT due to the efficiency it provides. They print books or magazines according to the requirements, which helps to avoid unsold stock, and thus, waste of finance.
The Bottom Line
The implementation of JIT is a confident step towards the improvement of the supply chain and overall cycle of end-to-end manufacturing. Its principle resonates with the lean philosophy of warehouse management – nothing but efficiency.
JIT, introduced with the help of SAP EWM, prevents businesses from waste of space, investments, and goods. It promotes demand-manufacturing equality and reduces all the unclaimed inventory and waste.
For further details and information, call the consultant from LeverX to address all the questions regarding JIT implementation into your structure.
