Many people stock up on supplies ahead of time, enough to last them a whole month. Others prefer to go to the store every few days to stock up on essentials, when and as they need to. In the world of operations management, the latter is known as a just-in-time approach.
With this approach, rather than fill warehouses with supplies they might need, companies aim to order only what they do need, when they need it.
Traditionally, inventory was regarded as an asset, regardless of whether it was used.
Just-in-time applies Lean thinking to inventory management. So instead of considering it an asset, excess inventory is considered waste. That’s because all those supplies need to be kept somewhere, and storage is expensive!
Also, employees waste time if they have to search for supplies in crowded warehouses. When you implement a just-in-time approach, the driving force is customer demand. So a smartphone manufacturer only has the circuit boards, glass screens, and metal housings delivered once customers place an order for such products.
Meeting customer demand
There are two key components of successfully meeting customer demand with a just-in-time approach. The first is good communication. Companies should establish good communication with customers, employees, and suppliers if they want the just-in-time approach to work.
This requires you to understand customer demands, needs, and quality expectations. You need to know what products your customers want and when they want them, so you can get the supplies you need. You’ll also have to make sure employees are clear on the goals of just-in-time. Training programs can help achieve this.
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