Small business stock control techniques: Just-in-Time
In the latest in our series of blogs on small business stock control, we take a look at the Just-in-time (JIT) method of inventory management. Is this the right approach for your small business to achieve stock control?
What is JIT?
Just-in-time is a method of small business stock control where parts or raw materials are ordered as and when they are needed in the production process. This method originated with Japanese manufacturers in the 60s and 70s and spread throughout the rest of the world after that.
The pros of JIT
With JIT, you will save money because you do not need to hold “buffer” stock. You simply order the parts or materials as you need them. This means your inventory levels remain low and as a result so do your holding costs.
JIT can work well for small, bespoke manufacturing businesses because you can produce a greater variety of products at any given time. Short production runs are also within reach, you simply order what you need to fulfill orders as they come in.
The cons of JIT
As a method of small business stock control, JIT has its limitations. Producing what you need as you need it means that there can be no errors in your production schedule. For production to run smoothly you need reliable suppliers, a predictable production process and no faults or issues with the parts or materials supplied. Attention to detail is crucial throughout the process. If, for example, an order is delivered short or late, this will throw out your entire production schedule.
JIT comes with risks and very little room for error.