Benefits Of Just-In-Time Inventory

May 3, 2020

There are many advantages of just-in-time (JIT) inventory, which is why it is one of our most popular inventory management options. The bottom line with our JIT service is that it gives you more space, time and money to invest in your core business.

What Is Just-in-Time Inventory?

JIT is a management system designed to replenish inventory with frequent deliveries, leaving you with enough packaging materials to support your operation until the next delivery, with whatever margin of error with which you feel comfortable. In the perfect theoretical world, you would be down to your last roll of stretch wrap when our truck or van pulls up with a new supply. (Of course, we don’t recommend playing it that tight!)

Just-in-time inventory management has been widely used in the packaging industry for decades, especially for managing inventories of corrugated (more about that later). JIT systems involve close collaboration between customer and supplier, and rapid communication about changes that affect established delivery quantities and frequency. 

Important changes that must be carefully monitored and communicated include: 

  • Changes in the customer’s shipping volume, up or down
  • One-time events that affect inventory levels, such as large, unexpected orders, temporary shutdowns, labor strikes, etc.
  • Changes in product availability, lead time and prices 

Benefits of Just-in-Time 

Customers realize tremendous benefits by implementing a JIT system for packaging. Let’s take a look at a few of the most significant:

  • Warehouse space savings: It’s no secret that packaging materials consume a lot of floor space and vertical space, especially corrugated boxes and many types of cushioning materials. Maintaining high inventory levels of such items limits room for production, expansion, secondary packaging lines, and other uses that improve the efficiency and capacity of your operation. For many of our customers, space saving is the No. 1 driver of JIT.
  • Reduced carrying costs: No company would miss a chance to improve positive cash flow, and that is a substantial benefit of just-in-time. Rather than tying a significant amount of cash in a one- or two-month supply of packaging materials, you can implement JIT and use your newly available cash for expansion, critical supplies, R&D — whatever it takes to help your business improve revenue, reduce cost and create competitive advantages.
  • Reduced waste and inefficiencies: There are more disadvantages to carrying large inventories of packaging materials than using lots of space and cash. With high inventories, there’s a risk that one of your packaging SKUs could become obsolete due to a change in your business, or be replaced by a superior product that you’d like to use right away. One thing GWC Packaging always does as part of our JIT services is to alert you to these new product options, so you can make the right decision and implement it in the shortest possible time.

Learn More 

Almost any manufacturing or distribution business is a good candidate for JIT, especially when: 

  • Corrugated usage is high
  • Bulky inner packaging materials are involved
  • Space is tight
  • Expansion, streamlining or improving finances is a priority 

To learn more about how we can help you improve results with a just-in-time program, please contact us now.