Just in Time
We have all experienced the "just in case" syndrome: Let's purchase a few extra file folders, just in case we need them next month. Let's order an extra toner cartridge, just in case the one we now have runs out of ink too soon. Let's buy an extra steak, just in case George decides to come for dinner.
While it is so wrong and so wasteful, many businesses still run on the "just in case" model. Instead, they should be running in the opposite direction - using "just-in-time" (JIT).
There are many reasons to use a JIT strategy. These reasons range from reducing inventory stock to reducing waste to boasting higher quality of production of goods and services to enjoying higher customer responsiveness and more. And best of all, the JIT strategy saves money by reducing overall costs of doing business.
With JIT, delivery of products and services occur as required. This is in contrast to the just-in-case syndrome where stockpiling of products and services is based on a hunch.
Take inventory as a simple example. While an extra cabinet of stationery supplies may be a way to avert waiting for supplies, the cost of the supplies is an expense that eats into the business' cash flow (not to mention the cost of the cabinet and floor space occupied by the cabinet). By not storing this excess inventory, you save space, free up cash resources (that you spent on the inventory), and reduce waste that comes from inventory obsolescence.
However, JIT strategies take work. Like most things worth doing, some planning and foresight need to go into implementing a JIT strategy. One of the easiest ways to facilitate JIT is to use a Kanban approach.
Kanban is a Japanese approach that uses a visual cue to signal when, for example, inventory requires replenishment. For instance, if your business uses bolts in an assembly line, you might paint a yellow line inside the bolts' storage bin. When bolts inside the bin reach this line, this is the signal to reorder more bolts. This prevents the supply from dropping to a critical level and ensures workers can carry on with their tasks without interruption.
While there are many facets to enabling a JIT strategy in your organization, one of the requisites is to build good relationships with your supplier network. It's much easier to call your regular supplier to replenish an order in a timely manner than it is to start over with a new supplier. Building good supplier relationships will help your business operate as a quality organization.