Just in time (JIT) delivery solidifies the relationship between you and your supplier to forge something greater than the sum of its parts. Traditionally, manufacturers keep a large stock of materials on hand and draw from that stock as needed when customer orders come in. With JIT stocking, manufacturers order only what they need to fill specific customer orders. With less inventory to store, and less waste, manufacturers can cut costs and boost profits. But realizing the full potential of JIT delivery requires the right balance of planning, foresight, and communication with your supplier.
Benefits of JIT Delivery
JIT delivery operates on the theory that less is more, providing tremendous benefits for manufacturers that can make the most of it.
Reduced Warehousing Costs
Warehousing costs are one of the biggest expenses for manufacturers. First, there’s the cost of purchasing or renting warehouse space for all of your inventory. Whether you’re paying mortgage fees or rental fees, you get a monthly reminder of just how much it costs to hang onto material that, at the moment, you’re not using. But that’s only part of the story. A warehouse takes personnel to run it. There’s also security to think about, whether you’re talking about a security system or additional security personnel.
Taken together, these costs can put a ceiling on how large a manufacturing business can grow. Maybe you’re looking to take on more work, but your warehouse is full. The cost of securing more space for more inventory may not be feasible. Or maybe you need to expand your production or sales team, but again, the money isn’t there.
When you rely on JIT delivery, your supplier takes on the bulk of the warehousing costs. You only get what you need to fill customer orders. And “just in time” means just that—you get your material when you need it. Many manufacturers who’ve turned to JIT delivery have gotten rid of their warehousing altogether. Materials go from their supplier’s truck to the production floor, with nothing sitting around unused.
Keeping a large inventory yourself means planning for every eventuality. Often times, that means erring on the side of caution and holding on to more than you’ll likely need “just in case.” Unfortunately, that typically means some of your inventory is destined for the dumpster or discount. The longer material sits, the greater the chance of damage or corrosion. And if customer needs change unexpectedly, you could be looking at once valuable stock with no idea where it’s going to go. With JIT delivery, everything you order is already spoken for.
This can have unexpected benefits beyond simply saving money. When you don’t have to factor that lost material cost into your budget, you may be able to pass that savings onto your customers. More affordable pricing may help you increase your business. It’s a win/win for everyone.
Important Considerations for JIT Delivery
There are, of course, risks to going with JIT delivery. An unexpectedly large order may overwhelm your supplier. And you need to have a strong understanding of trends and changes in your business. If your orders ramp up seasonally, you need to communicate that information to your supplier in advance.
The risks of JIT delivery are mitigated by having a supplier you can count on. Here at Great Plains Stainless Steel, we pride ourselves on being a reliable partner for just in time steel delivery. Our proprietary MetalSmith™ 2.0 inventory management software helps our partners take full advantage of our stainless steel stock.
Give us a call today at 1-918-437-5400 to learn more about implementing JIT steel delivery for your business.