There are many competitive advantages associated with sourcing your component supplies “just in time.” Yet, although the concept in principle may be attractive, you have to consider a number of factors before implementation. What do you need to know?
Changing the Mindset
You have to have a different type of mindset when selecting your suppliers in this type of environment. Not only must your supplier be cost and quality focused, but also they must be able to work with you more proactively. For example, they should be able to set up a “pull” system so that materials are replenished as they are used, or they should be able to work on consignment.
Factor into the equation all your other costs of sourcing raw materials, other than just the purchase price and transportation figures. These will include handling and storage, and elements associated with loss or spoilage.
To enable the most flexibility and the highest potential cost savings, JIT will usually involve moving smaller quantities of material more often. This can be counter-intuitive to many, as manufacturing cost efficiencies of scale are normally associated when doing everything in bulk.
The key, therefore, to using JIT effectively is to unbundle your transportation solution and use your logistic providers more efficiently. By working with these increasingly nimble freight companies, you may be able to combine your smaller loads with those of many other customers. This should enable you to use a strategically designed routing structure.
You should work with your transportation company to help design a logistics supply chain. This may involve using a number of different solutions and staging points versus the old traditional method.
Using Software to Help
These days it is possible to use sophisticated software tools to enable you to come up with a practical assessment of your needs. These tools will help you with modelling when it comes to the size and location of key points. For example, you may need to reassess some or all of your origin, transportation waypoint, warehousing and destination facilities. This will help you to pinpoint the optimal location for all these intermediary points, together with the ideal stocking strategies at each. You’ll be able to determine how to combine your transportation routings and different modalities. A good model analysis will help you achieve your objectives in terms of costs and service levels.
If you want to transition from a non-JIT to a true JIT production capability, it will involve integrated efforts from a number of different employees in your organisation. You will also need to selectively choose your transportation providers. For more information, contact a business such as Jayde Transport.