While Just-In-Time inventory provides efficiency by reducing storage space and reducing the amount of money that could be invested in inventory, it also puts an organisations entire supply chain at risk of serious disruption due to even slight imbalances. Understanding the risks associated with JIT inventory will enable organisations to better manage those risks.
Photo by Tima Miroshnichenko
Hidden Risks Associated with JIT Inventory
In addition to the risk of significant delays caused by shipping cost volatility, vendor delivery delays, and manufacturing slowdowns, JIT inventory increases an organisation’s vulnerability to other “hidden” risks. While these types of risks do not typically appear on a company’s financial statements until an issue arises, they include the increased costs associated with expedited shipments, overtime labour and potentially lost sales and customer dissatisfaction resulting from minor delays. Therefore, while JIT inventory may provide benefits such as reduced inventory levels and improved product flow, it is not beneficial to all organisations; particularly, those that operate on thin profit margins or lack flexibility and resilience in their supply chains.
Custom Freight Solutions Offer Flexibility and Speed to JIT Inventory Logistics
One way to mitigate some of the risks associated with JIT inventory is to establish relationships with flexible and responsive logistics providers who offer custom freight solutions. Custom freight service allows companies to rapidly and effectively respond to disruptions in their supply chains. Because custom freight services provide just-in-time transportation options, they enable companies to avoid overstocking inventory and subsequently reduce the likelihood of obsolescence and potential losses due to excess inventory. Additionally, because custom freight service is typically provided on demand, companies using these services are able to maintain a higher degree of control over their logistics operations.
Technology Offers New Tools to Manage JIT Inventory Risk
While many organisations view technology as a threat to their ability to manage their own logistics operations, technology has actually become one of the best tools available to help organisations manage risk in their JIT inventory operations. Forecasting tools have advanced significantly since the days of using simple spreadsheets. Today, advanced forecasting tools utilise artificial intelligence and machine learning to identify trends and patterns in data and seasonal fluctuations in demand. Using these tools enables companies to take advantage of the benefits of JIT inventory management while avoiding the pitfalls. Technology does not eliminate the need for human oversight of logistics operations; however, it does provide companies with additional insight and foresight into potential disruptions.
Collaborate with Suppliers to Mitigate JIT Inventory Risk
Another method to mitigate JIT inventory risk is through collaborative efforts with suppliers. Organisations that build strong, collaborative relationships with their suppliers are more likely to receive priority service during times of peak demand. Organisations can foster collaborative relationships by maintaining open lines of communication, entering into flexible agreements that account for changes in demand, and sharing information about forecasts and expected demand with their suppliers. Collaborative relationships create a more stable supply chain environment.
Safety Stock Isn’t the Enemy
Some companies adopt JIT as if it’s all or nothing. But keeping a limited buffer of critical items can offset unexpected delays. Safety stock doesn’t have to mean a warehouse full of overstock. Strategic reserves of high-risk components give your operations a cushion. It’s a small investment that can prevent costly shutdowns.
Balance, Not Extremes
The goal isn’t to abandon JIT, but to use it wisely. Businesses thrive when they can adapt to uncertainty, not avoid it. By blending lean principles with strategic flexibility, companies can create resilient systems. JIT should be a tool, not a trap. The future belongs to businesses that find harmony between speed, cost and stability.
While Just-In-Time inventory provides efficiency by reducing storage space and reducing the amount of money that could be invested in inventory, it also puts an organisations entire supply chain at risk of serious disruption due to even slight imbalances. Understanding the risks associated with JIT inventory will enable organisations to better manage those risks.
Hidden Risks Associated with JIT Inventory
In addition to the risk of significant delays caused by shipping cost volatility, vendor delivery delays, and manufacturing slowdowns, JIT inventory increases an organisation’s vulnerability to other “hidden” risks. While these types of risks do not typically appear on a company’s financial statements until an issue arises, they include the increased costs associated with expedited shipments, overtime labour and potentially lost sales and customer dissatisfaction resulting from minor delays. Therefore, while JIT inventory may provide benefits such as reduced inventory levels and improved product flow, it is not beneficial to all organisations; particularly, those that operate on thin profit margins or lack flexibility and resilience in their supply chains.
Custom Freight Solutions Offer Flexibility and Speed to JIT Inventory Logistics
One way to mitigate some of the risks associated with JIT inventory is to establish relationships with flexible and responsive logistics providers who offer custom freight solutions. Custom freight service allows companies to rapidly and effectively respond to disruptions in their supply chains. Because custom freight services provide just-in-time transportation options, they enable companies to avoid overstocking inventory and subsequently reduce the likelihood of obsolescence and potential losses due to excess inventory. Additionally, because custom freight service is typically provided on demand, companies using these services are able to maintain a higher degree of control over their logistics operations.
Technology Offers New Tools to Manage JIT Inventory Risk
While many organisations view technology as a threat to their ability to manage their own logistics operations, technology has actually become one of the best tools available to help organisations manage risk in their JIT inventory operations. Forecasting tools have advanced significantly since the days of using simple spreadsheets. Today, advanced forecasting tools utilise artificial intelligence and machine learning to identify trends and patterns in data and seasonal fluctuations in demand. Using these tools enables companies to take advantage of the benefits of JIT inventory management while avoiding the pitfalls. Technology does not eliminate the need for human oversight of logistics operations; however, it does provide companies with additional insight and foresight into potential disruptions.
Collaborate with Suppliers to Mitigate JIT Inventory Risk
Another method to mitigate JIT inventory risk is through collaborative efforts with suppliers. Organisations that build strong, collaborative relationships with their suppliers are more likely to receive priority service during times of peak demand. Organisations can foster collaborative relationships by maintaining open lines of communication, entering into flexible agreements that account for changes in demand, and sharing information about forecasts and expected demand with their suppliers. Collaborative relationships create a more stable supply chain environment.
Safety Stock Isn’t the Enemy
Some companies adopt JIT as if it’s all or nothing. But keeping a limited buffer of critical items can offset unexpected delays. Safety stock doesn’t have to mean a warehouse full of overstock. Strategic reserves of high-risk components give your operations a cushion. It’s a small investment that can prevent costly shutdowns.
Balance, Not Extremes
The goal isn’t to abandon JIT, but to use it wisely. Businesses thrive when they can adapt to uncertainty, not avoid it. By blending lean principles with strategic flexibility, companies can create resilient systems. JIT should be a tool, not a trap. The future belongs to businesses that find harmony between speed, cost and stability.
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