⏰ Just-in-time (JIT)
Big Idea: JIT means ordering and receiving stock only when it's needed for production — no stockpiling, no warehouses full of stuff! Think: right materials, right place, right time. ⏱️
How JIT works
- Materials arrive just before they're needed in production
- No large stockpiles — minimal inventory held
- Relies on very reliable suppliers who deliver quickly
- Production is 'pulled' by customer demand, not pushed by forecasts
Advantages and disadvantages
- ✅ Lower storage costs (smaller or no warehouses needed)
- ✅ Less waste from unsold or expired stock
- ✅ Cash isn't tied up in inventory
- ✅ Forces quality — no buffer stock to cover defects
- ❌ No safety stock — if a supplier is late, production stops
- ❌ Requires very reliable and flexible suppliers
- ❌ Cannot cope easily with sudden demand spikes
- ❌ Vulnerable to supply chain disruptions
📦 Just-in-case (JIC)
Big Idea: JIC means holding extra stock 'just in case' demand rises or a supplier is late. It's the safety-first approach to inventory! 🛡️
Advantages and disadvantages
- ✅ Buffer stock protects against supply delays
- ✅ Can meet unexpected spikes in demand
- ✅ Less dependent on supplier reliability
- ✅ Bulk buying may give discounts
- ❌ High storage/warehouse costs
- ❌ Cash is tied up in unsold stock
- ❌ Risk of stock becoming obsolete or expiring
- ❌ More waste if demand falls
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⚖️ JIT vs JIC — which is better?
Neither is always better — it depends on the business situation.
- JIT suits businesses with reliable suppliers and steady demand
- JIC suits businesses with unpredictable demand or unreliable supply chains
- JIT saves money on storage; JIC protects against disruptions
- Many businesses use a mix of both depending on the product
Exam tip: When evaluating JIT vs JIC, always link your answer to the specific business context — consider supplier reliability, demand patterns and the nature of the product.