Switch to just-in-case inventory management techniques; Shipping Industry


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By Wasana Nadeeshani Sellahewa

(Commonwealth) _ Edward Routh’s proposal to employ alternative, more long-term strategies to handle emergency circumstances rather than relying on just-in-time (JIT) inventory management strategies is an important consideration for businesses, particularly during times of economic uncertainty. JIT inventory management strategies involve ordering and receiving inventory as close to the time it is needed as possible, in order to reduce inventory carrying costs and increase efficiency. However, JIT inventory management can leave a business vulnerable to unexpected disruptions in the supply chain, such as natural disasters, geopolitical events, or other unforeseen circumstances.

Routh suggests that businesses should consider implementing more long-term inventory management strategies that are designed to provide greater resilience and flexibility during times of uncertainty. These strategies may include Diversifying suppliers. Businesses may lower the risk of supply chain interruption and lessen their reliance on a single provider by procuring from a variety of sources. A firm may assist guarantee that it has adequate inventory to fulfill demand by stocking up on important commodities in advance of times of high demand or unanticipated supply chain interruptions. Businesses may prevent supply chain interruptions by regularly monitoring inventory levels, which enables them to spot potential problems before they arise and take steps to lessen their effects. Businesses may anticipate inventory demands and make necessary adjustments to their inventory management techniques by forecasting future demand for their products. Businesses may cut carrying costs, increase productivity, and optimize inventory levels by automating inventory management.

As contrast to depending entirely on last-minute solutions like JIT inventory management, Routh’s idea urges organizations to take a more planned and proactive approach to inventory management. Businesses may better prepare themselves for the difficulties of economic uncertainty and unforeseen supply chain disruptions by putting in place long-term plans that offer more resilience and flexibility. Because just-in-time (JIT) inventory management strategies have been widely adopted during the past two years, many companies have had difficulties, as the quotation from the above passage makes clear. The JIT strategy is attractive because it lowers inventory carrying costs and boosts productivity, but it can also expose businesses to supply chain interruptions that could be harmful to their business operations.

A JIT model’s excessive dependence on prompt replenishments might cause inventory levels to be dangerously low. Brands have very little to no space for maneuvering amid supply chain interruptions as a result of this lack of a buffer, which may be particularly difficult during a pandemic. As a result, a lot of businesses are reviewing their inventory management processes in an effort to discover more reliable options that are more resilient to supply chain disruptions. By switching from a “just-in-time” (JIT) model to a “just-in-case” one, companies may keep higher stock levels, which can help them get around supply chain constraints and preserve the reliability of their fulfillment channels. By using this strategy, businesses may build a safety net that enables them to handle unanticipated supply chain interruptions more skillfully. 

The shift from JIT to just-in-case inventory management models is becoming increasingly important for businesses to respond to supply chain setbacks. Just-in-time inventory management involves ordering and receiving inventory as close to the time it is needed as possible, while the just-in-case approach involves maintaining a more significant inventory buffer to withstand disruptions in the supply chain.

As discussed, aggressive adoption of JIT inventory management models can result in razor-thin inventory levels, leaving companies vulnerable to supply chain disruptions. On the other hand, just-in-case inventory management models provide a buffer that enables companies to respond to unforeseen disruptions effectively. Maintaining more robust inventory levels through the just-in-case approach is beneficial for businesses for several reasons. For example, it can help prevent stockouts and backorders, which can negatively impact customer satisfaction and loyalty. In addition, having a more significant inventory buffer can provide more flexibility to respond to changing market demand, allowing companies to capitalize on opportunities and avoid missed sales.

By maintaining more robust inventory levels, companies can reduce their reliance on timely replenishments from suppliers, reducing the risk of supply chain disruptions. This is particularly crucial in times of economic uncertainty or global events such as pandemics, which can significantly impact the supply chain. The shift from JIT to just-in-case inventory management models can help companies respond more effectively to supply chain setbacks, maintain the integrity of their fulfillment channels, and improve customer satisfaction and loyalty. In today’s ever-changing business landscape, it is becoming increasingly important for companies to have a more stable inventory management model that is designed to withstand disruptions in the supply chain.


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