How does Just in Time Inventory Purchase Work in Ecommerce?

Inventory management for your online business can be a bit tricky. Orders come flying in, items should be shipped out, and you must try to monitor what you have all through inventory.

Consumer satisfaction is tremendously important to your business, so ensuring orders are fulfilled and shipped on time should be your top priority. You need a solution that holds the entirety of your inventory under control and guarantees you replenish in time.

Enter Just in Time (JIT) inventory, a training that limits inventory and overabundance items, so your business just has what is required close by.

While manufacturing organizations like Toyota have invested a great deal of energy and cash on perfecting this procedure, it isn’t generally as effectively recreated for ecommerce organizations.

Here’s a complete guide on what JIT inventory implies and the ways in which it can work for your business.

What is the Just in Time (JIT) inventory?

JIT is a technique for supply chain management that intends to reduce expenses, increment proficiency, and waste by accepting goods when they are required. It viably implies having enough inventory accessible to satisfy client needs, however close to simply enough, so you have to reserve the rest of the stuff, considering that point.

History of Just in Time inventory

The Just in Time inventory method initially originated in Japan and is otherwise called the Toyota Production System, as the car manufacturer received the Inventory management system during the 1970s.

Many believe that JIT has its roots in Japan’s shipyards because of Japan’s condition of cash post-war. There was a lack of standard assets and space for substantial industrial facilities and inventory.

Later, at the beginning of the 1980s, JIT was implemented in Western nations.

Is Just in Time worth it?

Viably implementing a JIT Inventory management system can prompt numerous favorable circumstances that empower makers to process inventory rapidly and proficiently. Notwithstanding, there are likewise a few drawbacks to JIT. Indeed, even the smallest disturbance can prompt tremendous issues.

Pros of JIT inventory

JIT has a few advantages to an organization’s creation procedure, including:

  • Reduced storage costs: Due to the way that stock is delivered or obtained at a sudden announcemet, there is no compelling reason to have extra or unsold inventory that occupies valuable inventory extra space. Storage space is costly, which can likewise prompt high inventory carrying costs.
  • Improved communication: JIT systems are just compelling when communication is clear. To guarantee issues don’t happen, and the inventory system runs efficiently, groups need to convey consistency.
  • Less waste: Since JIT systems depend on client requests and just production what has been as of late acquired, it dispenses with the volume of waste and excess inventory.
  • Smaller inventory investments: Companies spend a little measure of cash on raw materials since they just purchase the number of assets they have to deliver orders — that’s it and nothing less and nothing more. Inventory is regularly the highest cost for organizations, and JIT decreases the need to arrange enormous mass inventory clumps that will prompt item lounging around for some time.

Cons of JIT inventory

While JIT can have numerous points of interest, there are likewise a few drawbacks, which include:

  • Hard to execute: Companies that implement a JIT inventory system will rapidly comprehend there is no place for the mistake. Thus there is an opportunity they’ll encounter challenges and difficulties before they get it right. Inventory control is hard to oversee, particularly for quickly growing organizations.
  • Greater danger of supply chain failure: A delay in getting inventory or a breakdown in machinery could be adverse to an organization’s inventory network and cause huge issues.
  • More planning: In request to do JIT right, organizations must have accurate demand forecasts as well as real-time inventory tracking and client purchasing insights. A little miscount could largely affect all the business activities.
  • Stockouts are more probable: Since the JIT system calls just to have quite recently enough inventory, it’s feasible for organizations to run out if there is an impromptu flood in orders, making order fulfillment delayed.

Read more: https://www.builderfly.com/how-does-just-in-time-inventory-purchase-work-in-ecommerce

Builderfly is the best Ecommerce platform to build an online store for web and mobile. I work as Business Development Executive at www.builderfly.com

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