Just-in-time Inventory Management: Building Resilience with Your 3PL

Companies utilizing a Just-In-Time (JIT) manufacturing approach know there is little room for error.  The manufacturing industry faced some challenges in recent years, forcing many to take a critical look at their supply chain operations in search of further efficiencies and cost savings. Third-Party Logistics companies (3PLs) play a vital role in supporting just-in-time (JIT) manufacturing by providing flexible, efficient, and cost-effective logistics solutions to complex supply chains. Although a JIT approach offers many potential benefits, its intricacies create many risks that can cut into the advantages and savings of a JIT strategy. However, partnering with a knowledgeable 3PL helps organizations take full advantage of JIT benefits while effectively overcoming and minimizing risks.

What is JIT Manufacturing

Commonly used in high-volume, low-variability industries like automotive, electronics, and food processing, JIT is also applied in industries with complex supply chains, perishable products, or high-frequency deliveries. This strategy focuses on minimizing inventory and increasing supply chain efficiency. This is accomplished by carefully coordinated ordering, communication, production scheduling, and equipment based on customer orders.

Examples of industries using JIT manufacturing include:

• Paper and Pulp
• Plastics and Packaging
• Steel and Metal Fabrication
• Electronics
• Food & Beverage
• Aerospace & Automotive
• Fast-Moving Consumer Goods
• Industrial Equipment
• Chemical Processing

Pros and Cons of JIT Manufacturing

When considering the implementation of a JIT manufacturing strategy it’s essential to weigh the pros and cons involved. Although JIT offers many benefits, the risks can more than offset the benefits without tight production monitoring and stakeholder communication.

Pros:

• Reduced inventory costs
• Improved efficiency
• Enhanced customer satisfaction
• Reduced waste
• Increased flexibility

Cons:

• High risk of supply chain disruptions
• Increased complexity
• Reduced flexibility in production scheduling
• Higher transportation costs
• Increased risk of stockouts and overstocking

The Logistics of JIT Manufacturing

Logistics plays a key role in the success of JIT manufacturing. When the following aspects are properly achieved, monitored, and managed it’s easier to reap the benefits. However, many logistics-related challenges can hinder JIT efforts.

Inventory management: Minimizing inventory levels, optimizing storage, and reducing waste are primary elements of JIT. Accomplishing these goals requires accurate demand forecasting to order materials and schedule deliveries.

Supply chain visibility: Real-time monitoring of production, transportation, and delivery is necessary for JIT efficiency. Technology, like a warehouse management system and real-time reporting, helps facilitate this essential monitoring and streamlines communication across the team.

Lean operations (production and warehouse): Streamlined production and warehouse processes are crucial to minimize delays. Automation in these key areas helps boost efficiency and minimize costs.  

Warehousing and storage: Warehouses need to be Ideally located and efficiently designed to minimize storage needs and speed up receiving and shipping via multiple modes to stay on schedule.

Transportation management: Optimizing routes, modes, and carriers for efficient delivery helps prevent production delays and maintain customer satisfaction.

3PLs and JIT Manufacturing

Third-party logistics can offer support to organizations leveraging a JIT manufacturing strategy, facilitating the benefits of JIT and mitigating the risks in various ways.

Reduced inventory costs: 3PLs offer years of experience plus Warehouse Management technology. This enables an efficient logistics partner to optimize warehouse storage and manage inventory levels by overseeing storage, handling, and cycle counting.

Supply Chain Visibility: Great 3PLs provide visibility into inventory through technology offering things like a customer portal, real-time data analytics, custom reporting, and tracking capabilities. This allows for rapid issue identification and adjustments to prevent or minimize production delays.

Lean Operations + Ideal Locations: A 3PL’s expertise facilitates streamlined processes and minimizes delays. These logistics partners offer warehouse real estate assets where needed and labor management at customer-owned sites when appropriate. Sometimes 3PLs even manage facilities attached to the manufacturing site. This embraces the manufacturer and 3PL partnership and helps both sides work harmoniously. 

Transportation Management: 3PLs provide real-time visibility and flexible delivery options facilitating route, mode, and carrier optimization for efficient delivery.

Exceptional customer service: 3PLs offer excellent communication and collaboration for effectively and efficiently handling time-sensitive operations for on-time customer deliveries.

Increased Flexibility: 3PLs offer adaptable logistics solutions to easily adjust operations in response to changing demand to avoid shortages and overstocks.

Building Resilience with Your 3PL

In JIT manufacturing, 3PLs often bear the brunt of supply chain disruptions. These challenges can lead to delayed deliveries, increased costs, and strained relationships. To strengthen partnerships and improve JIT outcomes, consider the following strategies: 

• Establish clear communication channels for real-time updates
• Collaborate on forecasting and production scheduling
• Develop joint risk management plans
• Set realistic expectations and understand 3PL limitations
• Proactively address disruptions and issues together

Partner with a 3PL to Minimize JIT Risks

Third-Party Logistics plays a crucial role in JIT manufacturing success, providing flexible, efficient, and cost-effective logistics solutions to complex supply chains. Partner with a knowledgeable 3PL to reap the many benefits of a JIT strategy while minimizing the risks. They’re the secret weapon that provides a competitive advantage.

WSI works with businesses leveraging JIT manufacturing. Contact us today to learn more.