Pros and Cons of Just-In-Time Ordering
Just-in-time (JIT) ordering started in Japan in the 1970s and spread to the U.S. about decade later. Essentially, it is an inventory management system with the objective of having just enough inventory readily available to meet current demand but avoiding excess.
Many cleaning contractors and jan/san manufacturers have adopted the practice over the past decade. So now is a good time to ask, has it proven successful?
"The advantages and disadvantages of JIT ordering are now pretty clear, and while it does have its rewards, this inventory management system has its drawbacks as well," according to Terry Sambrowski, executive director of NSA, a group purchasing organization specifically for large contract cleaning companies in the U.S.
Sambrowski lists the key advantages and disadvantages of just-in-time ordering:
Cost reduction: Inventory management has costs; if inventory is not used for several months, that's money that could be used for business growth or other investments
Space reduction: Inventory requires warehouse space; having just enough inventory on hand to meet current demands opens up space for other purposes
Waste reduction: Often excess inventory not used for several months or longer ends up being trashed; this is costly and the waste interferes with sustainability initiatives.
The key drawbacks of JIT ordering, which some jan/san related companies have experienced, include the following:
Coordination: Many times it is difficult to coordinate with suppliers when products are needed; an effective JIT program requires significant coordination, timing, and rapid delivery
Shortages: There may be times when a product is needed but the supplier is short on supply or worse, sold out of the product
Increased costs: While the goal of a JIT program is to reduce costs, if a supplier is out of a product, the cleaning contractor or manufacturer may have to search for the item from other vendors, often paying more, which can eliminate cost savings.
"For cleaning contractors, the best way to start an effective JIT program is to monitor supply use very closely," says Sambrowski. "Create a spreadsheet. List when the product was purchased, how much is still in stock after two or three months, and when it was replenished. This will help create a JIT ordering timetable."
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