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jit

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t5mjzgntzc
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Just-In-Time “JIT”

VS
Just-In-Case “JIC”
Inventory Strategies
Just-In-Time (JIT):
JIT is an inventory management
strategy that aims to reduce
inventory levels to the bare
minimum by receiving goods only as
they are needed in the production
process.
The idea is to reduce waste, minimize
holding costs, and improve efficiency
by synchronizing production
schedules with supply deliveries.
Just-In-Case (JIC):
JIC is a more traditional approach
where businesses keep large
inventories of raw materials,
components, and finished goods as a
buffer against potential supply chain
disruptions or demand fluctuations.
This strategy ensures that the
company has "just in case" inventory
available if there are delays or
unexpected surges in demand.
Inventory Levels:
JIT:
Aims to keep inventory levels minimal,
ordering and receiving goods just as
they are needed in the production
process.

Only holds enough stock to meet


immediate production needs, reducing
storage space and inventory holding
costs.

JIC:
Involves maintaining higher inventory
levels as a buffer against uncertainties.

Businesses keep extra stock to deal with


supply chain disruptions or sudden
spikes in demand.
Risk Management:
JIT:

Higher risk of stockouts because it relies on


precise timing of deliveries. Any delays or
disruptions in the supply chain can halt
production.

Vulnerable to supply chain disruptions (e.g.,


transport delays, supplier failure, or unforeseen
demand shifts) due to minimal safety stock.

JIC:

Lower risk of stockouts because of the safety


stock held in reserve, providing a cushion
against unexpected demand spikes or supplier
delays.

However, there’s a tradeoff with higher risk of


overstocking, which leads to inventory wastage
or obsolescence.
Flexibility:
JIT:

Less flexible, as JIT depends heavily on


accurate demand forecasting and supplier
reliability. Any change in demand or unexpected
disruption can cause significant delays or
stockouts.

Companies must be able to react quickly and


adjust their schedules if any part of the supply
chain fails.

JIC:

More flexible in responding to changes in


customer demand, especially during periods of
high demand or supply disruptions. Since
businesses maintain buffer stock, they are
better positioned to meet unexpected needs
without delays.
Supply Chain Dependency:

JIT:

Highly dependent on reliable suppliers and


transportation systems. Suppliers must be able
to deliver on time to avoid production delays. If
a supplier fails, the entire production system is
at risk.

The supply chain must be highly synchronized,


requiring strong communication and logistics
coordination.

JIC:

Less dependent on supplier reliability


because extra stock is maintained to absorb
delays or supply chain disruptions.

While still dependent on suppliers, JIC can


withstand some degree of inefficiency or
delivery failure due to the availability of backup
inventory.
Impact on Customer Satisfaction:

JIT:

Can improve customer satisfaction by


speeding up production and reducing costs,
leading to quicker delivery times and
competitive pricing. However, if a supply chain
issue occurs, it can lead to stockouts and
delayed deliveries.

JIC:

Ensures higher customer satisfaction by


providing better availability of goods. There’s
less chance of customers facing delays or
stockouts, but the increased cost of carrying
inventory may lead to higher prices.
Side-by-Side Comparison:

Factor Just-In-Time (JIT) Just-In-Case (JIC)

Low, minimal stock, ordered as


Inventory Levels High, large safety stock maintained
needed

High risk of stockouts and Lower risk of stockouts, but higher


Risk Exposure
disruptions risk of excess stock

High operational efficiency, low Lower efficiency, higher holding


Efficiency
holding costs costs

Less flexible, dependent on More flexible, can absorb demand


Flexibility
accurate forecasting spikes

Lower holding costs, focus on Higher holding costs, tied-up capital


Cost Structure
operational efficiency in stock

High dependence on reliable Less dependent on suppliers, some


Supply Chain Dependency
suppliers and timing buffer capacity

Highly synchronized
More buffer in operations, less
Operational Impact production, lean
reliance on precise timing
manufacturing

Best for industries with stable Best for industries with variable
Suitability demand, high-volume demand, or where supply chain
production disruptions are common

Can improve with fast


Provides better availability and
Customer Satisfaction production and lower costs, but
reliability, but at a higher cost
risk of stockouts
In Conclusion:

JIT is ideal for companies looking to optimize costs,


reduce waste, and increase operational
efficiency, but it requires precise control over the
supply chain and carries a higher risk if disruptions
occur.

JIC, on the other hand, provides a safety net


against disruptions and demand fluctuations by
holding larger inventories, but it comes with higher
holding costs and potential inefficiencies.

The choice between JIT and JIC depends largely on


a company's risk tolerance, industry characteristics,
supply chain stability, and the demand patterns for
its products. Many businesses today use a hybrid
approach — leveraging JIT for routine operations
but keeping buffer stock for critical or
unpredictable items.
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