Just-in-Time vs. Just-in-Case
Would you rather risk running out of materials to ensure optimal, waste-free production or risk adding waste for the certainty of never running out of materials? This is the conundrum many manufacturers ask themselves as they choose the right approach to supply chain and value stream management.
It boils down to two chief philosophies that don’t necessarily clash, but do create different frameworks manufacturers must operate within. Should you adopt a just-in-time (JIT) model or organize your operations around a just-in-case (JIC) concept?
The philosophy of JIT manufacturing
Manufacturers around the world take a JIT approach to their supply chains. This Lean methodology was developed by Toyota in the early 1970s and follows a simple principle: Producers should only move materials right before they’re needed.
Companies following a JIT approach try to eliminate the need for a small “safety” stockpile by synchronizing their processes perfectly, even during spikes in customer demand or snags with material suppliers.
There are several benefits to the JIT model, including waste reduction and lower holding costs … but there’s also a lot of risk. The pandemic highlighted the JIT model’s flaws — among them, how companies risk significant challenges in times of unexpected crisis or in the face of protracted supply chain disruptions.
The philosophy of JIC manufacturing
A JIC philosophy is at the opposite end of the inventory philosophy spectrum, making stockpiling a priority. Unlike JIT and other Lean methodologies, the JIC method involves a distinctly proactive approach to inventory, and purchases are intended to maintain a healthy stockpile of raw materials so production can remain at a steady pace.
While JIT models are ideal due to sustainability and waste reduction, some cases justify the use of the JIC philosophy. For companies needing constant access to an inventory of raw materials — or experiencing frequent, sudden demand increases — JIC ensures enough materials are on hand to keep production at pace and meet shifting demand.
While there are benefits to JIC, there’s also a notable drawback. This system can be wasteful when demand slows and inventory stagnates. It also ties up cash that could otherwise be used to support the business.
Which philosophy is the right one?
A decade ago, you’d be hard-pressed to find any major manufacturer not abiding by a JIT philosophy. Today, numerous manufacturers are taking a second look at JIC as an alternative. Why?
The pandemic created a snowball effect for supply chains, causing disruptions and product shortages across manufacturing still lingering today. While JIT has long been the standard manufacturers strive for, it may not be the best one anymore, at least not for all manufacturers. Companies need to look closely at their suppliers — especially if they rely on foreign markets for critical raw materials — and follow supply chain and production models that work for them.
In the question of JIT vs. JIC, there is no right answer: only the one that gives manufacturers peace of mind about their production operations.