Just in case inventory management strategy prioritizes safety stock to prevent any loss due to risk in supply chain issues. This strategy aims to lower the risk of stock running out.
A company using this inventory strategy needs help to predict demand or face high unexpected demand all the time. But is this a helpful solution? How does it help companies fulfill customers' needs?
JIC helps businesses prevent potential losses such as loss of customers, suppliers, or supply chain collapse. JIC inventory management needs an extra value to maintain inventory but saves production process shutdowns.
In this article, we will learn in detail about JIC and how it is useful for businesses.
What Do You Mean by Just in Case (JIC)?
(JIC) Just in case inventory management is a method to keep a lot of inventories and avoid products running out of stock in case of significant demand. It helps businesses maintain a supply in case of need and requires higher investments.
- It needs higher storage costs and has spoilage risks if the stock doesn't sell out.
- It helps businesses to maintain a supply chain along with the production process smoothly.
- With an inventory filled with stocks, companies can deliver products faster and maintain good relationships with customers and suppliers.
It is mostly based on intuitive forecasting.
Just in Case (JIC) Inventory: How Does It Work?
The JIC inventory approach differs from the just-in-time (JIT) inventory method.
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In the JIT method, companies only produce products as per the demands. They lower the inventory and storage costs by reducing the production rate, as goods are only delivered once the order is placed or demand is higher.
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JIC is a more common practice in developing countries. Due to the need for a reliable supply chain, underdeveloped transportation systems, and suppliers, industries invest large amounts of money in filling inventory. If inventory is complete, companies can deliver goods more easily and on time.
Importance of Just in Case (JIC)
(JIC) Just in case Inventory management is a process that helps businesses maintain the supply chain during natural disasters, international disturbances, or pandemic-like situations.
During COVID-19, JIC inventory helped companies to fulfill market demand on time. In situations like these, global crises shut down many operations for weeks.
Suppliers, manufacturers, and even customers suffer, which affects production, and the JIT inventory management strategy can prevent it.
Benefits of JIC
The advantages of the JIC model are as follows:
1. Flexibility
JIC makes manufacturingon time and quick. Customer demands can increase at any moment, and additional inventory can fulfill customers' needs. Good distribution management allows stores to handle demand fluctuations easily.
2. Scalability
It reduces extra costs on sudden bulk orders. It might increase storage costs, but demands can increase product prices due to shortages. No price fluctuations can affect the supply chain if the product is stocked up in warehouses.
3. Customer Satisfaction
Stockouts can affect your customer base and fill up complaints if placed orders are delivered late. With JIC, timely delivery is not an issue, and customers' demands are a top goal.
4. Productivity
Companies can order all the stock once, saving time to reorder every time a customer orders. It makes the manufacturing process simpler and time-saving.
5. Marketing
Companies can increase profits greatly by sending samples or making in-store displays to promote products. With a large stock of products, businesses can offer discounted products and save a lot of money.
The Drawbacks of JIC
With many benefits, JIC inventory management also comes with a few disadvantages. These disadvantages are:
1. Overcrowding
Companies that use JIC inventory require large warehouses to maintain stock. With less space, stock management can be crowded and affect workflow. Due to large stock quantities, employees feel uncomfortable in warehouses.
2. Spoilage
Ordering and storing a large stock of products means more products are at risk of getting spoiled or remaining unsold for longer. Large stocks can get damaged or expire before even selling.
3. Disturbed Cash Flow
Large warehouses and stocks need a large amount of money. It also requires more storage costs to maintain inventory, disturbing the cash flow.
4. Quality Control
A business that invests in more complex production and supply chain processes must spend more to maintain the quality of the product throughout. If the product is just high in quantity, not quality, it will affect the customer's interest and demand.
Just in Case Inventory Management Case Study
If a company used JIC inventory to maintain its stocks, its whole operation would depend on managers forecasting how much inventory is required.
For example, during monsoon season, an umbrella-making factory might stock up on inventory due to high demand. If inventory goes below reorder points, manufacturers reorder supplies and raw materials for more production.
It is more of a gut-feeling concept rather than a calculated move.
Just in Case (JIC) Inventory With Software
One main benefit of JIC is that companies do not have to commit to any one product or service. Based on gut feeling, businesses can increase their stocks as per their needs or market demands.
Some companies increase their buffer stocks with an increase in order, but it is uncertain, and forecasting is difficult. With technology and proper analytical planning, inventory management is possible.
Businesses that use modern inventory management systemscan enjoy many benefits and reduce losses with accurate results. If the software manages all the analytics, companies can prepare the right plan for inventory management and offer stability to the supply chain process.
Improve Your Inventory Management With TranZact
TranZact can help businesses simplify their inventory management and achieve all target goals with real-time data. It helps companies forecast inventory stocks and methods to maintain stock for long periods.
With TranZact, businesses can easily manage unpredictable supply chains and run a smooth supply-chain process.
FAQs on JIC Inventory
1. What is just-in-time inventory management?
Just-in-time inventory management is a method to maintain stock by producing products only after a customer places an order.
2. What does JIC inventory management mean?
Just in case inventory management means that the business produces products based on forecasts or trends in the market. It is mainly based on gut feeling, not on statistical data.
3. What is one key difference between JIC and JIT?
The key difference between JIC and JIT:
- JIC is more expensive and needs storage, warehouses, and quality controls.
- JIT is inexpensive but time-consuming.
- JIT stock inventory after the order is placed.
- JIC keeps the warehouse full ahead of time.
4. Which companies need JIT inventory?
The Automobile industry is an example that works using JIT inventory. Besides that, restaurants and consumer products giants like Amazon and Flipkart also use JIT inventory.
5. What is the difference between buffer inventory and just-in-case inventory?
The difference between buffer and just-in-case inventory is that most companies keep a buffer inventory for high-demand situations but fewer companies keep just-in-case inventory.
Buffer Inventory works well with companies facing unexpected demands and needing large stocks quickly, but JIC helps businesses to stay ahead of time in shipment and quality.
6. What are the drawbacks of JIC inventory management?
Quality control, spoilage, high cash flow, and congested warehouses are a few drawbacks in JIC inventory management.
7. What are examples of JIC inventory management?
Hospitals use JIC inventory management to maintain a stock of drugs and tools in case of an emergency or pandemic.
8. Can JIT inventory management prevent overproduction?
Yes, JIT inventory prevents overproduction, allowing businesses to produce goods with demand only.
