Just-In-Time (JIT) Delivery: Pros, Cons, and Examples
Just-in-time (JIT) delivery can save companies time and money, but risks exist. Learn if it’s right for your business.
Quickly and easily manage drivers and deliveries with Circuit for Teams.
Managing inventory sucks. It costs money, takes time, and can be a real drag.
Here’s the thing — it’s also not essential. With just-in-time (JIT) delivery, you can actually save money and eliminate the need to keep up with inventory.
But you’ll need the right systems and processes to offer just-in-time delivery.
Hint: One way to make JIT delivery easier is to use Circuit for Teams, which allows you to give customers real-time delivery notifications and optimize driver routes.
- Just-in-time delivery helps companies minimize inventory and cut costs on unnecessary supplies.
- JIT delivery benefits include shorter production runs, lower warehouse costs, and less raw material waste.
- An interruption in the supply chain or a breakdown for a material supplier can quickly screw up your JIT delivery, so preparing in advance is a good contact
What is just-in-time delivery?
Just-in-time (JIT) delivery aims to get customers the items they need as quickly as possible.
Rather than managing their own inventory, customers can order supplies and materials as needed.
As a delivery company, your job is to high-tail it to the customer and get them their items as quickly as possible.
Here’s a little background: JIT delivery started in Japan in the 1970s.
Toyota was the first company to use JIT manufacturing.
The Toyota production system involved manufacturing vehicles one at a time and only using the materials needed for the current task.
JIT delivery is catching on because it allows companies to satisfy customer needs with minimal warehouse space.
Since your customers won’t have to keep track of a large inventory, they can order items for delivery as needed.
You’ll shoot to deliver as quickly as possible so your customers can fulfill their orders.
Your customers may not meet their deadlines if you can’t deliver on time (and their customers may get pissed).
Imagine you’re delivering a part to a car mechanic who promised the customer their car would be ready by the end of the day and you don’t get them the part in time.
They have to tell the customer that their car won’t be ready until the next day.
Not a good situation for anyone.
During the COVID-19 pandemic, JIT delivery became much more popular.
Many people turned to delivery to get food and grocery orders and grew accustomed to quickly getting their items at their door.
This would have been super helpful for Ryan’s character from “The Office” when he started the company website.
Dunder Mifflin could have sold their warehouse to Bob Vance and ordered paper directly from the supplier whenever Blue Cross of Pennsylvania placed massive orders. Missed opportunity!
The main elements of JIT are:
- Continuous improvement. JIT involves identifying inefficiencies and constantly looking for ways to improve the overall function of your production process. For example, once you recognize you can use software like Circuit for Teams to automate delivery routes, you no longer need to set aside the first hour of each day to plan your drivers’ stops.
- Minimal waste. Through JIT, you can cut down on several types of waste (overproduction, transportation, inventory). You won’t spend money or time delivering products your customers don’t need, and they won’t have to store any goods they may not use or sell.
- Automation. Over time, your company can find ways to eliminate or automate mundane and menial tasks to free up workers for other responsibilities. A great example is using automated technology like Circuit for Teams to send delivery confirmation messages to customers.
By offering JIT delivery, you’ll quickly give customers their goods in a way that helps them become more efficient with their time and resources.
Think of the time they could free up once they’re no longer tracking inventory or managing their warehouse.
That’s just one of the many benefits of just-in-time manufacturing and delivery.
Keep reading to learn more about how to put just-in-time delivery services into practice.
How does just-in-time delivery work?
Working closely with customers is important to know when to deliver products. This minimizes storage and maximizes productivity.
Here’s how the JIT production process normally works:
- You get an order from a customer.
- You send a ask for to the supplier for the necessary materials, parts, or components.
- The supplier delivers the product to you.
- You complete the customer’s delivery — usually within one to two days of getting the initial order (and sometimes even on the same day).
Effective supply chain management is one of the biggest components of JIT delivery.
A minor breakdown in the manufacturing process can result in a major setback, so keeping the supply chain moving smoothly is important to avoid shortages.
Remember the Suez Canal blockage a few years back?
You can’t plan for when a ship won’t get through a canal, but you can develop a solid plan B if you’re stuck waiting for a product or item.
Of course, if backorders happen, you’ll be prepared to handle them like a champ — especially if you plan your deliveries with Circuit for Teams.
Pros and cons of just-in-time delivery
Just-in-time delivery can help your business in a number of ways, but it’s not a perfect system.
Below, you’ll learn about the advantages of JIT delivery and some notable drawbacks.
By knowing what challenges might lie ahead, you can improve demand forecasting, increase customer satisfaction, and raise your bottom line.
Pros of JIT delivery
Here are a few reasons customers would love to pay you to offer them JIT delivery services:
- Decreased storage costs. Businesses don’t have to keep as many items on hand since they’re only ordering products as needs arise. They also don’t have to spend time managing their inventory, which decreases their ongoing warehousing costs (and general day-to-day frustration).
- Less waste. Rather than buying a bunch of products they may or may not sell, companies only order the items they know they’ll need to meet customer demand.
- Better quality. Since companies aren’t storing items for long periods, they don’t have to use outdated or worn-down supplies. This works especially well with the FIFO delivery method (which we wrote about).
- Shorter lead times. You can fulfill more orders on short notice since they’re likely smaller and need less advanced planning.
Cons of JIT delivery
JIT delivery isn’t perfect, and you may experience cons like:
- Supply chain disruptions. Your overall production may stall if a supplier has a breakdown or issue and can’t deliver your products on time. And you may have to delay deliveries and keep customers waiting if you can’t turn around the order (which would probably piss them off).
- Tougher to forecast demand. With JIT, you have to predict the short-term demand for a specific item and envision how demand could change over time.
- Potential for hidden costs. You’ll save money over time by implementing JIT delivery, but you’ll also have upfront costs (training and technology) as you put JIT practices into place. Frequent small batches or deliveries may also result in a higher cost.
- Communication issues. Some situations contact for a store employee to communicate with a delivery driver and pass off an order. This is challenging when the store worker is busy with other tasks.
- Changing production schedules. Since you’re only offering products as needed, you may notice production variances or changes. Some days might be busier than others, making planning a little more difficult.
An example of JIT delivery
The benefit of JIT delivery is that customers don’t have to order the products until they need them.
This saves them from setting aside the necessary time and space to manage inventory.
Restaurants are a great example of just-in-time delivery.
Rather than making food they may or may not sell ahead of time, the businesses wait to prepare dishes until they get a customer order.
Food services also rely on the JIT system for fresh ingredients.
They don’t have to keep a large inventory of food on hand that may go bad before they can use it.
What businesses does just-in-time delivery make the most sense for?
These businesses often use JIT delivery to improve their cash flow and cut down on necessary capital:
- Grocery delivery. Since grocery orders often have cold food items that should stay fresh, these items usually have a short delivery window. Grocery stores can use JIT delivery to decrease the amount of necessary storage space and limit excess inventory.
- On-demand publishing. Rather than printing a large number of books that may or may not sell, publishers can produce print books as orders come in.
- Automotive manufacturing. Car manufacturers love just-in-time inventory control because they can build cars on an as-needed basis rather than keeping a full inventory they may or may not use. They can wait to order parts until a customer places an order.
- Tech manufacturing. Tech companies can limit their inventory by ordering hardware on an as-needed basis and waiting to ask for various materials until they reach certain points in the development process.
- Health care services. Some hospitals and primary care practitioners may use JIT delivery to order supplies and equipment based on patient needs.
Managing your own deliveries? Circuit for Teams optimizes the process
JIT delivery allows companies to decrease their inventory space and cut down on wasted time, costs, and materials.
Using JIT delivery comes with a strong reliance on supply chain management but offers a range of benefits, including faster response times and better resource allocation.
As you think about how to implement JIT into your existing processes, check out Circuit for Teams.
Our newest product offerings include real-time driver tracking and optimized routes for greater efficiency.
You can use our system to streamline JIT production and effectively manage your entire team of drivers.
Customers can track their delivery in real time and get instant notifications once delivery is complete.
In other words, they can enjoy just-in-time delivery without planning their entire day around it. Sounds awesome, right?