Is just-in-time delivery still a business best practice in the age of COVID-19? If so, what’s the best way to manage inventory levels to avoid stock-outs? Before the pandemic, many North American and European companies were encouraged to adopt just-in-time (JIT) manufacturing as part of continuous improvement and waste reduction efforts. With the rise of global supply chains, however, just-in-time delivery became vulnerable to tariffs and trade wars, distant natural disasters, and other far flung factors that are beyond a company’s control or ability to react quickly.
At the height of the COVID-19 pandemic, the risks associated with this approach to JIT delivery became clear. If a supplier was closed or couldn’t source the materials for the products you needed, there wouldn’t be any deliveries at all. Today, the landscape has changed. Lower-cost suppliers in Asia have reopened for business, but a shortage of shipping containers is raising freight costs and threatening on-time deliveries. Even if you can get what you need, less-than-container loads may not be cost-effective. By modifying your approach to JIT, however, you can reduce risk and get the rubber and plastic products that you need.
Just-in-Time Delivery vs. Just-in-Case Inventory
JIT delivery aligns orders from suppliers with your production schedule. This increases efficiency and reduces waste because you receive goods only as you need them. JIT delivery also frees up cash because you’re not paying for products you don’t immediately require, and that would incur costs such as shelving, floor space, security, and climate control. In an ideal JIT system, the products you receive move from dock to assembly line and bypass inventory entirely. By contrast, just-in-case strategies require you to hold sufficient quantities in inventory so that you have enough product to meet minimum market demand.
During the height of COVID-19, some manufacturers increased their levels of safety stock to mitigate the risk of stockouts. Even for companies that want to maximize just-in-time inventory, this demonstrated how just-in-time and just-in-case are not mutually exclusive. For critical items especially, it makes good business sense to keep enough safety stock on-hand. The challenge, however, is determining the proper safety stock levels. But what if you could work with a supplier that uses your production forecasts to determine not just how much to send you, but how much to buy so that you can get the materials or finished products you need?
Globalize and Localize JIT Systems
Elasto Proxy buys rubber and plastic materials globally and can store raw materials or finished goods at our warehouses in North American and Europe. If you send us your production forecast, we can purchase everything you’ll need in order quantities that reduce unit prices and the risk of a material’s unavailability or delayed shipment. In other words, you’ll know you can get what you need, when you need it, and without paying for it until you receive it. With just-in-time delivery from Elasto Proxy, we can even ship kitted parts in order of assembly. Imagine receiving a box of ready-to-install parts that moves from your dock to the assembly line. That’s just one of the value-added services we offer.
Rubber and plastic parts might seem like commodity products, but Elasto Proxy isn’t a commodity company. Instead, we’re a supply chain partner that can help you to solve complex business challenges that include sourcing, manufacturing, and logistics. Ask us about how to get just-in-time delivery and how we can help you to reduce manufacturing waste. Even the way we produce finished products can help to you to avoid or minimize costs such as tooling. Our ISO 9001:2015 certified company is staffed by experienced solutions providers who can even tell you about the key business trends for 2021 and beyond.