JIT Inventory Management (Just-in-Time)

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Just-in-time or JIT inventory management is a common inventory control technique. It is used by facilities wanting to maintain as low inventory as possible while still having smooth and efficient operations. In maintenance, JIT inventory management is valuable in limiting the overstocking of machine parts, tools, lubricants, and other maintenance materials.

What is JIT Inventory Management?

JIT inventory management is a method where you don’t keep excess inventory items, but have them delivered “just in time” or when needed. This method lets you save up on costs of storage or warehousing and other related expenses. It is especially effective if you have limited space or want to ensure that your inventory doesn’t become unusable from sitting in storage for too long.

The fundamental step when implementing JIT inventory management is identifying the ideal sources or suppliers of stocks or items. Because your facility can’t keep your stocks on hand, you need reliable local suppliers that will hold these items so you can access them soon as you need them.

Proper planning and sorting of critical items are also essential when implementing JIT Inventory management. You must know which items to only buy when needed and which to buy in bulk and store inside your facility.

Pros of JIT Inventory Management

Below are the advantages of implementing just-in-time inventory management:

Low Cost of Managing Inventory

Most facilities don’t realize that keeping stocks of machine parts and maintenance materials results in small expenses that aggregate over time. Managing inventory, even at a small volume, means paying for:

  • Labor costs on receiving, stocking, and monitoring items
  • Overhead costs on lighting and ventilating stockrooms
  • Cost of damage or loss during storage

Implementing JIT inventory management transfers these costs to your suppliers.

Frees Up Capital

Keeping inventory means you spend capital on assets that you store and use when needed. If your maintenance parts and tools are not an immediate need, you may be spending money on items you will store for a long time and not use. With JIT inventory management, you free up this capital and use it to purchase other essential assets or investments, hire more staff, provide employee incentives, or take available opportunities to grow the business. 

Low Risk of Loss

JIT inventory management lets you order only what you need, thus lowering the risk of spending money on things that may turn out to be useless. Although many maintenance items have a low risk of expiring or spoiling, you don’t want to buy inventory items you may or may not use. Keeping items in storage also run the risk of technicians using them for other than their intended purposes or, worse, for personal or unofficial use.

Cons of JIT Inventory Management

Consider the following disadvantages of JIT inventory management before implementing it:

High Cost of Delivery and Shipping

If you need items frequently, ordering them multiple times will cost more than buying them in bulk. Not only do you miss out on bulk discounts, but also you pay more for shipping, delivery, and receiving. Using JIT inventory management is not advisable for fast-moving or frequently used items.

Limited Accessibility

If you rely on your suppliers for your maintenance items, there is a high risk of items being unavailable when needed. When planning and scheduling work orders, account for ordering and delivery time. This way, you have a time allowance for procuring maintenance items before taking machinery out of production.

Suppliers failing to meet your time requirements can cause increased downtime, work order pile-ups, and constant maintenance rescheduling. Thus, it is crucial to have reliable suppliers when implementing JIT inventory management. We recommend you identify multiple suppliers for your stocks, so you’ll have backups when a supplier fails to deliver.

JIT Inventory Management with CMMS Software

Data-dependent planning and tracking are critical when implementing JIT inventory management. A computerized maintenance management system or CMMS can be a valuable help by providing real-time and accessible data for your maintenance team and item suppliers.Redlist’s CMMS allows you to automatically update inventory items as they are used. Paperless and instant recording mean accurate data and instant purchasing decisions. Schedule your free demo today to learn more about how Redlist can help you optimize your inventory management.

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