What are Just-in-time and Just-in-case production management principles? What is the difference between strategies? Why the Covid-19 pandemic has pushed businesses to switch from a Just-in-Time production strategy to a Just-in-Case strategy? How do businesses choose the right production and inventory management strategy? Find out right through the article below!
What is Just-in-Time?
Simple to understand, the Just-in-Time principle ensures production enterprises “right product - right quantity - right place - right time" aim “no inventory - no waiting - no extra costs”.
Accordingly, the enterprise will make a detailed plan for the production and distribution of all materials, goods, and products to ensure that the next process can be carried out as soon as the current process ends. As a result, all outputs of the previous stage are supplied at the beginning of the next stage; No workers, and no equipment is in a waiting state during the production process.
What is Just-in-Time?
>>>> See More: Manage production with Just-in-Time principle.
What is Just-in-Case?
The heavy impact of the Covid-19 pandemic on the global supply chain has made Just-in-Time no longer a "model" principle for all manufacturing businesses. Instead, businesses have turned to a Just-in-Case strategy.
Just-in-Case is a strategy to increase inventory storage to minimize the risk of supply chain disruptions, ensuring sufficient supply to meet demand. Besides "stocking when needed", businesses also move from being dependent on a single supplier to importing goods from many different sources to avoid production interruptions.
What is Just-in-Case?
>>>> See More: What is BOM? How to build and calculate BOM effectively and accurately
Differences between Just-in-Time and Just-in-Case
| Just-in-Time | Just-in-Case | |
| Inventory level | Meet immediate production or sales needs. | Stock up on materials and inventory to avoid "out of stock" when demand spikes or when suppliers delay supply. |
| Expense | Focus on using productive capital efficiently and economically, minimizing inventory levels. | Invest more capital for the storage of materials, and produce more goods with actual demand. |
| Ability to self-stabilize against objective developments | Requires stable supply-demand and must predict and plan accurately for production by Low self-stable | Support high self-stabilization ability against unstable supply-demand conditions. |
| Rules of production and supply chain | Apply the Pull rule: the customer demand will generate the corresponding purchase order for materials, inventory, and production requirements. | Apply the Push Rule: production and material purchasing requirements do not depend solely on the actual needs of the customer. |
Just-in-Time vs Just-in-Case: Choosing the Right Strategy?
Looking at the comparison table above, it is easy to see that choosing the right production and inventory strategy depends a lot on the characteristics of the business and industry. Typically, Just-in-Time will be more suitable for businesses that can predict accurately predict consumer demand, as well as have a stable, reliable supply.
Meanwhile, the Just-in-Case prevention strategy is capable of responding to external factors that can cause difficulties for businesses, such as supplier reliability, weather problems, transportation information, fuel prices, surprise orders, etc. Just-in-Case works to keep business operations uninterrupted, especially during the post-COVID-19 business recovery period.
Choosing the Right Strategy: Just-in-Time vs Just-in-Case
Businesses can completely apply a "hybrid principle" - both maintaining a sufficient inventory level to prevent unexpected situations while ensuring the optimization of capital used for production and storage. warehouse.
Viindoo SCM - The Enterprise's Supply Chain and connection Management Solution is part of the Viindoo All-in-one Management Software Solution.
With Viindoo SCM, businesses easily align all aspects of a supply chain, standardizing supply processes with automated rules. In addition, the modular structure that integrates all Purchasing, Sales, Logistics, Manufacturing, etc. gives managers an overall picture of the business supply chain.
Hopefully, the above article has answered businesses' questions about What are Just in Time and Just in Case production management, and What are the criteria for comparing and choosing the right strategy? Remember to refer to other useful knowledge and documents by Viindoo!
