Don’t Be Late: Simple Lessons That Automotive JIT Inventories Offer Across Industries

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Originally developed by Toyota in the 1970s, just-in-time (JIT) inventories offer a to-the-bone way to manage leaner inventories. Far from having to pay for the storage of unlucrative and often unneeded stock, the JIT shift has certainly transformed the automotive world, a fact that’s proven especially imperative when delays elsewhere threaten to unravel supply chains in their entirety.

In the face of increasing money struggles and productivity delays across industries, the value of JIT, or at least the benefits that it brings to the table, is becoming more universally relevant than ever. While this doesn’t necessarily mean that a repeat model would be right for your business, it certainly highlights the need to reassess inventory management in light of recent challenges. Here, we’re going to help you see how by especially considering the JIT benefits that enabled a swift automotive recovery, and an estimated 7-9% market growth in 2021 alone

Benefit 1: Cost-effective production

With businesses losing vast amounts of money over the past eighteen months and facing further cost setbacks from the need for diversification into online markets etc., it’s fair to say that budgets are tight. As such, piling resources, time, and profits into the development of stock that sits in a warehouse (which you also pay for) simply isn’t viable right now. By comparison, JIT inventory management that involves working more closely with suppliers to meet real-time demand ensures only the production necessary to keep consumers happy. While you might not want to go all out with lean inventories as such, keeping stock to a minimum, and taking the time to more realistically predict demand and output using analytics, can certainly better help to preserve money when you need it the most. 

Benefit 2: Continual quality improvements
The improvements necessary to keep up with an ever-changing landscape can be difficult to implement if you’re still shifting stock that’s been in storage since last November. Leaner inventory management on an as-needed basis is therefore far more receptive to quality improvements. Toyota is certainly a great example of how to adapt, with their latest EV releases being just one in several cutting-edge adjustments seen in Toyota service repair manuals across history. While companies in other sectors may prefer to keep some stock on hand for security purposes, streamlining warehouses and focusing instead on new development could quickly prove imperative in the face of quickly-changing consumer expectations.

Benefit 3: Improved supplier relationships

By encouraging faster turnovers and responsive production for disaster preparedness, JIT inventories also improve supplier relationships. In-the-moment updates and the ability for partners to request changes at the development stage are certainly imperative for automotive supply networks that often span numerous parties and locations. Even for small scale supply networks elsewhere, a more in-the-moment, speedy delivery focus based on the work you’re doing now, rather than parts created two years ago could be transformative. 

JIT inventories aren’t for everyone, but as supply disruptions continue to wreak havoc across industries, it’s certainly plain to see that leaner inventory management offers some important lessons worth learning from.