Merchants are replenishing items rather than stockpiling inventory, The Wall Street Journal reports. Just-in-time inventory (JIT) management is back.
The report reveals that companies were stockpiling during the pandemic, where businesses were ordering ‘just in case.’
Here’s a scenario: There is a sudden need for a certain product on your store shelf. You go ahead and order 10,000 units of the product. In one week, you sell half of that stock. You then notice people have stopped buying the item in the coming week. The item expires and now you have excess stock that is wasted – time to revert to just-in-time ordering patterns.
You might remember the hunt for toilet paper during the pandemic. Imagine you’re a toilet paper supplier right now, and you’ve ordered two shipping container loads – the demand is gone immediately. And you are now most certainly wasting money on storage space for the two containers on your premises or at a storage facility.
Just-in-time inventory is key
Jamie Bragg, chief supply chain officer at Tailored Brands, tells The Wall Street Journal that just-in-time inventory is the goal. “We are bringing in the inventory we need to support our sales plan and have visibility out to 180 days to adjust up or down based on the demand signals we are receiving,” Bragg says. The ability to react to changes in demand means the company has “no need for ‘safety stock’ inventory,” he adds.
Locate2u News recently reported most stores are cutting prices to move stock.
Benefits of just-in-time inventory management
- Reduce waste: Following the JIT inventory management system eliminates excess stock.
- Improves efficiency: JIT ordering stops the company from expenses related to acquiring, handling, and storing inventory. This leads to quicker inventory turnover.
- Minimize costs: Following the JIT model allows a company to spend less on storage due to lower inventory levels.
- Reduces product defects: JIT inventory management streamlines the production cycle. This leads to on-time deliveries, keeping customers satisfied.
E-commerce sector boosts warehouse market
In 2023, the e-commerce sector saw several initiatives to boost the market. Warehouse fulfillment remains important in warehouse operations. Even social media company TikTok has seen the opportunity to offer followers fulfillment warehouses moving into logistics.
Machine learning is another trend taking center stage in warehousing and logistics. Artificial intelligence (AI) is making warehousing more efficient.
The AI is seeing automation of decision-making processes. This includes assisting warehouses with replenishing inventory. There is a challenge for 2024 – labor shortage. Labor challenges will see companies invest heavily in automation. This will also help companies keep up to speed with keeping customers satisfied.
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About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
