2 Methods of Inventory Management
Inventory management is the process of controlling the flow of goods, raw materials, and finished products from manufacturers to warehouses, and from warehouses to retail stores or directly to customers. Inventory management aims to ensure that the right products are available in the right quantities at the right time while minimizing the costs associated with holding and managing inventory. This blog consists of two methods that help a bakery manage its inventory: 1] Just in Time 2] Just in Case
“Just in Time” (JIT) and “Just in Case” (JIC) are two approaches to inventory management.
Just in Time (JIT) is a manufacturing philosophy that emphasizes the timely delivery of the correct quantity of goods or materials to the production line, just when they are in need. The goal of JIT is to reduce inventory levels and increase efficiency by eliminating waste and reducing the time and cost associated with storing, handling, and transporting goods. Delivery of materials on time and in the correct quantity is ensured with the help of the JIT method in this method of inventory management, there is a close collaboration between the suppliers and manufacturers which relies on effective communication.
In a bakery that uses the Just in Time (JIT) approach, ingredients and supplies are delivered to the bakery just when they are needed for production. This helps the bakery to reduce waste and minimize the costs associated with holding and managing inventory.
Just in Case (JIC) is an approach that focuses on having a safe stock of goods or materials on hand, in case of unexpected events, such as a sudden increase in demand, supply chain disruptions, or unexpected production delays. The goal of JIC is to ensure that there are sufficient quantities of materials available to meet customer demand and to minimize the risk of stockouts or production downtime. JIC requires careful inventory planning and management, as well as a good understanding of the demand and supply dynamics of the bakeries.
Just in Time (JIT):
JIT has several advantages and disadvantages:
- Reduced inventory costs: By reducing the amount of inventory that needs to be stored and managed, JIT can help to lower the costs associated with holding and managing inventory.
- Increased efficiency: JIT helps to eliminate waste and reduce the time and cost associated with storing, handling, and transporting goods.
- Improved quality: JIT helps to ensure that only the right quantity of goods or materials are delivered, reducing the risk of overproduction and defects.
- Improved supplier relationships: JIT requires close collaboration between suppliers and manufacturers, leading to stronger, more trustworthy relationships.
- Dependence on suppliers: JIT relies heavily on suppliers for the timely delivery of goods and materials, so disruptions in the supply chain can have a major impact on production.
- Increased risk of stockouts: If a supplier fails to deliver goods or materials on time, it can lead to stockouts and production downtime.
- Difficulty in forecasting demand: JIT requires accurate and up-to-date information about demand, which can be challenging to obtain.
- Need for flexible processes: JIT requires flexible processes and the ability to quickly respond to changes in demand or supply.
Just in Case (JIC):
JIC has the following advantages and disadvantages:
- Reduced risk of stockouts: JIC helps to ensure that the bakery has enough inventory to meet customer demand, even in the case of unexpected events such as increased demand or supply chain disruptions.
- Increased production stability: JIC provides a buffer against stockouts and production downtime, helping to ensure that the bakery can continue to meet customer demand.
- Better control over inventory: JIC requires careful inventory planning and management, giving the bakery better control over its inventory and the ability to respond quickly to changes in demand.
- Increased inventory costs: JIC requires a safe stock of inventory, which can increase the costs associated with holding and managing inventory.
- Reduced efficiency: JIC can lead to overproduction and the waste of resources if demand does not match the safety stock levels.
- Difficulty in forecasting demand: Accurately forecasting demand can be challenging, and having too much inventory on hand can increase costs and lead to waste.
The inventory management system that a business opts for is dependent on the scale of the business, the physical location, no. of staff, no. of SKUs and the shelf life of the product that are sold.
Both JIT and JIC have their advantages and disadvantages, and the right approach will depend on the specific needs and circumstances of the bakery. JIT is well-suited to fast-paced, highly responsive manufacturing environments, while JIC may be a better fit for bakeries that operate in more unpredictable or volatile environments. Rise POS solution can be custom-made for your needs with central kitchens, factories, and warehouses, to streamline their ordering, dispatch, invoicing, and much more.Rise POS is a complete solution that can be customized based on specific business workflow, it also works with single bakery stores as well as an enterprise having several retail stores under one brand.