Preparing For July Fifth: The Benefits of Just-in-Time Shipping

For the past month, retailers have been stocking their shelves with patriotic clothing, decorations and other various items in preparation for this upcoming Fourth of July weekend. Odds are your local store has an entire aisle dedicated to all things red, white and blue. But what happens when the weekend ends? Like all holidays, one of the main challenges retailers face around the Fourth of July is maintaining the proper amount of inventory. If inventory is too low, retailers can’t meet customer demands. However, if inventory is too high, retailers are left with excess after the holiday is over.

One way retailers combat this issue is by implementing just-in-time (JIT) practices. JIT is a production strategy where companies operate on low inventory levels and rely on their supply chain partners to deliver shipments, such as raw goods or products, when needed. The JIT model is used to increase efficiency as product inventories are lowered or completely eliminated altogether. Shipments are coordinated to arrive at the precise time they are needed. There are many benefits to this, especially around holidays, such as lower costs, improved responsiveness and the reduction of obsolete inventory.

Lower Costs

Storing excess inventory is costly and time consuming. Additional stock ties up capital and runs the risk of being stolen, misplaced or damaged.  It also occupies unnecessary storage space that could otherwise be devoted to operations. Furthermore, the lengthy process of packing and storing goods could be avoided altogether by using JIT processes. The JIT model allows companies to keep their stock at the bare minimum and significantly decreases expenses (UPS).

Improves Responsiveness

By maintaining minimum inventory levels, companies are able to purchase a wider variety of goods at lower quantities. Greater product line variety results in an improved response rate to consumers and a supply that is better aligned with demand. With the unpredictability of consumer demand, it is best to implement JIT practices. If a particular alcoholic beverage with patriotic themed packaging is in high-demand, retailers are able to quickly respond and order more  of that product.  This is a win-win for both companies and consumers.

Reduces Risk of Obsolete Inventory

Holiday inventory runs the risk of becoming obsolete if it is not purchased beforehand. For instance, if a company orders an excess amount of Fourth of July themed decorations, they become irrelevant on the fifth of July. Sometimes these types of items can be sold at a discounted rate but it does force the company to take a financial loss. By implementing JIT shipping methods, companies increase their turnover rate and reduce the risk of having obsolete inventory (Cognizant Reports).

The JIT model greatly reduces costs, improves responsiveness and diminishes obsolete inventory. It is especially important to utilize JIT methods, especially around the holiday rush, to better forecast customer demand and ensure proper inventory levels.

blog comments powered by Disqus