Some companies that want to increase efficiency and bring down costs are considering the just-in-time (JIT) manufacturing system to accomplish their goals. Although the system offers benefits with regard to inventory, it also poses risks that can prove detrimental to operations and sales. An alternative to JIT that companies can look into is outsourcing warehousing and fulfillment processes to qualified third party logistics providers.
Also called the Toyota Production System, JIT involves purchasing and producing items only as needed in order to eliminate waste (whether inventory, time, or effort) and make operations more efficient. Because companies will only be carrying and processing small amounts of raw materials and finished goods, there is no need for in-house warehousing or comprehensive fulfillment processes.
While it seems like a promising concept, JIT doesn't come without limitations. All processes in the JIT system are interdependent. Thus, a chink in one aspect of operations can cause the entire system to grind to a halt. For example, should a delivery of raw materials or parts fail to arrive due to an accident or disaster, a company will have to close down its assembly line while waiting for the next shipment. Even a few days of delay can cost companies a significant amount of sales. And because a company employing the JIT system will typically have eliminated its warehousing and fulfillment components, this means it won't have available stocks to fall back on should this occur.
Companies can still achieve their goals of bringing down costs and maintaining efficiency without compromising their supply chain by outsourcing warehousing and fulfillment. Enlisting a third party logistics provider not only eliminates the need for additional space, equipment, and manpower, but also allows companies to access expertise and technology otherwise unavailable to them at a significantly lower cost.
Third parties that offer warehousing and fulfillment services will typically be able to provide just the services a company needs. These services cover various aspects of the supply chain, including but not limited to inventory management; assembly; pick, pack, and ship services; and automated packaging.
Those that use the latest technology can even go beyond simply providing warehousing and fulfillment. Using the latest technology, they can integrate their systems with client websites to begin processing the order as soon as each transaction is made. Some solutions may also allow them to better process bulk or internal orders.
Unlike the JIT system, outsourcing warehousing and fulfillment not only helps to streamline operations; with the right service provider, it can also add value to the entire operation.
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Also called the Toyota Production System, JIT involves purchasing and producing items only as needed in order to eliminate waste (whether inventory, time, or effort) and make operations more efficient. Because companies will only be carrying and processing small amounts of raw materials and finished goods, there is no need for in-house warehousing or comprehensive fulfillment processes.
While it seems like a promising concept, JIT doesn't come without limitations. All processes in the JIT system are interdependent. Thus, a chink in one aspect of operations can cause the entire system to grind to a halt. For example, should a delivery of raw materials or parts fail to arrive due to an accident or disaster, a company will have to close down its assembly line while waiting for the next shipment. Even a few days of delay can cost companies a significant amount of sales. And because a company employing the JIT system will typically have eliminated its warehousing and fulfillment components, this means it won't have available stocks to fall back on should this occur.
Companies can still achieve their goals of bringing down costs and maintaining efficiency without compromising their supply chain by outsourcing warehousing and fulfillment. Enlisting a third party logistics provider not only eliminates the need for additional space, equipment, and manpower, but also allows companies to access expertise and technology otherwise unavailable to them at a significantly lower cost.
Third parties that offer warehousing and fulfillment services will typically be able to provide just the services a company needs. These services cover various aspects of the supply chain, including but not limited to inventory management; assembly; pick, pack, and ship services; and automated packaging.
Those that use the latest technology can even go beyond simply providing warehousing and fulfillment. Using the latest technology, they can integrate their systems with client websites to begin processing the order as soon as each transaction is made. Some solutions may also allow them to better process bulk or internal orders.
Unlike the JIT system, outsourcing warehousing and fulfillment not only helps to streamline operations; with the right service provider, it can also add value to the entire operation.
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