What is Just-in-time (JIT)?
Timing is everything, in life and in retail! JIT is a method of inventory management that allows you to maximize your on-hand inventory and open to buy dollars, all while capitalizing on sales using key timing factors as the basis for strategic decision making. This system balances the needs of your company, the demand from your customers, shipping times of vendors, and real-time sales forecasting. No matter what size your company is, cash flow and warehouse space will always be finite. This is why JIT is important to companies in today’s market.
How does STORIS Calculate Optimal Timing?
STORIS has JIT capabilities available to help your merchandising team make optimal decisions. Calculations for accurate Just In Time Inventory Management have grown more sophisticated over the years. STORIS does all of the calculations required for this process automatically through our Advanced Buying Tools, saving you time and resources, all while helping you make better business decisions.
By using a complex dataset from within the system, STORIS consolidates the information into an easy to understand report we like to call “Replenish Stock Inventory Based on Sales Rate.” This report monitors your rate of sale, current inventory, anticipated inventory receipts, and vendor lead times. STORIS then creates recommendations for purchases. STORIS can also go a step further and automatically generate purchase orders from those recommendations.
What are the benefits of JIT?
Just in Time, by its nature, matches cash flow with sales. This methodology allows you to cycle your inventory in a way that allows you to sell more with less inventory, therefore increasing turns in your warehouse. If you know the flow of your inventory supply chain, you can anticipate needs, rather than reacting to inventory shortages. By minimizing inventory, the Just in Time system frees up resources to utilize elsewhere in the company.
The Foundation of Understanding Inventory
STORIS is able to calculate many important factors for you automatically and make accurate recommendations, but it is still important to have an understanding of your business and your customer. Having a sense of changing external factors such as competition, market share, pricing strategies, promotions, and other foreseeable market shifts is what truly makes a great merchandiser. This supporting knowledge of your business combined with STORIS’ recommendations makes for strong merchandise planning.
The Key Factors of Just In Time
1. Demand Forecasting is all about understanding your customers’ shopping patterns and monitoring these trends to plan for the right inventory quantities to be stocked at the right time. Seasonality, trend direction, demographic shifts, and pricing strategy are just a few factors that can impact the demand of a product.
- STORIS’ Executive Information System gives you both spreadsheets and visual sales reports, allowing you to see real-time sales trends across products, categories, and groups. This historical data can be used for accurate forecasting.
2. Lead Time Monitoring In order to sell goods to your customers, the manufacturer has to make and ship the product. It is important to configure your settings for Just In Time inventory management with an understanding of the typical supply chain timeline of each individual vendor. Also, understand factors such as country of origin, current conditions of importing and other sourcing issues that may affect your vendors, as JIT depends largely on product availability.
- In STORIS, you can set up average lead times, including conservative pad days, by each vendor. This is a critical part of calculating Just In Time accuracy.
3. Inventory Control including tracking your current on-hand inventory quantities, statuses and locations, is another piece of the JIT equation. Knowing what you have in your current inventory is the foundation of where your purchasing and replenishment plan begins.
- In STORIS, you can configure the optimal on-hand quantity for a SKU, including safety stock levels, or how many pieces of SKU you want to have in stock if demand exceeds supply. These are the settings that will trigger STORIS’ automated replenishment.
4. Purchasing is the often overlooked component of JIT. It is important to factor in future merchandise quantities based on pending purchase orders soon to be received into your warehouse or store locations.
- STORIS not only accounts for what you have now, but what merchandise you have on order by expected delivery dates. This is a vital component to maximizing your Open to Buy and JIT strategy.