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The Pros and Cons of Just in Time Vs Just in Case Inventory Management Strategies

June 4, 2022

6 min read

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Author : United We Care
Clinically approved by : Dr.Vasudha
The Pros and Cons of Just in Time Vs Just in Case Inventory Management Strategies

This article will give you the pros and cons of just in time (J.I.T.) vs just in case (J.I.C.) inventory management strategies.

Just in Time vs Just In case

Just in time (J.I.T.) is a form of inventory management in which a company works with suppliers to make raw materials available when required. That production is about to begin. A just-in-time inventory management strategy aims to have the necessary inventory to meet the demand and avoid waste. Where Just in case (J.I.C.) is a form of inventory management where a company orders excess raw materials than required and produces more products than is expected to sell. Inventory management aims to keep extra stock in hand to avoid any risks.

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The Pros of Just in Time vs Just In case Inventory Management Strategies

Just in time vs Just in case inventory management are suitable for small companies. It saves quick production time and reduces lost sales due to excess production. Let’s discuss here–

 Pros of Just in Time Inventory Management Strategies

  1. The first and most important pro of just-in-time inventory management strategies is the reduction of wastage. They eliminate the risk of overstocking and damage to excess inventory. It reduces the risk of unsold inventory or unused piled-up stock. When production is less, you can also quickly identify defective products.
  2. Just in time, inventory management strategies also cause a reduction in the cost of purchasing and managing excess inventory. They are buying raw materials from local suppliers to ensure timely stock delivery. As a result, maintaining massive warehouses is also not required.
  3. J.I.T. inventory management strategies optimise production by eliminating delays by automating processes and reducing product defects. Moreover, since a lot of time is saved just in time, companies can quickly produce and deliver new products.
  4. If you compare just in time (J.I.T.) vs Just in case (J.I.C.), inventory management strategies are best for small-scale companies. Overall costs incurred in just-in-time companies are less because they don’t pile up extra stock, and there is no added cost on storage and warehousing.

 Pros of Just in Case Inventory Management Strategies

  1. The first and most significant pros of just-in-case inventory management strategies are that a company can compete at any level of competitiveness by adopting these. With the excess stock in hand, they can supply products whenever demanded. More advantageous is that companies with extra stock are ready to sell when competitors are out of stock.
  2. If you compare just in time (J.I.T.) vs just in case (J.I.C.), J.I.C. companies benefit from the reduced risk of lost sales because they have excess inventory stock. The excess inventory allows J.I.C. companies to produce goods while getting more supply.
  3. Since companies keep a large stock of inventories available at all times, it saves a lot because it incurs vast discounts on bulk purchases. Moreover, these companies purchase lists when the cost is at its lowest.
  4. Just in case inventory management strategies save the global supply chain in emergencies like the recent pandemic, when the whole world came to a standstill for weeks and months on end. Many companies following just-in-time inventory management strategies had to shut down because of a lack of inventory. But the just in case companies, who had excess inventory, kept the supply chain going because they did not have to stop production.
  5. Just in case companies can indulge inefficient marketing strategies with the extra stock in hand. They can give out samples for promotion. This way, they can reach out to more people and expand their business.

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The Cons of Just in Time Vs Just In Case Inventory Management Strategies

 Cons of Just in Time Inventory Management Strategies

  1. There is no scope for making errors in just-in-time inventory management strategies as there is no excess inventory. Therefore, the company has to be very vigilant at all times.
  2. J.I.T. will not be open to increased demand in production as there is no stock of inventory or raw materials available. The company is never ready for unexpected or massive orders.
  3. Inventory management strategies depend on local suppliers to supply raw materials. It can be risky as local suppliers might fail to provide the needful inventory on time. Inability to meet client expectations can have a negative effect. Therefore, it becomes essential to maintain a strong relationship with the supplier to ensure a timely supply of raw materials as and when required.
  4. Inventory management strategies require more planning to run the business because they do not keep a stock of inventories. Many clients order significant amounts of products during certain seasons. Higher demand requires a higher stock of merchandise. Therefore, preplan, and ensure the supply of inventory when necessary, even with suppliers.
  5. Sometimes workers lose hope and face anxiety and depression.

The Cons of Just in Case Inventory Management Strategies

  1. The most significant disadvantage of just-in-case inventory management strategies is the excess cost incurred for storage and warehousing. Storage and warehouse costs can be excessively high, sometimes nearly twenty to thirty per cent of inventory value.
  2. Since companies invest a lot of capital in procuring excess inventory, the money gets locked away. Therefore, the companies cannot use it in other aspects, such as advertising or increasing the business. The business loses flexibility, and thereby, the opportunity cost increases.
  3. When a company stocks huge inventory and produces in excess, discovering a flaw might incur huge losses. Quality control becomes an issue when a huge pile of goods must return to the market after modification.
  4. Due to investing a lot of capital and work pressure, workers face anxiety and depression. Sometimes they are in a panic attack.

Conclusion

Just in time (J.I.T.) inventory management is the new age inventory management strategy, and it has almost taken over just in case (J.I.C.) inventory management strategies. But both inventory management strategies have pros and cons, which must be considered while adopting them for your business.
https://en.wikipedia.org/wiki/Just_in_case

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