IBDP Design Technology - 10.1 Just in Time (JiT) and Just in Case (JiC)

Commercial Production / 10.1 /
Just in Time (JiT) and Just in Case (JiC)

Just in time and just in case are opposing production strategies utilized by the manufacturer. While inventory creates a safety net for companies, maintenance and potential waste of resources can have significant implications for companies and the environment. Manufacturers must evaluate and analyse each market and determine whether a JIT or JIC strategy is the best to follow.

10.1.1 | Just in Time & Just in Case

Just in Time (JiT) and Just in Case (JiC) represent two opposing approaches to inventory management in business operations, particularly in manufacturing. They differ significantly in their philosophy and practical applications:

Just-in-Time (JiT) focuses on efficiency and minimizing inventory costs. JIT aims to receive raw materials and components only when they are needed for production, reducing storage space and associated costs.

Just-in-Case (JiC) focuses on risk management and maintaining a safety net. JIC prioritizes maintaining higher inventory levels of raw materials and finished products to meet unexpected fluctuations in demand or supply chain disruptions.

The choice between JIT and JIC depends on various factors, including the:

Industry: Different industries have varying levels of inherent risk and demand predictability.
Product Characteristics: Factors like lead times, shelf life, and product complexity influence inventory management needs.
Type of product: Products with long lead times or high demand variability benefit from JIC, while stable, predictable demand favours JIT.
Supply chain stability: The reliability and efficiency of suppliers are crucial for successful JIT implementation. JIC is better suited for situations with a high risk of disruptions.
Company Size and Resources: Financial resources and storage capacity can influence the feasibility of holding larger inventories.
Risk Tolerance: The company's willingness to accept the risks associated with each approach.

Ultimately, many companies use a hybrid approach combining elements of both JIT and JIC depending on specific circumstances and product categories.

The global supply chain seems to be in a perpetual state of crisis. Whether it's groceries, petrol or micro-chips for electric vehicles, everything just keeps running out. But why does it keep happening?The crux of the matter lies in the way our global supply chain works, and how companies have come to rely on a unique system of efficiency, dubbed 'just in time'.

10.1.2 | Just in Time versus Just in Case

Just in Case

Advantages

Improved Customer Service: Raw materials, parts and products are readily available to meet customer demands.
Increased Resilience: Provides a buffer against unexpected disruptions in the supply chain.
Better Preparedness for Demand Fluctuations: Allows for handling unexpected surges in demand without compromising production schedules.
Economies of Scale: Potential for bulk discounts on materials when purchasing larger quantities.

Disadvantages

Higher Inventory Carrying Costs for additional storage space and resources to manage and maintain larger inventory levels.
Increased Risk of Waste if demand declines or product specifications change.
Reduced Risk of Product Obsolescence: Less risk of losing inventory value due to outdated products if demand remains consistent.

Just in Time

Advantages

Reduced Inventory Costs: Less inventory translates to lower storage costs, insurance costs, and potential spoilage or obsolescence.
Improved Cash Flow: Less capital is tied up in inventory, making it available for other investments or operational needs.
Increased Efficiency: JIT encourages streamlining the production process, minimizing waste and focusing on value-added activities.
Enhanced Quality Control: Frequent receipt of materials allows for earlier detection of defects and quicker corrective actions.
Greater Flexibility: Allows for quicker adaptation to changing market demands due to reduced dependence on large inventory stocks.

Disadvantages

High Dependence on Suppliers: Requires highly reliable and efficient suppliers to ensure timely deliveries and maintain production flow.
Vulnerable to Disruptions: Unexpected supply chain disruptions can lead to production stoppages and lost revenue.
Requires Precise Planning and Coordination: Demands a high level of planning and coordination throughout the supply chain to maintain accurate inventory levels.
Potential for Stockouts: If demand exceeds expectations or deliveries are delayed.
Limited Buffer for Errors: Less room for error in production planning or forecasting due to a minimal inventory buffer.

Industry examples | Just in Time / Just in Case

Toyota
The Toyota production system (TPS) is based on the philosophy of achieving the complete elimination of waste in pursuit of the most efficient methods. It incorporates two pillars: Jidoka and JIT

McDonalds
This case study explains how McDonald's operates a collaborative supply chain where all partners—the company, its franchisees, and its suppliers—are vested in each other's success, a core JIC principle.

Which strategy, JiC or JiT, do these images/companies ilustrate?

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