Thoughts on Just-in-time to Just-in-Case inventory

 An interesting article and statistics. 77% of respondents use safety stock and the same % use Just-In-Time. I think many of us would consider the answers mutually exclusive. However, hidden in the data, is how big those safety stocks are. If the safety stock is really buffer stock between cellular lines and amounts to a few hours, or a day, of consumption then not a big deal. If, due to long lead times and offshore suppliers, the safety stocks are weeks of supply then it's a different story.

The key is near the end - it's about lead/cycle times and component availability instead of finished goods inventory . Shorter lead/cycle time is better. If you can assemble to order, in a short time, you retain flexibility while offering responsiveness. Buffer stocks of components, especially if there is commonality across product lines/families, are easier to plan and manage than a magnitude higher number of final SKUs. The investment will be less as well.

Surprisingly, only 69% of respondents use A-B-C inventory categorization and analysis. Sadly, this reflects what I see in my consulting practice. This is a SCOR (Supply Chain Operations Reference) Best Practice. It is a simple way to categorize materials in a way to determine how much time and energy to invest in managing. Following the Pareto Principle, 20% of items will cover 80% of your inventory investment. Focus on them for the best returns. Then work your way down through the B items to the C items (80% of part numbers that represent 20% of inventory value or turnover).




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