Beyond JIT Inventory

Being in business means managing customer expectations. Customers place an order with you. Then, you use raw materials to create and fulfill the desired order. You get paid when you can deliver the order. It’s a simple process. Well, that is, until you don’t have the raw materials needed to do whatever it is that your budges does with those materials. Let’s think beyond JIT Inventory.

The needs of businesses change all the time. Some materials are in high demand while others are in low demand. Unfortunately, you don’t get to wait around until supply chains work efficiently or until industries bounce back. The moment you need something, you have to consider how you’re going to get it and minimize the risks that you take in the process.

JIT Change

Just in Time (JIT) inventory has been an effective form of inventory management. You may have even used it to focus on risk aversion. However, it isn’t the most effective solution any longer because of supply chain disruptions. Particularly when you are looking to meet deadlines and provide premium customer service, your inventory levels have to be considered.

You miss 100% of the sales you don’t get (because you’re out of inventory.) –  Dwayne Gretsky or somethin’

Often, it comes down to inventory. The more space you have, the more inventory you can hold. If you find that you are lacking in storage space, a commercial post frame building can ensure you can store more. However, is this what’s right for you?

Consider JIT and whether it’s the best way to manage risk aversity for your business, regardless how large or small your operations may be.

What is JIT Inventory and Why is it Relevant?

Just in Time inventory has been a popular form of inventory management because it allows you to work with little to no inventory in place before an order comes in. Only after an order is in place do you get the inventory needed to complete that order. You focus on what you do best: production.

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JIT works based on a close relationship with suppliers. Raw materials arrive on your job site so that you can begin the production process. You don’t start until the materials arrive, which means that there are both advantages and disadvantages to consider.

There are several reasons why JIT has been a relevant form of inventory management for so long:

  • Reduces costs associated with storage
  • Eliminates waste
  • Improves productivity
  • Improves supplier relationships
  • Enhances cost efficiency

As long as you have reliable supply chains and you have up-to-date sales forecasts, Just in Time inventory can work for you.

What you have to remember is that it only works when your suppliers can get the supplies to you. If you don’t have inventory, you have to rely on the suppliers’ ability to get everything you need.

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How Supply Chain Disruptions are Causing Small Businesses to Rethink Just in Time Inventory Practices

Supply chains have been dramatically disrupted for a number of reasons. There are minimal resources, minimal labor to mine the resources, and more. It’s not a single industry that has been affected, either. The construction industry cannot find wood. The food and beverage industry cannot find a wide range of ingredients. Even healthcare cannot find certain products. With so much demand, many companies have struggled with the supply.

As a result, the supply chains dwindled. There have been countless reverberations. Some supplies are impossible to find while others are significantly overpriced within the market.

The Just in Time inventory has become a less-successful form of inventory management as a result of the supply chain disruptions.


Remember, one of the reasons why JIT is successful is because of the relationships you have with suppliers. However, suppliers simply cannot get the supplies. Depending on your industry, your suppliers may be dealing with backlogs that may take weeks or even months to get through. They’re waiting on their suppliers, too. They may not have access to certain items, which means you could be waiting longer than what your clients find acceptable.

JIT fails the moment you receive an order and turn to your suppliers to drop the raw supplies. If they don’t have the supplies to deliver to you, there’s no way that you can begin production until you get them. What happens next?

  1. The need to delay your deadline to your client.
  2. You have to wait longer to get paid from your client until the job is complete.
  3. Then you risk your client leaving to go to another company that has the supplies and can complete the job faster.

You can have all of the best supplier relationships in the world. If they don’t have access to the supply, they can’t deliver anything to you. That means that your production line comes to a screeching halt until your suppliers can get you all of the raw materials that you need.

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Risk Aversion Strategies to Consider

All it takes is being burned by Just in Time to determine that it’s not the model that you want to rely on moving forward. You need to focus on ways to avoid risks that will cause harm to your business.

Think about some of the risks you expose yourself to when you rely on suppliers to provide you with inventory just in time to fill your order. You risk providing a less-than-desirable experience for your client. The risk not getting paid on jobs that you have forecasted into your financial projections increase. This could all compound to where you risk losing business.

How much business do you have to lose before you close your doors forever? Obviously, you have to begin managing risks before you lose your business.

A sale isn’t something you pursue; its what happens to you while you are immersed in serving your customer. – unknown

There are a number of strategic directions that you can take to focus on risk aversion. Essentially, risk-averse decision making is based on the desire to seek certainty over uncertainty. By reducing your risk through specific strategies, you can take your small business to the next level. Businesses that don’t focus on risk averse strategies will often stumble. They’ll exceed deadlines, spend more due to supply chain issues, and even risk customer service.

You need to be smart about how you run your small business. As such, there are a few risk aversion strategies to consider. Much of this is based on the different types of inventory management.

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Once you decide that JIT is no longer an effective system, you have options.

Finished goods inventory: Maintain an inventory of finished goods. This allows you to request supplies from your suppliers as you anticipate orders. You can finish the goods and sell them as orders come in.

Buffer inventory: Maintain a “safety stock” of items that are harder to get in. This allows you to depend on suppliers for items that are readily available. Your buffer is what allows you to avoid extended wait times so you don’t have to extend deadlines or cancel orders.

Cycle inventory: Maintain an inventory of all of the products that you need to produce your goods. By ordering excess, you can save money by ordering in bulk. Additionally, you won’t become dependent on the supply chain as significantly because of maintaining a large inventory so that you can fill orders at any time without waiting for a delivery of raw items.

Regardless of what inventory management strategy you choose, you’ll need to have sufficient room to store your inventory.

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Consider all of the raw materials that you have

Will you have boxes or entire pallets that need to be stored?

You will want to take a close look at your sales forecasts to determine what kind of demand there will be. By identifying the demand, you can calculate how much inventory you will want to have in storage.

Now, if you’re used to Just in Time inventory, you may not have any kind of storage facility. In an effort to manage your risk aversion, you should control your storage. Don’t depend on rental facilities as this can be an added cost that your bottom line cannot support. The rental facilities may not be able to grow with your business. Additionally, facilities can raise their prices at any time, making it difficult for you to budge the expense.

If you find that your orders dwindle and you have a significant amount of inventory, there are options. consider a promotion or a deep discount to move it quickly if your inventory is a raw material that has an expiration date. If there is no expiration date, you can hold onto it or simply market that you can offer a fast turnaround.

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Managing Your Risks

Your business is faced with a number of risks when it comes to inventory. Understanding how to manage those risks will help you to be more successful.

Each risk is unique.

There’s no inventory. While having no inventory available is terrifying, there are options available. You can choose to swap out your inventory management system so that you have inventory on hand – whether it is for all of the supplies you need or only the hard-to-find ones.

You don’t have storage space. It’s a lot easier to keep inventory on hand when you have storage space. You may want to look at what your options are. By moving around offices, you may find that you have more storage than you realize. Otherwise, you can add storage by adding a pole barn to your facility.

Your suppliers are not getting you what you need. Strong relationships with suppliers are needed so that you can be confident that they will meet your needs. If they are unable to fill your orders, they need to be honest about that. Additionally, they need to explain why. There may be instances where you will have to research new suppliers from other parts of the country/world so that your business doesn’t take a hit.

Your customers are complaining about the deadlines. Communication is critical when you deal with clients and their expectations. Whether you have an inventory on hand or not, you may not be able to get products delivered as quickly as you have in the past. Explain what is causing the extended deadlines and ask for everyone’s patience.

Suppliers want to charge more. When it comes to supply and demand, prices are known to skyrocket. After all, suppliers know that there is a greater demand for supplies and they’ll want to profit from it. You can often manage these risks by establishing contracts with your suppliers so that you have fixed pricing in place. Additionally, if you buy in bulk, you may be able to reduce the pricing so that you can come out ahead.

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Why a Larger Inventory Can Help You Succeed

If you’ve noticed by now, one of the easiest risk aversion strategies, particularly as you move away from the Just-in-Time inventory model, is to have a larger inventory on hand.

When you have a larger inventory, you are less susceptible to problems with the supply chain. As others struggle to get products in, you can let out a sigh of relief knowing that you have what you need to fill orders.

The more space you have, the more inventory you can have

As long as you focus on forecasting, you won’t have to worry about not having enough or having too much.

By talking to your suppliers, you can also let them know about your shift. Rather than asking for inventory to be delivered based on orders being placed, you can let them know that you want inventory based on the forecast of upcoming orders. You can decide how much inventory you want to maintain at any given time. This will depend on your industry and the type of raw materials you require. You may want inventory based on a certain number of orders or based on a certain number of days or months.

When you start to maintain an inventory, there are still risks. However, these can be easily managed by knowing about them ahead of time.

Supplier issues: Ensure your suppliers are reliable and can be trusted. If you have to shop around for better suppliers, do so.

Shelf life: Identify what, if any, products have a shelf life so that you can manage this carefully. Rotation will be critical so that you don’t end up throwing away valuable inventory.

Theft: As soon as you maintain an inventory, you want to ensure the inventory isn’t going to walk off. Adding cameras and security to your storage facility can help you to protect your profits.

Damage: If items in your inventory are damaged, you cannot use them. Be cautious of how you store items, such as stacking so high that boxes get crushed. With more storage, you can spread items out and focus on better organization.

Business insurance can be obtained to help you protect your inventory. Additionally, by taking the necessary precautions, you can have a storage facility that you can count on to hold your inventory. Be sure that you’re not placing your inventory just anywhere. It needs to be dry, well-insulated, and secure.

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Choosing Where to Store Your Inventory

Obviously, there are going to be different answers based on the raw materials you use for your business. If you’re in the construction industry, you may be storing lumber or roofing shingles. If you’re in the restaurant industry, you may be storing ground beef or even sacks of flour. Whatever the situation may be, there are things to consider as you look to store your inventory effectively.

Too many businesses look for the cheapest storage solution. The problem with that is that it’s not an effective risk aversion strategy. The cheapest storage solution may be so entirely inadequate that you’re putting your full inventory at risk. You don’t want to do that.

Instead, focus on storage that is capable of reducing your risks:

  1. Storage space should be large enough for all of your raw materials.
  2. Storage space should be easy to get in and out of.
  3. Ensure there’s should be plenty of insulation so that materials aren’t affected by spikes of hot and cold weather.
  4. The space should be easy to secure.
  5. The space should be close to your operations so that transportation doesn’t become an issue.

How Sherman Pole Buildings Can Be a Beneficial Strategy

Small businesses have to stick together. When you decide that you’re ready to change your inventory management style, you have to be ready to make changes. Working closely with other small businesses can ensure that you meet all of your needs and accomplish more.

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Some small businesses may help you with supply. Others may help with storage.

You can begin to meet and exceed expectations with the help of Sherman Pole Buildings.

As a manufacturer of commercial pole buildings, we can meet your needs in many ways.

First, we can build the commercial post frame building that you need in order to hold more incoming and outgoing inventory. By holding more inventory, you’re less prone to the supply chain shortages. It can make it easier for you to meet tight deadlines. Additionally, if you already have the inventory of hard-to-find items, it ensures that you’re no longer limited in what you can sell to your clients.

While you could choose to build storage on your own, you run the risk of the same supply chains you’re trying to avoid. This brings us to another way that Sherman Pole Buildings can assist you.

By allowing us to build the storage, we tap into our own supply chains. Our team is capable of designing and building the various commercial pole buildings that you need. You can work with a small business and support local while minimizing your risks.

There’s no need to do all of the planning and building on your own where you’ll be at the mercy of supply chains. We can work to get the necessary supplies and build to your specifications. It reduces your stress and allows you to focus on other areas of your business.

With the many ways in which a commercial pole building can be customized, you can store as much inventory as needed. You can exceed what you are used to storing with a Just in Time inventory approach. Suddenly, you can have more room for source materials, finished goods, retail products, and more.

We’ll work carefully with you to understand requirements for commercial post frame building dimensions, single or double doors, heating and cooling, and more. This means that no matter what your inventory is comprised of it can be stored within one of our Sherman pole barns. You minimize your risks and begin to move toward an inventory strategy that allows you to be a more successful business.

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