Just in Case : choosing the best method
22 November 2021
Just-in-case is a method of inventory management that consists of having stock available in production to cover any difficulties. In opposition to Just-in-time strategy where production is only triggered when the order is received, buffer stock provides more security.
These two methods are debatable in terms of storage capacity and cost: should we accept to lose orders in case of using the Just-in-time method, or should we assume higher costs to store safety goods in case of using the Just-in-case method?
With the Just-in-case method, you produce more to prevent the issue in which the supply chain stops. By putting some stock aside, the company protects itself from shortages of raw materials and finished products.
This production model is particularly applicable in sectors where stock-outs can have serious consequences. For example, in the pharmaceutical industry the Just-in-case method is used to avoid demand peaks and stock-outs in times of dangerous health situations.
This method is more difficult to apply in sectors with perishable goods or in sectors with bulky or heterogeneous goods, as warehouse space is required.
Obviously, this has a cost. The Just-in-time method, on the one hand, avoids storage of security goods, which is useless unless an incident occurs. It works on a pull basis and therefore does not imply overproduction. The company only produces when the customer orders. The need must be expressed for the action to be carried out.
The Just-in-case method, on the other hand, works on a push basis. Goods are prepared upstream, just in case, and each step of the production process is anticipated. This strategy is implemented in sectors where it is difficult to predict demand or where a stock shortage would be unthinkable.
The production method must be chosen according to the company's characteristics. It is necessary to evaluate its capacity to foresee the demand and to support the additional costs of storage to choose the Just-in-time or Just-in-case.
Just in Case : choosing the best method
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