Just In Time Delivery

Did you ever order something online and then find out that the seller doesn't even have the item in stock? No worries! These days, with just in time delivery, the seller is poised to get the product from a warehouse, maybe on the other side of the world, to your doorstep, in a matter of days. The just in time delivery process is a huge help for companies looking to save money and protect their bottom line, but it also has some advantages for the environment. Read on to find out about some just in time delivery pros and cons.

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Table of contents

    Just in Time Delivery Definition

    For a Just in Time Delivery definition, it is useful to know the alternate way of spelling: 'Just-in-Time Delivery' as well as the oft-used shorthand 'JIT.'

    Just in Time Delivery: In the secondary and tertiary economic sectors, this is a method of managing inventory that provides products only as they are needed, rather than storing them.

    Just in Time Delivery Process

    Everyone has seen this process in action. All you need to do is order a specialty drink at Starbucks or a Big Mac at McDonald's. You don't want that Frappuccino sitting around for a while, do you? They make it on the spot: that's just in time delivery! Let's see how the just in time delivery process makes sense from the retail company end.

    A fast-food hamburger can be made ahead of time and parked on a heated shelf, but that doesn't make sense from a JIT perspective. We're not looking at haute cuisine here, so the reason the company prefers just-in-time isn't to provide a fresher product to the customer. Rather, it is to avoid waste, because avoiding waste cuts costs. By making hamburgers only after they are ordered, the restaurant has less inventory that it is required to throw out at the end of the day.

    Just in Time Delivery ordering at mcdonalds counter StudySmarterFig. 1 - Hamburger assembly after ordering your food at McDonald's is a perfect example of just in time delivery.

    So far, we've looked at JIT in the tertiary (service) sector, but it extends all the way back to the primary sector, which is where raw materials come from. The secondary (manufacturing and assembly) sector stands to reap huge economic benefits from employing just in time methods. Basically, it works like this:

    In a lean economy, an automobile manufacturer cannot afford to overproduce vehicles it cannot sell in around a year. Thus, it waits for orders from customers. Because of high-efficiency global supply chains, the parts that need to be assembled to make the vehicle can be delivered to the manufacturing plant as needed. This means the company does not have to pay for warehousing. Most of those parts come from other manufacturers in the secondary sector also employing just in time methods.

    Certain manufacturers rely on raw materials from the primary sector: metals and plastics, for example. They, similarly, wait for orders from assembly plants and keep as little inventory on hand as possible.

    Just in Time Delivery Risks

    Not keeping inventory on hand or in stock comes with considerable just in time delivery risks. We all saw this first-hand during the COVID-19 pandemic when global supply chains were disrupted. Reductions in labour, the shutdown of non-critical economic activities, and other forces rippled along supply chains like earthquake waves. The result was products going out of stock and companies going out of business. They ran out of inventory and there was no quick way to get more.

    The global supply of microchips used in electronics, including automobiles, slowed to a trickle during the COVID-19 pandemic. Raw materials and assembly plants were affected, particularly by the lockdowns and other pandemic response strategies used in countries such as the US, China, and Taiwan.

    Large-scale disruptions to transportation and other geographic forces are huge risks for the just in time delivery systems that dominate our global economy. Stores that sell food are highly vulnerable since their product is perishable. Store shelves go bare quickly even before natural disasters as people panic-buy, which often results in rationing. But it's even scarier to think that in countries such as the US, only a few days of complete transportation stoppage can leave supermarkets nearly empty.

    Just in Time Delivery empty supermarket shelves in australia StudySmarterFig. 2 - Empty supermarket shelves in Australia as a result of the Covid-19 pandemic

    Stores simply don't keep inventory on hand anymore. The global economy relies on speed and convenience, and there's not much space to plan for shortages.

    Just in Time Delivery Pro and Cons

    Like any economic system, there are just in time delivery pros and cons. You might be surprised by some of the pros.

    Pros

    We'll consider four main pros of the just in time method:

    Lower Costs for the Consumer

    To stay competitive, a business wants to offer the lowest price it can afford. Becoming more efficient helps cut costs, and JIT is part of that. If one business is doing JIT, its competitors are likely to do so too, and some of the savings are passed on to the consumer (you!).

    Higher Profits for Investors and Employees

    Whether companies are publicly held (offering stocks, for example) or privately held, the more efficient they are, the more competitive they are. JIT can help a company gain a competitive edge over the competition and raise its overall value. This is reflected in offerings such as stock prices, but it may also mean that employees can be paid more.

    Less Waste

    Of direct concern for geographers is the fact that JIT focuses on the reduction of waste. Less unused and expired foods are thrown on the rubbish heap. Mountains of unbought goods are not disposed of because they weren't made in the first place! What is made matches what is consumed.

    'Ah!,' you may say. 'But won't this hurt recycling?' Of course it will, and that is part of the point. 'Reduce, Recycle, Reuse' - the first goal is to use less in the first place so that less has to be recycled.

    It may already have occurred to you that less energy is needed in a JIT system. Less energy = fewer fossil fuels. Except for those heavily invested in fossil fuels industries, this is seen as a good thing. Remember that most raw heavy industry still relies on fossil fuels, even if households, vehicle drivers, and other end users have switched to renewable energy. What this means is that the energy used to make the thing is still mostly non-renewable.

    Smaller Footprint

    Here we mean a smaller amount of space is used: the physical footprint. No longer do vast warehouses have to exist at every step of the supply chain. Vast warehouses do indeed still exist, but it is not in the interest of companies using JIT methods to have more space than they need. Less space for warehouses might mean more space for the natural environment.

    Cons

    Of course, not everything is rosy.

    Susceptibility to Supply Chain Disruptions

    As we mentioned above, just in time delivery methods can be quite fragile. Instead of local or even national stockpiles of necessities such as food and fuel, countries rely on flawlessly operating global supply chains running 24/7. When war, natural disasters, or other disruption happens, shortages can happen, and prices can skyrocket. This places an incredible burden on lower-income households as well as developing countries.

    Greater Demand = Greater Waste

    Greater efficiency in the global economy doesn't mean people will use less. In fact, because it is easier and easier to get things faster and faster, people may consume more and more! The result, needless to say, is more waste. Regardless of how efficient the system is, more consumption results in more waste. Regardless of how much reuse and recycling takes place, the fact is that more energy was used at the outset.

    Unsafe Working Conditions

    Finally, while consumers and even the environment can benefit from just in time delivery, the stresses placed on workers can be extreme and even hazardous. Companies can track and monitor assembly and delivery in microseconds and therefore can push workers faster and faster as just in time delivery is pushed to its limits.

    In response, workers at companies such as Amazon, Walmart, and other US global retail behemoths engage in various collective actions, including work stoppages, to attempt to protect themselves. This extends into the transport sector as well, with rail workers and lorry drivers particularly pressed by conditions that demand greater and greater efficiency but more health risks.

    Just in Time Delivery Examples

    We've already mentioned fast food hamburgers, automobiles, and a few others. Now let's look at a politically relevant example: fossil fuel delivery for home heating. The names of the countries have been fictionalised, but the examples are highly realistic.

    Country A gets really cold winters, and for many decades its economy has relied on cheap natural gas for heating. Country A doesn't have its own natural gas, so it has to buy natural gas from Country C, which does. Between countries C and A is Country B.

    A buys natural gas from C, which delivers it to A through B. Where does just-in-time delivery come in? Through a highly efficient pipeline! Gone are the days when A had to buy liquified natural gas (LNG) overseas and have it shipped to port. Now, an entire international infrastructure exists to supply A the gas it needs, when it needs it, direct to every home. But there's a catch (isn't there always?).

    B and C go to war. A's reliance on JIT means it no longer has sufficient infrastructure for long-term LNG storage. So now, with winter on its way, A is scrambling to figure out how to keep its people warm, because as long as B and C are at war, it is too risky to pipe natural gas through B.

    Just in Time Delivery - Key takeaways

    • Just in Time Delivery is a method for managing inventory that eliminates or curtails warehousing.
    • Just in Time Delivery focuses on supplying products to consumers after they have been ordered or purchased.
    • Just in Time Delivery saves companies money by eliminating the need for expensive storage and also eliminates excess waste of unbought products.
    • Just in Time Delivery can be risky because of supply chain vulnerabilities such as natural disasters.
    • Just in Time Delivery reduces waste and, as such, can be beneficial for the natural environment and also save energy.

    References

    1. Fig. 1: ordering at mcdonalds (https://commons.wikimedia.org/wiki/File:SZ_%E6%B7%B1%E5%9C%B3_Shenzhen_%E7%A6%8F%E7%94%B0_Futian_%E7%B6%A0%E6%99%AF%E4%BD%90%E9%98%BE%E8%99%B9%E7%81%A3%E8%B3%BC%E7%89%A9%E4%B8%AD%E5%BF%83_LuYing_Hongwan_Meilin_2011_Shopping_Mall_shop_McDonalds_restaurant_kitchen_counters_May_2017_IX1.jpg), by Fulongightkam (https://commons.wikimedia.org/wiki/User:Fulongightkam), Licensed by CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/).
    2. Fig. 2: empty supermarket shelves (https://commons.wikimedia.org/wiki/File:2020-03-15_Empty_supermarket_shelves_in_Australian_supermarket_05.jpg), by Maksym Kozlenko (https://commons.wikimedia.org/wiki/User:Maxim75), Licensed by CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/).
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    Frequently Asked Questions about Just In Time Delivery

    How does just in time delivery work?

    Just in Time Delivery works by delivering components of products or end products only after they are ordered, thus saving warehousing costs.

    What is the process of just in time?

    The process of just in time is to first take an order and then place an order for the product and/or its components. The process has to be highly efficient to reduce customer wait times.

    What are two benefits of Just-in-Time delivery? 

    Two benefits of Just-in-Time delivery are increasing company efficiency and reduced waste.

    What is an example of Just-in-Time?

    An example of Just-in-Time is the assembly of a fast food hamburger after you order it.

    What are the risks of JIT?

    The risks of JIT include supply chain breakdowns, greater consumption and greater waste, and unsafe working conditions.

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