This can mean either destroying it or selling it at a heavy discount. Stock with low turnover could date and become obsolete.For example, more stock takes up warehouse space, increases storage costs and ties up capital that you could use elsewhere. Carrying safety stock or increasing your safety stock levels will impact your carrying costs.The disadvantages to just-in-case stock management include: Being able to respond to market changes quickly due to additional safety stock puts you in a strong position to facilitate growth.ĭisadvantages of just in case stock control.These additional sales could balance the increase in carrying costs and capital invested in buffer stock. It can help you generate more sales and gain a competitive advantage if your competitors hit a stock out. Having the right stock available could be more profitable in the long run.The ability to use the additional stock to meet any unexpected demand surges or mitigate supply chain disruption, such as increased delivery times or suppliers with stock outs.The advantages of following a just-in-case inventory management strategy include: JIC works well where demand is volatile or to help overcome supply chain disruption. Companies will look at anticipated demand and add on extra quantities ‘just-in-case’. Companies keep ‘buffer’ or ‘ safety stock’ of items so that they can quickly respond to unexpected demand surges. JIC stock management takes a more cautious approach. If you fail to fulfill demand, you may see an increased risk of dissatisfied customers moving to competitors with better product availability.Alternatively, you need to have strong relationships with your suppliers, so they’ll be more inclined to help you if there’s a problem.
JIT needs supplier reliability, which is much easier for organizations that own parts of the supply chain.It works best when demand is stable with little to no fluctuations. You may struggle to meet any unexpected surges in demand.The disadvantages of using just-in-time methods include: Reducing warehousing and carrying costs.ĭisadvantages of just in time stock control.Reducing waste as only stock that is needed is ordered.Preventing over-ordering and having unnecessary stock so you can divert cash to other parts of the business.The advantages of JIT inventory management strategies include: This works where there aren’t any issues in the supply chain and requires accurate demand forecasting. By only ordering necessary stock, they can maintain low storage costs and invest capital into other business areas. They make sure stock levels mirror actual consumption levels to minimize waste. With JIT stock management, companies order products and stock to meet customer demand. Here we explain the benefits and drawbacks of both JIT and JIC inventory management models and help you decide which is right for your business. This has seen a switch to just-in-case (JIC) inventory management as companies raise their stock levels to avoid the risk of running out. The pandemic has led to various global supply chain issues, such as increased demand volatility and trouble with stock availability. For years companies have operated a just-in-time (JIT) supply chain model, only ordering stock items when necessary and carrying minimal inventory to reduce carrying costs.
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