8 Mistakes Blog Series – Mistake #5: Planning JIT Inventory Too Close to Production

At Label Solutions, Inc., we value the success of your business. We’re here to identify some common mistakes made by business owners and inform you about the best methods for managing your product labels. In today’s blog, we cover Part 5 of our 8-part series: Planning Just-in-Time Inventory too Close to Production; Affecting On-Time Deliveries.

What is JIT Management?

Using JIT (Just-In-Time) management is common throughout North America. JIT involves manufacturers and suppliers trying to minimize, or even eliminate, their inventory. This approach relies on suppliers to deliver materials just before production begins. When companies do this method correctly, it is a very efficient way to minimize production costs, but when they do not prepare for a “crisis” situation, they will have nothing in stock to fall back on.

The Challenge of Minimizing Inventory Costs

Minimizing inventory costs is always a challenge. It’s a never-ending contradiction trying to maintain low inventory costs while factoring the percentage of potential new growth.

Calculations can fluctuate from month to month, especially when industries rely on commodity ingredients or when sudden regulatory changes impact them, as we see with the cannabis, food packaging, and health supplement markets. Front runners in these markets practice minimizing their product label inventories, but their needs might quickly change from one day to the next. They do not want to place a one-time annual label order for each SKU. If an ingredient runs out of supply or a regulatory change affects their production profile, they would be sitting on unusable labels that will go to waste.

Best Method Approach

Think in terms of what the bottom line effect will be when factoring how you should manage your inventory. Try not to reduce your list too low — this could cause your company to experience shipping delays when complications arise with suppliers or quality control. You should have at least one-to-two production cycles worth of inventory available for those “crisis” moments. 

Build a Relationship with Your Label Provider

This backup inventory can also help reduce paying for excessive rush fees. Having unexpected demand for a product, especially when companies consolidate production plants, acquire other companies, or have a new product launch. Supplier material shortages can significantly impact internal quality control and delay delivery times. Building a strong business relationship with your label provider is key to working around business demands and potential problems, which in turn, will help your label provider ship on-time deliveries, so your production deadlines are met.

Label Solutions, Inc. Wants to Work with You

At Label Solutions, Inc. we utilize our industry experience and regulatory knowledge to offer unique products and value-add solutions. We contribute to our customer’s success and provide personalized customer care. To learn more about our products and services, visit our site or call 1 (800) 299-9200 today.