The “just in time” method, symbolised by the acronym JIT and also known as “lean production” consists in only replenishing stock once provisional or fixed orders have been placed within the company. Once the order is known, the company places its order for the raw material, components or goods required for the retailer. Delivery then occurs with limited or non-existent time. This kind of management is efficient when wanting to reduce stock levels to close to zero. It therefore entails a drastic drop in fees, whilst complying with the products’ obsolescence date. Originally, this method was used in very small Japanese shops that were unable to store several products at the same time. It implied several deliveries per day. Retail pharmacies use the just-in-time method. They receive daily deliveries from a dispatcher.
Though stock is a main source of revenue, it also generates large fees. Reduced stock requires less space, handling, transport, disposal, depreciation and fewer cash disbursements. This being said, to work efficiently with customers and suppliers, just-in-time stock management requires strict compliance with the following rules:
Just-in-time or lean product can be operated in two different ways:
It is the perfect solution to limit loss during transport, damage during handling, depreciation caused by seasonality or expiry dates. Retailers can maximise margins by strongly reducing expenses. Only products that have already been sold are purchased. This guarantees good treasury management.
The first constraint is a strong one. Though costs pertaining to and loss no longer have an impact on the retailer’s results, they do on the provider’s - as they have to respond to production. They are at the very least required to store their production or components. Furthermore, the needs to be sound. Even the tiniest fault entails delays that can be hard to catch up with. Mutual trust when it comes to the quality of the partners involved is essential for this kind of management. The JIT (just in time) method is a prerogative for companies with regular orders.
Otherwise, the Internal transport orientation law, no. 82 - 1153 dated 31 December 1982 that made a written agreement