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The Waste of Just in Case

Topics: Warehouse/Inventory Management, Macola 10, Distribution, Manufacturing, supply chain, inventory management, supplier management, Lean Six Sigma, Lean, Professional Services, just-in-time

Posted on Mar 1, 2018 10:15:00 AM by J. Michael Wong, CPIM

From Just in Case to Just in Timeinventory-ThinkstockPhotos-576545504.jpg

There’s a saying that goes like this, “you can’t wish for success, you have to work for it.” Wishing for no stock outs or line shortages with Just In Case (JIC) inventories is the same thing. Yes, there are lots of ways to “fire and forget” your replenishment plans, but there’s an art—and science—to it. 

Just in Case vs Just in Time

Just in Case is reactive versus the proactive Just in Time (JIT). Every planner has been burned by a stock level held too close to zero. Every planner also has had the dreaded knock on their door from the line supervisor letting them know they’re out of a component that shuts down the line and sends home 25 workers. This error can result in the worst feeling in the world…times 25.


The Consequences of Reactive

After making this costly inventory management error, promises get made that they’ll never be burned again. They’ll never watch 25 workers have to clock out early.

But what went wrong?! Was it the math? Was it the forecast? They used all of the tricks, a highly tuned seasonal index…and blaming the sales team. Was this an anomaly or bad planning? Most don’t know the difference.

Most of us don’t have the bandwidth, the systems or the desire to go through that post-mortem. So we make that reactive promise. We order that extra pallet, even that extra load. Then we somehow apply it to our entire inventory and ordering processes. But did we just build our business on that “one time,” that one bad story…an anomaly?

There’s too much at risk, too many families involved. There must be a constant cadence of calculate and evaluate, PDCA, Plan Do Check Act. Our systems will do the work for us, but we must recognize that garbage in, ultimately makes garbage out.

Six Sigma - ThinkstockPhotos-488844370.jpg

The Benefits of Proactive (Just in Time)

Inversely, JIT, in most cases, is the continuous improvement, the Six Sigma, the absolute zero that we are all striving to achieve.

The previously mentioned “fire and forget” methods entail a significant amount of sweat equity to get going. They’re yielded from that perpetual cadence of calculate and evaluate. Creating this cadence brings out the exceptions and boils them to the top. This analysis can be as simple or complex as you need it to be. By establishing a benchmark an exception can be driven, a red flag can be raised. 


The Paradigm Shift of Just in Time

But there must also be a mindset change. A paradigm shift to becoming proactive.

Because a sense of pride can grow from "successfully" reacting and putting out fire after fire, one can fail to recognize the original spark that started each one of those fires.

Alternatively, there is a drab and laborious monotony in the success of fire prevention. Apply the formulas, trust your math, trust your event managers, and move forward.  Plan the return to reevaluate and accept that there will be opportunities to make adjustments.

Do not maintain that “no news is good news” but find the success in checking the battery of an unused smoke detector. (Right, Jack?)

Get Started


Be Sure to join us at Evolve 2018 where we will have several breakout sessions for you to learn more specifically about Inventory and Demand Management. If you want to learn more today about how Macola 10 can help your organization click here

The ERP Blog covers the impact of Enterprise Resource Planning (ERP), business software and accounting solutions on organizations in the manufacturing and distribution industries.

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