Just-in-time manufacturing (JIT) is the ideal state that organizations look to achieve in order to keep inventory lean and efficient. The goal is to reduce waste by closely matching inventory levels with projected demand. Having supplies arrive “just in time” for production through expedited shipping avoids the high costs of inventory overhang, and has many other efficiency benefits as well.
For a period during the pandemic, the opposite inventory management strategy – just-in-case – was by necessity pressed into service. This was a function of global supply chains whipsawing back and forth. Factories at first shut down or drastically reduced production levels in response to COVID-19, then went into overdrive as “make-up” orders poured in. Just as companies boosted stock levels, faced with uncertain lead times for getting replenishment, demand for goods plummeted and inventory levels skyrocketed.
After spending much of 2022 and 2023 reducing bloated stocks, many manufacturers are returning to the more efficient, cost-effective practice of JIT. This is happening in parallel with an increase in global production levels. The Production Managers Index (PMI) from S&P Global Market Intelligence was in positive territory at 50.9 in April for the fourth month in a row, with production at its highest level since July 2022. As well, new orders for goods in May rose at the fastest level in 26 months, as companies reloaded on inventory.
“The latest data signaled an ongoing steady improvement of the global manufacturing economy so far in 2024 after almost one and a half years of decline,” wrote Chris Williamson,
Chief Business Economist with S&P Global Market Intelligence.
While a new crop of supply chain disruptors – geopolitical unrest and conflicts, potential port labor issues – should not cause backups like we saw in 2021, some are calling today’s escalating situation “COVID junior.” Shippers are bracing themselves as prices increase and capacity tightens up.
The rise of just-in-time manufacturing, enabled by expedited freight shipping, is one approach to building up supply chain resilience and reducing risk. Expedited shipping is in fact a key tactic that ensures the timely flow of materials needed to match production with demand in a JIT scenario.
The Essence of JIT Manufacturing
Just-in-time manufacturing, often used synonymously with lean manufacturing, is a production model that calls for closely matching sourcing and production with demand. Its main advantages are increased efficiency and lower holding costs, improved process times, and faster delivery. Done right, JIT eliminates wasteful practices such as overproduction, excess inventory, and a leaner production process.
Toyota first introduced JIT manufacturing in the 1970s, and it has since become a widely adopted strategy used by industries worldwide. For example, Toyota only receives raw materials in its factories when it is ready to start building a vehicle, minimizing inventory holding costs.
Dell, to use one well-known example, uses JIT manufacturing to produce its computer products, ordering components and assembling units based on customer orders. This of course reduces the need for large inventories and enables a greater degree of customization.
While a highly efficient process, just-in-time manufacturing does come with challenges. It sets a high bar for manufacturing processes, including quality control (such as Total Quality Management or TQM); supplier reliability; extremely accurate demand forecasting; and logistics precision.
Expedited Shipping as a JIT Strategy
This is where expedited freight shipping comes in as a key component of any successful JIT manufacturing strategy. Without the ability to quickly procure raw materials for production when necessary, especially to address gaps and projected shortfalls, the concept of JIT completely breaks down.
Expedited freight shipping, within the context of JIT, is a fast-track delivery service built to quickly deliver goods in bulk for manufacturing. It prioritizes urgent shipments of raw materials or components in order to minimize or eliminate any production downtime. Expedited freight shipping comes at a higher cost than standard shipping (via air vs. ocean), but is nonetheless crucial for maintaining a seamless, efficient manufacturing process.
By using expedited freight shipping for JIT, manufacturers can minimize inventory costs and reduce lead times. They can swiftly respond to shifts in demand as they occur, maintain a continuous production flow, and avoid costly delays. Again, while expedited freight shipping comes at a premium, the added expense is cheaper than the thousands or tens of thousands of dollars lost per day if a production line shuts down for a lack of parts.
An Expedited Shipping/JIT Scenario
We’ll use a fictional scenario to illustrate how expedited shipping enables a JIT manufacturing process to meet its production targets in an efficient manner.
A mid-sized manufacturer of custom circuit boards relies on JIT to maintain its lean operations, keeping production schedules tightly aligned with incoming orders. To minimize inventory costs and drive quick turnaround, the company partnered with a leading provider of logistics and transportation, including a highly regarded expedited freight service, as part of its JIT strategy. This allowed them to respond quickly to demand fluctuations while maintaining a smooth production flow.
The company received an urgent order from a new computer manufacturing client that called for a significant production increase within a short time frame. Just as production was ramping up, however, word came that a critical ocean freight shipment of microchips would be delayed for weeks due to a Red Sea diversion. The production manager knew that any delay would lead to a missed deadline, a penalty for violating contract terms, and a potential loss of the business.
She assessed the company’s current microchip inventory, confirming a stock shortfall. Knowing the lead time for standard shipping of a replacement order wouldn’t work, she called her representative with the logistics partner, who had booked the shipment through its carrier network. He confirmed with the supplier that they could expedite the order at a higher cost, and the production manager approved the upgrade.
The microchips were shipped via overnight air freight and arrived within 24 hours. The fast decision-making, quick work by the logistics partner, and timely availability of a cargo flight in the belly of a passenger jet from Singapore to the company’s assembly plant in Baja, Mexico allowed the production line to continue without a hiccup.
By leveraging expedited freight, the company was able to meet the new client’s tight deadline, cementing its reputation for reliability and agility. By avoiding a potential production halt, the company saved on the significant costs of idle workers and line equipment. The new client was so thrilled with the quick pivot and positive outcome that they extended the contract and doubled the initial order.
Optimizing Expedited Shipping Within JIT
As in the example above, choosing the right logistics service provider is the best way to optimize expedited shipping within the context of JIT manufacturing. A reliable partner can consistently help you avoid production delays by facilitating the timely delivery of critical components. Manufacturers are urged to vet candidates based on their track record of success, responsiveness, technical capabilities, and capacity to handle urgent shipments.
Technology and Tools
Partnering with a logistics provider that has advanced technology capabilities is vital for supporting expedited shipping. For starters, real-time tracking is a baseline requirement, providing visibility into shipment status and monitoring the progress of critical deliveries. Comprehensive tracking includes status update emails, with links to a dashboard that provides access to signed import documents, notices of freight clearance, etc. On particularly “hot” shipments, the logistics provider should be ready with a contingency plan to address any potential delays or issues.
Artificial intelligence is also being leveraged to improve communication between logistics providers and shippers. Large language models can be trained to determine if an incoming email is about shipment status, a pickup appointment or a quote request, and route it accordingly.
To optimize expedited freight spend, your logistics provider should have a tool that can constantly update pricing information so you can make informed decisions based on market dynamics. This technology can also optimize routes and enable quick adjustments, including rerouting if necessary. It ensures greater efficiency and reliability while enhancing the overall shipping experience.
Continuous Improvement
Manufacturers must continuously assess and improve expedited shipping tactics to make sure it aligns with JIT manufacturing objectives. Regular review of shipping data and vendor performance helps identify areas for improvement and adjustment to shipping strategies.
Implement a feedback loop with your logistics partners, including the use of data analytics to uncover trends and insights to increase shipping efficiency. Staying updated on emerging technologies and innovations can improve the performance of expedited shipping and keep it aligned with your JIT objectives.
Expedited Freight Shipping: Key to JIT Manufacturing Success
With JIT manufacturing back on the rise, along with global production levels and increased demand, companies employing this approach need to be especially mindful of the critical logistics piece. While leveraging more economical ocean freight as often as possible, the strategic, targeted use of expedited air for time-critical shipments is an inevitability.
As time sensitivity becomes paramount, complex challenges can hinder efficient operations. COGISTICS Transportation, a leading provider of supply chain and logistics services, is your go-to expedited partner, with an integrated, robust network, advanced technology, and 24/7 on-demand expertise that help ensure accurate and timely deliveries.
COGISTICS Transportation also provides a comprehensive range of logistics services across land, sea, and air. We have the skills, experience, and connections to execute against your JIT goals, provide visibility and communication, and manage every detail of your expedited shipments. Get in touch with us today to learn more about our JIT strategy and expedited freight services.
