JIT ordering models for non-core materials

In the building materials distribution industry, Just-in-Time (JIT) ordering models have become an increasingly popular strategy to manage inventory efficiently. JIT is particularly valuable when dealing with non-core materials—those items that are necessary but not used in large quantities for every project.

In this blog, we’ll explore how JIT ordering models can help distributors manage non-core materials, reduce inventory costs, and improve operational efficiency. We’ll also discuss how ERP systems can support JIT models and help distributors stay responsive to changing market demands.

📦 WHAT IS JIT ORDERING?

Just-in-Time (JIT) ordering is a strategy that aims to minimize inventory levels by purchasing materials only when they are needed for production or delivery. The primary goal is to eliminate excess inventory, reduce storage costs, and avoid overstocking of materials that aren’t regularly used.

JIT is ideal for non-core materials, which may be necessary for some projects but are not frequently in demand. Examples of non-core materials include specialized insulation, custom fasteners, and unique plumbing components. These materials may sit in inventory for long periods, tying up capital, but are still required when a project demands them.

🛠️ BENEFITS OF JIT ORDERING FOR NON-CORE MATERIALS

• Reduced Inventory Costs

Problem: Non-core materials can occupy valuable warehouse space and tie up capital in excess inventory.

Solution: JIT ordering ensures that these materials are purchased only when required, minimizing storage costs and freeing up warehouse space for higher-demand items.

ERP Tip: Use your ERP system to automatically track inventory levels and trigger JIT orders when stock falls below preset thresholds.

• Improved Cash Flow

Problem: Holding large amounts of non-core materials can strain cash flow and reduce the ability to invest in more critical business areas.

Solution: By reducing the amount of non-core materials in inventory, JIT ordering helps keep capital available for other investments or operational needs.

ERP Tip: Monitor inventory turnover and purchase frequency for non-core materials within your ERP to ensure that you’re ordering materials only when necessary.

• Minimized Waste and Obsolescence

Problem: Non-core materials often have long shelf lives and can become obsolete or damaged if stored for extended periods.

Solution: JIT ordering ensures that materials are used shortly after they are purchased, reducing the risk of expired stock or obsolete products.

ERP Tip: Track expiration dates, product shelf life, and seasonal demand patterns for non-core materials in your ERP system to ensure timely procurement.

• Increased Supplier Responsiveness

Problem: Managing frequent, small orders from suppliers can sometimes cause delays or communication issues.

Solution: By establishing strong relationships with suppliers, JIT can help improve communication and ensure that materials arrive quickly when needed.

ERP Tip: Use your ERP to maintain supplier lead times and order histories, helping you manage relationships and anticipate demand more accurately.

🛠️ HOW ERP SYSTEMS SUPPORT JIT ORDERING

• Real-Time Inventory Tracking

ERP systems allow you to track inventory in real time, providing the necessary data to determine when and how much to order for non-core materials.

ERP Tip: Use automated reorder triggers based on inventory levels and demand forecasts, reducing the need for manual tracking and ensuring timely procurement.

• Demand Forecasting

By integrating sales data and historical trends, ERP systems help predict future material needs, enabling you to adjust JIT ordering schedules accordingly.

ERP Tip: Use ERP analytics to forecast demand for non-core materials and adjust ordering patterns based on past project cycles.

• Supplier Integration

ERP systems can integrate with your suppliers’ systems to streamline the ordering and delivery process, reducing lead times and improving the reliability of your supply chain.

ERP Tip: Set up electronic ordering systems within your ERP to communicate directly with suppliers and automate JIT procurement processes.

📈 METRICS TO TRACK FOR JIT ORDERING SUCCESS

Inventory Turnover: Monitor how quickly non-core materials are used and replenished to ensure that you are minimizing stock while maintaining product availability.

Lead Time Variability: Track the consistency of supplier delivery times to ensure timely replenishment of JIT-ordered materials.

Stockout Rate: Measure how often JIT materials are unavailable when needed, indicating the need for better forecasting or supplier collaboration.

🏁 FINAL THOUGHTS

JIT ordering is a powerful strategy for managing non-core materials, helping distributors reduce costs, improve cash flow, and eliminate waste. By leveraging an ERP system for real-time inventory tracking, forecasting, and supplier collaboration, distributors can optimize their JIT ordering process and stay agile in the face of fluctuating demand.

📞 Ready to implement JIT ordering and streamline your inventory management with ERP? Let’s reduce waste and improve operational efficiency in your business.