Understanding VMI, JIT, and JIC

Stack of Pallets at The Rock - A Kamps Company

In Supply Chain Management, effective inventory management is crucial. It impacts everything from budget allocation and warehouse capacity to order fulfillment and customer satisfaction. Some businesses struggle with holding a large inventory on-site, due to the substantial initial investment and the space requirements it entails. Another issue businesses might face is the fact that self-managing inventory demands considerable time and effort to ensure supplies are consistently stocked and replenished on time, to avoid shortages.

To meet these challenges, many companies turn to one of the three most common inventory strategies: Vendor Managed Inventory (VMI), Just In Time (JIT) delivery, or Just In Case (JIC). These methods not only help in meeting inventory needs but some also allow businesses to focus their time and resources towards their primary operations.

Vendor Managed Inventory (VMI) Defined

Vendor Managed Inventory (VMI) is an approach where suppliers are responsible for managing the inventory of their clients over a certain period. In this arrangement, vendors take on the task of inventory counts and order management that typically fall on the buyer, ensuring that supplies are readily available for delivery as needed.

In the pallet industry, because pallets play such a crucial role in a supply chain, clients will typically store the pallets on-site. In this case, the pallet supplier will send an inventory expert at regularly scheduled intervals to go to the client’s facility and perform an inventory count. Based on the inventory and agreed upon levels, the pallet supplier will determine how many additional pallets to manufacture and deliver – and when. Invoicing can vary between occurring based on consumption of inventory at the customer site or upon receipt of new stock.

Just in Time (JIT) Delivery Defined

Just In Time (JIT) Delivery is a strategy aimed at optimizing inventory efficiency by ensuring materials are delivered exactly when and where they are needed, minimizing the need for excess stock on either the client or the manufacturer.

In the pallet industry, Just in Time delivery is usually achieved through Inventory Agreements. The client and pallet supplier will work together to set a minimum-maximum agreement. This is a set of guidelines and conditions for consumption-based ordering; setting a minimum and maximum stocking level for the pallets. Once the client’s inventory of pallets reaches either level, the pallet supplier will either produce more pallets or halt production. In the JIT scenario, the pallet supplier usually houses the pallet inventory until the product is ready to ship.

Just in Case (JIC) Delivery Defined

Just in Case (JIC) is an inventory strategy where companies keep large inventories on hand to avoid running out of stock and experiencing the loss of sales as a result, especially when predicting demand is challenging or demand can surge unpredictably, accepting higher inventory costs as a trade-off.

Which Inventory Management System is Right for You?

There are many factors to consider when determining which inventory system is best for your operations.
In the traditional sense, VMI is more suitable for companies that have a high number of SKUs to manage, require a large volume of stock to meet customer demand and those that can trust their vendors to manage their inventory. JIT inventory is more suitable for companies with extended lead times.

When choosing which inventory system is more appropriate for your organization, it is also important to consider how global and economic effects may impact your strategy. For example, during the COVID-19 pandemic, JIT received negative press as supply chain resiliency was tested. Experts believe that JIT is not equipped to manage the turbulence of global events, like COVID-19, weather disasters, and geopolitical conflicts.

Whether you choose Vendor Managed Inventory (VMI), Just in Time (JIT), or a Just in Case (JIC) system for your pallet management, it’s important to make sure it’s managed by a trusted pallet company such as Kamps. Kamps comes equipped with industry leading reporting tools, guaranteed inventory, national capabilities, and support staff monitoring your inventory – so you can focus on what matters most.

Contact Kamps today to get started.

Drew Bedsole

Drew is Kamps Digital Marketing Specialist and a seasoned blogger with over five years of experience in the field.


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