What does “Just in Case” (JIC) mean?
Just in case (JIC) is a way for businesses to manage their stock by keeping many items on hand. The goal of this inventory management approach is to make it less likely that a product will sell out. When a business uses this approach, it often has trouble predicting what customers will want or sees big jumps in demand at odd times. This approach means that a company has to pay more to keep its goods on hand, but it also loses fewer sales because of running out of stock.
How Does Just in Case (JIC) Work?
The newer “just in time” (JIT) inventory strategy is different from the older “just in time” (JIC) strategy. With JIT, companies try to cut down on inventory costs by making things only when they are ordered.
The JIC approach is more common in countries that aren’t very well developed, where problems with transportation, natural disasters, quality control, and being open to other providers’ production problems are common. These problems in the supply chain could cause business problems that cost a lot of money. So, a company that makes things might buy extra stock to keep production from stopping.
For JIC, manufacturers reorder stock before it falls below a certain level to keep selling products while the sellers send the goods. Lead time is when the company buys more stock and when the seller sends it. A JIC stocking method tries to keep enough stock on hand in an emergency. Sometimes JIC costs more than JIT because if not all of the inventory is sold, it can go to waste, and the extra inventory means more storing costs.
Why pick the more expensive JIC plan?
A more significant reason to use a more expensive JIC system is the losses that could happen, like losing big customers, providers, and the whole supply chain. Some extra costs might happen if the JIT reaction plans are too slow or don’t keep output going. It may be cheaper to keep up with the extra costs of extra storage and resources than to use a more efficient JIT method.
Recent events have led some businesses to start intentionally not having enough inventory. Customers won’t accept alternatives for certain popular goods, so companies that make those goods can use this approach.
A company with trouble predicting demand will use the “just in case” approach. With this plan, the businesses have enough raw materials to handle sudden increases in demand. The biggest problem with this approach is that it costs more to store.
What “Just In Case” (JIC) Looks Like in Real Life
Military or hospital buyers are two examples of JIC buyers. These kinds of businesses need to keep a lot of goods on hand because waiting for just-in-time (JIT) makers to start making more could lead to deaths or even wars.
Conclusion
- Just in case (JIC) is a way for businesses to manage their stock by keeping many items on hand.
- The chance that a product will sell out is lower with this approach.
- When a business uses this approach, it often has trouble predicting what customers will want or sees big jumps in demand at odd times.
- The biggest problem with this plan is that it costs more to store and wastes product if none of it sells.
