Just in time fulfillment (oftentimes referred to as JIT fulfillment) is a method of managing your inventory and shipping that involves purchasing product as orders come in, packaging, and sending them off to customers on your own. It’s definitely an uncommon strategy for most merchants, and there are some pros and cons to consider before giving it a shot.
Reaping the benefits of JIT
Rather than dumping some cash on a bunch of product and having to tie up your money in inventory as orders flow in, JIT merchants simply purchase product from their vendors after the customers place orders. When Cornelius Cobb, your top customer, buys his favorite corn accessories (these do exist) from your marketplace, you do the same and buy the product from your vendor. The vendor ships the product to you, you wrap it up in some corn husk packaging, stick it in a box with a corny letter saying “Aww, shucks! Thanks for the order!” and send it off to Cornelius in Iowa.
JIT fulfillment, unlike other methods of fulfillment like in-house and dropshipping, avoids the pain of managing an unwieldy and expensive amount of inventory, while providing complete quality control when it comes to shipping. Because of that, JIT merchants are oftentimes able to expand their product portfolios – you could offer popcorn makers or handbags made of corn, solely because you don’t have to handle inventory. And, because you handle packaging and shipping, you’re able to put some personal touch into your product marketing to grow that customer loyalty that keeps them coming back.
The shear truth of JIT
On the surface, JIT seems like a preferable strategy for fulfillment. You don’t have to handle the irritations of a large inventory, and you have complete control of your packaging and shipping. But there’s a reason why it isn’t as common as cornfields in the Midwest.
To put it bluntly, JIT is operation overload. While the peril’s of handling inventory are reduced, the downside is that you must purchase and ship products on your own, and rely heavily on tight relationships with vendors that possess a supply of products to meet your demand. Granted, a JIT merchant is in full control of how the product gets to the customer – how it looks, and how it’s packaged – but it’s at the cost of time. JIT fulfillment typically extends shipping times, and it functions best under the assumption that vendors will have the product in stock when you need it. That means you need to be pretty good at forecasting your demand.
Be “all ears” with your vendors
Relationships between merchants and vendors are so critical, and vendor management is a big portion of just in time fulfillment. If you can negotiate and stay in constant contact with a vendor to guarantee a supply of product that can be delivered to you promptly, you’ve got little to worry about since shipping and handling are on your end. But when you’ve got a large portfolio of products with multiple vendors, it’s more difficult to ensure that each of your supply chains is reliable and available for any order that comes through. Communicating with vendors and selecting ones that are willing to listen to your needs is crucial.
It’s important, above all else, that your vendor is able to provide regular, accurate updates on available-to-sell inventory so you can better predict when supply may not meet your demand. Before selecting a vendor, be sure they have multiple ways of contacting them, and that they’re responsive. In the event that something goes wrong – whether a product is shipped late, or supply levels are inaccurate – there’s a better chance they will be there for you. Service Level Agreements (SLA) are also a good sign indicating a vendor is committed to top-notch service.
People often say “you’re only as good as the company you keep,” and that kernel of wisdom is as true as it gets for a JIT fulfillment strategy. If your company’s vendors aren’t good at keeping you up-to-date on stock levels and consistently carrying your products, your fulfillment strategy is going to reflect that. Having solid relationships with vendors that reliably ship your products to keep your fulfillment process streamlined from POS to the customer’s doorstep is absolute key to reaping the benefits of just in time strategy.