Risk of running out of stock: By not carrying much stock, it is imperative you have the correct procedures in place to ensure stock can become readily available, and quickly. To do this, you need to have a good relationship with your supplier(s). You may need to form an exclusive agreement with suppliers that specifies supplying goods within a certain time frame, prioritising your company. JIT means that you become extremely reliant on the consistency of your supply chain. What if your supplier struggles with your requirements, or goes out of business? Can you get the products quickly from somewhere else?
Lack of control over time frame: Having to rely on the timeliness of suppliers for each order puts you at risk of delaying your customers’ receipt of goods. If you don’t meet your customers’ expectations, they could take their business elsewhere, which would have a huge impact on your business if this occurs often.
More planning required: With JIT inventory management, it’s imperative that companies understand their sales trends and variances in close detail. Most companies have seasonal sales periods, meaning a number of products will need a higher stock level at certain times of the year due to higher demand. Therefore, you need to factor that into planning for inventory levels, ensuring suppliers are able to meet different volume requirements at different times.