The Cons of JIT
– Predicting the Future
The most salient limitation of the JIT inventory management approach is the difficulty in accurately predicting the demand for the stock. In most industries, demand is in constant fluctuation. Predicting demand may be quite difficult. For some businesses, predicting immediate demand is more straightforward than others. For those businesses that have somewhat predictable demand, the JIT inventory management approach is an ideal option.
– Slower Fulfillment
The JIT approach may result in slower fulfillment of customer orders. If the JIT process slows order fulfillment, customers may become dissatisfied with your service. Any impact on the customer’s perception of service may be too high a price to pay for the business.
– Theory versus Practice
Applying JIT to inventory management is a great theory. However, in practice, the business will encounter a few challenges. For example, the natural fluctuation of market demand will constantly be a challenge for the JIT warehouse. If there is a marked and immediate jump in demand, JIT cannot efficiently address fulfillment. JIT may interfere with a business’ ability to respond to changes in demand. When conditions are perfect to implement JIT, this inventory management strategy reduces overhead and improves the company’s bottom line.