Just-in-Time vs. Just-in-Case: Which Is Best for Inventory Management?

Inventory management is complex and high-stakes. Small decisions can cost an electronic manufacturer a lot of money and negatively impact the environment in the process.

Recent supply chain disruptions caused by severe weather events, global conflict, and shifting market dynamics make choosing the right inventory management strategy more important than ever.

Just-in-Time (JIT) and Just-in-Case (JIC) are two widely adopted inventory management strategies in electronics manufacturing. This article explores their implications and how Component Sense helps mitigate risks associated with both by helping companies redistribute surplus electronic components.

Just-in-Time (JIT) inventory management

As the name suggests, JIT is when component stock is acquired only just as it is actually needed for production. The inventory management and procurement strategy was initially created by Toyota sometime between 1948 and 1975.

Many companies, including those in PCB assembly, have adopted JIT since Toyota pioneered the strategy. JIT is particularly beneficial in industries with rapidly evolving technology, production involving modular designs, lean operating environments, and if manufacturers have a secure and reliable supply chain.

Financial implications

Although some manufacturers view JIT as risky, its financial benefits often outweigh the perceived risks.

Pros of JIT:

• Lower warehousing and storage costs due to reduced inventory being held.
• With no over-forecasting, there is less risk of excess and obsolete (E&O) component accumulation that often ends up being scrapped at the owner's cost.
• Less money is tied up in inventory, freeing up funds for other areas and investments.

Cons of JIT:

• If a component suddenly becomes discontinued or obsolete, it may catch out manufacturers who cannot pivot quickly.
• Supply chain disruptions that delay component shipping can catch manufacturers out.
• Urgent part replacements and last-minute design changes can be costly.

Top tip: Many brand-new, unused, discontinued components are in stock with trusted secondary market sellers like Component Sense!

Sustainability implications

One of the core benefits of JIT is its potential to minimise waste.

Pros of JIT:

• If you do not sell your obsolete electronic components, they will likely become e-waste. Thankfully, JIT minimises surplus inventory, to begin with.
• Electronic components must be kept in an environment that protects them from moisture, electrostatic discharge, and extreme temperatures. This all costs money, but having less stock on hand can lessen the costs.

Cons of JIT:

• Short turnaround times often require faster, high-emission shipping methods rather than longer, more sustainable options like sea freight.
• It can be difficult to find and partner with suppliers that share the same approach, making it challenging to align production schedules with availability.

Just-in-Case (JIC) inventory management 

Unlike JIT, JIC is often considered a safer approach, as it involves holding more stock than immediately needed for production. In essence, over-forecasting.

JIC procurement and inventory management have become especially popular following major supply chain disruptions, such as the global chip shortages during the COVID-19 pandemic. It is understandable why electronic manufacturers would want to take an approach that protects their production line.

This strategy is particularly beneficial for industries with long lead times for components or where sourcing unique parts is critical. Medical, aerospace, and defence manufacturing generally fall into this category.

Financial implications

Although JIC is often seen as more reliable for maintaining production, it comes with significant costs.

Pros of JIC:

• Production stoppages are expensive. Keeping backup stock prevents costly delays caused by component shortages.
• Having extra stock available also means you can capitalise on surges in demand.
• You may receive bulk-purchasing discounts by ordering large quantities from a franchised distributor or chip maker.

Cons of JIC:

• Excess inventory of electronic components leads to high costs, including insurance, storage, and ongoing maintenance.
• Over-forecasting and holding a larger supply of component inventory than you need heightens the risk of these parts becoming obsolete, losing value, and eventually being scrapped.

Sustainability implications

While JIC inventory management may be justified for financial reasons, some see it as a less environmentally friendly option.

Pros of JIC:

• Having a buffer of stock available in the warehouse may prevent last-minute panic ordering, which requires less sustainable shipping methods, like air freight, to get components in on time.

Cons of JIC:

• When over-forecasting to be cautious, surplus electronic parts often go unused and end up as e-waste. E-waste is one of the world's fastest-growing solid waste streams, making it crucial to minimise excess inventory.
• The more stock you hold, the more difficult it can be to track and manage this inventory, report on it, and prevent waste.

Take control of your electronic component inventory

Ultimately, the best inventory strategy depends on your industry, supply chain stability, and ESG (Environmental, Social, and Governance) goals. Sustainability is becoming more of a priority for electronic manufacturers worldwide, and rightly so. Many companies are assessing their practices and, in particular, the option of JIT to reduce waste.

In some cases, companies operate a hybrid strategy - JIT for most general components and JIC for highly critical, unique, and irreplaceable parts. While JIT has the potential to reduce costs and e-waste, some see it as riskier. JIC may be seen as a safer approach, but it can create more (E&O) inventory.

The good news is that Component Sense mitigates the risks of both JIT and JIC inventory management. Our InPlant™ redistribution solution simplifies surplus stock management by identifying and redistributing excess at the earliest possible stage. Component Sense also helps buyers of electronic components by providing access to unused parts no longer available through direct channels.