“Just-in-Time”

“Just in Time” (JIT) delivery relies on the improved tracking of parcels and improved order-processing equipment that ITS creates in order to provide accurate delivery estimates and enable quick loading and maximum vehicle utilisation. It has strong links with the concepts of routing and scheduling systems and asset tracking (See Routing and Scheduling Systems and Security) “Just in Time” can be split into two different components:

• industrial scale which focuses on the minimisation of inventory - the standard form of JIT
• consumer-focused delivery of goods (often ordered over the internet) – a rapidly growing sector

INDUSTRIAL “JUST-IN-TIME”

“Just-in-Time” (JIT) is an approach to business which aims to minimise costs through the reduction in the amount of inventory being held. It can be summarised as “producing the necessary item in the necessary quantity at the necessary time”. Some of the benefits of JIT for companies include reduced lot sizes, lower inventory, reduced waste and lower overhead costs. It is especially used in high-value industries such as the automotive sector. However, the widespread adoption of JIT across sectors has had widespread implications for the transport and logistics industry.

Impact on the Transport Industry

The growth of JIT creates a range of challenges to the logistics industry. JIT demands speed and reliability from transportation systems. In many cases, this results in a greater number of vehicles hauling smaller payloads. This, in turn, increases traffic on already congested infrastructure which can undermine JIT - where delivery windows can be as short as 15 minutes. With such small windows, even minor events such as road closures can have a serious effect. The trend also risks the capacity of the vehicle being under-utilised or increased demand for larger numbers of smaller vehicles.

The Future of Industrial “Just-in-Time”

The trend towards JIT is not irreversible. Reliant, as the philosophy is, on stability, it has proven to be susceptible to external shocks. Major events such as the Japanese earthquake and tsunami in 2011 indicated that the system, rather than promoting flexibility, can be brittle, fragile and unresilient. The Japanese Renesas Electronic Corporation, a global manufacturer of custom-made microchips, experienced a dramatic reduction in output following the disaster. This resulted in the suspension of automotive production across large parts of the world. The chips proved hard to source whilst JIT management had reduced inventory - in some cases to approximately only 6 hours’ supply.

CONSUMER FOCUSED DELIVERIES

The internet has enabled a wide-range of goods to be ordered online and delivered straight to the doorstep of the consumer. The goods vary in nature from bicycles and books to weekly groceries. In an attempt to deliver superior customer service many companies offer next day delivery on orders which are placed as late as 7pm the day before. This creates a logistics challenge for the organisation(s) involved in selecting, packing, loading and delivering the goods on time, especially if the consumer has specified a tight delivery window on the following day. Order-processing technology and scheduling systems have to be able to deal with these sorts of orders in real-time.

What’s New?

Although internet delivery has been around for a significant amount of time, its use has recently mushroomed. For example, on December 3, 2012, Amazon.co.uk received the equivalent of 44 orders per second, with a truck leaving its fulfilment centres in the United Kingdom (UK) every two minutes and 10 seconds. Online shopping is now approximately 20% of the UK market (excluding food-based sales). In France the use of online shopping increased by 45% between December 2011 and December 2012 whilst in the United States over 8% of all retail sales were conducted online, with a value of $142.5 billion. The delivery of goods from internet-based retailers is big business and is set to grow further. As firms compete to deliver the best service, estimated delivery hours are becoming more accurate. Deliveries which were originally quoted as being made “within 3 days” can now be booked to within single hour timeslots.

Sustainability Issues

From an environmental perspective, the rise in large scale next-day delivery traffic has both positive and negative impacts. Whilst it may be more sustainable than all shoppers on a given delivery round driving to the shops individually, it is less sustainable when packages are not delivered by the same company or when there tight delivery schedules reduce the time opportunity for load consolidation.

ISSUES FOR DEVELOPING ECONOMIES

All “Just-in-Time” delivery requires reliable, extensive delivery networks, from national distribution through to last-mile residential links. The quality of the nationwide road network needs to be taken into account as well as any potential delays at inter-modal terminals or border clearance points for international shipments. This is particularly the case with manufacturing-based JIT.

Another important factor to bear in mind for customer-led JIT is that of matching customer aspiration. Only 4% of Amazon (USA’s) customers have signed up for the Amazon Prime guaranteed 2 day delivery scheme. If longer delivery schedules will still satisfy customers, then these should be recommended on the basis of the extra options they offer any logistics firms delivering to customers.