Time impacts space and cost when it comes to production. That’s why so many brands are making the switch to just-in-time (JIT) packaging inventory management. The concept behind using JIT packaging inventory management works the same as the concept behind using JIT product inventory management. Brands know that having an excessive inventory can cause them to lose money in the forms of occupied warehouse space, unused products, wasted products, and damaged products. Brands are constantly using forecasting tools to try to create tight inventories with very little room for unsold products. This strategy can extend to the packaging materials and supplies used for products.
It’s important to have packaging ready when it’s needed. Even a fully stocked product warehouse will send order fulfillment screeching to a standstill if the packaging isn’t there to process each order. However, excess packaging inventory can easily incur extra costs related to storage and inventory management. It can also become damaged or outdated if it’s stored for too long. A JIT packaging inventory plan offers the benefits of:
- A fully managed packaging inventory with sharp accountability.
- Less capital tied up in packaging stock.
- Reduce warehousing requirements.
- The ability to change packaging styles without being stuck with a large inventory.
JIT packaging inventory management is a well-oiled dance that ensures brands have just the right amount of packaging materials for their processing and shipping needs. Brands really need to go in with their eyes wide open when adopting a JIT plan. They also need the right partners to ensure that just in time never turns into too late.
What Does a JIT Arrangement Look Like?
Companies that make the switch to JIT packaging supply plans carry less packaging and packaging raw materials at any given time. They rely on accurate, time-based ordering instead of stocking their own “buffer” supplies. Typically, brands that switch to JIT rely on automated systems capable of predicting future usage needs. The system will use historical internal and global data to predict ebbs and flows in demand based on previous seasons, seasonal increases, seasonal slumps, and trends related to current events.
Of course, a JIT plan is never strictly internal. A brand needs to have a dependable, flexible packaging supplier or vendor capable of entering into a JIT agreement. The packaging supplier will agree to hold specific amounts of packaging in stock to fulfill orders. Orders will be released based on the changing needs of the brand.
JIT can work for many brands. However, this is a decision that requires careful planning and monitoring. Next, take a look at the big “pain points” to perfect before automating packaging inventory.
JIT Forecasting Needs to Be Pristine
Forecasting is often the first big hurdle that brands face after deciding to pivot to JIT. A JIT plan is ultimately only as good as the forecasting tools fueling it. Smaller brands may struggle with justifying the investment in IT infrastructure needed to carry out a JIT plan.
There’s also the general unpredictability that can exist in supply and demand. Most forecasts rely on the previous year’s figures. However, factors ranging from a brand’s marketing campaigns to supply shortages can impact sales volume for the year ahead. While an increase in sales may be a positive thing, a bottleneck can occur if a brand has used last year’s numbers to automate packaging materials. This could prohibit a brand from fulfilling promises for next-day delivery. It can also overwhelm an in-house warehouse.
There’s also the problem of decreasing business leaving a brand with too much packaging during any given month. While this isn’t necessarily devastating, it does partially undo some of the benefits of JIT that are tied with costs savings on materials and warehouse space.
A Plan for “Sudden” Demand Needs to Be on the Back Burner
What if a competitor goes out of business? What if a celebrity decides to “talk up” a product on a podcast? These “black swans” can all impact demand for a particular product. Every brand wants that lightning strike that sees orders increase overnight due to viral exposure or word of mouth. However, this can be a case of brands needing to be careful with what they wish for if the infrastructure simply isn’t in place to handle a huge upswing in orders.
Having a JIT supply plan in place can restrict a company from being capable of keeping up with the demand pace in real-time. It’s important to have contingency plans for ramping up supply quickly. One way to increase the likelihood of being able to meet demand quickly is to utilize simple packaging designs that can be turned around relatively quickly.
Stock Checking Becomes More Important With JIT Sourcing
Brands that adopt JIT supply sourcing for packaging must build in extra accountability for tallying and recording packaging inventory. Smaller businesses will need to consider making stock recording a part of the daily protocol. Larger brands may consider using inventory software to keep close tabs on existing packaging inventory, depletion rates, and other key indicators for monitoring how much longer current stock will last.
Brands Need to Understand JIT From a “Customer Satisfaction” Perspective
It’s very easy to get caught up in the benefits of JIT supply sourcing from the perspective of a product seller. A properly executed JIT plan can result in cost savings, reduced waste, more warehouse space, and a cleaner, more streamlined plan for handling packaging materials. However, the pitfalls of JIT stand to directly impact customer satisfaction.
It’s possible for a company to be late with shipments even when products are fully in stock simply because the packaging isn’t there to process orders. In addition, shippers may be forced to use alternate packaging and shipping boxes that aren’t appropriate for the products being shipped. This can result in damaged, jostled, and weather-damaged products. This can be detrimental to customer satisfaction during a pivotal exposure spike!
Yes, JIT can ultimately increase customer satisfaction when it’s done correctly because brands are able to carefully manage packaging inventory for neat, smartly managed processing, packaging, and shipping. However, it’s important to remember that good intentions ultimately can’t prevent a customer from having a negative experience due to packaging-related delays or product damages. Even a package that arrives fully intact in a “makeshift” package can diminish customer perceptions because customers strongly tie product value with the impression generated from packaging. A box that doesn’t “fit” with a brand identity can leave a customer feeling like a company cuts corners on quality. Research shows that attitudes toward visual packaging directly influence consumer-perceived food product quality and brand preference. The fact that customers form brand impressions on what is mostly a subconscious basis means that it’s nearly impossible to “talk customers out of” how a product’s packaging makes them feel.
A Good Partnership Is Everything for Companies Using JIT Packaging Sourcing
Brands that adopt just-in-time packaging sourcing need dependable packaging partners to make it work. This is truly a collaborative decision that relies on good communication, clear expectations, and mutual use of helpful software tools. An equipped and qualified packaging supplier or vendor should have the following qualities:
- Experience with working with both large and small clients.
- Production capabilities that allow for fast order fulfillment.
- Great shipping channels to deploy orders quickly.
- Flexible manufacturing capabilities based on monthly needs.
Ultimately, JIT requires more planning than simply placing dynamic orders. It takes collaboration between sales teams, forecasters, inventory managers, brand managers, and warehouse associates to bring the whole thing together internally. Next, the pivotal relationship between brand and packaging supplier is really the linchpin in the whole operation.
Discuss Your Plan for JIT Packaging Supplies With an Experienced Packaging Supplier
Just-in-time packaging inventory can help brands to operate more efficiently. The right plan for implementing JIT can help a brand to enjoy all of the perks of using dynamic supply acquisitions without compromising customer satisfaction. Explore options for getting the right packaging totals just in time with the Mid-Atlantic Packaging team. Our dynamic ordering options make it easy for brands to get the packaging materials and supplies they need without holding on to excess inventory. Request your company’s custom packaging quote today!