Profitable Order Fulfillment Strategies for Warehouse Logistics
Just-In-Case Warehouse Logistics
The just-in-case strategy aims to smooth out bumps in the supply chain. The idea is that companies hold a buffer inventory to meet sudden spikes in demand and stabilize any disruptions upstream. When executed correctly, the JIC strategy minimizes waste while maintaining customer satisfaction.
When some people hear about the just-in-case strategy, they sometimes think it means buying immense amounts of stock and holding it for a rainy day. This is not the case. Even though some U.S. retailers did this during the global pandemic, the strategy ultimately backfired. The companies had to apply deep discounts to liquidate the unsold goods.
The JIC strategy focuses on optimizing inventory, where recklessly buying backstock is shortsighted and usually leads to losses.
Advantages and Challenges of the Just-In-Case Method
Advantages:
- Safety stock: Maintaining extra stock reduces delayed orders that would result in customer complaints.
- Cost planning: The just-in-case method allows better planning for more precise cost calculation.
- Responsiveness: If demand suddenly spikes, the company has the opportunity to strengthen its market position.
- Efficiency: Holding more inventory of evergreen items adds efficiency with little risk.
Challenges:
- Higher storage costs: Storing extra inventory is more expensive, especially for perishable goods or products of different sizes.
- Risk management: There’s an added risk of holding too much inventory if the goods are perishable or seasonal.
Examples:
Our client, Thomann, is a German-based music retailer that ships products worldwide. Since musical instruments tend to be evergreen products, they benefit from holding buffer stock. And thanks to the automated warehouse logistics we implemented for them, their average order fulfillment time is 28 minutes.
Conrad Electronic is another example of a client that benefits from a JIC strategy. They sell consumer electronics and electronic components to millions of customers worldwide. Since electronics usually aren’t seasonal, holding extra stock is cost-efficient. A JIC strategy paired with TGW Logistics’ warehouse automation has resulted in a more profitable operation.
Our Intralogistic solutions
Implementation of the just-in-case strategy
Implementing the just-in-case (JIC) order fulfillment principle requires a well-organized warehouse and efficient warehouse logistics. This is where modern warehouse automation software, such as the WERX Management Software (WMS) from TGW Logistics, comes into play. Our software automates the management of warehouse items, accurately tracks items through the supply chain, and minimizes picking errors—all of which are vital for successful JIC adoption.
Automation is especially important for the JIC strategy when dealing with large warehouses and warehouse expansion. Our client, Kärcher, expanded its storage capacity by 40% while also reducing lead times to 30 minutes as a result of our solutions. Due to its scalability, the storage can be expanded even further.
Automation software, such as WERX, keeps a JIC strategy from becoming bloated and expensive as companies grow and expand their operations.
OTIF: Monitoring of warehouse logistics performance
A key performance indicator in logistics is OTIF (On-Time, In-Full). OTIF order fulfillment measures delivery percentages according to quantity and schedule. This metric provides companies with the ability to track and improve logistical performance. There are several advantages.
- Improved customer satisfaction: The logistics service meets the agreed quantities and delivery conditions.
- Lower return rates: A high OTIF rate is associated with decreases in product returns—the largest source of waste in logistics.
- Warehouse optimization: A high proportion of timely and complete deliveries makes it easier to plan and optimize the different areas of the warehouse.
Combination of JIC and OTIF: benefits for customers
Combining the JIC order fulfillment strategy with a high OTIF ratio offers significant customer benefits. Just-in-case logistics means always having sufficient stock to fulfill any order, even with sudden spikes in demand or supply chain disruptions. At the same time, a high OTIF rate ensures that these orders are delivered on time and in full.
This combination leads to higher customer satisfaction, as customers can be confident that their orders are available and delivered on time and in the desired quantity. It also minimizes the risk of stock-outs and delivery delays, which is especially crucial with increasing e-commerce demand and short delivery windows.
Product returns and waste
It is an uncomfortable fact that billions of dollars of goods are thrown away every year because of returns. It is costly to handle returns and prep products for resale, even if nothing is wrong with them. Many companies are content to have returns sent to landfills because it ends up being cheaper. TGW Logistics wants to be part of the solution to this growing problem.
One benefit of automated warehouse logistics is improvements in order accuracy, which reduces returns. Another is increasing the speed of putting returned goods back into storage and, therefore, back into future orders. By lowering both the number of returns and the cost of handling, product waste can be reduced. We want to provide solutions that incentivize taking care of the environment. When less waste ends up in landfills and the oceans, everybody is better off.
Conclusion: Efficiency with TGW Logistics
The just-in-case order fulfillment strategy with a high OTIF rate means companies can optimize logistics processes while maximizing customer satisfaction. Digital warehouse management enables efficient and error-free logistics that meet both the requirements of the modern market and customers' expectations.
TGW Logistics offers comprehensive solutions that combine the advantages of JIC inventory management and OTIF. Our customers have appreciated our wide range of leading automation technologies for many decades, and they are particularly suitable for various product sizes. If you need help optimizing your inventory management, get in touch. With our tailor-made logistics solutions, we design your warehouse processes efficiently and reliably.