Just-in-time inventory, or JIT, is a process designed to cut business investment in inventory, thus freeing up funds to invest in other parts of the company, such as labor or infrastructure. Nowadays animal feed manufacturing companies try to reduce their amount of raw materials as well, relying on a sophisticated ERP system that predicts future inventory needs and orders them just before they're needed.
Deliveries are smaller but more frequent, creating a revolving small stock of fresh supplies. The goal of this system is to have components delivered to the facility shortly before they're needed instead of keeping a large inventory of parts or ingredients on hand. With less money tied up in materials in storage facilities, companies are free to improve or expand more easily.
But as it pertains to the nutritional supply chain, we shouldn’t forget about the following important topics either:
- Some raw materials have a large lead time (international trade)
- Macro raw materials are often purchased seasonally (grains)
- the minimum order quantity of bulk materials is often at least one truck (also: the storage capacity is large enough (silos)
These factors are essentially going in against the JIT principles, which can have some disadvantageous effects: for feed businesses, drastic changes in demand (sometimes expected i.e. seasonal effects; sometimes unexpected i.e. the first weeks of COVID – 19), can often see a sudden rise in revenue that wasn't planned for in advance. As a result of this, there may not be enough feed to be shipped out to the farms.
On the other hand, a sudden and unexpected drop in business can mean excess ingredients on the silo, possibly spoiling before being used. With an automated system, it can be two or three inventory cycles before a business owner can adjust the amount of product coming in.
JIT support in MILAS®
Adifo’s Industry specific ERP “MILAS” (based on Microsoft dynamics 365 for Finance and Operations) offers powerful and strategic JIT support. We have specifically developed these functionalities to support our customers in their commodity management processes. MILAS helps manage the most important challenge pertaining to JIT strategy, namely: how can a company react to unexpected events?
Therefore in our MILAS item coverage monitor, we offer an interactive tool that allows users to see each ingredient, present and future stock evolution. This way, users can see exactly when a certain ingredient will run out in the production facility. Furthermore, users can also immediately take reactive steps on a stock challenge directly from within the coverage monitor (i.e. placing a new purchase order, shifting production dates,…).
In the example above, a user can clearly see an overview for an ingredient in one of the plants. The user sees the daily evaluation of stock figures, how those figures will change with the projected raw material consumptions (always taking the last actual figures into account) and the already placed purchase orders. The user can easily see both incoming and outgoing transfer movements as well. The days which are marked in yellow , warn users to place a purchase order. This takes into account lead times, and minimum stock as well. If a PO isn’t placed on that day , than the user will see that said ingredient will run out. The monitor supports users to work interactively, creating the PO directly on that form.
Thanks to our foundational backbone (Microsoft Dynamics 365 for Finance and Operations), the functionality has a very clean user interface with fast access to key functions. For all important overviews, you can use it also from your smartphone.
MILAS: The ERP for nutritional industry
MILAS supports the daily practices for inventory management in an easy and efficient way. It supports production planning, ensures inventory performance, and it has powerful tools for real-time traceability and profitability management. Operations management and financial management all rely on a single source of data and one application.
So if you need strong ERP support to implement JIT for your company, and you need a quick insight into your ingredient evaluation based on future transactions on your smartphone, MILAS is the perfect solution for your needs.