This article was first published on Insights – Ripple
Just-in-time production is an increasingly common way of working for manufacturers, retailers and service providers around the world. It involves a business holding on-site the minimum amount of parts, materials and stock needed to create a product or deliver a service, while relying on frequent, small-batch deliveries to ensure it can continue working at all times.
When done well, it leads to remarkable efficiencies. Honda U.K. only keeps one hours’ worth of parts on its production line, with two million new components arriving at the plant every day. At German supermarket Aldi, deliveries of new produce are sent straight to the shop floor, often using the boxes or pallets they arrive in as the in-store display unit.
Just-in-time is good for growth
For large manufacturers and retailers, just-in-time production means they need a lot less expensive floor space for storing parts and stock. But it’s also essential for startups and small-to-medium enterprises (SMEs) looking to compete in a global economy, especially those based in the E.U. Europe’s many frictionless borders allow a business to source supplies from a wide range of countries and have receive them within 5-24 hours.
When your SME doesn’t have to tie up a large chunk of its working capital in supplies and stock, you can use that money to hire staff, develop more efficient processes and foster future innovation. In the growth stage of a business, your order book isn’t always consistent, so the ability to react to increased demand as new orders come in, is an especially useful feature of just-in-time production.
Despite these growth-enhancing benefits, SMEs still face a surprising problem. Paying for a just-in-time service in another country can often take longer than it does for the goods to arrive. Cross-border payments within the EU sometimes happen quickly but ...
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Insights – Ripple