What is Just In Case ?
372 reads · Last updated: December 5, 2024
Just in case (JIC) is an inventory strategy where companies keep large inventories on hand. This type of inventory management strategy aims to minimize the probability that a product will sell out of stock. A company that uses this strategy typically has difficulty predicting consumer demand or experiences large surges in demand at unpredictable times. A company practicing this strategy essentially incurs higher inventory holding costs in return for a reduction in the number of sales lost due to sold-out inventory.
Definition
Just In Case (JIC) is an inventory strategy where companies maintain large stock levels to minimize the risk of stockouts. This strategy is particularly useful in industries with unpredictable demand or significant demand fluctuations.
Origin
The JIC strategy originates from traditional inventory management methods, where companies increase stock levels to ensure supply continuity in unstable supply chains or uncertain market demands.
Categories and Features
The JIC strategy can be categorized into two main types: one for seasonal demand fluctuations and another for unpredictable market changes. Its features include high inventory holding costs and reduced risk of stockouts.
Case Studies
Case 1: A large retailer increases inventory before the holiday season to handle potential demand surges. Case 2: An electronics manufacturer boosts stock levels before a new product launch to prevent stockouts due to supply chain disruptions.
Common Issues
Common issues include high inventory costs and the risk of inventory obsolescence. Investors often misunderstand that this strategy suits all industries, whereas it is more appropriate for those with volatile demand.
