It's been about 30 years since the concept of just-in-time (JIT) delivery was introduced in the manufacturing and transportation industries. Since then, hundreds of companies in multiple industries have adopted the JIT model to reduce inventories and warehousing space, while saving millions of dollars on insurance and handling expenses.

During this time, the JIT model has also been refined and sophisticated. Ten years ago, audio system manufacturer Bose Corporation formally launched JIT II, which advanced the model to include placing a supplier's rep on-site at the customer's facility. This single step was nothing short of revolutionary. Now, manufacturers, suppliers, transportation providers, and others along the supply chain are devising unique ways to work with each other toward the common goal of improving communication, visibility, and efficiency, from a product's inception to final delivery.

JIT: The Current State of Affairs

JIT clearly offers many advantages, beginning with reduced inventory and administrative costs, and increased opportunities to reallocate valuable capital. Yet some companies and their suppliers have been reluctant to use JIT despite the mutual benefits. One of the last remaining obstacles has been in the area of communication; specifically, between information systems. Historically, companies and their suppliers often chose to establish EDI links. This process involved a lot of money, programming, and support staff, not to mention a major commitment from both sides. In recent years, however, use of JIT programs has exploded, and the increased use of the Internet has only pushed the process faster and farther.

While the automotive industry was one of the pioneers in the use of JIT programs, other industries have quickly adopted its principles. The sheer cost of having inventory sitting in a warehouse is a significant motivator. "When you picture a warehouse stocked with high-tech inventory, you can understand why a company would want to reduce inventory and operate on a JIT basis," says David Quin, vice president and managing director for Emery Expedite (www.emeryexpedite.com). Emery is one of the leading transportation providers that have introduced new services to meet the increased demands brought about by JIT programs and thegenearlly more-competitive business environment. With JIT service providers, it seems, no matter when, how, and where a customer needs product delivered, there's a service available to meet their needs.

Anything You Want, You Got It

Con-Way Transportation Services introduced its Con-Way NOW (www.con-waynow.com) expedited services nearly five years ago. "Next day and second day were not enough. Customers needed expedited services," explains Ed Conaway, president and CEO of Con-Way NOW. "Ninety-nine percent of our shipments are delivered on time, and we quote delivery times in minutes," he adds.

Like Emery and Con-Way, most of the leading transportation providers have responded to their customer's needs for expedited services. "Customers 'raise the bar' every year as their world gets increasingly competitive," says Joel Childs, vice president of marketing for FedEx Custom Critical (www.fedexcustomcritical). "New products are being introduced continually. One example is FedEx Custom Critical's Point-to-Point. This product combines our dedicated ground fleet for pickup and delivery with FedEx Express's air network for linehaul. The customer gets time specific, to the minute, pickup and delivery on an air freight product with proactive communications on exceptions."

Expedited services have also helped more than one customer out of a jam. "When an auto manufacturer's line goes down it can cost thousands of dollars every minute," says David Quin of Emery Expedite. "In this case, the premium cost of expedited services is totally justifiable." In the meantime, the leading transportation providers make sure they're not the one making any errors. "When you're providing expedited services, there's no room for failure. Failure is not an option," emphasizes Joe DeLuca, director of marketing services for Con-Way Transportation Services.

Additionally, "As companies operate 'leaner and meaner,' they begin to consider expedited transportation as part of their overall supply-chain planning and operation, instead of as an exception," says Childs. "This is because they have less 'cushion' and need to depend on faster and, most important, more reliable carriers when unexpected needs arise. They typically address total supply-chain costs, instead of sub-optimizing in areas such as transportation."

Indeed, not only have transportation providers beefed up their menu of delivery services, they're also able to manage their customers' entire supply chain more efficiently than ever before. Furthermore, "While the customer profits with JIT deliveries that reduce inventory and the associated costs, suppliers, in turn, can make more accurate forecasts," notes Nancy Colvert, director of public relations for CNF, Inc., the parent company for Emery Worldwide and Con-Way.

The New and Improved JIT

While JIT programs obviously require the transportation providers to work closer than ever with their customers, the constant refinements to the model require transportation providers to work intimately with even their competitors. Lance Dixon, executive director of the JIT II Education & Research Center at Bose Corporation, describes the company's logistics command center as a room within Bose's facility where representatives from all the company's transportation providers sit shoulder to shoulder. The different companies are expected to coordinate shipments among themselves, especially when problems arise. And, given the complexities of many companies' global supply chains, the rewards of such interaction are invaluable. Not only does this arrangement give Bose incredible control over its supply chain, the command center has allowed them to offer a level of "responsiveness to customers that we wouldn't otherwise have," says Dixon. The number of late deliveries has been significantly reduced, too, thereby offering another competitive advantage to Bose.

The good news doesn't end there. The on-site supplier representative that was the cornerstone of the JIT II model has become a valuable commodity to both the manufacturing company and the supplier. "When they aren't performing their primary procurement and materials-planning duties, they are seeking out design engineers to get 'designed in' for future products," says Dixon. The idea of concurrent engineering, whereby suppliers are brought in to consult with design engineers early in the process, isn't new, he says, but it has really advanced as JIT II has evolved. "Reps are also going down to the advertising department. If you know about an ad campaign scheduled for next month that could prompt a big spike in demand and you're a supplier, you're not going to shut your plant down to install new equipment that month or otherwise leave yourself unprepared to fill the customer's order," Dixon says.

There are still other ways in which JIT has changed the traditional business process. According to Dixon, some companies have "removed the transportation provider out of the supply chain entirely by placing the production process on-site." While transportation providers would naturally bristle at this idea, it's not that widespread. However, it is indicative of just how far the concept of JIT has changed over the years, and how far the model can continue to expand in the years ahead. wt

sidebar: The Internet and JIT

"Just in time" often means now, and the internet-a now medium-has been playing a decidedly important role in the evolution of JIT. The transition from telephone, fax and EDI has not been easy, but there are many companies out there that have come up with ways to get it done.

One such company is FreightMatrix (www.freightmatrix.com), based in Memphis, Tennessee. A majority-owned subsidiary of Dallas-based i2 Technologies, Inc., FreightMatrix has more than 10 years of logistics-management-software development behind it.

The foundation of FreightMatrix is composed of 15 different "core technologies," wrapped into a bundle that uses the TradeMatrix Platform, for managing all logistics aspects of a company's supply-chain, from day-to-day order tendering to final shipment.

As explained by Craig Clark, vice president of i2 and FreightMatrix, "FreightMatrix is a place for a shipper, an exchange, or a service provider to manage their transportation, to improve efficiencies, and to collaborate in the buying and selling of logistics services, whether its reducing costs or managing the supply chain. It's one central place a shipper or provider or exchange can come and use the 15 pieces of core software, along with 25 pieces of OEM software, all in an integrated workflow offered in a shared hosted environment."

A shipper interested in using FreightMatrix's services has two choices.

First, FreightMatrix can help develop a tailored, integrated system for aiding in the shipper's supply chain operation. In doing so, the shipper becomes a member of the TradeMatrix community and has its own FreightMatrix marketplace. Says Clark, "In doing this, we first determine where you have the most pain and where we can bring the quickest value to you and get you up and running on FreightMatrix, using the 15 core technologies."

Second, a shipper may just acquire access to the FreightMatrix additional services through their TradeMatrix connection . In this case, the cost is only a per-transaction fee.

- Charles Wesley Orton