What is a just-in-time manufacturer?
Air cargo charter services cater to the needs of a multitude of industries by keeping them supplied with stock, raw materials, urgently needed replacements, and spare parts. From pharmaceuticals and the food industry to engineering and the oil and gas industries, most large manufacturing facilities are heavily reliant on cargo charter services to keep the wheels of their business turning.
In the United States, and elsewhere in the world, the just-in-time (JIT) business process is hugely dependent on cargo air charter services to ensure the continuous flow of production to meet their client’s needs.
Unlike other business models, the just-in-time system operates on the principle of minimizing inventory to increase efficiency. Predominantly, using chartered air freight, JIT-based organizations receive materials exactly when they are needed for the production process; this means that the timing of deliveries is always crucial. This system eliminates the need for storage, and vastly reduces overheads. Also, the business owners are not left with excess inventory if an order is canceled or goes unfulfilled.
On the downside, operating a JIT business can be extremely challenging with no margin for errors, delays, or any other fracture to the delivery chain. The system requires in-depth planning, precise coordination, and all backed up by an experienced team who understand their role and its importance in the supply chain.
An air cargo charter service, working in cooperation with a JIT industry, has been specifically chosen because they also fully understand the importance of the role that they play in the supply chain.
Why are JIT and cargo air chartering important?
The just-in-time manufacturing strategy had its origins in the Japanese motor industry back in the 1970s. Car manufacturers, Toyota, were the first to employ the system as a means of ensuring that the company could respond to their client’s demands with minimum delays. However, it is a system that relies heavily on the complete commitment of all employees, suppliers, and processes used to meet demands.
JIT as a production process is now standard throughout the car manufacturing industry, an industry that operates on the low inventory principle. Stocks are kept to a bare minimum but production is reliant on the supply chain to deliver parts on an on-demand basis. This means that the production side of the organization only request parts once orders have been received and confirmed. To complete the order, the manufacturer is partly reliant on air cargo charter companies to deliver the parts as needed, and must already have forged a strong and trustworthy relationship with that company for the system to work efficiently.
As the JIT system steadfastly relies on air cargo charter companies, building a lasting relationship between the manufacturer and the freight carrier is vital to its success. That relationship is usually founded on the freight charter company having full understanding of exactly what it is that the client needs. This is best achieved through in-depth dialogue and asking the right questions – as obvious as that may sound. Only then can the cargo carrier start to build a system to answer the client’s demands and ensure the fluidity of the JIT manufacturing process.
Building a JIT air cargo relationship
The type of cargo being transported will determine many elements of the mutual understanding and the success of the process. To charter a cargo plane, as a link in a successful supply chain, the charter company will need to know all of the spec’s associated with the goods it will be entrusted to ship.
Due to the many rules and regulations governing cargo charter flights, the cargo company will need to ensure that the material being shipped does not impinge on any of these regulations. Is the cargo combustible, oversized, explosive, or considered as being dangerous in any way? Does it need special conditions such as regulated air temperatures or humidity levels? Does it need to be packed or loaded into special or reinforced containers?
In the case of outsized shipments, the charter cargo flight company may need to enlist the services of specialist aircraft – and on a regular basis. This would lead to the charter company either investing in the purchase of such an aircraft or forming a sub-relationship with another charter company capable of providing the required aircraft on time, every time.
Although every year approximately 50% of the world’s air cargo travels as belly freight in scheduled passenger flights, for JIT manufacturers this system is simply not always feasible. Scheduled air services are subject to delays, cancellations, industrial action, weather conditions, and localized difficulties of many kinds. Any form of delay – outside of the tolerances built into the JIT system – could spell ruin for a JIT organization.
Since the arrival of the COVID-19 pandemic, new demands have been placed on cargo charter flights and their operators. With 50% of the world’s air cargo capacity grounded, almost overnight, air charter companies found themselves vying to protect the needs of their JIT partners.
Changing the JIT air cargo landscape
One way of ensuring uninterrupted service was through the conversion of passenger aircraft – many of which were forced into storage for an indeterminate time – to freighter aircraft. Many of these ‘preighters’ – as they have come to be known – may never return to regular passenger service and may be more viable to continue operating as cargo carriers (at least for the near future) supplying JIT manufacturers and other industries due to increased demand.
It is envisioned that the successful air cargo companies of the future will have to adapt according to their JIT partners' needs, as the landscape of retail commerce continues to change in the wake of the pandemic.
How this future will look is not entirely clear, but one option being posited is the merging of various modes of transport to service JIT organizations.
While this is already the case for many of the larger cargo and express shipping companies, it is deemed likely that we will witness the emergence of cargo companies completely dedicated to serving JIT, rather than mixing their specialist business with the e-commerce and other industry sectors.
Many US cargo charter companies and JIT manufacturers are spreading their wings with a focus on an international business structure. JIT logistics and supply chain managers are dissatisfied with dealing with multiple transport companies and realize that having one dedicated cargo partner is their path to a more viable, and sustainable future. Additionally, JIT companies are keen on using one service provider to ship goods directly to their manufacturing facility, while using the same service provider to ship the finished product directly to the market destination.
To meet these growing needs, far-sighted cargo air chartering specialists are adapting to these changing demands. They are creating dedicated teams of supply chain experts charged with building relationships with JIT manufactures. Plus, they are expanding their cargo freighter fleets and choosing more sustainable aircraft types to meet future demands for a more environmentally friendly future within JIT and other industry sectors.
Smart air cargo charter companies are also focusing their attention on improved customer service. They provide dedicated partner managers, especially in the JIT sector, to oversee the smooth maintenance of the relationship between both parties. Many of the more progressive cargo charter providers are less interested in getting involved in price wars to win short-term customers and have, in turn, set their sights on generating long-term relationships.
Just-in-time manufacturing is a LEAN business philosophy requiring time-saving and cost-effective solutions. JIT managers make business decisions based on this philosophy, and one of those decisions involves their choice of cargo charter partners.
Building lasting relationships between JIT manufacturers and cargo charter partners is an important step in the growth strategy for both parties and one that should be considered carefully.
Thankfully, the cargo industry is changing and adapting to JIT needs, and finding the most suitable partner to keep your business running successfully, and more efficiently, has never been easier.