Relating Just in Time Concept with Insurance

• 13 November 2019 | 1382 Views | By Mint2Save

JIT -Just In Time concept seems to be the new strategy that every business nowadays seems to adapt to managing the inventory. It provides the best ways to meet customer demands and requirements. Along with that, it helps in reducing the costs involved in procuring, maintaining the goods, insurance of the items too. Avoiding excess work, overloaded stock items, reducing insurance wait time, and maintaining the products available to meet the customer requirements readily is the main aim of JIT.

Examples of JIT equipped companies:

Numerous companies have created benefits by reducing costs and increased customer satisfaction by adopting the JIT methods in various departments of inventory, marketing, and insurance of their business.

Following are companies that are employing Just in Time concept to improve the overall process of service and manufacturing:

• Toyota: One of the first companies that have adopted JIT Technology, where the raw materials are stored in less quantity but made available at all the production sites. So that whenever there is a requirement for a new product, they would not wait from somewhere else to get the products. Also, the other material required for the next step of the process is requested only then. The products produced are so that they can always meet customer demands with the latest articles.
• Mcdonalds: The best and relevant example that applies to JIT is McDonald’s. Here the product is almost ready. When the customer places an order, the last minute preparation takes place, and the food is prepared to get served. It ensures immediate delivery and also a similar customer experience anytime and anywhere.

Every company and industry’s primary objective is to provide products, services, and goods for the usage of customers. As it is essential to develop the products as per the customer’s requirements and needs. It is equally critical for the company to safeguard itself from any factors that might jeopardize the company’s future in terms of money or resources or any other risks. Signing up for insurance is one of the significant decisions that every company takes to protect and secure its products, the people, and the uses so that if any loss takes place, it would be cut down to the minimal. In recent times there have been many changes in the way the companies are being run and developed. With changes in models and business techniques, the need for insurance, and the duration of the risk management models have also changed a lot. 

Just in Time goes the Insurance Way

Generic insurance companies and the mechanism of the insurance are in such a way that the company is obligated to pay the premium and other required fees irrespective of the companies working state, goods production, or any other factors. In simple terms, the company has to pay the insurance whether or not it is up and running, which constitutes a significant amount in the companies financial department. Just In Time Insurance, also called JIT Insurance, has been developed to cut that considerable insurance costs that are being paid by the company even when the insured does not need it. JIT provides the option to every company to take up the insurance when and how they want it and pay for only the required ones. 

The advent of JIT insurance is a boon to all those small companies, and a massive advantage for big companies, as this is the best method to reduce and eliminate the unwanted costs and premiums. These financial savings can be effectively used elsewhere instead of being paid off as unnecessary costs.

One might often wonder the necessity to change to the JIT model when the current ongoing insurance model works well for them even when the expenditure associated are high. The JIT insurance model, when adopted by a company it reaps a whole lot of benefits. There are several advantages which one gets on changing from regular insurance to the JIT model of insurance:

• Lessen the stock: Removing the overstocking of materials to having the availability of it just in time reduces the requirement of storage space, reduces the cost of buying, maintaining, and ensuring the storage space and products.
• More productive work: Effectively using the space and materials when needed rather than having them in stock makes the company efficient in terms of management and money on the anticipated order a company would receive.
• Avoiding outdated products: The production of goods even when orders are not there will waste the effort, time, and money spent on the raw materials, warehouse space, and also the wages for the workers. Adapting to JIT can make this unnecessary expenditure to be utilized for more productive works.
• Lower production costs: The quality and the overall expenses incurred by a company would reduce a lot for the production of the goods by a company while using the JIT model. 
• Reduction in inventory: Rather than having the raw materials arrive and kept in stock before needed, JIT ensures the availability of raw materials and other items at the time of order.
• Improved quality: Work, time, and money spent on inventory stock are cut down, and the people involved in that can now be engaged in other productive work.
• Reduced space requirements: Eliminating the stock eliminates the storage space also needed; hence, costs involved with that storage space no longer exists.
• Shorter lead times: The waiting period among the departments decreases as there is no need for unnecessary production. Dispatching and an insurance claim, if any, would get cut drastically too. It is so because in the JIT model, when there is a requirement, all the items will be readily available for the production in the shortest time possible, avoiding the delay.
• Increased productivity: Regular business models have repetitive and unnecessary documentation and lesser utilization of the workforce. Whereas in the JIT model, the communication between retailers, suppliers, customers, and insurance person is effortless, and so the productivity of the product and service is always excellent.
• Increased machine utilization: When a company buys a stock of all the raw materials to process it, they spend the money on buying the raw materials and also to maintain that raw material. During the low demand period, the machines remain ideal, and the burden of maintaining that extra machine is always there. The application of JIT machines needed for the stock of an item is reduced and also eliminates the insurance associated with that particular machine and the storage space. The JIT ensures that the machine is put to use when a customer requirement arrives.
• Greater flexibility: Unlike the traditional insurance model, the JIT insurance method allows the company and the customer to take up the insurance only when they need it and only for the specified duration for which they want it.
• Better communication: The overhead delay of communication, request, and response from the various departments is typical. Inventory, production, retailers, suppliers, insurance person, customers feedback team everything will be connected through proper communication compared to the prolonged and ineffective earlier method. All communication can be quickly recorded and maintained systematically.
• Better marketing: JIT Marketing is an effective method of marketing that eliminates the overburden costs of promoting unnecessarily. JIT focuses on the customers who are going to buy the product rather than one’s who browse the product for information. Relevant messages are sent in time, reducing the ineffectiveness of conventional marketing.
• Increased customer rate at lowered marketing costs: JIT market insurance always remains relevant by knowing what the customer is precisely doing. What would their future requirements be and equip businesses with that information and products so that they would provide the right services at the right time The companies keep the customers engaged by delivering direct and meaningful content which meets their needs and expectations.

Top JIT Insurance Startups:

These JIT Insurance startups not just provide insurance and benefit the customers but also make it very easy for the customers to get their claim settled. Along with this, the process takes a short period with the latest technology.

• Tractable: The AI technology used by tractable looks at asset damage and repair cost from photos in accident and disaster recovery, making the claims to be settled in minutes eliminating the time-taking process of days or even weeks.
• Dinghy: The problem which was faced by the online freelancers earlier is no longer there. This on demand based startup matches insurance online based on the work lifestyle. The insurance works in such a way that when the work is not there, the coverage is off. It helps to eliminate the over cost of insurance.
• Untangler: In general, the data collected and sent from external resources can cause a lot of confusion, thereby delaying the process of purchase and insurance settlement. 
• Sure: One of the startups in the CNBC’s list of top 100 startups to watch for, Sure claims to be ideated during an airplane journey. Serving only an app, Sure has its offices in the United States, Israel and South Africa. This insurtech provides insurance solutions to personal, business and travel purposes and over two dozen customizable offerings.

Business comparison

General insurance businesses provide a plan for the company to get the best insurance coverage with less premium. However, this model may not apply to the micro business. Business comparison and adapting the insurance coverage is the requirement for the specific micro-business. It also provides tips and other advice to save money along with insurance.

Therefore JIT insurance is preferable as it reduces duplication of efforts and brings down the timeline taken for completing the production cycle. Also, it cuts down unwanted expenses and opens the option of better utilization of funds for the businesses. 

Insurance on demand, the idea propagated by concept of Just in Time, is a game changer. Paying premiums to secure gadgets, cars, computers etc., for year long, has started to become less lucrative. Users now have the urge to secure their precious tangibles only when needed. For instance, a bicycle shall need to be insured only when taken out for a weekend getaway or a DSLR might need insurance when actually took out in the field or wilds.

While airlines did offer such type of insurance, often bundled with the air tickets, the idea was kept away from other usables. With insurtech reaching down to swipe of your smartphone, the convenience to get insurance on demand is going to get the young generation moving.