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You may have heard the term, Just-In-Time Inventory (JITI). That term is used in manufacturing to describe the process of getting inventory in right before it needs to fit into a production cycle. In a perfect retailing world, their inventory would be received just in time to sell it. However, retailers often find themselves stuck with too much inventory or inventory they can't sell after a certain date.

Having to keep unsold inventory around isn't without cost. You have to make room for it on the shelf or in the warehouse, heat it, cool it, insure it, and pay people to move it around. To minimize that carrying cost, businesses rely on aged inventory reports to tell them what they have on hand and how long they've had it. Also, well-managed companies will keep an eye on the historical number of times their industry "turns," or sells, its inventory to see if their inventory is meeting or exceeding the average number of turns.

Exceeding the average number of turns for an industry is usually seen by investors as a good thing. It means that the investment made in inventory is well managed so that the profit gained from increased turns can be put back into the business.

And let's not forget how important the customer is in the process of increasing turns and managing inventory. Without the customer, no inventory gets turned. So, now let's discuss another new wrinkle in inventory management and how some of our sign customers are using their LED displays to better manage the sale of their inventory.

An Example of JITA
One of my customers, Alan Fanning, owns a chain of drive-through Southern fried chicken restaurants in North Louisiana. Most often dressed in jeans, a pullover and sneakers, Alan's looks are deceiving. But underneath that baseball cap, is a young man who knows his restaurant business inside and out. An early adopter of LED display technology, Alan invested in outdoor LED displays years ago. When he bought them, he had a clear vision of how he wanted to use them. To start, he made his displays all accessible via the Internet so he could remotely control their content.

The state's Health Department requires Alan's "fresh and never frozen" chicken to be either cooked in a timely manner or discarded. Allen uses computer-generated inventory reports to tell him at any given time, how much uncooked inventory he has on hand.

"If I see that I have an excessive amount of uncooked chicken wings, for example, and I'm looking at having to toss that chicken at a loss, I'll send my LED signs one of our discounted wing ad specials and leave it up until the wing inventory comes back in line."

As Alan says, "I'd rather attract buyers for those wings; let them go for a little less money, than have to toss them out and make no money at all."

I've seen Alan's JITA process work first hand. I've been helping him design some of his new LED display ads. Nine o'clock one morning, he called me from one of his restaurants.

"We've got way too many legs here. Do me a favor; whip up a chicken-leg special. Put 'Today Only' on it and make it 5 legs for $2.39 plus tax. Then upload it up to the Monroe (LA) display." About two o'clock that afternoon I received an excited call from the restaurant manager. She said, "Mr. Rogers, please take that leg special off the sign. We've sold out of legs!"

Later, when I had a chance to speak to Alan, he said, "Oh, I knew that was going to happen. That restaurant display faces a very busy street. Once, when it was down, I saw a drop in sales. Now you can see why I bought those LED displays."

Even though Alan's restaurant is 85 miles from me, it took me just a few minutes to design the ad and upload it to the display. It took less time than that to take the ad off. I can't think of another advertising medium that could have corrected Alan's inventory problem so quickly.

The idea of tying inventory to advertising, the basic idea behind JITA, tends to work best when you have a management team that understands their inventory position at any given time and then leverages an effective advertising medium, like a network of LED displays, to manage and move their inventory. And again, let's not forget the role the customer plays in JITA.

Developing an ad and getting it out to the buying public quickly does not guarantee success. The customer has to respond favorably to the ad for JITA to work well. Timing and location of the ad is also important. With it running on a busy street around lunch time, Alan felt sure that ad would be effective. It might not have been as effective had it been run between midnight and 4 a.m. on a street with much less traffic.

Alan uses his system of LED displays and JITA to avoid taking a loss on uncooked chicken. A high-end furniture dealer could use the same system to attract buyers to slow-moving dining room sets. A car dealer might use it to always sell the vehicles on the lot with the highest profit margin first. Any retailer with a keen eye on their inventory could develop a program of JITA to help them meet their business objectives:

"
• Increase number of inventory turns "
• Announce just-in items to the customer "
• Move out seasonal items (snow blowers in summer, lawn mowers in winter) "
• Move hard-to-sell items or items before they reach their "Sell By" date

The JITA Process:

• Assess Inventory Position
• Create the ad
• Distribute the ad
• Measure effectiveness of the ad

Conclusion
I'm always disappointed when I can't get my prospects to understand the value of leveraging LED display technology - when they think they're just trading in one sign type for another. I like to think that the caveman who discovered fire was not nearly as important as the one who learned how to use it to cook a meal. With JITA, we can have a new concept to talk about - using LED displays to better manage inventory and make businesses more profitable.

For more information concerning using LED displays and just-in-time advertising, please contact:
Randy Rogers at Main Street LED Signs, LLC, Minden, LA. Phone: 318-268-0312. Email: randy@mainstreetledsigns.com