Opinion

Ask Timpo: Should we move to just-in-time production?

2 min read

15 February 2012

Q: I'm considering moving towards "just-in-time" production so we can reduce the costs of holding stocks and improve cash flow. But I'm nervous about glitches in the system – and letting customers down. How do you balance stock and working capital at Timpson?

A: Stock levels don’t play a big part in our cash flow. We spend much more on wages, rent and taxation. But it is vital for us to have more than enough stock. If we haven’t got the soles, heels or watch batteries, we can’t give the service each customer needs. 

I can understand why other businesses operate a just-in-time system. The reduction in stock can make a big difference to the bank balance. But you are clearly nervous, so go carefully: don’t change your stock control system overnight. 

Just-in-time production could be a disaster if it turns out to be “just-too-late”. Stock management, like most of the day-to-day decisions in our business, is delegated to the colleagues in our shops. They know more about what they need than anyone else in the business. 

We don’t use a computer to work out stock levels. Each shop sends a hand-written order and it is our job to make sure our warehouse holds the stock they need.

Most outsiders think we are odd and old fashioned in our approach but it works. I have seen two major competitors disappear because their stock was controlled by a computer at head office. 

You are right to be paranoid about cash (I check our bank balance every day against the same day last year) but only tighten up your stock levels when you have fully tested the new system.

John Timpson runs high-street cobbler Timpson, which has 800 branches nationwide and sales of £150m. Got a question for him? Post it in the comments box below or email dearjohn@realbusiness.co.uk