Just-in-Time Buying and Why It's Disrupting Your Business

CEO sentiment is on the rise. According to a McKinsey survey in January 2021, “Majorities of executives continue to believe that conditions in their home economies and in the global economy will improve over the next six months. Yet their positivity has moderated since the previous survey [December 2020].”‍

Tempered optimism hampers sales performance.When customers feel uncertain they hesitate. They can demonstrate a desire and a need to move forward, but they don’t buy. They keep pumping the brakes and delaying purchase decisions until the very last moment.It’s a situation of “just-in-time buying.” Buy what you need, but only when you need it.Just-in-time buying triggers a cascade of challenges:

• Predicting customer demand and having enough inventory or resources to deliver is extremely challenging. Companies are finding themselves scrambling with the diversity and sporadic nature of customer orders.
• Salespeople are working just as hard to close small deals as they did for larger deals.
• The sales funnel is lumpy; revenue is lumpy; and it’s harder to manage cash flow.

The irony is just-in-time buying is not new.Justin Roff-Marsh writes in The Machine (published in 2015), “We have seen a recent and dramatic shift from make-to-stock to make-to-order environments…. In a make-to-order environment, it no longer makes sense for the salesperson to simply sell as much as possible; the salesperson needs to sell only what production has the capacity to produce.”

Justin called it over five years ago. Like so many other trends, the pandemic simply accelerated and amplified just-in-time buying so that we couldn’t ignore it anymore.

‍Just-in-time buying hurts commoditized services the most. When one product can be switched for another customers tend to follow a predictable path:

• First, buy from who they know. Relationships win when your customers are making smaller purchases at the last minute. Unless you can’t deliver.
• Second, customers will change vendors quickly based on availability. If there’s a delay, there’s a risk. Customers may pay a bit more or even change suppliers based on their ability to get the products they want when they want them.

That is an insidious circle. Not only are companies competing on price, they are competing on availability. It’s a hard game to win, even in the best of times.

The best strategy to manage just-in-time buying is to grow your brand. As a starting point, focus on two questions:

1. What makes your company unique and better?
2. Do your customers clearly understand your value proposition and associate that advantage with your company?

If you are fuzzy on #1 that’s the starting point. Truly distill your company’s value proposition and how it will win in the marketplace. If #1 is understood but #2 is lacking, that is a marketing challenge. You have an opportunity to educate your customers on how you can truly serve them well.

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