For decades Just-In-Time (JIT) supply chain management has reigned supreme. Companies aggressively attacked their inventory to get as lean as possible. Bottom lines reached rock bottom as globalization allowed for products to move quickly around the world. However, this focus on agility came at the expense of system speed and agility (Hadwick, 2020). The system was working great, till it did not. 2020 and COVID showed that it was not the magical solution everyone thought it was. Now companies are starting to diversify their supply chains, and hope this will help keep JIT relevant. I agree that finding multiple sources is a part of it, however, I think building up some kind of emergency inventory will be key moving forward.
Production countries in Asia started shutting down and consumption countries closed their borders to prevent the spread of COVID. The lean JIT system quickly found itself unsuitable for the lack of inventory. Panic set in and shelves went empty. Companies and experts started wondering this was the end of JIT. Frank Pisch does not think it is the end, instead he thinks it is a time for reevaluation. Pisch sees an increase in inventory across the global system as a way to buffer against future disruptions (Pishc, 2020). However, I do not feel this is enough. Maybe a combination of increased inventories and more local supply sources would work, but fatter JIT alone will not solve the problem. An alternate solution comes from Kristoff Symons.
Symons thinks there should be a shift to a Just-In-Case (JIC) model (Symons, 2021). Symons claims that with the advancement of IoT it is possible to have more inventory within JIT. I tend to agree with this. JIT was invented in the early stages of the industrial revolution with everything done by hand. Companies could not keep track of each item. Thus, big changes to the system had to be made. Now, systems can track everything down to the last screw. A new process can merge JIT with JIC to make a system that is fast, flexible, and resilient.
My recommendation is for whole industries to build up inventory, not individual companies. This would require the U.S. Government to allow industries to collaborate in building a strategic reserve. Much like the oil reserve, but the companies of the industry would split the cost of managing it, not the government. Then in an emergency like this, they could pull from that stock and maintain a certain level of production.
Regardless of what the future holds, COVID has shown the current global JIT model is not able to adapt to an emergency fast enough. Companies need to make a change in the way they conduct supply chain management. The ones that make those moves now will be in a more competitive position when, not if, the next global emergency occurs.
Hadwick, Alex. (03 July 2020). The end of just-in-time? Reuters. https://www.reutersevents.com/supplychain/supply-chain/end-just-time
Symons, Kristof. (27 January 2021). Supply chain from just-in-time to just-in-case. Orange business service. https://www.orange-business.com/en/blogs/supply-chains-just-time-just-case
Pisch, Frank. (30 June 2020). Just-in-time supply chains after the COVID-19 crisis. Vox EU. https://voxeu.org/article/just-time-supply-chains-after-covid-19-crisis