Just in Time or Just in Case? The Future of Supply Chain Management in a Post-Pandemic World
For many decades the just in time, or JIT, model was seen as the gold standard for supply chain management. Whether it was restaurants relying on a steady stream of fresh fruits and vegetables and delicious meats, manufacturers turning raw materials into finished products or hospitals and medical facilities managing their surgical supplies and personal protective equipment, the idea was to have materials arrive just in time to be used.
The idea, of course, was to reduce inventory costs and eliminate the need for expensive storage facilities, and this paradigm worked very well for many years. The just in time model of supply chain management worked perfectly – until it didn’t.
When the COVID-19 pandemic hit, the virus laid bare many deficiencies in the supply chain, sometimes with tragic results. Almost overnight supply chains around the globe began to break down, driven by closing factories, infected workforces, consumer fears and a host of other previously unforeseen factors.
The breakdown of the just in time supply chain and its previously robust paradigm was breathtaking, and in some cases enormously harmful. The much reported shortage of toilet paper was just the tip of the proverbial iceberg, and the real danger involved the sudden shortfall in masks, hand sanitizer, soap and other critical safety supplies.
Even now, more than a year into the pandemic the supply chain has not yet recovered in many places. Once again consumers are struggling to purchase the products they need, and many manufacturers are still finding themselves short of critical component parts. The fact that so many car and truck manufacturers are suddenly unable to get the computer chips they need is just one of the high profile examples, but it is far from the only one.
It is clear that the disruptions caused by the pandemic have laid bare deficiencies in the just in time (JIT) method of manufacturing, inventory control and supply chain management, but does that mean JIT is dead? Are hospitals, medical clinics, factories and manufacturers really moving away from just in time and stocking their shelves just in case?
As the deficiencies inherent in the just in time model of inventory control and supply chain management becomes apparent, many people are in fact rethinking they way they view their risks and associated costs. The risks posed by various industries are different, and every management team will need to make their own decisions.
The management team at a busy factory may decide, for instance, that maintaining a small but significant amount of component parts is less risky than hoping those parts will arrive just when they are needed. Even if the factory incurs additional costs by storing products, the risk of not having finished products reach their customers is even greater, and more than enough to justify the extra expenses.
Even if the factory management team must allocate additional space, the peace of mind they gain through the just in case (JIC) supply chain management model more than makes up for the inconvenience, especially in the presence of a flexible workforce. The same paradigm may be true in other settings as well, especially parts of the economy where the risks of supply chain disruption are more than just financial.
While many parts of the economy were impacted when the just in time (JIT) supply chain was suddenly disrupted, the disruption was felt most acutely in the health care field, with hospitals struggling to find personal protective equipment (PPE) for their workers and government officials engaging in bidding wars over masks and bottles of hand sanitizer.
Given the enormous societal implications of these types of shortages, it is reasonable to assume that hospitals and other medical facilities that are still relying on the just in time (JIT) supply chain management model will be taking a serious look at alternatives like just in case (JIC) inventory control. At the very least these health care providers may decide that allocating a small part of their facilities for the storage of critical supplies is well worth the extra costs, and that the risk of not having those items is simply not an option.
The fact that the supply chain broke down so quickly in the wake of the COVID-19 pandemic has laid bare a key deficiency, one that many experts now claim had been hiding in plain sight all along. When the just in time (JIT) model was first adopted, there were those who predicted that it would not be robust enough to handle a serious crisis. The fragility of JIT, they argued, made it an unsuitable choice for critical industries, but for many years their warnings went unheeded.
Now that those predictions have come true in the worst way possible, experts who foresaw the death of just in time supply chain management and inventory control are not gloating, but they are warning that a premature return to JIT could increase the danger even more. For those in the world of business, the deficiencies of the just in time paradigm may give rise to a new appreciation for the just in case (JIC) management style.