When Winter Storm Uri hit Texas in February of 2021, it crashed all the state’s systems. It did grave damage to the state’s unusual power grid, but it also stressed manufacturers, retailers, and customers. It did so in part because American business has for some time relied on what is called just-in-time (JIT) logistics.
What have crises taught us about the utility and the limitations of JIT logistics? What needs to be changed to retain the virtues of the method? How can organizations insure themselves against JIT’s drawbacks? According to logistics experts, the key is to understand what JIT really means.
Disasters, Damned Disasters, and Supply Chain Disasters
The approach that grew into JIT was pioneered by the Japanese car company Toyota in 1938, so it’s not new. JIT prescribes, in essence, that you eliminate waste. Your warehouses should contain what you need now, not everything you could ever need. Understanding your company’s needs, what must arrive, when and from where is integral. Sounds great. So what could be the problem?
The problem is what happens when decision-makers want the simplest possible guiding concept and ignore the fact that no aspect of life is easy, and no part of what we do is accomplished with the snap of a finger, Avengers notwithstanding.
“The minority of clients that are proactive were using just-in-time principles, but in a way that works during the pandemic,” said Lisa Anderson, President of the LMA Consulting Group. “As a decision-maker, I need to have a certain amount of safety stock, but I will replenish that as we take orders, and we’ll replenish those reserves just in time. But 80% of the companies out there are definitely in a world of hurt.”