Is Economic Uncertainty the End for Just-in-Time Supply?
Manufacturers are likely familiar with just-in-time (JIT) supply chains. Modeled on lean manufacturing principles, JIT is the epitome of low to no waste and maximum efficiency. But despite the industry’s long reliance on JIT models, manufacturers are increasingly worried it’s “too efficient,” for prevailing supply chain struggles. Now, the industry is seeking new options for a more flexible supply chain.
The origins of JIT supply chains
A JIT supply chain is all about efficiency. JIT methods move material just before it’s needed to reduce the amount of inventory stored on-site. The goal of a JIT supply chain is exactly the right amount of material at the precise moment it’s needed, no more and no less.
Just-in-time supply chains streamline processes and reduce storage costs. Because materials must be ordered at the perfect time, every time, JIT requires intricate knowledge of your company’s supply chain. There’s no inventory buffer in this supply chain model, and manufacturers are subject to significant losses if even one link is broken.
Glaring issues with modern JIT
While the low inventory associated with a JIT supply chain keeps costs low, it takes high-level coordination to run a business this way. Every facet of JIT production demands synchronization, from securing raw materials to ensuring timely delivery.
Manufacturers operating under a JIT model must anticipate and overcome two key challenges:
- Supply shocks. On-demand manufacturers must partner with suppliers that can fulfill small, frequent orders on short notice. Without a backstock of materials inventory, supply chain issues can stop production.
- Demand shocks. JIT production relies on existing orders, making it less than ideal for navigating an unexpected surge in demand.
What comes next?
Manufacturers are already confronting the rigidity of JIT supply chains. Making matters worse, an uncertain economy and looming supply shocks make JIT models even more challenging.
So, what’s the solution? For the benefits of JIT supply chains, without all the baggage, more manufacturers are adopting cloud-based models.
Cloud models support on-demand manufacturing, make supply chains more flexible and reliable, and reduce the need for physical storage space. With all information stored digitally, on-demand production is consistent, on spec, and efficient.
When a manufacturing supply chain isn’t operating at full potential, it’s time to consider a change. Cloud supply chain models allow manufacturers to avoid bottlenecks, rising costs, and product quality concerns. Leaving JIT behind is a monumental step, but it’s necessary to counter persistent and increasingly complex supply chain problems.