February 22, 2021
Just-In-Time Adjustments to Prevent Supply Chain Interruptions
The COVID-19 pandemic and resulting supply chain issues (and near-disasters) raised many concerns and theories about the just-in-time (JIT) approach. Some experts believe these issues exposed serious flaws in JIT, signaling the beginning of the end, while others went as far as saying JIT actually caused the issues. The question for manufacturers that have been using JIT is what to do next. Do you abandon it, and if not, how do you prevent those problems from occurring again? While we hope not to experience another COVID-like event again in the near future, there will always be disruptive events, from natural occurrences like hurricanes and ice storms to man-made problems like political upheavals, to contend with. Before deciding what to do, it’s important to determine if JIT was part of the problem. Are there flaws that can’t be overcome? Are they pointing to even bigger flaws with the Lean philosophy overall? No one who is a fan of JIT would argue about its benefits. Done correctly, it helps align production, eliminate waste, and forecast demand accurately. It saves money by lowering inventory costs, raising production quality, and reducing waste. However, JIT is sensitive to errors and disruptions, which has perhaps never been more evident than throughout the COVID-19 pandemic. While demand for some products dropped dramatically (cars), it went sky high for others (toilet paper and masks). Nearly everything produced in China was immediately impacted for some time. Concerns about workplace safety slowed or stopped production altogether. All of this—and on a global scale. To say JIT’s sensitivity and agility were tested is an understatement. And it’s no surprise that many manufacturers became less risk tolerant and moved to a less risky, “just-in-case” approach over the past year and are wondering if they should stick with that moving forward. However, was that a failure of JIT (or Lean), or was it a failure to understand how it should be approached and applied? Perhaps the “failure” was in the fact that JIT has slowly become a set of tools rather than a philosophy, becoming too rigid and isolated. As one expert said in iSixSigma, “Rigidly applying an East Asian car manufacturing principle from the 1950s to a modern-day global supply chain without questioning the context” is not very logical. The idea is to take the Lean mindset and use JIT as a starting point—with the idea that it needs to be adapted to today’s conditions, continuously identifying problems and continuously improving—addressing anything that is getting in the way of 100 percent efficiency and quality, not just striving for zero inventory. But this is not a discussion about blame; it’s an opportunity to examine what has happened over the past year, determine how to apply the Lean philosophy to avoid those issues in the future—and how to use JIT in that application. Nearly every aspect of our lives changed as a result of COVID, forcing us to examine how we do everything. We learned how to adjust our routines, and we learned that some things that added value before are no longer necessary now—they are “waste” and should be disposed of or at least re-evaluated. The same goes for how manufacturers look at the supply chain, how we operate, and how we manage our inventory. While the just-in-case approach was a logical course for companies to stabilize their supply chains and be in a better position to assess possible disruptions in the future with structured responses to risk, experts agree that this is not a sustainable long-term approach. When we go back to business as usual, JIT strategies will put those who have not abandoned them back on top, helping them leverage their competitive edge. In fact, many experts agree that a balance between these two strategies is a very viable solution. The key is technology. The right technologies—which provide end-to-end supply chain visibility and provide the ability to react to a dynamic supply chain landscape and make adjustments to and implement backups for vulnerable areas of the supply chain—will drive efficiency and enable a leaner, more responsive and resilient structure. And the companies that adopt these technologies will be in a much better position to deal with disruptions—which will, in turn, pave the way to the next generation of JIT. Learn how ArcherPoint can boost manufacturing efficiency and help you manage production with Microsoft Dynamics 365 Business Central.
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