2.8 End-of-Topic Case

You have timed that it takes you 22 minutes to get from home to school for class—under perfect conditions. If you give yourself exactly 22 minutes each time you leave for class, what do you think will happen within just a few class periods? You will almost certainly be late, as problems will arise. One morning you will need to iron your dress shirt because you forgot to do so the night before, burn your morning toast and need to make an alternate breakfast, find that your gas gauge is on empty, hit an unexpected traffic snarl, or find the only available parking spot is far from your normal lot and classroom.

Organizations have realized similar issues with their JIT processes during the COVID-19 pandemic.

  • As reported in a 2020 article in Forbes, the co-founder and CEO of supply chain marketplace platform Tradeshift calls JIT a “broken model.” According to CEO Lanng, “Almost all modern supply chains are optimized for efficiency. Investment in resiliency and redundancy has been seen as waste.”1 This view fails to recognize the realities of supply chain disruptions, and cannot reasonably recover in the face of huge disruptions like COVID-19. Robert Hormats, former U.S. Undersecretary of State for Economic Growth, Energy and the Environment, suggests that one of the key measures companies and the federal government will look to going forward is that of increasing domestic stockpiles.2

  • Supply Chain Management Review reported on the results of Foley & Lardner LLP’s Global Supply Chain Disruption and Future Strategies Survey. Of the approximately 150 executives surveyed, 62% agreed that the pandemic will change their company’s JIT policies and allow for more inventory to buffer against future disruptions.3

  • Even governments struggled to understand an appropriate response to the COVID-19 supply chain crisis. According to a World Economic Forum report published in April 2020, 80 countries restricted the export of certain medical supplies and sometimes critical goods.4 Certainly, the absence of adequate buffer stock exacerbated the effects of these supply chain breakdowns.

While companies and governments around the world formulate risk management plans to carry them through the next crisis (and the next crisis is always right around the corner!), eyes are definitely on reevaluating JIT policies. Of course, practical considerations influence these decisions. In some cases, such as stockpiling certain medical supplies like vaccinations, there are perishability concerns that limit the usefulness of inventories.

Questions

What other factors might impact the JIT policies of a company you would like to work for?

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