What Comes After Just-in-Time? (Inventory Management)

The World Trade Magazine recently published a very good article that noted that the new premiums placed on cost control, speed-to-market, and credit as a result of the global economic crises are in direct opposition to the need for inventory buffers when sourcing globally … creating a dichotomy between the goals of minimizing inventory (the goal of Just-in-Time) and maximizing supply chain resiliency (through reduced risk). As a result, it noted that change, a constant in the supply chain, is coming and that we probably need to be asking What Comes After Just-in-Time?

So it gathered a panel of eight practitioners and asked the question. Most of the responses, as one might expect, centered around risk management, finance management, and better visibility. Only one pointed out that, in the purest sense, there’s nothing better than just-in-time — because in an optimal scenario, if you need a widget for manufacturing, you’re never waiting for the widget, but it also never sits in inventory. It arrives just-in-time. There’s nothing beyond just-in-time, it’s the perfect supply chain model in theory … the problem is that it’s original implementation didn’t account for all of the risks that have materialized in today’s global supply chains since it’s initial definition and implementation in a market where supply was local, reliability of delivery was more predictable, and financing was easier to obtain.

The model just needs to be extended to take into account the risks and incorporate the appropriate responses to changes in the global market. And this, as a third contributor pointed out, requires more real-time information and visibility into your supply chain. Just plug the holes and deal with the risks, and you’ll find the model will work as well as it always has.