For the past two decades, the goal was JIT DDS — Just in Time Demand Driven Supply — and the ultimate in Sourcing and Procurement was sourcing and procuring to optimize that mode of operation as it minimized costs and maximized revenue. In theory at least. And for a while, more often than not, it did in practice.

When predictability and reliability is high on both the customer side and the supply side, JIT DDS is the ultimate source-to-supply goal. Optimizing delivery time (JIT) minimizes inventory cost and waste, allows shipments to be right sized, and makes cashflow more predictable as spend appropriately correlated to sales. Accurate forecasting (DDS) optimizes sourcing events, minimizes stock-outs, and minimizes waste.

But what happens when:

• customer demand is unpredictable due to rapid changes in inflation, employment, tarrifs, and other factors
• supply lines get caught off with little to no warning thanks to strikes, pandemics, wars, and droughts
• raw materials get scarce or suddenly become unavailable

Supply Stops. Then sales stop. Everything breaks. And there’s no quick fix.

Now, that’s why you have visibility, monitoring, multiple sources of supply, mitigation plans, etc. That works when there are alternate sources, alternate routes, and enough time to react — but when the sources depend on the same raw material or rare component, and that becomes unavailable, one or more of your product lines are brought to a halt. And there’s nothing you can do.

Except for preventing that situation from ever happening in the first place.

The only way to do that is to ensure you are not dependent on raw materials or rare components that could disappear literally overnight.

Which means that if you revenue is heavily dependent on products (and categories) that rely on these raw materials, you need to do your best to identify alternates wherever possible and if those alternates don’t allow you to make roughly the same product, you’ll have to work with marketing and sales to shift demand based on available supply.

In some categories, that won’t be possible — you can’t make certain electronics without rare earths, but you can shift to product designs that minimize them. Depending on the rare earth in question, any change in quantity will affect the design options — not just in material composition, but in size, performance, and cost. If the cost goes up, or performance goes down, it could be difficult to convince the market an alternate design or product is better, but if there are no other real options, that’s what has to happen.

Which is why success in turbulent times is dependent on supply driven demand — and, more importantly, an abandonment of JIT to balanced inventory where enough supply is kept on hand to survive the average delay expected by an interruption, with a buffer.