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When the world started to run short on essential goods last year, the finger-pointing soon followed—and many of those digits were being directed at companies’ just-in-time (JIT) manufacturing and distribution processes. For decades, it seems, these organizations had been operating with fairly lean inventories centered on stocking as little as possible while still being able to meet customer demand.
Empty grocery store shelves during the early stages of the COVID-19 pandemic forced some companies to rethink their lean approaches and make changes. The supply chain disruption and raw material shortages that subsequently emerged—and that haven’t let up yet—pushed even more organizations to take introspective looks at their inventorying strategies and adjust for the times.
Now the question is, will JIT survive the pandemic? The jury is still out on that, but there are some convincing arguments both in favor of and against using this lean inventory approach in manufacturing, distribution and even retail environments.
What is JIT?
Centered on minimizing inventory and increasing efficiency, JIT supply chain models can be traced back to Toyota, which adopted JIT in the 1970s. Focused on making customer-ordered vehicles as quickly as possible, Toyota Production System (TPS) combined “automation with a human touch,” with the goal of only producing enough to support the next process across a continuous manufacturing flow.
Using this approach, the automaker was able to meet consumer demands with minimum delays, and all while decreasing its costs and increasing its efficiencies. “In the story of how the modern world was constructed, Toyota stands out as the mastermind of a monumental advance in industrial efficiency,” The New York Times points out. “The Japanese automaker pioneered so-called Just In Time manufacturing, in which parts are delivered to factories right as they are required, minimizing the need to stockpile them.”
But as we saw happen in 2020, during times of extraordinary upheaval in the global economy, JIT may run late. “The most prominent manifestation of too much reliance on [JIT] is found in the very industry that invented it: Automakers have been crippled by a shortage of computer chips— vital car components produced mostly in Asia,” The New York Times reports. “Without enough chips on hand, auto factories from India to the United States to Brazil have been forced to halt assembly lines.”
Proving its Value
JIT has proven its value in numerous settings since Toyota birthed the concept. By keeping inventories thin, major retailers have been able to use more of their space to display a wider array of goods. JIT has also enabled manufacturers to customize their wares, The New York Times reports, “and lean production has significantly cut costs while allowing companies to pivot quickly to new products.” And despite the questions that have arisen over the last 18 months, these and other virtues ensure that JIT will “retain its force long after the current crisis abates,” the publication concludes.
In IndustryWeek, Ken Eakin, author of Office Lean: Understanding and Implementing Flow in Administrative and Professional Environments defends JIT, stating that the media has jumped at the same erroneous conclusion every time a new product shortage is publicized: low inventories—fed by JIT strategies—are to blame. Eakin says a more probable cause is simply the lengthy, complex nature of the global supply chain.
“When products have to move from a distant overseas factory to your house by way of a long network of handoffs between ports, ships, trucks, trains, depots and warehouses, all run by different companies with different capacities and prioritization systems,” Eakin writes, “the probability that something, somewhere, will be delayed is very high, especially during times of high demand when the system is under intense strain.”
When done well, Eakin says JIT is a “wonderful thing” that can bring many benefits to workers, owners and direct customers (distributors and wholesalers). For this and other reasons, JIT will likely be around long after the current pandemic is in the rear-view mirror. “”JIT creates cost savings by organizing operations to require less inventory,” he adds. “It asks suppliers to deliver small batches of materials and parts more frequently so that the factory does not need to carry excess raw materials.”
