Just In Time is Not Going Away

The global COVID pandemic has stressed economies and supply chains in ways that haven’t been experienced in decades, if ever.  The result has been difficult for many to understand and manage, as evidenced by the overwhelming inventory situations that the US and other nations continue to work through in early 2023.  

Many observers have claimed that this failure is – at least in part – due to the “Just In Time” systems and processes (JIT) long associated with Toyota and Lean Manufacturing. And many have been all too eager to shoot arrows and throw shade at this system, using the current state of affairs as an opportunity to claim that JIT was ill-informed from the start - and a recipe for disaster. 

We don’t believe that’s true.

Those who truly know the Toyota Production System know that JIT is nothing more than a countermeasure to a myriad of problems to be applied to a system if or when it is needed.  And while the uninitiated and “black and white” thinkers will see JIT as binary (you either do it or you don’t), Toyota itself often uses excess inventory as a countermeasure to avoid disruptions and problems associated with quality, delivery or other primary objectives. (https://asia.nikkei.com/Business/Automobiles/Toyota-ditches-signature-just-in-time-to-fight-chip-crunch)

The reality is that inventory is an expense.  Yes, sometimes that expense is worth incurring to protect your delivery and customers.  But the global supply chain environment will not be in shambles forever.  When relative stability returns, there will be renewed calls on the part of ownership and shareholders to reduce costs, so  inventories will be scrutinized again.  

Eventually, protective levels of inventories will be reduced and the application of JIT solutions will be applied, likely in even better ways that take into account the learnings of the pandemic.  

One way you can embrace JIT while also mitigating your risk? 

You can grow supply chain partners that are nearer to the point of use to reduce risk and inventory at the same time. 

What is truly coming to an end is the idea of sourcing all of your parts and pieces from halfway around the world without regard to risk, inventory, and fully-loaded cost.  JIT will be around and applied as long as cost, quality, and delivery are central to customers and commerce.

But what do you think? Do you think we will stay with “Just in Case” or move back to embracing “Just In Time”?