Dispatch From the Director: Explore Collaboration and Connectivity
The concept of Just-in-Time (JIT) was not an inventory containment strategy alone. The original idea, originated and championed by Toyota, was to manage a complete supply chain and create visibility and collaboration across a spectrum of suppliers. The theory centered around immediate detection of failure points in supply, quality, quantity, and logistics.
Manufacturers love JIT, not for the inventory cost savings alone but also for the manufacturing efficiencies delivered in a “lean” process environment.
The challenge, some might even say flaw, is that elasticity can be hard to predict. Demand for the manufacturers’ goods is complicated enough. The sales, operations, and planning elements require constant management, including on-the-fly changes to inputs and outputs. Added to that is the visibility of what is happening to the suppliers upstream and what is happening to consumption downstream of the manufacturing activity.
So, a pandemic-induced shift of 30% or more means many manufacturers and distributors have been caught in a pain point on inbound inventory and finished goods inventory. This is leading many in the industry to add in a “Just in Case” inventory. Particularly on the inbound side. As many headlines read now: “if only” we had added a stronger buffer on the front end, we would not have had these challenges on the back end.
It seems logical, but the ripple effect left over from the pandemic, which is still influencing shipping and manufacturing behavior, could catch many off-guard. A better approach for many will be to explore collaboration and connectivity with their upstream suppliers and how to loop in their logistics providers. For carriers, there is an active and even proactive role, as well, by creating live data for the shippers and consignees. At the Institute, we explore the concepts of visibility and collaboration. Digital visibility and digital collaboration are likely going to be the new JIT/JIC. Join us for the collaboration.
Interested in learning more? Email me at firstname.lastname@example.org.