Can a “Just-in-Case” Supply Chain Thrive when “Just-in-Time” Doesn’t Work Anymore?

There was a time when companies in the supply chain followed a ‘Just-in-Time’ methodology to cut costs and streamline processes. They could run lean and efficient, with certain operations nowhere near their customers.? Plus, they could keep warehouses pretty empty of inventory until orders came in, saving thousands of dollars on storage costs.

Fast forward to the pandemic, material shortages, geo-political issues, or climate impacts and supply chain leaders are pushed to adopt a ‘Just-in-Case’ model instead just to survive. And this is being felt across all departments – procurement, manufacturing, planning, and logistics.

Companies are stuck between a rock and a hard place - how do they balance the higher costs of holding onto inventory and storing it against the real risk of empty shelves and potentially dissatisfied? - or worse - lost customers?

The CEO of an international vehicle coatings company called the current state of supply chain disruptions “bad”, with his own inventory costs rising 10 times more than he’s used to and logistics taking five times longer to get materials to him.?

Brett Benito from Ceramic Pro said, “We used to ship a lot of our products via boat, and now I have to ship everything via air, or have the cash flow to make sure that I have six months to wait until it gets here.”? When he’s got containers stuck in Los Angeles or in New York, or even some that landed via air in Ohio, he needs to get creative on how to get his products to the customers who want them.??

On the warehouse side, Brett is taking his cash flow and putting it all into inventory, with about a six month supply currently being stored. And it’s worrisome, especially if there is a recession. “I can't take the inventory down cause I can't get it back,” said Brett.?

For the VP of Sales of a high end building design company, this era of disruption has been interesting to see.? Although sales numbers for projects have been up, the shelves have been empty.? Jonathan Thompson of E.B. Bradley said, “You're selling more and you can't get the products that you need as quickly as you need to.”??

Although E.B. Bradley has seen stable and steady growth throughout their history, taking recessions and such into consideration, they have implemented alternatives through product architecture to fill the needs of their customers during these unprecedented times.?

The CFO of a foam insulation manufacturer felt it too, with overseas shortages hiking international container shipping prices and making them “exponentially more expensive.”?

While managing the disruptions,? Adam Faber of SES Foam would also set his sights on his customer base. Identifying key customers that would continue expanding with the company was important - especially during these challenging times.? This was happening SES Foam was only able to produce so much of the product.? “We're not only gonna sell to the biggest of the big or only the small. We wanted to make sure that we hit everyone,” said Adam.???

In order to really nurture those customer relationships, one of Adam’s moratoriums during the pandemic was ‘No New Customers.’ At a moment when inventory was low and logistics were tight, his sales teams focused on visiting and having honest? - and frequent -? discussions? with key accounts of what they needed versus what SES could provide. “It was tough on our sales force, but at the same time, it was the right decision for our company and for the folks that we serve for the long term,” said Adam.

So, where do you sit? Are you operating under the “Just-in-Time” model still? Or have supply chain disruptions pushed you to adopt a more “Just-in-Case” way of doing business?? Or… just maybe, you have considered a more hybrid approach?? Whatever you’ve decided, I’d love to hear about it. Share in the comments below or reach out to me directly.?