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Just-in-time supply chains: A thing of the past?
ISSUE 51
With our portfolio of supply chain management services, the U-Freight Group was interested to read that freight and shipping decision makers at the recent Multimodal 2022 conference believe that the switch away from the pre-civid just-in-time (JIT) supply chain model towards a more cautious local warehousing approach by shippers and end users is set to stay until confidence in the resilience of global ocean freight transport systems is restored.
Describing the shift away from JIT driven by Covid, towards the more cautious just-in-case (JIC) model of holding a supply of material and goods in local warehouses, panellists cautioned that despite the widespread lifting of Covid restrictions, there would be no quick return to pre-Covid practices.
“If you look at warehouse occupancy rates, customers are holding a lot of product locally, and I don’t see that changing until there is more resilience,” said Nick Winder, group managing director for WIN Logistics Group.
HMM Europe managing director for Great Britain, Peter Livey, highlighted that there have been so many ‘black swan’ events in the last few years that some previously dominant supply chain models such as ‘Lean JIT’ were no longer seen as reliable.
“I think people have been burnt in the last two years, by the disruptions to logistics supply chains,” said Samantha Brocklehurst, customer experience director for the UK & Ireland, Maersk.
“We have seen a swing from JIT to JIC, and I don’t think we can go back to JIT, but I think there is a middle ground.”
Livey said many companies have had to adjust or re-examine their models because of the extensive disruptions due to Covid and port congestion, with significant implications such as the location of stock.
The panellists questioned the idea that customers will significantly reverse two decades of outsourcing manufacturing production to China and the Far East – near-shoring production closer to consumer markets – because it was a complex and expensive change to make.
More commonly, it was discussed, customers were instead looking at moving some production to other Asian countries.
For more information about U-Freight’s multimodal freight, logistics and supply chain management services, please contact your local office.
Describing the shift away from JIT driven by Covid, towards the more cautious just-in-case (JIC) model of holding a supply of material and goods in local warehouses, panellists cautioned that despite the widespread lifting of Covid restrictions, there would be no quick return to pre-Covid practices.
“If you look at warehouse occupancy rates, customers are holding a lot of product locally, and I don’t see that changing until there is more resilience,” said Nick Winder, group managing director for WIN Logistics Group.
HMM Europe managing director for Great Britain, Peter Livey, highlighted that there have been so many ‘black swan’ events in the last few years that some previously dominant supply chain models such as ‘Lean JIT’ were no longer seen as reliable.
“I think people have been burnt in the last two years, by the disruptions to logistics supply chains,” said Samantha Brocklehurst, customer experience director for the UK & Ireland, Maersk.
“We have seen a swing from JIT to JIC, and I don’t think we can go back to JIT, but I think there is a middle ground.”
Livey said many companies have had to adjust or re-examine their models because of the extensive disruptions due to Covid and port congestion, with significant implications such as the location of stock.
The panellists questioned the idea that customers will significantly reverse two decades of outsourcing manufacturing production to China and the Far East – near-shoring production closer to consumer markets – because it was a complex and expensive change to make.
More commonly, it was discussed, customers were instead looking at moving some production to other Asian countries.
For more information about U-Freight’s multimodal freight, logistics and supply chain management services, please contact your local office.
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