CAPS Webinar Recap: Just in Time (JIT) Viability Amid Disruption – Does It Exist?
Melanie Stern, Communications Specialist at Institute for Supply Management®.
Disruptions, over the last four years, have given way to more challenges for supply management professionals as solutions to command inventories, hone spend and reduce waste remain elusive. A recent webinar by CAPS Research, a program jointly sponsored by Arizona State University (ASU) and ISM® and hosted by Executive Managing Director Denis Wolowiecki focused on identifying the most beneficial model in practice for businesses navigating supply chains through disruption.
Viability of JIT Under Major Disruptions was the topic of the October 17, 2023, event available to CAPS Research and Institute for Supply Management (ISM) members that served as a platform to discuss the research and subsequent whitepaper written on their findings. Dr. Mohan Gopalakrishnan and Dr. Otagoki Oki (Goki) from ASU and chair of the WP Carey Supply Chain School co-authored the work and spoke of the details involved in the project. The formulation of the research and its ambition was to examine “the right way to approach just in time,” Wolowiecki said.
JIT And Uncertainty
“JIT itself is nothing new, we've been using it for the past 30 to 40 years,” Gopalakrishnan said, and that by looking at the waste in the system and diligently trying to avoid it, disruptions and delays can be mitigated — to a point.
“Effectiveness is in doing the right things, making the right decisions, which improves resiliency,” added Gopalakrishnan, though consumer demand can shift, increasing delays and diminishing inventory. “IT systems have improved customer service, but disruptions can remove the ability to hold and deliver product at the right time and place,” he said. Continuous system improvement, he noted, helps maintain the right amount of inventory and ensures timely deliveries.
When supply and demand uncertainties are low and manageable, Gopalakrishnan said JIT works, allowing business to keep moving. However, the global pandemic tested JIT vulnerabilities not previously visible until sudden demand increases and supply shortages could not match customer expectations, he stated. At the time, “supply management relied on forecasts,” a precursor to the imbalance realized.
Supply Chain Complexities
By looking at end-to-end supply chains, added Gopalakrishnan, the study sought to identify the tenets of efficiency and resiliency balance through improved visibility and transparency.
“Detail complexity is the size of a supply chain, its’ uniformity — Starbuck’s carries a lot of uniformity — how many suppliers and customers are involved and the level of geographic disbursement. Dynamic complexity is introduced through uncertainty, the uncertain reaction to any sudden volatility and uncertain redaction to variability, which often manifest together,” Gopalakrishnan said.
Pre-pandemic supply management strategies, including JIT, were sufficient in complexity-driven situations when the global environment was stable, he said. “COVID-19 catalyzed all these complexities simultaneously, leading to redacted lean effectiveness.”
“All these complexities rendered lean and JIT ineffective, but we cannot abandon JIT,” said Goki.
Proactive Risk Management
Proactive risk management is a hybrid strategy that combines the best of JIT with flexible strategies that can give organizations resilience, Goki said. “Scenario planning, planning for the unknown and creating potential critical uncertainties, what-if scenarios and brainstorming for solutions to cope in those circumstances is essential to supply chain resiliency.”
Amid disruptions, Goki suggested that “flexible work schedules and flexible contracts could be viable alternatives, engaging organizational-wide changes in people, processes, plants, products or services they offer.”
“What we found in our research is that resilient JIT is counterintuitive as it combines the advantages of resiliency as well as the advantages of a lean JIT system. Rather than seeing them as two sides of a coin, they can be complementary,” he said.
Resilient JIT will be most applicable to highly complex supply chains with expansive geographical inventories during major disruptions, according to the study findings.
Goki noted that combining JIC with alternative strategies could be effective if holding inventories is not problematic. “Having a JIT system in place prepares organizations for unknowns,” Goki said. Through planning and optimal use of inventories to meet demand, it can remain an effective tool in response to major disruptions.
Discover more details and findings in the CAPS Research report Investigating the Viability of JIT Systems Under Major Disruptions. Click here.
CAPS is a B2B nonprofit research center serving supply management leaders at Fortune 1000 companies. CAPS Research inspires leaders with profound discovery and executable strategies to shape the future of supply management. Research reveals the destination, benchmarking charts the course, and networking creates the path to transformation. All CAPS offerings are sales-free, bias-free, and practitioner-driven. CAPS was established in 1986 at the W. P. Carey School of Business at Arizona State University in partnership with the Institute for Supply Management. Learn more at www.CAPSResearch.org.