For years, the Just In Time (“JIT”) strategy was seen as the ideal model for electronic components. Then the world got complicated in ways no-one saw coming, with COVID lockdowns, international trade tensions between the US and China, and the Ukraine war. The lack of resilience in JIT became a major problem. Major motor manufacturers had to shut their production lines, due to lack of components. This led to a new strategy, Just In Case (“JIC”), to replace JIT .
The JIT supply chain model, honed to perfection by Japanese car manufacturer Toyota, is all about efficiency. It aims to reduce inventory to the absolute minimum, ideally having items delivered just in time for when they are needed in the production process.
There are many benefits to JIT. It significantly reduces inventory carrying costs, including storage, insurance, and potential obsolescence. With less money tied up in inventory, businesses can utilize capital more efficiently elsewhere.
The fundamental weakness in the JIT model is that it operates on the premise of predictability. Any disruptions in the component supply chain can cause the entire production of the company to halt. A high degree of supplier and logistics reliability and are critical to JIT success.
The JIC supply chain strategy, on the other hand, focuses on resilience. Businesses employing this model maintain larger inventory levels to protect against uncertainties. In essence, it’s the business equivalent of the spare tire in your car. You hope not to use it, but you don’t want to be stuck because you haven’t got it.
The JIC strategy’s key advantage lies in its ability to weather disruptions, making it potentially more robust in the face of crises. With sufficient stock at hand, companies can ensure continued operations, even when the supply chain experiences hiccups.