Why our supply chains need to move from a ‘just-in-time’ to ‘just-in-case’ model
If it ain’t broke, don’t fix it - so the old saying goes. If you were oblivious to the critical role of supply chains before covid, then you’re surely aware of them now. We rely on them for everything from toilet paper to micro-chips, and from crips to cooking oil. Recent events have shown us how vulnerable our supply chains are.
Brexit, the pandemic, and the ongoing conflict in Ukraine have brought them into the spotlight. While we are exposed to the shortcomings and weaknesses of our supply networks, simply making piñatas out of supply chains for all the problems we face isn’t fair either. Supply chains are there to serve a purpose and while they do naturally have “bounce-back abilities”, they were never designed to be put through so much trauma. It's akin to a patient being discharged following a near-fatal accident, only to be involved in another accident on the way home - recovery will undoubtedly be uncertain and at best, slow.
Access to cheaper materials and cost-effective labour supply has geographically expanded our supply networks, often at the expense of resilience, flexibility, and the ability to respond fairly quickly to disruptions. Hence, we must find new ways to operate in a post-covid, post-brexit and globally fragile environment.
Firstly, there is a need to undertake a comprehensive mapping exercise of existing supply networks, to better understand what it offers and what it doesn’t. Do we have substitutes closer to our shores? Local substitutes are likely to be more expensive (to begin with) but probably have more availability, are easier to manage, therefore making it a better option than having no suppliers at all.
Secondly, is it worth considering shifting from just-in-time (JIT) to a just-in-case model? JIT is still relevant, but we must acknowledge the nature of recent disruptions faced and how this approach limits inventory and reduces the ability to respond to surges. JIC can offer much needed resilience, in terms of greater stockpiles, responsiveness and flexibility during times of uncertainty.
Thirdly, thinking global but acting local - in doing so, we would remove dependency on geographically dispersed suppliers and build capacity at home, exploring less international and more intra-regional collaborative opportunities.
The pandemic, albeit by force not choice, has shifted mindsets and encouraged eco-activism, local sourcing, and even manufacturing closer to home. Localisation, or ‘reshoring’, helps, offering flexibility to changing demands, while protecting organisations from the external shocks (such as the kind we are currently experiencing). The idea is to simply move away from sole dependency abroad to having capacity at home, thereby spreading the risk and providing more options. This move from international to ‘intra-regional’, involves local cooperation and can help reduce transaction costs, whilst still promoting economies of scale.
While shifting from global to local is a step in the right direction to counter logistics challenges, it also offers protection from global price volatility and gives us a real shot at achieving our carbon footprint pledges.
That doesn’t mean globalisation is now a thing of the past. Committing to local may seem an appropriate and sensible approach for now, but resources and skill shortages as well as the economic impact of covid, means organisations will be reluctant to forsake global growth opportunities and cheaper labour markets, which is why a supply network mapping exercise is essential to establish the feasibility of localisation across a multitude of sectors.
Finally, regardless of ‘local’ or ‘global’, we must now digitise our supply chains so we can better forecast disruptions..Only so much planning can take place. We should spend less time blaming supply chains and invest more effort in repositioning and reevaluating their configuration by embracing the untapped power of local networks...
About the author...
Dr Kamran Mahroof is an assistant professor and programme leader in the University of Bradford’s MSc in the Applied Artificial Intelligence and Data Analytics programme, delivered by the School of Management. He is also an expert on supply chains and logistics. Here he explains the need of shifting from global to local supply chains and opting for a Just-in-Case, as opposed to Just-in-Time, in order to remain relevant in an increasingly volatile, uncertain, complex and ambiguous business environment.
Dr Mahroof is currently exploring the potential of local networks through two projects he is leading with City of Bradford Metropolitan District Council, in which he is i) mapping Bradford district’s food economy and ii) exploring the feasibility of a local, sustainable halal lamb farm-to-fork system for the region.