Just-in-time: Global Supply Chains in a Mess?

There is growing dependence on ‘mechanised’ supply chains. These are set up and once operational are often controlled and run by computer-monitored supply and demand. These supply chains operate with minimal time and stock buffers and as long as there is stability in the market they are highly efficient and cost effective.

However, the global pandemic has shown how fragile these just-in-time operations can be. For example empty spaces on supermarket shelves, shortages of petrol at filling stations, lack of computer chips for vehicle manufacturing and on a grander scale, container ports full to overflowing. These problems were exacerbated by the blockage of the Suez Canal and, a general shortage of lorry drivers and migrant labour in other sectors.

Because there is little relationship connection between the links, the ability to manage risk is very limited and by the time the problem has become serious it is too late to plan work-arounds.

Tim Cummins, President, World Commerce and Contracting, Professor, International Commercial and Contract Management, University of Leeds School of Law, echoes our concern:

“The supply chain model tends to operate with constrained trust and transparency, with individual links jockeying for position and no innate loyalty to the ultimate value or outcome produced by the chain – it is inherently compete effectively, not collaboratively.”

Furthermore he has a wider view of the solution:

“We see supply chain thinking as rather constraining and perhaps anachronistic. Our research and member conversations have ventured more into how to establish and manage supply networks and ecosystems – essentially building an environment of greater trust-based on collaboration.”

Relationships need to be managed jointly in a formal disciplined way that ensures all activities at all levels are properly controlled and therefore robust. Moreover, continuous improvement to create and capture the maximum joint value is an essential element that is missing from ‘mechanised’ supply chains.

Without collaborative relationships contingency plans will be of minimal value.