A 2011 article by the Guardian newspaper suggests the UK “could only withstand a week of disruption after a major event before spiralling into chaos” because of ‘just in time’ business models “that stress lean, ultra efficient operations with little slack built in for unforeseen circumstances or stock held in reserve“.
So our question is – do ‘just in time’ business models mean that those employing them inherently have little or no resilience?
‘Just in time’ (JIT) is a business methodology that was famously pioneered by Toyota in the 1980′s, and it’s name is usefully self-explanitory. The ethos being JIT is that doing things too far in advance isn’t efficient or costs effective. If you have too much stock or components available, then money is tied up in that stock and you need to warehouse it. If you build items to early then you have to store them and carry the cost until they are moved on. JIT can be a powerful business tool for improving returns on investment, minimising cost and – done properly – ensuring quality and effectiveness. It requires very, very good management, but Toyota proved that it can be a very profitable approach.
However, JIT was born in the 1980s and, the Guardian points out, we’re living in a far more interdependent world now. Supply chains are long and involved, and any issues within it can cause disruption for those much further down the line. JIT practitioners are used to managing issues of price and quality volatility, as well as demand and supply stability, but organisations weren’t as interdependent in the past as they are now.
So, has the time come for JIT to be modified to provide organisations with more resilience and business continuity potential, or not?
We’d be interested to know what you think. Please join the discussion using the comments section at the bottom of the page.
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