Boom Economy Kills JIT Manufacturing Model

Last year in April I wrote a piece on how “Just-in-Time Manufacturing” failed to keep pace with high demand products as a result of the Covid-19 lock down. (https://blog.1sae.com/2020/04/03/jit-manufacturing-fails-to-be-timely/) People were buying in extremely large volumes based on fear and not need. Items such as toilet paper, food stuffs and sanitizing items were no longer readily available. Back orders were now months away and the fears just grew. There was a lot of uncertainty, some kept their cool and worked through it logically, others did not.

We all know that history, we even saw it again in the energy sector early this year and just a month ago along the east coast. Texas was hit with an arctic blast that lasted for weeks and took down the power grid that was heavily dependent on renewable energy. Then we had gas shortages along the east coast after the ransomware attack on Colonial Pipeline shut down distribution of refined fuel. This resulted in sending people once again to be fearful and hoard fuel even if they did not need it.

This is becoming an all to frequent occurrence and if business owners are not thinking 5yrs out on how to limit their risks to keep their businesses growing and service their customers they will be just one of the statistics on the wrong side of the ledger. Losing customers to a competitor is bad enough. Having the opportunity to do something about it before it happens and not taking action is even worse.

I read an article this week that validated my prognostication last year. The article was about North American Manufacturing and supply chains. Here is the link: https://www.thomasnet.com/insights/83-of-north-american-manufacturers-are-likely-to-reshore-their-supply-chains-in-2021-report/ You should definitely check it out if you worry about having material and man power to complete your growing list of committed projects.

To summarize, its a report put together by Thomas Industry Data showing that manufacturers are pivoting their business models to better serve the growing needs of their customers and keep pace with the ever changing ecosystem of supply and demand. Manufacturers are moving away from Just-in-Time manufacturing and moving towards Availability Optimization. To quote verbatim from that report:

The supply chain disruptions brought on by the pandemic have become a wake-up call for businesses to look beyond cost-saving and just-in-time inventory management. 94% of the manufacturers surveyed listed ‘Availability’ and ‘Lead Times’ as the most important factors when vetting new suppliers, instead of the generally anticipated answer ‘Price per Unit.’ One of our respondents commented, “We need more U.S. manufacturers and the supply chain needs to be strengthened. Just-in-time does not work in a boom.”

Space Age Electronics has been preparing for these very industry shifts for the past 5 years, our top level Gold and Platinum Partners strategize and forecast with our National Business Development Team to ensure their product needs are met. With the onset of higher raw material costs, longer lead times for those materials and fewer workers at the ready to pick up the pace, the time is now to think ahead and get your business plan for all your projects in place.

Reach out to your local BDM here and lets have a conversation on where and how Space Age can help you this year and for the years ahead. https://www.1sae.com/contact

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