Allow me to push back a little on the subject of ‘Just in Time” supply chain management. This concept is not so much about when a company produces their products, but how it manages those items it uses to produce their merchandise.

Where the concept began is arguable, but Toyota often gets credit for the idea within it’s Toyota Production System (TPS) adopted in the 1970s. The point is, the idea revolved around the production of goods. Before computerization, companies stockpiled component parts that they used to produce their products. This required significant capital investment for the many components necessary to produce goods—like cars for instance. Reducing process inventory could free significant amounts of capital, which became available for other uses. What JIT required, however, was intricate communication between producers and their supply chains. Producers sent suppliers a list of planned production ahead of schedule with the requirement that those suppliers deliver the necessary components just aas production began for a specific product. For cars, the correct seats, windshields, brakes, and so on arrived hours before a specific car entered the production line.

The benefits to such a scheme are obvious, however, two potential downsides exist in tandem with the benefits. If something goes wrong—and there are many things that can go wrong—along the chain, the product scheduled for production cannot be completed, as essential items would be missing. A truckers strike, mechanical breakdowns with supplier’s equipment, fuel shortages, a pandemic, etc. can disrupt the system flow and stop production. A current example is the lack of microchips needed to complete car production for American manufacturers. Thousands of cars now sit in lots unfinished because they lack needed microchips. One hiccup and the whole system breaks down.

Another possible downside comes in the form of misapplication. By example, a local medical doctor received praise by a journalist covering his story. This doctor decided to adopt the JIT concept within his hospital. He took staff members to Japan to visit a Toyota production plant so as to view the concepts in firsthand. I challenged this journalist to print a rebutal or challenge to the doctor’s notion this was a good idea, but received no response from the journalist. This was a doctor after all, a professional granted seeming omniscience by our society.

The problem with this effort comes from a lack of predictability. Producing an automobile is routine with all needed components known ahead of time. The medical profession lacks such predictability. Who knows what patients will show up during a specific week, or what exactly will be needed to treat that person. Without a certainty of needs, how do they know what to order so that it will arrive “just in time”. I interviewed a nurse who worked at that hospital and asked how the new arrangements worked. Truncating a lengthy conversation, her word to describe the new practice: “disaster.” This represents the very reason we ran out of KN95 masks in this country during the pandemic. We don’t produce them in sufficient numbers anymore and the demand jumped at the same time the supply chain got interrupted and we quickly ran out. Unless you have a stockpile to draw from, that is the enivitable outcome, which flies in the face of JIT.

We’re still recovering from the shock of Covid-19. We rely on China for many of our product components. When they shut down their economy to deal with domestic infection rates, much of our economy had no choice but to shut down as well. It takes time to recover from such a disruption and JIT may never make a full recovery in practice. Therein lies the rub of the global supply chain coupled with JIT. It’s inconvenient when car manufacturers get stuck with unfinished merchandise. When the same happens in the medical industry, people die.