News / Don't write off the just-in-time model just yet, says logistics specialist

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Shippers are “feeling the pinch” as they look for cost-savings, but one forwarder has stressed the need to retain the just-in-time model.

MD of 500 Logistics Steve Dinsey told The Loadstar that, in much the same way there had been an increase in cost-consciousness among consumers, shippers were assessing ways to cut spending, some considering no reversion to just-in-time.

“This has led to companies trying to opt for a more cost-effective shipping method, such as a standard airfreight instead of NFO, or a connecting flight over a direct flight,” he said.

“It seems a great approach for companies, in theory, but in reality, the knock-on effect of the production line being stopped is a much greater cost than savings on airfreight. Long-term, some companies will change their approach, but time-critical will always be time-critical.”

With Covid followed by Russia’s invasion of Ukraine, global supply chains were in disarray as production lines were brought to a halt and logistics managers moved to a ‘stockpiling just-in-case’ approach to ensure inventory availability.

Some have sought to press the claim that just-in-time is dead with a continued preference for stockpiling, but Mr Dinsey suggested the situation was more nuanced.

“Holding large amounts of stock in numerous locations across the world is not cost-effective, certainly in the current economy, and with interest rates rising, but companies are starting to identify key parts and components vulnerable to supply chain disruption,” he said.

“They are then stockpiling these parts only, normally in central warehouses, until they are needed. This is a reversion to just-in-time, just revamped from the way we know it.”

This revamp, he said, would be aided by IT advances that have led to the onset of AI, with capabilities to help supply chain managers predict their requirements more accurately and further in advance.

He noted: “Logistics management systems use this same technology to predict the demand of time-critical freight, and also to plan the most viable route for a shipment.

“Live shipment visibility gives forwarders the ability to spot potential issues with a shipment and create a new plan to get the goods delivered on time, increasing reliability and reducing the number of late or failed deliveries,” he explained.