Just-In-Time or Just-In-Case?
May 17, 2020
Author: Guy Soreq
The Big Question in the Art and Science of Logistics: Can we afford to move from Just-In-Time to Just-In-Case?
In the Art of Logistics, logisticians are the artists themselves - the orchestral conductors making music from the cacophony of sounds along the supply chain. Whether they work for a multinational company or a local distributor, they must organize, analyze, and keep time in order to move goods across the farthest corners of the globe.
But there’s also a science behind what these logistics managers do, especially when dealing with the never ending cascade of troubles from the current shock to the global supply chain. They are the ones most directly faced with solving the challenges related to our global supply pain while getting their organizations the right material at the right place, time and cost.
And they must do all this while still abiding by the physical laws governing the global supply chain. United States Air Force Major General Allan Day, director of logistics operations for the Defense Logistics Agency, calls this science the “Physics of Logistics,” and it works under three simple but unavoidable laws:
- Stuff can be in only one place at one time.
- A square meter (or a cubic foot) of space can only be occupied by a finite amount of material at a time.
- The same dollar can only be spent once.
One solution is to increase the amount of inventory that can be quickly accessed. Just-in-case solutions can be very costly, however, not only for the basic cost of the inventory, but for management costs including touch labor, accountability, auditability, and shelf life concerns. Just-in-time solutions allow us to lower inventory and rely on transportation to meet our needs, but they pose massive operational risks. Furthermore, there is no guarantee of continued supply during a global crisis - this is of course the most costly scenario we face.
Money and resources consumed storing materiel can’t be spent on speedier modes of transportation for items that aren’t forward-stocked. The laws governing the Physics of Logistics require that logistics managers balance equations for time, space and cost. The Art of Logistics is in understanding the various risk trade-offs which can vary substantially by material. This requires transparency and collaboration to help management increase options, reduce risk and generate better decisions.
Photo Credit- U.S. Sailors guide pallets from the fast combat support ship USNS Arctic (T-AOE 8) to the hangar bay of the aircraft carrier USS Harry S. Truman (CVN 75). DoD, Mass Comms Specialist 3rd Class Karl Anderson