The Just-in-Time (JIT) concept was a novel innovation for importers when Colless Young started operations in the early 1980s, and we worked closely with those clients who embraced it, to smooth out any hiccups in the system. With the arrival of the pandemic, however, came snags that are now lumped under the heading of ‘supply chain disruptions,’ making JIT more unpredictable than it once was.
Challenges facing Australian importers and exporters over the past three years have included rising freight and port charges, port congestion, container and pallet shortages, delays in shipping and clearance through Biosecurity, as well as changes to the availability of air cargo services as an alternative to seafreight.
The origin of JIT inventory management can be traced back to post-WWII Japan, when industrial engineer Taichii Ohno devised the concept, and went on to implement it at Toyota Motors in the 1970s. The central theme behind JIT is to maintain low inventory levels that do not cause any wastage. Importers try to bridge the gap between suppliers, stock levels, and demand.
Before the Covid pandemic, the world experienced more than three decades of stability and high predictability in supply chains, thanks to an inreasing move towards globalisation.
Countries became more specialised, industries moved away from the U.S. and Europe, and manufacturing became leaner by using the just-in-time production model which ensured they met demand, but didn’t get stuck with inventories. This prosperity was based on the assumption that goods and people could move freely around the globe.
For importers who choose to use JIT rather than standard inventory-based production models, with little backup stock, the slightest supply chain issue can lead to delivery delays and angry customers.
Because JIT production is usually based on existing orders that the importer has received from its customers, it is not the most efficient system for dealing with the unexpected. A company that uses this strategy may be ill-equipped to handle a sudden surge in demand for a product.
An unexpected increase in prices due to issues with material sourcing, shortages, natural disaster, or political upheaval (called supply shock) can also pose a serious threat to the ability of a company to service its customers effectively.
Global Supply Chain Challenges in 2023.
At the beginning of this year David Logan posted a comprehensive article on LinkedIn titled Challenges facing the shipping Industry in 2023 in which he noted: “Supply chain disruptions: Staff shortages at critical transportation hubs and transhipment ports can disrupt the flow of goods through the supply chain and may cause delays or shortages for customers.”
He also made this observation: “To avoid delays in clearing goods through agriculture and customs, it is important to ensure that all necessary documentation is in order and to be aware of any potential regulatory issues that may arise. It may also be helpful to work with a customs broker or freight forwarder who can assist with the clearance process.”
For those who still prefer Just-in-Time…
JIT is probably a more stressful option these days than it used to be, but working smarter and keeping up with the latest technology will keep the process more orderly and efficient.
The pandemic has not only amplified the need for greater supply chain optimization, but the need for faster decision-making, too. According to Gartner (a leading research and advisory company): “Through 2024, 50% of supply chain organizations will invest in applications that support artificial intelligence and advanced analytics capabilities.” They also say, “Through 2025, 25% of supply chain decisions will be made across intelligent edge ecosystems.”
Stock control can best be streamlined by prioritizing forecasting. With automated inventory alerts and forecasting tools, importers can order with confidence, based on predicted product demand or historical sales. So, you might want to upgrade your tech capabilities to help you stay afloat and stand out among the competition in this post-pandemic era.
You may also be interested in this related article from our archives: Renewed Warnings on Global Supply Chain.
As licensed Customs Brokers and International Freight Forwarders, Colless Young professionally handles shipping and customs clearance of all your import consignments by both sea cargo and airfreight. We provide a complete range of services including landed costings, quarantine treatments, trucking, warehousing and exporting. We are based in Brisbane and offer logistics facilities through all Australian ports and airports.
