The future of just-in-time logistics is local

The concept of just-in-time (JIT) manufacturing originated in the 1950s in Toyota’s car factories. Over time, this idea has found its way into warehouse and logistics processes, and today it is part of the “lean” business management philosophy. The economic changes precipitated by the COVID-19 pandemic have transformed the way we organize JIT logistics today.

JIT logistics supports smart production, with less inventory and fewer trucks waiting for cargo at the same time. Greater efficiency translates into shorter delivery times, which is vital in a competitive market where high quality, a diverse service portfolio and attractive prices are not enough for a logistics company to truly stand out. To make operations effective, manufacturers need supply chains that work fast.

The coronavirus crisis and the challenges that the pandemic has brought to global markets have brought about significant changes in the current market for logistics and transportation solutions. The first of these challenges appeared in China, the epicenter of COVID-19.
“With the outbreak of the pandemic in China, we are experiencing disruptions in supply chains and in the availability of certain goods. The virus has revealed that countries are dependent on imported goods. Consumers had to deal with shortages of basic products like disposable gloves, antibacterial gels and toilet paper.

The spread of the pandemic around the world caused, in many cases, that production was temporarily suspended in the automotive, chemical, food and textile industries. Blocked supply routes and trade restrictions made the JIT model no longer feasible, and many manufacturers did not have contingency plans. Only those who thought quickly and flexibly were able to respond efficiently.

“The coronavirus has highlighted the shortcomings of the JIT approach. When the pandemic interrupted liquidity in supply, goods could no longer be delivered on time. Manufacturers were forced to reevaluate and diversify their plans, and determine the necessary inventory levels.
The uncertainty has also been a demanding test for pre-pandemic logistics chains. Despite the resurgence of the Chinese industry, companies still face the challenge of evolving their supply chains. As punctuality in deliveries is a priority, there has been a migration from road transport solutions to rail, sea or air alternatives.
In order to avoid similar complications in the future, many manufacturers plan to focus on maintaining a local inventory that balances supply with demand, as well as digitizing their supply chains. Therefore, the importance of JIT shipments and local logistics solutions will increase.

“Now we have an opportunity to identify the gaps in old systems and structures and fix them. Across the transportation and logistics industry, great efforts are being made to digitize processes and build common platforms where process participants can share up-to-date information that was often missing before.