Just in time and just in case: How to shift to a hybrid inventory strategy

Tariffs, geopolitical instability, and ongoing supply chain disruptions are forcing manufacturers to rethink their inventory strategies. For decades, the just-in-time (JIT) manufacturing model, with its ultra-lean supply chain method, was embraced as the industry standard for operational efficiency. JIT sought to reduce the buffer or “just in case” (JIC) inventory traditionally held as a safeguard against supply or demand uncertainty. However, the COVID-19 pandemic exposed the drawbacks of JIT inventory management, and subsequent disruptions have only served to further emphasize the risk.

Many organizations are adopting hybrid models that combine both JIT and JIC principles in an effort to balance efficiency with resilience. For example, a 2022 survey by the cloud manufacturing platform Fast Radius found that 48% of surveyed companies had now moved away from a JIT manufacturing model following the events of 2020. The report linked the shift to a desire for greater resiliency and flexibility. The survey results suggest that many companies have evolved beyond seeing inventory strategy as solely an operational concern. They now take a broader perspective and consider its effects on risk management, service levels, and working capital.

Successfully managing a hybrid inventory model, however, requires more than adjusting stock levels. Companies also need to adopt sourcing strategies that can support the added flexibility and resilience required by a hybrid model. Additionally, manufacturers need integrated data that helps them identify which materials can be managed efficiently under JIT principles and which require strategic buffers under JIC. Data modernization efforts can help provide them with the visibility needed to make those decisions with greater confidence.

This story was originally published by Supply Chain Quarterly. Read the full story at Supply Chain Quarterly →