Manufacts
Spring 2002



Just in Time or Just in Case?

When supplies are uncertain, pressures can grow to switch from modern just-in-time supply chain management ideas back to outdated just-in-case stockpiling ideas. But with sharply reduced demand increasing the risk attached to idle inventory, few manufacturers can afford a bulging warehouse.

Clearly, there are no easy answers when flight delays, disrupted international borders, and long lines of trucks awaiting cargo inspections leave plants unable to meet some orders even as plunging consumer demand threatens to leave unsold goods languishing in factories.

Attention to detail and flexible response to change are the keys to effective supply chain management in the face of the current conflicting market forces, industry leaders say. Several critical considerations can help fine-tune your supply chain.

  • Inventory location. Parts and materials may need to be stored closer to production facilities to minimize the effect of unpredictable transportation disruptions. Working with suppliers and logistics providers, some manufacturers are finding ways to maintain miniwarehouses near production plants.


  • Dual sourcing. Relying on single suppliers for parts or supplies crucial to production has become riskier. An expanded supply base provides quick backup if a supplier cannot deliver materials on time.


  • Materials handling. Increased buffer stock brings greater demands for efficient inventory flow within the plant. To keep cycle times down, plant managers may need to reevaluate the suitability of pallets, carousels, conveyors, cranes, hoists, and other equipment used to move materials.


  • Shipping choices. Big segments of the transportation network — the air transport system, international border operations, the U.S. Postal Service — may be out of your control, but you do have a chance to exercise choices about how your goods get into the system. Be sure to make the most of your opportunities.


  • Software solutions. Supply chain problems can be eased with software programs — not only the software you use,  but also the technological solutions employed by your logistics providers. Applications too costly for you to acquire might not be out of reach for an enterprise moving goods as its main business, and it may make sense to choose your logistics provider with an eye to the sophistication of its software solutions. Applications are now available to manage cross-border shipment problems, to provide notification at critical shipment milestones, and to provide precise shipment visibility.



  • Perisho Tombor Ramirez Filler & Brown
    901 Campisi Way, Suite 250
    Campbell, CA 95008
    408-558-0500
    info@ptlr.com

    The articles in this newsletter are general in nature and are not a substitute for accounting, legal, or other professional services. We assume no liability for the reader's reliance on this information. Before implementing any of the ideas contained in this publication, consult a professional advisor to determine whether they apply to your unique circumstances.
    © 2002