The dangers of a just-in-time delivery system

“A society is only three meals away from anarchy.”

It’s hard to imagine a well-developed country like the U.S. experiencing food shortages, considering the progress and technological advancement s made in transportation, delivery systems, and agriculture. These progresses have made it easier for the country to get access to food and other important supplies in a very rapid manner, even from different parts of the world.

However, the country’s food supply chain is actually vulnerable and experiencing food shortages is not out of the question. In fact, our food supply is not the only thing that is vulnerable. Medical supplies and important drugs are also vulnerable. The country actually experienced a 27% spike in drug shortages in 2018, the highest in the last 5 years.

One major reason for this vulnerability is the Just-In-Time (JIT) Delivery system, where businesses and stores keep just enough inventory on their shelves to meet the current demand replacing an item purchased next as the last item is sold.

Businesses have developed this system as it lessens their overhead costs.  Instead of paying more money to purchase a huge amount of supplies and pay rent for a warehouse to store them, businesses have streamlined their inventory to just the bare minimum items they’ll need to fulfill the next day’s orders.  This system allows them to have the next batch of items delivered just as the current inventory is about to be depleted at your local store.

Though this is a cost-effective strategy for businesses, it presents a massive problem if a disaster hits your region as there will not be an excessive amount of supplies to meet the needs of those in the affected area.  In this article, we’ll take a more in-depth look at how this will impact those not prepared during a crisis.

What is the Just-In-Time Delivery System?

In a nutshell, it just means stores won’t carry excess items in their inventory. The number of items they have is based on the customers’ demand.

Though this is a great idea at keeping costs down, this system is dependent on a fragile balance.

1. Perfect Balance between Supply and Demand – The first delicate balance that can affect the JIT Delivery system is supply and demand. The main requirement for the system to work is that the supply of the product should be able to meet the demand. But forecasting demand accurately is challenging and to make the system work a flexible supply chain is needed to accommodate the potential additional demands or else there will be a shortage.
2. The Entire System Needs to Run Smoothly – Though supply and demand is the main requirement of ensuring the success of the JIT Delivery system, it is also important that every aspect of the system is running smoothly. Employees running the system should know what to do and should be able to do it accurately. They also need to learn how to operate certain computer systems to ensure everything runs properly. The delivery process of the goods should also arrive on time without any delay since this could affect the entire system. An issue with supply and demand could cause the system to fail, but a problem with other aspects will also have a significant impact on the overall success of the system.

What are the potential problems in this system?

While this system provides several advantages for businesses and retail stores, it does present the following problems:

1. Vulnerability to Supply or Demand Shocks – As I discussed previously, this system relies on a delicate balance between supply and demand. Should a business experience a supply shock (a supplier that is incapable of providing the stocks of an item on time), or a demand shock (there’s a big demand from customers for a particular item) then the JIT Delivery system won’t function properly. This system is not flexible enough to adapt to these kinds of shocks, which could also result in shortages, depending on how severe the shock is. One example of demand shock causing shortages is the demand for immune globulin (IG) products. The U.S. Food and Drug Administration stated last August 2019 that increased demand, as well as uneven product distribution, production delays, and other factors, have contributed to the shortage. The FDA did say that supplies of IG products have already increased in past years, but the increase in demand during the same time period still negated that supply increase. They’re now working with manufacturers to try and provide solutions to the shortage of this important medical product.
2. Vulnerability to Price Shocks – The system operates on the assumption that prices do not fluctuate too far from the baseline. Should there be a sudden and significant increase in prices of an item or of the raw materials that they are made of, businesses might not have the necessary budget for the increase. This could also cause a shortage since companies won’t be able to purchase enough items to meet the demand. It could also cause prices of certain items to surge due to the increase in raw material prices. One example is the oil price shock that happened following the attack on Saudi Arabia’s oil production facilities last September 14. Though the initial price shock was not significant, economists fear that a prolonged increase in prices could derail consumer confidence and plunge the country into a recession. Increasing gas prices also have a negative impact on the transportation sector, which relies on cheap fuel for their profits in delivering packages and important supplies.
3. More Complex System – As I mentioned earlier in the article, the entire system needs to run smoothly for it to work as intended. The problem is that running the system is complex. There are a lot of moving parts that need to work properly and precisely. From the delivery of the raw materials in creating the product up to the delivery of the actual product to the business, everything needs to be in order and in sync and one small issue with one aspect of the process could disrupt the entire system. A natural disaster or civil unrest are examples of threats that the system is vulnerable to. Take a look at what happened in 2017 when Hurricane Maria devastated Puerto Rico. Our country experienced a shortage of medical supplies, like IV saline bags, which are made in Puerto Rico. Though the disaster happened in 2017, the country still felt its effects in 2018. Another example of a situation that disrupted supplies was the protest in Hong Kong. In July, the country started experiencing a shortage of protective gear like gas masks, goggles, and helmets due to the ongoing protests. The demand for protective gear has increased due to Hong Kong police firing tear gas canisters at demonstrators. The supply chain was also disrupted by China stopping its deliveries to Hong Kong to try and make protesters stop.

These vulnerabilities can cause this system to fail and when that happens, the effects could be devastating.

What Could Possibly Happen if the Just-In-Time Delivery System Fails?

What possible effects will it have in our country?

Shortages of important supplies and items

The main impact of a failure is that it could cause a shortage of important supplies and items. 

Take for example the fact that the majority of the raw materials and ingredients that the U.S. needs for drugs are all coming from China. Should the trade war between the two countries intensifies, China could stop exporting drugs, and the important ingredients and raw materials the U.S. needs. Or if the country experienced a disaster similar to the one that hit Puerto Rico in 2017 and causes massive damage to the infrastructure that makes these drugs or ingredients. These two scenarios could cause massive drug shortages for medicines for blood pressure, depression, and epilepsy to name a few.

Imagine if this scenario were to happen on an item or supply that is more commonly used by the population like food and water? You can expect conflict and civil unrest.  

Could Cause A City To Stop Functioning Altogether 

The on-time delivery of necessary supplies is what keeps cities in our nation functioning properly. Timely deliveries of food, water, and medical supplies to various points throughout the city are critical.  An issue with the delivery system could cause major problems to a city in just one week. The American Trucking Association came out with a report in 2015 that outlines what could happen should there be a disruption in the trucking industry and affect the delivery of necessary supplies.

Within 24 hours, there will be a shortage of basic medical supplies and fuel at service stations, and retail stores using the JIT delivery system will also start to experience shortages in their inventory. Delivery of mail and packages will also cease. In 1 day, food shortages will start to begin and the delivery of fuel will slow down, causing prices to spike due to shortage. 

In 2-3 days, food shortage will begin to get worse, especially after the panic buying and hoarding. Other essential items like bottled water, canned meat, and powdered milk will also disappear from retail stores. Fuel will completely run out in service stations and ATM machines will start to run out of cash. Rail transport and garbage collection will also be disrupted. In one week, automobiles will be useless because of the lack of fuel and oxygen supplies will start to run out in hospitals. In 2 weeks, clean water will start to run out and by week 4, there won’t be any more access to clean water since trucks have stopped delivering purification chemicals to water supply plants.

Though this was a worst-case scenario, it’s not a far-fetched situation. Our country is walking on a tightrope when it comes to supplies of important items.  One simple issue whether great or small could bring the whole system to its knees.

How Can You Prepare for the Failure of the Just In Time Delivery System?

Should the Just-In-Time Delivery system fail, it’s important that you are prepared for it so you and your family’s survival is assured.  Here are some tips on how you can prepare for this type of scenario.

1. Be Aware of Possible Supply Disruption in Your Area or Community – One of the most important things you need to do first is to be observant and aware of the happenings in your community. Information is key in this type of scenario and being aware of possible supply disruptions like a looming strike, an incoming hurricane or weather disturbance, or shortages in other areas can help you prepare early before the disaster strikes.
2. Stock up on Important Supplies – Another important thing you need to constantly do is to stock up on important supplies. This means having enough supply of food, water, medicine, and other medical supplies that can last you for at least a month at a minimum.  Most Americans have enough food to get them through a few days. Having these items stocked in your home means you won’t have to worry about the immediate impact and effect of a supply disruption in your city or area.
   1. Also, consider producing your own food if you have enough space in your home for a small garden or an area to raise chickens.
   2. You should also consider setting up a rain harvesting system that can collect rainwater and building a system to purify rainwater.
   3. Also consider getting a renewable power system like solar, wind, or a combination of both so you can have access to electricity should your city experience a power outage.
3. Have a Plan to Evacuate – You will also need to have a plan to evacuate if needed. You never know how long before things go back to normal after the chaos due to the shortages of supplies. Stocking up on important items and supplies can only sustain you for a certain period. In addition, security will now become an issue as others in your area will probably not have prepared. Bugging out before things get chaotic or after the chaos has died down a bit is a good option to have.

Conclusion

The Just-In-Time Delivery system is a great system to have for businesses and retail stores, especially if they want to keep costs down. The problem with this system is that it is that is very vulnerable to the slightest hiccups and a minor disruption on just one of the processes could cause the entire system to collapse.

Since businesses only rely on having enough supplies to meet current demand, shortages are likely to occur should the system fail to deliver the items in a timely manner or should there be a disaster causing people to make a rush on the store. This is why it is so important that you and your family are prepared for this kind of scenario, so you can avoid experiencing the chaos that will ensue.

If you have additional tips or suggestions, please put them in the comment section below.  Please click the like button and share it on social media if you enjoyed the article. As always, stay safe out there.