Just-in-time production is too brittle for our unstable world

Contributor: Samir Jeraj

The ‘Just in Time’ model has become more and more popular around the globe as transport and communications technology has improved. However, two recent crises affecting the UK, the Icelandic ash cloud and the averted truckers strike, have brought home how such a reliance on just in time practices is undermining our resilience. With a move to energy and food ‘security’ is this the end of just in time?

Originally pioneered by Toyota in the 1970s, ‘Just in Time production’ was designed so that manufacturers would not need to store large stocks of parts and items. Instead, organisations are meant to have “the right material, at the right time, at the right place, and in the exact amount” – (Ryan Grabosky). Advocates of Just in Time argue that beyond a simple change to reduce storage costs, the philosophy of the model requires close cooperation with suppliers and workers who are trained in a broad range of skills rather than the deskilling tendency of industrial capitalism earlier in the 20th Century symbolised by conveyor belt production.

In the decades since 1970, the Just in Time model has been exported to firms, charities, and governments around the world. Alongside this development in management and organisational practice, processes of globalisation and technological development have meant an increasingly smaller world. As such, organisations have been able to look outside national boundaries and extend supply chains around the globe in order to satisfy the rise of consumerism. However, the experience of ‘high impact low probability events’ (i.e. disasters) has prompted a re-examination of this model.

The Chatham House study, the soberly titled Preparing for High-impact, Low-probability Events, points to secondary and tertiary impacts of these events which are “hard or impossible to predict”.  Research from Japan and Thailand pointed towards the alarming statement that, “One week seems to be the maximum tolerance of the ‘just-in-time’ global economy.”

After Japan’s horrific earthquake and Tsunami in 2011, the New York Times revealed that even General Motors, nominally a rival to Toyota and other Japanese car manufacturers, was being affected by disruptions in their Japanese supply chain. The averted strike of UK petrol tanker drivers earlier this year raised the spectre of the chaos prompted by a similar disruption 12 years earlier. During the 2000 fuel protests, supermarkets, which sell around 80% of our food, warned that they only had around three days worth of supplies. This was one of the reasons for widespread panic buying by the public, and a poor response from national government.  Similarly, the Icelandic Ash cloud in 2010 had a major impact on air freight. Whilst, the UK imports around 40% of its food (with a rising trend), including 90% of its fruit and 60% of its vegetables, only 2% of these goods are air freighted. A disruption on the same scale to shipping could potentially be disastrous.

Defenders argue that the process of experience and weathering such crises make for more secure and resilient supply chains. However, the problem with this perspective is that organisations are unlikely to reduce their profits/increase their costs in order to prepare for High probability Low-impact events like an earthquake or tsunami.  It also accepts that there would almost certainly be short-term impacts. The sheer scale of impact on societies and economies must prompt a re-examination. A recent study by UK think-tank Chatham House estimated the cost of SARS in 2003 to be around 2% of East Asia’s GDP and the 2011 Earthquake to have destroyed 10% of capital stock (around 20% GDP).

The discourse around energy, in particular, has moved towards ‘securitisation’, driven by “dwindling supplies and international tensions” according to the UK Parliamentary briefing on Energy Security. Similarly, Food security is inextricably linked with energy, with food being likened to ‘the new oil’.

The factors listed in the parliamentary briefing include:

–  heightened competition over depleting energy sources

–  the new scramble for Africa’s oil and gas

–  the security of supplies from the Middle East and the instability of their governments’

dependency on “petrodollars”

–  the future of Iraq, with the world’s second-largest oil reserves

–  the energy-rich countries using energy supply and price as a political weapon

–  potential dangers of liberalisation of energy supplies and distribution

These ‘security’ factors however pose the inevitable problem of justifying force to maintain the status quo.

The process of reframing supply chains away from having the minimum needed just in time has already begun. The ‘securitisation’ of food and energy policy in the wake of shifting international relations in the 21st Century may well mean the end of just in time, but it might not mean resilience.

Samir Jeraj is a Green Party City Councillor in Norwich where he is currently the deputy leader of the opposition. He has worked in local government and the voluntary sector, and recently completed an MA in Development Studies focusing on the rise of the far right in India.

If you would like to write an article, about any aspect of resilience, to be considered for publication on GetResilient.com then please visit our ‘Contribute’ page.

Be the first to comment

Leave a Reply

Your email address will not be published.