Tuesday, January 28, 2014

Just-in-Time Distribution

Just-in-Time Distribution

I read a New York Times article* about a shift towards just-in-time supply chain (stocking, distribution and delivery) practices across industries. Although this shift has been happening for decades, it has been seeing a lift with the rise of natural disasters such as Hurricane Sandy. Unexpected natural events can disrupt regular transportation and distribution. Thus, having small, accessible inventory hubs allows retailers and other businesses to be less vulnerable to supply chain problems. During Hurricane Sandy, ports along the East Coast were affected (non-working or working at less capacity) for weeks. In addition, companies with less flexible supply chain systems are more affected by vacillations in transportation and energy costs. Ranger Steel, for instance, responded to spikes in fuel pricing by building distribution centers across the nation.

Another advantage to just-in-time supply chain practices is their resonance with today's consumer expectations. A retailer who has faster access to more varied inventory can ship speedily to customers, and win market share. This also allows the retailer to be more responsive, precise, and detailed in their forecasts and purchases. Purchasing smaller quantities of products allows, on some level, greater control and awareness of product flow.

Question: What might be some disadvantages of just-in-time distribution and supply chain practices?


1 comment:

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