From Portside <[email protected]>
Subject Why It’s High Time to Move on From ‘Just-in-Time’ Supply Chains
Date October 15, 2021 12:05 AM
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[ This logistical model is the engine of breakneck capitalism. But
its fragility is now being exposed. Decades of deregulation,
privatisation and market worship have left society vulnerable to the
unbidden force of “just-in-time” supply chains.]
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WHY IT’S HIGH TIME TO MOVE ON FROM ‘JUST-IN-TIME’ SUPPLY CHAINS
 
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Kim Moody
October 11, 2021
The Guardian
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_ This logistical model is the engine of breakneck capitalism. But
its fragility is now being exposed. Decades of deregulation,
privatisation and market worship have left society vulnerable to the
unbidden force of “just-in-time” supply chains. _

‘Speed, as any Formula One driver will tell you, brings its own
risk.’ Lorry drivers on the North Circular, London, at rush hour.,
Photograph: David Levene/The Guardian

 

A price shock on the global natural gas markets brings down
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small energy providers, leaving customers without heating and facing
rising fuel prices. A fire knocks
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the huge cable sending electricity from France to the UK, threatening
homes with darkness and increasing power bills. The container ship
Ever Given, bound for Felixstowe from Malaysia, gets stuck in the Suez
canal for six days, backing up shipping traffic at an estimated cost
of £730m and delaying that electronic gadget you ordered from Amazon
Prime.

What these incidents have in common is the speed at which a single
event can disrupt the supply chains that crisscross the world . Almost
every time you order something online, it is transported via a network
of factories, rails, roads, ships, warehouses and delivery drivers
that together form the global economy’s circulatory system. This
tightly calibrated infrastructure is designed for perpetual motion.
Once one link breaks or stalls, the impact on today’s just-in-time
supply chains can be felt immediately.

Just-in-time was the idea of Taiichi Ohno, an engineer at Toyota in
the 1950s, who was inspired by the work of Henry Ford. Ohno defined it
as a way of eliminating “waste” – by which he meant stockpiles,
extra workers and unused minutes – in the production and movement of
goods. Instead of wasting time, labour and money by storing parts
along the assembly line or warehousing goods (as manufacturers had
done for decades), Ohno’s idea was that suppliers could instead
deliver these just as they were needed. In turn this would increase
profits, reducing the amount that businesses spent on maintaining
inventories and paying for additional labour.

After its introduction to the west in the 1980s, the just-in-time
model gradually moved out of the car plant and into every type of
goods and service production. It forced its way down every supply
chain until each supplier, big or small, was expected to deliver
products promptly to the next buyer. This increased competition
between companies to deliver goods quickly, which meant firms reduced
their costs (usually the price of labour). Just-in-time delivery thus
contributed to the growth of low-wage, often more precarious jobs,
with workers recruited only when they would be needed. This constant
squeezing of workers has fuelled our 24/7 work culture and the mental
health problems that go with it, while attempts to cut the price of
labour have added to the growth of economic inequality, regardless of
who sits in government.

Delivering products at speed relies on infrastructure. From the 1980s
onwards, motorways widened, ports deepened and extra runways
were added here and there to keep up with the pace of change.
Twenty-first century warehouses transformed from places of storage
into VAST distribution and fulfilment centres. But speed, as any
Formula One driver will tell you, brings its own risks. Floods, power
outages, closed roads, labour disputes and, of course, pandemics can
all halt the system. Because just-in-time has eradicated stockpiles,
an unforeseen crisis can lead to treacherous shortages. At the start
of the pandemic, there were widespread shortages of PPE, gowns, masks
and plastic gloves – all of which rely on just-in-time production,
with few stockpiles kept as backup.

Now, our just-in-time world is becoming increasingly crisis prone. The
schedules of container shipping have been unreliable since the
pandemic began in early 2020. The rise of fuel prices has also led to
reduced shipping speeds, known as “slow steaming”, to cut costs.
The British International Freight Association, meanwhile, has warned
about a “shortage of land transport” – in other words, dockers
or warehouse workers have gone down with Covid and lorry drivers are
in short supply owing to the pandemic and Brexit, as well as years of
stagnant wages, long hours and lack of available training. The Road
Haulage Association estimates
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current shortage at 100,000 drivers in the UK. Too few drivers means
clogged ports, stalled ships, empty shelves and higher prices.

Supply chain managers and logistics experts are aware of all the
potential problems, and have been debating the trade-off
between “risk” versus “resilience” – the latter being the
ability to minimise or quickly recover from a disruption – for the
past decade or more. Low just-in-time inventories increase the risks
of shortages when a crisis bites. “Resilience”, however, means
bigger stockpiles, more workers, multiple suppliers and higher costs.
This creates a dilemma. Competition makes resilience itself risky for
individual companies. Who wants to buy from the higher-priced laggard?
Yet so long as profitability is the driving force, national efforts to
turn inward or “take back control” – ironically, often in order
to create an imagined resilience, as with Brexit
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create more disruptions, broken supply chains and higher prices as
businesses seek to recover losses. The regime of cheap consumer goods
becomes more and more difficult to sustain.

There are even bigger implications for this regime of breakneck
capitalism. All this global real-time motion is driven by fossil fuels
that are driving climate breakdown. The increase in tsunamis,
wildfires, floods and other extreme weather events is making supply
chains and the necessities they deliver even more vulnerable. Those
protesters sitting down in central London or out on the motorways are
on to something. One way or another, if you deprive big business of
the free use of its favourite deadly energy sources, you can slow
things down to a human pace – and maybe even save the planet while
you’re at it.

Decades of deregulation, privatisation and market worship have left
society vulnerable to the unbidden force of “just-in-time” supply
chains. No amount of government subsidies, lower taxes, job training
and other shopworn policies will be enough to address the crises we
face, from the pandemic to climate breakdown, which are causing supply
chains to fail. Now is the time to think about not just how we make
and consume things, but also how we move them.

_[Kim Moody is a visiting scholar at the University of Westminster.]_

_Tens of millions have placed their trust in the Guardian’s
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Thank you. [[link removed]]_

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