Supply chain issues have become fixtures in our daily lives. As the pandemic shut down factories, closed ports, and re-routed shipments across the globe, businesses have struggled to meet expectations for rapid product delivery. In response, companies have increased their focus on building more flexible and resilient supply chains.
This is true for companies that have relied on just-in-time (JIT) manufacturing, where businesses carry little or no extra inventory, producing goods as needed to deliver them “just-in-time.” In the pre-pandemic world, JIT enabled less capital tied up in inventory and warehousing, and helped reduce waste.
But such reliance on precise production schedules, especially from contract manufacturers that provide little transparency into the production process, creates new challenges.
After World War II, Japanese manufacturers faced several challenges: Lack of money, lack of space to build large warehouses, and lack of natural resources. All these factors put a roadblock that Japanese manufacturers had to remove in order to find their way to industrial success. Then, Toyota came up with a simple solution – they just made their processes lean
Fast Radius’ recent report, “Case for Cloud: Charting the Future of Custom Manufacturing,” surveyed engineers, product and industrial designers, and procurement professionals about their experiences with contract manufacturing. Nearly half had tried JIT and moved away from the strategy, mostly during the pandemic, due to concerns about flexibility and resiliency. Top concerns included long lead times, rising costs, and a lack of flexibility. Companies want to get parts faster at reasonable prices, while keeping their supply chains elastic enough to adapt quickly.
As a result, manufacturers are rethinking their supply chain strategies. JIT typically relies on a handful of suppliers, which makes it more difficult to pivot quickly and prevent factory shutdowns and raw material shortages from turning into expensive delays. JIT also relies on trust. Yet the Case for Cloud report showed that many product teams struggle to find manufacturers they trust. The lack of clear and transparent communication and pricing, including inaccurate quoting, also are key pain points.
Nearly half of respondents said they exchange more than 50 messages with a manufacturer over the course of a project, and many times the rapid quotes they receive are inaccurate. Another 65 per cent said they often receive parts made inconsistently or not up to specifications. This creates additional delays as new parts need to be produced to meet requirements and can be costly for companies using JIT, ordering only in necessary quantities and on precise timelines.
Just-in-time (JIT) production is a ‘pull’ system of providing the different processes in the assembly sequence with only the kinds and quantities of items that they need and only when it needs them. Production and transport take place simultaneously throughout the production sequence – inside and between all the processes. The primary objectives of just-in-time production are to save warehouse space and unnecessary cost-carrying and to improve efficiency, which means organising the delivery of component parts to individual work stations just before they are physically required
Companies rely heavily on manufacturers to meet shipping deadlines in order to deliver products on time. Yet, a majority of the respondents in the report said they learned about problems after it was too late to meet shipping deadlines. This can create budget overages or other monetary impacts.
Ineffective communication, inaccurate quoting, poor quality, and the inability to hit deadlines all reduce trust. As a result, it’s no surprise that many companies have moved away from JIT. But one-third of respondents are still employing it. These companies are more likely to say they trust a manufacturer to deliver quality parts based on proximity or long-standing relationships. But that same trust can be built quickly by selecting a production partner with a digital-first strategy.
Cloud-based digitisation enables manufacturers to operate more transparently, prioritise communication and quality, and offer production through a network of partners. It provides global flexibility and resiliency, integrating otherwise disparate processes to analyse data for process and quality improvements, communicate seamlessly with customers, store parts digitally to reduce waste, and provide real-time production updates.
These digital workflows support the benefits of JIT manufacturing (low inventory and reduced waste) without sacrificing flexibility. In the future, cloud-based manufacturing tools will be the determining factor for product teams seeking production and supply chain support they can truly rely on.
This is the viewpoint of John Nanry, Chief Operating Officer of Fast Radius Inc and it first appeared in Manufacturing Engineering