Are we witnessing the demise of just in time inventory (JIT) practice?
There are snaps of light in the darkness indicating supply chains are coming back online and some major firms are shifting away from just in time tactics earlier adopted to wring the pennies from their value chains. With the pandemic these firms have found it an expensive lesson when things go off line.
One of the most critical items is the provision of semiconductor chips. Many sectors are impacted. Most of us are aware of supply issues automobile dealers have experienced and as a result the escalation of prices of good second hand cars to satisfy the demand.
Chipmakers have started to drive production and stockpile raw materials in support of anticipated further heavy demand for chips. Financial Times parent, Nikkei, reports total inventory at the world’s nine leading chipmakers hit a record high of $64.7 billion as of the end of June as “companies quickly moved to ramp up production to alleviate a protracted shortage that has disrupted supply chains in the auto industry and beyond.”
It is reported it will take 2-3 years to balance the demand supply curves.
So some companies to watch… TSMC, Intel, Samsung Electronics, Micron Technology, SK Hynix, Western Digital, Texas Instruments, Infineon Technologies and STMicroelectronics.
Also watch for new competitors to emerge.
Comment – Do you know of other supply chains moving away from JIT?
