Just in case rather than just in time

Russell Waite and Julia Warrander, of Affinity Private Wealth, say:

Time to order that garden furniture (30840245)
Time to order that garden furniture (30840245)

HOW many of us have started to encounter problems trying to source things we want to buy?

Given the numerous ‘staycations’ planned this summer, anecdotal stories suggest Islanders eager to buy new garden furniture have been told little is currently available and any orders are taking months to be delivered. Throughout the world shortages are being reported across a whole host of goods, ranging from aluminium cans to pickle jars; concrete blocks to roof tiles; and chicken wings to pet food. What is going on?

The pandemic has, of course, exposed the very thin margins on which global commerce operates. Highly indebted companies, working with extremely lean inventory, supported by just-in-time supply chains and staffed by short-term contractors, have borne the brunt of the economic ‘stop’ caused by lockdowns. The evolution of this operational model has been possible ‘thanks’ to the growth in globalisation – the process of interaction and integration among people, companies and governments across geographies.

Globalisation is seen by many as an economic success story; however, it has created winners and losers. Even among the winners, the distribution of gains has not been equitable through economies and social classes and the exodus of low-end, labour-intensive industries, in the manufacturing sector, has blighted many communities.

De-globalisation rhetoric had been building for some time and culminated in the Brexit vote of 2016 and the election of President Trump that same year. This backlash has seen global trade shrink and the imposition of tariffs and cross-border restrictions (think about the fishing dispute in the Channel Islands) grow. All this has created shortages, which have now been amplified by the pandemic. Add to this transportation problems (Suez Canal), environmental factors (the Texas big freeze) and infrastructure problems (cyber-attacks on oil pipelines) and it is no wonder companies are shifting to just-in-case business models. This means maintaining large inventories of parts, supplies, raw materials, warehousing resources and extra employees to meet production contingencies.

The move from just-in-time to just-in-case operations commonly leads to less efficient use of resources and the potential for hoarding. This further pushes up prices (inflation) and amplifies shortages.

If you have not ordered that sun lounger yet, we suggest you do.

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