When Toyota initially created the just-in-time (JIT) approach to inventories, its factories and those of its suppliers were located near each other. Their proximity eliminated “wastes” like transit time and excessive inventory and enhanced collaboration at all levels.
Over the decades, companies extended the JIT concept to global supply chains. Still, the system continued to work, thanks to stable trade conditions and logistics capabilities worldwide, which made the delivery of items highly dependable and predictable. Now, turbulence and uncertainty resulting from the Covid-19 pandemic, climate-related disruptions, geopolitical tensions between the United States and China, and the war between Russia and Ukraine have called into question the wisdom of continuing to operate factories on a just-in-time basis that are dependent on global supply chains.
