Lisa Anderson, LMA Consulting President and Founder, feels there is still a great deal of confusion global supply chains. Anderson joined “Bloomberg Markets” with Caroline Hyde and Paul Sweeney on Friday morning.

(Source: Bloomberg)

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Originally posted as “Episode 2: Creating Resilience In Your Logistics Operations” on Cargo Shorts – Old Dominion Freight Line Podcast.

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How to calculate your total cost of transportation and strengthening the shipper-carrier relationship.

The rising cost of transportation bottlenecks and service delays have left logistics managers with much to manage. Calculating the total cost of these issues is difficult when only addressing a predetermined price per transaction. Strategic partnerships between shippers and carriers can mitigate pain points and lead to a better customer experience. But, how can logistics partners improve the supply chain and reduce cost in today’s operating environment and create resilience in logistic operations?

Ed Garner is the Director of National Accounts at Old Dominion Freight Line and has been in the transportation industry for more than 35 years. Ed lead’s OD’s National Accounts team and is responsible for growing and fostering the relationships with OD’s top shippers. He is passionate about the shipper-carrier relationship and problem-solving the most complex LTL shipping challenges. 

Lisa Anderson is the Founder and President of LMA Consulting Group. LMA Consulting provides expertise and advice on end-to-end supply chain strategy and business transformation. She’s the author of three books, including Future Proofing Manufacturing & Supply Chain Post Covid-19, and I’ve Been Thinking. Turning Everyday Interactions into Profitable Opportunities.

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Lisa Anderson was quoted in Supply Chain Dive on whether just-in-time (JIT) is sill relevant or has the world moved to just-in-case.

“As retailers struggle with inventory glut and overstocked warehouses, the lean operating model may need to make a comeback. Just-in-time supply chains took a lot of heat during the pandemic after empty shelves laid bare the pitfalls of ordering as little inventory as possible in the name of efficiency. But, with retailers now struggling with inventory glut and overstocked warehouses, could the lean operating model be making a comeback?

Experts are mixed: While some believe that just-in-time has no place in the supply chains of the future, others say a modified version of the strategy will still be necessary to maintain resilience while keeping costs down.

Supply Chain Dive reached out to three experts in supply chain management to ask: Did the pandemic kill just-in-time? Here are their responses, which may be edited for length and clarity.

‘Just-in-time is not dead; however, the days of taking the concept literally and ordering inventory to arrive ‘just in time’ is dead. The just-in-time concept has always accounted for common sense decisions. For example, if ordering strategic inventory from China, you should account for likely demand and supply volatility and stockpile inventory appropriately. With that said, most businesses were completely focused on efficiencies prior to the pandemic and took just-in-time literally, assuming the supply chain would continue to support their needs. They went through the motions of assessing risk, but did not adjust their inventory profiles and were left empty handed during the pandemic,’ said Lisa Anderson, CEO of LMA Consulting.”

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When Winter Storm Uri hit Texas in February of 2021, it crashed all the state’s systems. It did grave damage to the state’s unusual power grid, but it also stressed manufacturers, retailers, and customers. It did so in part because American business has for some time relied on what is called just-in-time (JIT) logistics. 

What have crises taught us about the utility and the limitations of JIT logistics? What needs to be changed to retain the virtues of the method? How can organizations insure themselves against JIT’s drawbacks? According to logistics experts, the key is to understand what JIT really means. 

Disasters, Damned Disasters, and Supply Chain Disasters 

The approach that grew into JIT was pioneered by the Japanese car company Toyota in 1938, so it’s not new. JIT prescribes, in essence, that you eliminate waste. Your warehouses should contain what you need now, not everything you could ever need. Understanding your company’s needs, what must arrive, when and from where is integral. Sounds great. So what could be the problem? 

The problem is what happens when decision-makers want the simplest possible guiding concept and ignore the fact that no aspect of life is easy, and no part of what we do is accomplished with the snap of a finger, Avengers notwithstanding. 

“The minority of clients that are proactive were using just-in-time principles, but in a way that works during the pandemic,” said Lisa Anderson, President of the LMA Consulting Group. “As a decision-maker, I need to have a certain amount of safety stock, but I will replenish that as we take orders, and we’ll replenish those reserves just in time. But 80% of the companies out there are definitely in a world of hurt.”

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Forget ‘If It Ain’t Broke, Don’t Fix It’

All bets are off in these unprecedented times. What worked yesterday might not work tomorrow. Take a fresh look at your product supply strategies.

Should We Make or Buy?

Many executives outsourced when it was the popular and often a smart cost decision to do so. However, the times have changed substantially. Sometimes, we continue what is in place because of the cost and disruption to change. What is the current situation and how has it changed since the pandemic? Read our eBook, Future-Proofing Manufacturing & Supply Chain Post COVID-19 to gain details about make or buy strategies and what makes the most sense to meet your business and customer requirements.

According to my friend and colleague’s article, Is Just in Time Broken?, the incremental cost of inventory as a percent ranges from 31-58%. Now, that is substantial! Are you considering these costs in your calculations? Great minds think alike as our recent articles, JIT Might Not Be What It is Cracked Up to Be and Think Twice About Your Manufaturing Supply Chain encourage executives to THINK. Start with your customer, do a few quick calculations, use common sense and you’ll know what to do.

We are definitely interested in what you discover as you rethink your product supply strategy. Remember, no matter how “good” you feel you are positioned, if you aren’t innovating, you are moving backwards. Check out our eBook and contact us if you’d like to brainstorm these concepts further.

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Published in Industry Week on May 11, 2007

It seems very common that people get on the bandwagon of some of these philosophies like JIT, and they give up as opposed to understanding that it’s not something trendy to do,” says Lisa Anderson, president and founder of business processes advisory firm LMA Consulting Group Inc.

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