Has COVID-19 Destroyed Just-In-Time Logistics for Business?

By Dr. Larry D. Parker, Jr.
Program Director, Transportation and Logistics Management and Supply Chain Management, American Public University

As a career supply officer within the United States Marine Corps, supply chain management was my life for over 24 years. It was my job to study the most efficient way to locate and provide resources for the individuals and units I supported.

The profession took me around the world and introduced me to various approaches to the same problem: how do I get products moved through the supply chain and use the least amount of money possible in the least amount of time? The concepts of supply chain management are no different than any other profession.

Logistics and Supply Chain Management Approaches Have Varied Over Time

In business, there are schools of thought or approaches that are popular at one time and then people migrate to the next approach. At one time, for instance, managers considered that warehouses stocked full of goods at a particular location were insurance against work stoppage or famine.

When business profit and loss metrics were weighed against this practice, managers determined it was not the most efficient use of their resources. Assuredly, maintaining a fully stocked warehouse was an accounting decision that drove the profit and loss bottom-line result and was not based on the peace of mind created by having items in stock.

Later, there was the just-in-time business model, which was first introduced in Australia but gained popularity after the Japanese adoption in the production of Toyota manufacturing. Many people within the supply chain management field lauded the savings in resources and the elimination of warehouse management expenses. Advances in transportation and in-transit visibility technology fostered a sense of confidence that created a longer and longer figurative leash by which suppliers and manufacturers operated.

The COVID-19 Pandemic Poses a Threat to the Status Quo of Supply Chain Management

In 2019, the coronavirus that caused the COVID-19 pandemic not only turned the world on its head, but also placed supply chain management and supply chains squarely in the limelight. While it is not uncommon for a threat to occur to a segment of worldwide various supply chains, that threat has typically been to a single product used worldwide or to multiple products in a specific geographic area.

However, the COVID-19 threat stretched all supply chains almost simultaneously. It has become a medical threat and even imperiled national security, due to the impact on its victims and the very procurement of life-sustaining items, such as masks and ventilators, for others.

When we think of significant threats to our national security, most of the threats we often consider are territorial disputes, worldwide wars, nuclear bombs and cyberterrorism. Acknowledging the rapid increase of coronavirus infections, it is clear that we are facing a significant threat not only to our national security but also the global economy.

Recently, the Johns Hopkins University of Medicine reported that there are six million confirmed cases worldwide and so far, no cure has been developed. There is no doubt that this COVID-19 crisis has caused economic problems with ripple effects that could last for years.

The Economic Effect of COVID-19 on Business

Since the rapid outbreak of COVID-19, government authorities all over the world have been imposing prolonged lockdowns on most affected countries, such as the U.S., Spain, Italy, the UK and the Philippines. Business operations are slowing down, while some companies have entirely shut down until further notice.

Similarly, the stock markets are crashing. The Dow Jones Industrial Average added March 12th and 16th of this year to their ongoing list of worst percentage drops within a day.

Due to the uncertainty of this dire pandemic situation, investors are anxious about the unforeseen impact COVID-19 could cause on their investments, resulting in an increased demand for a higher yield. Studies show that if these economic problems continue to happen, a recession is more likely to occur and could lead to another Great Depression if left untreated. That is history that we never want to repeat in our era.

What’s Next in Supply Chain Management and Logistics?

One of several solutions to the current supply chain management problem would be the exploration of a happy medium of a less aggressive, just-in-time process and the increased warehousing of products. With the sudden abnormal shortage and hoarding of basic products such as food, toiletries and medical supplies, a traditional “demand forecasting” method isn’t enough.

Consumers will demand more from suppliers. Business seeking the confidence of customers will have to deliver their products with a higher degree of certainty. Suppliers will have to work overtime and do more than merely make predictions and come up with viable solutions to this current crisis.

Leading logistics researchers assert that advances in mapping and global monitoring of issues will allow for better handling of significant supply chain problems. I agree that any progress in the tools of our profession will improve future responses. However, I believe that the purist approach of just-in-time logistics may be a practice of the past.

The world may be entering a phase that appreciates the prepositioning approach more than ever. All of the warehouses and logistics terminals built across the countryside that miraculously deliver products we order online may be more of a glimpse of the future than we once thought. It is conceivable that the businesses that create and ship the products we consumers use will utilize this form of logistics to ensure they don’t fall victim to the next wave of COVID-19.

About the Author

Dr. Larry D. Parker, Jr., currently serves as the Program Director of Transportation and Logistics Management and Supply Chain Management with the School of Business at American Public University. He serves as an adjunct faculty for various universities around the world. Dr. Parker is a native of Temple, Texas, a certified Inspector General by the Association of Inspector Generals, and a proud member of professional organizations advancing knowledge and professionalism, such as the Association of Supply Chain Management and the National Naval Officers Association.

Dr. Parker is a published author, inspirational speaker, consummate entrepreneur and consultant who speaks worldwide on the value of education. He holds a Ph.D. in organization and management from Capella University, an MBA from Liberty University, and a B.A. in history from Wittenberg University. Dr. Parker has a long history of passion and interest in local communities and is a proud member of Kappa Alpha Psi Fraternity, Inc.