How often did you try to buy something during COVID-19, only to find the unavailable product? For example, perhaps you missed out on buying toilet paper at lockdown? Or maybe you’re having trouble purchasing a new car now due to a shortage?
If so, you’re not alone.
Product unavailability has become an increasing issue during the pandemic, especially in the United States. This summer, this trend was so noticeable that the White House acknowledged the shortages. But why is this happening?
One answer lies in our current manufacturing models. For decades, manufacturing in the U.S. has employed a strategy called just-in-time manufacturing. In this model, products are made by warehousing the minimum amount of materials, time, and processing needed to deliver the expected output. This philosophy prevents storing extra components or stocking extra raw materials — companies just stick to what’s absolutely necessary.
On the one hand, this method has helped to optimize cost. When demand is regular or able to be predicted with enough notice, everything works just fine. However, if product demands jump suddenly — as it has during the pandemic — then the entire process can break down without extra materials on hand. When you add to this that businesses were forced to close during the bulk of the last year, these events caused manufacturers to reduce inventory levels even further, along with staffing — and now they can’t meet demand as it comes back.
The United States was not the first to apply these methods. Globally, just-in-time manufacturing dates back to World War II, when materials were in short supply. Although the old model included stocking up on materials “just-in-case” of need, it simply wasn’t possible anymore. This fear led to the shift that lingers today, and it’s a direct example of how significant world changes in product supply and demand can shift the manufacturing process.
The similarity between the current climate and WWII raises the question of how the pandemic will affect manufacturing. Similar to the effects had by World War II, will the massive delays in production today prompt us to swing the pendulum back?
According to the Harvard Business Review, it’s very likely there will be substantial changes moving forward. The last couple of years has done wonders to highlight the weaknesses in our current systems. The HBR author suggests the following changes that companies should evaluate: Hidden risks and vulnerabilities (identifying the materials or processes that could be rate-limiting), maintaining intermediate stock, and innovation.
Has your company had to face changes in manufacturing due to the pandemic? We’d love to hear from you!