Supply chain problems

With the apparent levelling off of Covid-19 infections in SA, at least a manageable situation seems possible, and perhaps relatively normal conditions will return within a few weeks.

But when demand surges there will be pressure on the economy to supply, which probably can’t be done quickly enough.

In addition to normal activity levels, there must also be the need to build and maintain extra stocks because of what we now know can happen if we don’t. But parts of the entrenched supply-chain technology may have to change, and the reason may be because of the way “just-in-time” is used.

Many economic issues arising will persist unless changes are made in the way we do things right now. Not least will be the management of money, but that is not the purpose of this letter.

It used to be common practice to hold stocks “just in case”. Toyota’s success with just-in-time almost completely eliminated stockholding costs, space and confusion. But it necessarily required solid supply arrangements, radical improvements in quality and its control, and minimised product changeover delays. It originally worked simply, and suppliers were treated with consideration. The system worked well, but had to be completely reliable.

However, failure to provide for any significant disruption has been indicated as the main cause of our GDP collapse. It has to be asked if a lesser disaster could have produced a similar result, simply for lack of foresight and contingency planning. Foresight and contingency planning are inadequate in the way just-in-time supply chains are implemented locally and internationally.

Business and industry should remember not to blindly follow technology taken to the extreme, but remember the basics that Toyota proved originally.

South Africans could adjust quite quickly, probably with a bit of training at executive level and systems administration groups as a start point, and with priority given from funding sources to the areas where needed most.