The resilience-versus-efficiency spectrum
Just-in-Time (JIT) minimizes inventory by ordering or producing exactly when needed, no buffer. A Tesla factory receives batteries hours before they're installed. JIT reduces storage costs, working capital, and obsolescence risk. It also exposes problems instantly: if the battery supplier is late, the line stops immediately, creating urgency to fix the supplier. JIT is efficient when supply is predictable and fast.
Just-in-Case (JIC) is the opposite: build inventory buffers to absorb disruptions. A manufacturer holds 10 days of safety stock on critical parts. If a supplier fails, the factory keeps running while an alternate is found. JIC costs more (storage, capital, handling) but survives uncertainty. During the 2020-2021 semiconductor shortage, JIC companies kept producing while JIT factories idled for months waiting for parts.
Choosing the right strategy by supply stability
The tradeoff depends on supply reliability. A large car manufacturer with established suppliers, multiple sourcing options, and contractual penalties for late delivery can run JIT profitably. A small company with one supplier or volatile demand, or a company making perishables where obsolescence is fast, should JIC. The choice is not moral; it's economic.
In practice, most supply chains use hybrid strategies. Core critical parts JIC with days of safety stock. Common components JIT via rapid replenishment agreements. Perishables order weekly and accept some waste. Semiconductors increasingly JIC after 2021 taught the cost of JIT in volatile markets. The most resilient supply chains can flex: contract capacity and stock during stable periods, then shift to JIT efficiency when supply is proven.