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Written by: John Nanry, chief manufacturing officer at Fast Radius.

In today’s on-demand business climate, companies are expected to deliver products quickly and at scale. There are many moving parts to the supply chain, and custom manufacturers play a critical role by creating unique parts for customers—when they can’t deliver, businesses experience delays and budget overages.

Supply chain challenges are particularly painful for companies that follow just-in-time (JIT) manufacturing principles—an inventory management model in which manufacturers produce parts only when needed, enabling companies to carry minimal inventory. But with limited inventory and a reliance on partners to deliver parts as needed, this model creates a fragile supply chain that is especially vulnerable to disruption.

For a deeper dive into this issue and other obstacles manufacturers are facing, Fast Radius surveyed 250 engineers, procurement professionals and industrial and product designers about their pain points with custom manufacturing. The survey results, which you can read here, shine a light on the factors that are negatively impacting companies’ bottom lines and obstructing innovation—showcasing the need for a new manufacturing paradigm that uses software and distributed physical facilities to streamline the manufacturing lifecycle

Concerns About Agility are Pushing Companies Away from JIT Manufacturing

Supply chain disruptions and the need for tighter turnarounds mean engineers, product and industrial designers and procurement professionals want parts more quickly, but they won’t tolerate inflated costs. Additionally, these individuals require an agile supply chain capable of avoiding shortages and other disruptions.

The problem is that organizations are following JIT manufacturing principles in a way that can’t keep up with expectations in today’s supply chain. Nearly half of respondents (48 percent) have moved away from JIT, with the majority making the change during the pandemic. This is no surprise, as respondents’ top supply chain pain points correspond to the greatest weaknesses of JIT.

Long lead times: Increasingly common incidents such as shipping delays and factory shutdowns are causing long lead times, which is respondents’ number one supply chain pain point (42 percent).
Rising costs: Forty percent of respondents indicated that high costs are a top supply chain pain point. In addition to materials costs, delays can result in costly disruptions from warehouse expenses and expedited shipping.
Lack of flexibility: Most companies using JIT only work with a minimal number of suppliers. While this tactic is cost-effective, it also creates less flexible operations, which 35 percent of respondents cited as one of their biggest pain points with their supply chains. For example, if one supplier experiences a materials shortage or delay and their only other partner is booked through the month, the company may not be able to resume production.

Organizations that work with custom manufacturers are facing a range of challenges that result in unexpected delays and costs that harm organizations’ bottom lines—and the problem is much more difficult for organizations that employ JIT.

JIT Can be Effective with the Right Partners

While most companies are moving away from JIT, nearly a third of respondents (32 percent) still follow JIT manufacturing principles, but only with the right partners and under the right circumstances.

Trustworthy manufacturing partners: Of the respondents who still employ a JIT model, only 38 percent say it is difficult to trust a manufacturer to deliver quality parts—significantly lower than those who either used to or never employed JIT.
Commitment to the practice: Companies that currently use JIT are the least likely to change inventory management practices. Nearly three-quarters of respondents who currently employ JIT say their practices won’t change in the next five years, highlighting their loyalty to the practice.

This data indicates that only some organizations are effectively employing a JIT manufacturing model, which is largely due to the trustworthy partners these companies work with. That is why many organizations are turning to technology partners that help minimize inventories—one of the main benefits of JIT—without sacrificing flexibility.

Fill Supply Chain Gaps with Cloud Manufacturing

In recent years, many companies have partnered with cloud manufacturing providers to effectively deploy JIT manufacturing. Cloud manufacturing uses various technologies to unite each stage of the manufacturing lifecycle within a single digital infrastructure. This creates a flexible platform that allows for on-demand manufacturing and virtual warehousing.

Cloud manufacturing streamlines the manufacturing lifecycle, ultimately improving visibility and supply chain resiliency. This enables organizations to reap the benefits of JIT manufacturing while maintaining an agile supply chain. And in today’s disruption-prone supply chain environment, these elements are no longer just nice to have—they are critical to customers’ bottom lines.

Visit the Fast Radius website for more insights from their recent survey.