Shipping juggernaut Maersk advocates a “Just-In-Case” (JIC) supply model after COVID-19 fallout
Following proven fails at meeting deadlines, Maersk encouraged customers to adopt the JIC supply chain model. Incidentally, this came after Hapag-Lloyd announced what seemed like an “apologetic advisory”.
A bewildering proposal
Maersk appeared to have joined in the bandwagon to diffuse shippers’ fury with big liners. The port congestions in China, Europe and United States had shipowners and charterers charging exorbitant rates in the pretext of insufficient equipment. Suffering the most pressure is certainly the supply flow from Asia to the United States and Europe.
Most retailers operated on the JIT model to avoid over-stocking; hoping a conservative sales projection will mitigate some losses in the already wounded market. At the 32nd Annual State of Logistics Report virtual presentation organised by the Council of Supply Chain Management Professionals (CSCMP), Maersk offered a startling overture – the JIC supply chain model!
The meeting involved several supply chain executives from Maersk, Nordstrom, Penske Logistics, Kearney, Norfolk Southern and IHS Markit, participating in a panel that discussed major forces shaping logistics in the pandemic and post-pandemic world. Matthew Hill, Head of Maersk North Americas Import business, commented: “JIT is not sustainable these days. JIC supply chain models with inventory buffer ensure sales demand can be fulfilled. Customers are trusting us with a wider part of their supply chain to focus more on shipment level performance instead of container level.”
What it could have been
JIT model is a complex inventory management strategy requiring predictable and accurate forecasting. JIC on the other hand is more common in locations with weak transportation and production capabilities. It would make perfect sense for retailers to order excess inventory, albeit more costly due to storage fees, and wastage from unsold inventory especially for perishables!
Maersk’s comment reflects carriers are uninclined to openly man up about their roles in missing deadlines on top of imposing outrageous surcharges. Was Maersk feeling the heat when smaller vessels gained more traction in the chaos? They can certainly take a leaf from Hapag-Lloyd’s book – be humble instead of suggesting something riskier.
Marine Online News Team
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