Just-in-time is not a logistics choice. It is a financial model. The distinction matters because you cannot fix a financial model by issuing guidance about warehouses.
A joint report from Anglia Ruskin University and the Institute and Faculty of Actuaries warned recently that biodiversity loss, climate shocks and geopolitical conflicts are fracturing global food systems. Its recommendation was to move away from just-in-time supply chains and build in resilience. The government’s standing position is that the UK has a highly resilient food supply chain. Neither side is wrong about the facts. The argument passes each other in the dark because they are measuring different things.
Just-in-time supply chains were not an accident. They were engineered, deliberately, because holding inventory costs money. Stock in a warehouse is working capital tied up and not earning a return. Inventory write-downs hit the P&L. Supplier stockrooms carrying buffer stock are costs that do not show up on your balance sheet, but only if you have structured the supply relationship to make them someone else’s problem. That is what just-in-time does. It compresses inventory days, frees working capital, and pushes buffer-holding costs upstream onto suppliers who are rarely in a position to refuse. Capital markets reward the result. EBITDA improves. Return on assets improves. The efficiency gain is real and visible in the numbers.
What disappears from the numbers is the buffer itself. When a port closes, a harvest fails, or a drought runs into a second year, the shock-absorbing capacity that used to exist in warehouses and supplier stockrooms no longer exists. That was the point. You cannot tell firms to rebuild what was deliberately removed without addressing the financial logic that removed it.
Holding more inventory costs money. Paying suppliers to carry buffer stock costs money. Longer-term supply commitments with guaranteed volumes transfer financial risk back toward the buyer. Lower inventory turns reduce return on assets. These are not complicated changes to explain. They are expensive, and capital markets will not reward them voluntarily.
This is why recommendations to build in resilience tend not to go anywhere. They ask firms to absorb costs the system was designed to avoid, without changing the financing structures or market incentives that made just-in-time rational in the first place. The advice sounds serious. It requires nothing of the financial architecture. The Anglia Ruskin report is right about the diagnosis. What it does not answer is who bears the cost of the buffer, and through what financing model. Without that, the shift away from just-in-time remains a preference, not a programme.
Further reading
from-optimised-to-resilient examines the structural shift away from uniform efficiency and what it would actually involve.
Garden notes
overoptimisation — Systems that narrow to the measurable shed unmeasured load-bearing capacity. The supply chain version of this is just-in-time.
what-gets-removed-does-not-come-back — Capability shed through optimisation tends not to wait around for restoration when conditions change.