How just-in-time became just-in-case: Lessons from recent disruptions

Key takeaways

• Just-in-time (JIT) supply chains delivered efficiency for decades, but recent shocks exposed their fragility for Australian businesses.
• Disruptions including COVID-19, global shipping volatility, geopolitical tensions, and climate events have pushed many organisations toward just-in-case (JIC) strategies.
• Australian data shows supply chain disruptions materially affect costs, service levels, and business confidence, particularly in manufacturing, construction, healthcare, and food.
• The shift to JIC is not about stockpiling everything. It is about targeted resilience, better supplier diversification, smarter inventory policies, and improved visibility.
• Businesses that combine data-driven forecasting, local sourcing where it makes sense, and collaborative supplier relationships are better placed to balance cost, risk, and compliance. 

Introduction: why supply chains feel different now

If you ran an Australian business before 2020, just-in-time probably felt like a non-negotiable. Lean inventory, predictable shipping, and global sourcing kept working capital low and margins competitive. Then, almost overnight, it stopped working.

Factory shutdowns, port congestion, labour shortages, and unpredictable demand revealed a hard truth. Supply chains optimised purely for efficiency are brittle. According to the Australian Bureau of Statistics, more than 40 percent of Australian businesses reported supply chain disruptions at the height of the pandemic, with transport delays and input shortages among the most common issues.

Since then, disruptions have not eased in a linear way. Instead, businesses have faced rolling shocks including Red Sea shipping disruptions, extreme weather events affecting domestic logistics, and persistent skills shortages. The result is a broad reassessment of how you design supply chains. Just-in-time has not disappeared, but it has been supplemented, and in some cases replaced, by just-in-case thinking. 

How just-in-time became the default

The efficiency promise

Just-in-time emerged as a dominant philosophy because it worked. By aligning production closely with demand, businesses reduced holding costs, minimised waste, and improved cash flow. For Australian manufacturers and distributors operating far from major markets, JIT helped offset geographic disadvantages.

IBISWorld has long highlighted inventory turnover as a key performance metric in Australian manufacturing and wholesale sectors. Higher turnover typically correlates with stronger margins and lower working capital requirements. In stable conditions, JIT was a rational response to competitive pressure.

Globalisation made it possible

JIT depended on global supply chains that were:

• Predictable in transit times
• Supported by low-cost shipping
• Backed by reliable trade relationships
  
  

Before 2020, global container freight rates were relatively stable. The Reserve Bank of Australia noted that international goods trade costs declined steadily through the 2010s, supporting import-reliant industries such as construction materials, electronics, and medical supplies.

The hidden assumption was continuity. When that assumption failed, the weaknesses of JIT became visible. 

The disruption wake-up call for Australian businesses

COVID-19 as the stress test

COVID-19 was not just a health crisis. It was a systems failure across supply chains. ABS Business Conditions and Sentiments surveys showed that supply chain disruptions were among the top three concerns for Australian businesses through 2020 and 2021.

Common impacts included:

• Delayed inputs halting production
• Inability to meet customer demand
• Sudden spikes in freight and input costs
  
  

A mid-sized Australian food manufacturer, for example, may have sourced packaging from a single overseas supplier on tight delivery cycles. When that supplier shut down, production lines stopped within days because there was no buffer stock.

Compounding shocks since 2021

While borders reopened, volatility did not disappear. Businesses have since faced:

• Shipping delays linked to port congestion and geopolitical risks
• Extreme weather events disrupting domestic transport, particularly floods affecting east coast road and rail networks
• Ongoing labour shortages across logistics and warehousing
  
  

According to the Australian Industry Group, supply chain pressures remained a top constraint on manufacturing output well into 2023, even as demand normalised.

The lesson was clear. Risk had been underpriced in supply chain design. 

What just-in-case really means in practice

Moving beyond stockpiling

Just-in-case is often misunderstood as simply holding more inventory. In reality, effective JIC strategies are more nuanced. They focus on criticality, not volume.

Key characteristics include:

• Identifying inputs where disruption risk outweighs holding cost
• Holding buffer stock selectively for high-impact items
• Using multiple suppliers across different regions
  
  

For example, an Australian healthcare provider may choose to hold several months of critical consumables such as PPE, while still running JIT for non-critical items.

A risk-based inventory lens

Many businesses are now segmenting inventory using criteria such as:

• Impact on operations if unavailable
• Lead time variability
• Availability of substitutes
  
  

This approach aligns with guidance from bodies such as the Australian Institute of Company Directors, which has emphasised supply chain resilience as a board-level risk issue. 

The cost implications you need to manage

Higher working capital, but fewer shocks

There is no denying that JIC can increase costs. Holding more inventory ties up capital and may increase storage and insurance expenses. However, disruptions are also costly.

The Productivity Commission has highlighted that supply interruptions can have cascading effects across industries, amplifying economic losses beyond the initial shock.

For your business, the trade-off often looks like this:

• Higher steady-state costs from buffers
• Lower risk of revenue loss from stockouts and downtime
  

Passing costs through, or not

In some sectors, businesses have been able to pass increased costs on to customers. In others, competition limits pricing power. Construction is a clear example. ABS data shows construction input prices rose sharply during recent disruptions, while fixed-price contracts limited builders’ ability to recover those increases.

This has driven stronger interest in forward purchasing and supplier contracts with clearer escalation clauses. 

Local sourcing and reshoring: opportunity and limits

The renewed appeal of local supply

Recent disruptions reignited interest in Australian manufacturing and local sourcing. Government initiatives such as the Modern Manufacturing Strategy reflect this shift.

Local sourcing can offer:

• Shorter and more predictable lead times
• Reduced exposure to global shipping volatility
• Alignment with government procurement preferences
  
  

According to the Department of Industry, Science and Resources, domestic manufacturing output stabilised faster than expected post-pandemic, partly due to renewed local demand.

Why reshoring is not a universal solution

However, reshoring is not always commercially viable. Australia faces higher labour and energy costs than many offshore locations. Skills shortages can also limit capacity.

For many businesses, the realistic approach is diversification rather than full reshoring. That might mean:

• One local supplier as a contingency
• One or two offshore suppliers in different regions 

Supplier relationships are now strategic assets

From transactional to collaborative

Under JIT, supplier relationships were often price-driven and transactional. JIC rewards collaboration.

Leading businesses are now:

• Sharing demand forecasts with key suppliers
• Agreeing on minimum stock levels held upstream
• Co-investing in capacity or tooling
  
  

An Australian agribusiness, for instance, may work closely with packaging suppliers to align harvest forecasts with production schedules, reducing last-minute shortages.

Visibility matters

Supply chain visibility has become a differentiator. According to Deloitte’s Australian supply chain surveys, businesses with better end-to-end visibility reported faster recovery from disruptions.

Practical steps include:

• Tracking inventory across tiers, not just first-tier suppliers
• Using digital tools to monitor lead times and delays
• Regularly stress-testing supplier assumptions 

Compliance and risk management considerations

Regulatory expectations are rising

Supply chain resilience is increasingly linked to compliance and governance. ASIC and the ASX Corporate Governance Principles emphasise risk management systems that address material operational risks, including supply chains.

For regulated industries such as healthcare, food, and pharmaceuticals, shortages can also create compliance breaches. Holding adequate contingency stock is no longer just operational prudence. It is part of regulatory risk management.

ESG and ethical sourcing pressures

Just-in-case strategies must also align with environmental and social expectations. Excess inventory can increase waste if poorly managed, while supplier diversification raises questions about ethical standards.

Businesses are responding by:

• Improving demand forecasting to reduce obsolescence
• Auditing alternative suppliers for ESG compliance
• Designing buffers that rotate stock rather than letting it expire
  

Technology as the enabler of smarter just-in-case

Better data, better decisions

The shift from JIT to JIC is being supported by better analytics. Forecasting tools that incorporate variability and scenario planning allow you to hold buffers where they matter most.

The CSIRO has noted that advanced analytics and AI-driven forecasting can materially reduce inventory volatility, even in uncertain conditions.

Automation and flexibility

Warehousing automation, modular production, and flexible logistics contracts help offset the cost of holding more inventory. For example:

• Automated warehouses reduce per-unit storage costs
• Flexible third-party logistics arrangements allow scaling up or down
  
  

Australian retailers have been early adopters here, particularly those managing omnichannel demand. 

A realistic scenario: balancing resilience and cost

Consider a mid-sized Australian medical device distributor. Pre-2020, it relied on a single overseas manufacturer with six-week lead times and minimal buffer stock. During COVID-19, lead times blew out to six months, and hospitals faced shortages.

Post-disruption, the distributor restructured its supply chain by:

• Adding a secondary supplier in a different region
• Holding three months of buffer stock for critical SKUs
• Using demand data from hospital customers to refine forecasts
  
  

Costs increased modestly, but service levels improved, and customer trust strengthened. In regulated healthcare markets, that reliability became a competitive advantage. 

The new balance: efficiency plus resilience

What the evidence suggests

Australian supply chain thinking has matured. The debate is no longer JIT versus JIC. It is about blending both.

IBISWorld and industry bodies consistently note that businesses performing best post-disruption are those that:

• Apply JIT where demand and supply are stable
• Apply JIC where disruption risk is high and impact is severe
  
  

Questions to ask in your own business

To apply these lessons, ask yourself:

• Which inputs would stop your operations within days if unavailable?
• Where are you overly dependent on a single supplier or route?
• Do you understand true lead time variability, not just averages?

Answering these honestly is the foundation of a resilient supply chain. 

Conclusion: designing for the world you have, not the one you had

Just-in-time was a product of a highly stable, globalised world. Recent years have shown that stability can no longer be assumed. For Australian businesses, distance from major markets, exposure to climate risk, and a concentrated supplier base amplify that reality.

Just-in-case is not a retreat from efficiency. It is an evolution toward smarter risk management. By selectively building buffers, diversifying supply, strengthening supplier relationships, and using better data, you can protect your business without losing competitiveness.

The core lesson from recent disruptions is simple. Efficiency still matters, but resilience now sits alongside it as a non-negotiable design principle.