The blockage of the Suez Canal will accelerate the global shift away from just-in-time supply chains, Soren Skou, chief executive of AP Moller-Maersk, told the Financial Times, Report informs.
He noted that companies had already been changing their supply chains because of the coronavirus pandemic, moving away from single suppliers and rethinking their dependence on just-in-time - where components are delivered to factories exactly when they are needed.
Companies are instead embracing just-in-case supply chains, keeping much higher levels of inventory to avoid being caught short by disruptions.
“We are moving towards a just-in-case supply chain, not just-in-time. This incident [in the Suez Canal] will make people think more about their supply chains,” Skou added.
The Ever Given, the container ship that became stuck in the canal last week, is one of the largest in the world, capable of carrying 20,000 20ft containers. Rescuers have been trying to refloat the vessel to unblock one of the world’s most important trade routes, so far without success.
“How much just-in-time do you want to be? It’s great when it works but when it doesn’t, you lose sales. There’s no just-in-time cost savings that can outweigh the negative of losing sales,” Skou said.