What are the right configurations of just-in-time and just-in-case when supply chain shocks increase?

Abstract

Shocks caused by COVID-19 pandemic have compelled manufacturers to decrease their reliance upon just-in-time (JIT) and embrace a more just-in-case (JIC) approach. This study clarifies the right configurations of JIT and JIC under low/high upstream and downstream shocks. Drawing upon contingency theory and configuration theory, a framework is developed to differentiate configurations of JIT/JIC under low/high magnitude SC shocks. Survey data from China's manufacturing industry, which experienced SC shocks due to COVID-19, are analysed by regression and sub-group analyses. The results show that only upstream shocks have a negative impact on operational performance. The effect of JIC (but not JIT) on operational performance is strengthened by upstream and downstream shocks. When shocks are high, increasing JIC is effective only when JIT is low. These empirical findings demonstrate that manufacturers can improve operational performance by emphasising JIC models under high SC shocks. Those with high JIT benefit from low JIC under low shock settings.