Let's take a car plant, for example. Say at full production the plant would use 3,000 yellow, left-handed widgets per day. So, to shave costs to the bone, the plant places orders for the delivery of 3,000 yellow, left-handed widgets every day. Not 30,000 or 300,000 at a time but just 3,000 each and every day. That way the company isn't carrying the cost of all those surplus widgets stored for future use.
Makes perfect sense, right? Sure. But, like so many brilliant ideas, it makes perfect sense until something goes askew. It makes perfect sense until it doesn't and, when it doesn't, it wreaks disaster. At least that's the assessment of Britain's per-eminent think tank, Chatham House (that's the "Royal Institute" to the likes of you).
On a small scale, the Just in Time management concept isn't particularly worrisome. Even if some factory had to shut down or cut back for a few days it wouldn't disrupt the economy or society. But, when industry and governments embrace Just in Time management and they all get hit, say by some sort of natural disaster that disrupts communications, then the wonks predict society would have just days before it spiraled into chaos.
With public services and businesses being run as if constantly in crisis mode, even in normal circumstances, there is little flexibility when a real crisis strikes.
The problem is compounded as national and local governments are underprepared for disasters, despite a growing range of intensifying threats and recent experiences around the world, from the Icelandic ash cloud to the nuclear crisis in Japan.
"Slow-motion" crises such as water shortages, resource scarcity and the impact of climate change also present a range of new difficulties that will put added strain on the public and private sectors, they say.
Beyond a one-week disruption, "costs can escalate rapidly once transport networks (or major production centres) are disrupted for more than a few days", according to the report, entitled "Preparing for high-impact, low-probability events", from the Royal Institute of International Affairs. As the economic impact is felt, vital infrastructure, from food and water supplies to energy and communications network, could fall under threat, it says.
In effect, it's the societal equivalent of setting out to drive across the wilderness without a spare tire. If everything goes okay, it's no problem and you've saved the cost of that fifth wheel and tire. If you get a flat, you're completely buggered.