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Business
Just-in-Case Inventory
A inventory management approach where companies maintain large safety stock buffers to protect against supply chain disruptions, demand spikes, or supplier failures — the opposite of just-in-time.
Just-in-case inventory carries significant costs: capital tied up in stock (opportunity cost), storage and warehousing expense, insurance, obsolescence risk (especially for technology or fashion goods), and management complexity. These costs are why just-in-time became so popular — eliminating them dramatically improved profitability and capital efficiency for decades.
The COVID supply chain crisis forced a fundamental reassessment of the trade-off. Companies that had optimized inventory to near-zero discovered that supply disruptions could shut down production entirely, causing lost sales that dwarfed years of inventory carrying cost savings. The optimal inventory strategy is now understood to depend heavily on the criticality of the component, the reliability of the supply chain, the ability to substitute alternative sources, and the severity of the consequences of stockouts.