March 29, 2022
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At a Glance: Just-in-Time, or Just-In-Case?

A ‘wait and see’ approach has not rewarded corporations with increased value. Forward thinking firms should seek to lock in terms now and provide optionality for the next 12-18 months.

Over the past 30 years, corporations have built complicated ‘Just-In-Time’ systems. The current real time integration of manufacturing, inventory, labor, and capital has begun to show signs of strain. The new paradigm will require firms to evaluate more ‘Just-In-Case’ possibilities.

Production

  • 95% of Manufacturers are expecting same or higher prices (ISM)
  • 39% of Manufacturers expecting Increased backlog of orders (ISM)
  • Supply Lead times set record highs to 97 days (ISM)

Capital

  • Corporate bond rates have increased 193 bps since Sept 2021, amongst fastest rate rises in a decade
  • Mid-Market borrowers have indicated a ‘wait and see’ strategy as rates continue to rise
  • Mid-Market lenders have indicated they have not yet decreased their underwriting targets

SOURCES

https://www.ismworld.org/supply management news and reports/reports/ism report on business/pmi/february/

https://fred.stlouisfed.org/series/ BAMLH0A1HYBBEY

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