What happened. GEP’s June supply-chain data found manufacturers continuing to build safety stocks, with reports of stockpiling at their highest level since January 2023 and critical-input shortages driving growing backlogs.
What it actually means. Just-in-time has not disappeared. Trust in just-in-time has weakened.
Businesses are accepting the working-capital cost of additional inventory because they do not trust international supply conditions to remain stable. That protects production in the short term, but it also ties up cash, increases holding costs and creates exposure if demand softens.
Resilience is not free. The cost is moving from emergency disruption into the balance sheet.
What to watch. Whether inventories continue rising through the third quarter, or whether weakening demand forces manufacturers to unwind the buffers they have built.