The insufficiency of the production level reached by operating the production resources with the current technological development level, to meet the endless human needs and demands is defined as "economic scarcity". The fact that the number of people living in the world has reached 8 billion increases the importance of the concept of economic scarcity even more. In this context, prevention of waste in production processes comes to the fore; Companies are constantly looking for cost-reducing measures.
Just -In Time” system, which was started to be implemented in Japan in the 1970s, aimed to minimize inventory costs and to provide competitive advantage by preventing waste in this area. Trying to identify areas open to continuous improvement in order to increase efficiency, increase income and further reduce waste, the Japanese have continuously developed the “Just - In Time” model, which is supported by the principles of reducing storage costs, using financial resources effectively, and being careful while putting existing inputs into production . Today, this system has begun to be used effectively by all actors of the global economy.
However, we should not forget that the zero-stock production system is only valid for a peaceful world where the global economy works like clockwork and supply chains are not interrupted.
It is necessary to address the increase in imports
Based on TÜİK data, it is seen that Turkey's exports increased by 18.7 percent and imports by 39.7 percent in June 2022 according to the general trade system...
It is understood that the exports of our country increased by 18.7 percent in June 2022 compared to the same month of the previous year to 23 billion 428 million dollars, and imports increased by 39.7 percent to 31 billion 595 million dollars. Based on the January-June period, it is seen that our exports increased by 20 percent and our imports increased by 40.6 percent. Thus in January- May 2022, exports reached 125 billion 866 million dollars, imports reached 177 billion 267 million dollars.
Then, considering that 85 percent of import products are also the input of export products, it should be examined why imports increased by 40 percent while exports increased by 20 percent.
First of all, imported energy prices should be kept separately. Energy imports, which amounted to 30 billion dollars in 2021, are likely to reach 80 billion dollars this year due to the global crisis. As a matter of fact, the barrel price of oil has reached 115 dollars from 70 dollars. Therefore, energy occupies an important place among import items. However, we cannot explain the increase in imports solely with the increase in energy prices.
In our research, we find that companies residing in Turkey have increased their orders abroad in terms of quantity and volume. For this reason, we see that they import their inputs in larger lots and, in a sense, increase their stocks. Thus, we understand that companies are starting to move away from the “Just - In Time” system.
Why did exporting companies start to use stocks?
The reasons for moving away from the “Just-In Time” system can be listed as follows:
- Due to the shipwreck in the Suez Canal on March 24, 2021, global supply chains have been disrupted for nearly a month. Thereupon, companies started to create safety stocks in order not to interrupt their production processes.
- Supply problems experienced during the coronavirus epidemic, which took the whole world captive for 2 years, led companies to work with stock.
- On February 24, 2022, due to Russia's attack on Ukraine and the war between the two countries, the Western world began to impose heavy sanctions on Russia. Russia stopped energy and grain exports to these countries on the basis of reciprocity. Likewise, ships loading wheat and sunflowers from the Ukrainian port of Odessa could not leave their places due to the war. As a result, global food shortages began to be experienced; Grain and sunflower oil prices increased. This situation also negatively affected the agricultural industry in Turkey. Pasta and sunflower factory companies started to stock more inputs.
- The disruptions in the global supply chain after the coronavirus epidemic and the Russia-Ukraine war again led to global inflation. Worried about the price increase of inputs in supplier countries, our domestic companies started to place orders in larger lots.
- Global inflation also hits the US economy. In order to combat inflation, the Fed began to gradually increase the interest rates, which it had kept stable for many years. Therefore, the dollar rose to its highest level in the last 30 years. The rise of the dollar, which is used as a means of global exchange, was reflected in the prices of exported products of all countries. This situation accelerated the stock increase trends.
The dollar rate rose from 9 liras to 18 liras in Turkey, which was most negatively affected by the dollar increase due to its fragile economy. The belief that things could not improve in short terms in an economy where official inflation rates rose to 80 percent due to the inability to stop the rise in exchange rates, led companies in Turkey to stock more inputs.
- The relatively cheap labor force in Turkey did not go unnoticed by other countries. These countries, to which we export, have started to increase the amount of orders they place from Turkey. Increasing orders increased the appetite and sales expectations of Turkish companies. Encouraged, these enterprises decided to continue their production by making more stock.
It seems that it will not be possible to prevent the increase in the foreign trade deficit in the short term. For this, we will wait for global political and economic stability to be achieved. In addition, we will eliminate the structural economic problems in our country with permanent measures.
Geri