5 ms·

Shouldn't an efficient JIT process define an ideal inventory quantity level that triggers restocking? "Qty=1" is definitely inefficient.

ergothus 8y ago
I think people are taking me way too literally here - Your company uses toilet paper in the bathroom. No one suggests that you have no extra toilet paper on hand. Instead, someone says "we use 3 rolls/week on average" Dumb person: "So let's never have more than 3 rolls spare" Better: "While 3 is the average, 5 covers 80% of the weeks. The remaining weeks can be covered by having John run down to the corner store to grab an extra." (Note: ASSUMING someone has done the math and decides the opportunity cost of storage is greater than the opportunity cost of those 20% of times) My concern: Joan's retirement party serves bad tuna casserole on the same day the corner store is out of stock. JIT can totally work - wasting money on storage on something that might be wasted can be an easy win. But you have to consider the other cases. To tie this back to the article, if you're operating at capacity all the time, what happens when something comes up and you need more capacity?
- mattmanser 8y ago
  Until the week there's a national toilet roll shortage and you have to shut the office for a week because you don't have any toilet roll and lose $100,000s. Both our examples are glib, but it's very easy for JIT to turn in to a "penny wise, pound foolish" scenario, where you're saving small amounts of money, but occasionally losing big amounts of it because of those savings.
itronitron 8y ago
Yes, and universities in particular have a level of responsibility to their customers that is much higher than other organizations.
FakeComments 8y ago
My local grocery store switched to JIT stocking of shelves: they’re now perennially out of 1 in 10 basics, and I just shop online. Amazon Fresh can routinely be out of things too, but at least they don’t waste my time doing it. The only value in a grocery store was that it was a warehouse of food stocks that smoothed out the irregularities suppliers face. If I have to deal with supplier problems because they JIT stock, I may as well just get deliveries directly from suppliers. You can’t “JIT” when your entire value is supply smoothing, because you’re increasing the failure modes of your core business for tangential benefits. People keep showing me math that says it works, and places keep trying it, but I’ve yet to see it do anything but significantly damage their core business for questionable benefit.
- deleted 8y ago
  [deleted]
- aikinai 8y ago
  It can be done well as seen with Japanese convenience stores. They keep no stock but never seem to be out of anything. I’m not an expert but I think it’s a combination of insanely good modeling for each specific store and a super efficient and fast restocking pipeline.
  - pfranz 8y ago
    I can't seem to find a reference, but I remember hearing years ago someone trying to adopt Japanese convenience store stock strategy. Apparently, the small stores have a good relationship with their peers and exchange goods as needed. The distributed nature compensates for deep stock. Similarly, when I worked for Pizza Hut years ago about once a month we'd run low or out of something and would phone up 1 or 2 nearby stores and send a driver out to make the swap.
- matchagaucho 8y ago
  Walmart has JIT down to a proactive science. If they see a heatwave coming, they allocate more ACs and water to a region. It takes years to train good JIT supply chain models.
  - FakeComments 8y ago
    While we’re calling out good examples, Toyota’s whole Kanban system is the root of most JIT manufacturing or business, as a formalized method. Toyota was very successful with it. I didn’t mean to imply it couldn’t be done, but rather three points: - It’s very challenging to get right, requires a lot of buy in and restructuring, and takes time to transition to. - It’s an extremely risky thing to do if, unlike Toyota, your value proposition isn’t manufacturing, but instead smoothing the supply between a manufacturer and a customer. - Most people implementing JIT have a poor model of the variances, and undervalue disruptions (in terms of harm to customers, lost goodwill, etc — the intangibles). Taken together, I think it’s extremely challenging to do JIT for grocery stores, and they’re basically building a black swan nest, no matter how careful. Spoilage in exchange for consistency is what I pay them for: removing that risks removing the value they deliver me.

ergothus 8y ago

I think people are taking me way too literally here - Your company uses toilet paper in the bathroom. No one suggests that you have no extra toilet paper on hand. Instead, someone says "we use 3 rolls/week on average" Dumb person: "So let's never have more than 3 rolls spare" Better: "While 3 is the average, 5 covers 80% of the weeks. The remaining weeks can be covered by having John run down to the corner store to grab an extra." (Note: ASSUMING someone has done the math and decides the opportunity cost of storage is greater than the opportunity cost of those 20% of times) My concern: Joan's retirement party serves bad tuna casserole on the same day the corner store is out of stock. JIT can totally work - wasting money on storage on something that might be wasted can be an easy win. But you have to consider the other cases. To tie this back to the article, if you're operating at capacity all the time, what happens when something comes up and you need more capacity?

mattmanser 8y ago
Until the week there's a national toilet roll shortage and you have to shut the office for a week because you don't have any toilet roll and lose $100,000s. Both our examples are glib, but it's very easy for JIT to turn in to a "penny wise, pound foolish" scenario, where you're saving small amounts of money, but occasionally losing big amounts of it because of those savings.

itronitron 8y ago

Yes, and universities in particular have a level of responsibility to their customers that is much higher than other organizations.

FakeComments 8y ago

My local grocery store switched to JIT stocking of shelves: they’re now perennially out of 1 in 10 basics, and I just shop online. Amazon Fresh can routinely be out of things too, but at least they don’t waste my time doing it. The only value in a grocery store was that it was a warehouse of food stocks that smoothed out the irregularities suppliers face. If I have to deal with supplier problems because they JIT stock, I may as well just get deliveries directly from suppliers. You can’t “JIT” when your entire value is supply smoothing, because you’re increasing the failure modes of your core business for tangential benefits. People keep showing me math that says it works, and places keep trying it, but I’ve yet to see it do anything but significantly damage their core business for questionable benefit.

deleted 8y ago
[deleted]
aikinai 8y ago
It can be done well as seen with Japanese convenience stores. They keep no stock but never seem to be out of anything. I’m not an expert but I think it’s a combination of insanely good modeling for each specific store and a super efficient and fast restocking pipeline.
- pfranz 8y ago
  I can't seem to find a reference, but I remember hearing years ago someone trying to adopt Japanese convenience store stock strategy. Apparently, the small stores have a good relationship with their peers and exchange goods as needed. The distributed nature compensates for deep stock. Similarly, when I worked for Pizza Hut years ago about once a month we'd run low or out of something and would phone up 1 or 2 nearby stores and send a driver out to make the swap.
matchagaucho 8y ago
Walmart has JIT down to a proactive science. If they see a heatwave coming, they allocate more ACs and water to a region. It takes years to train good JIT supply chain models.
- FakeComments 8y ago
  While we’re calling out good examples, Toyota’s whole Kanban system is the root of most JIT manufacturing or business, as a formalized method. Toyota was very successful with it. I didn’t mean to imply it couldn’t be done, but rather three points: - It’s very challenging to get right, requires a lot of buy in and restructuring, and takes time to transition to. - It’s an extremely risky thing to do if, unlike Toyota, your value proposition isn’t manufacturing, but instead smoothing the supply between a manufacturer and a customer. - Most people implementing JIT have a poor model of the variances, and undervalue disruptions (in terms of harm to customers, lost goodwill, etc — the intangibles). Taken together, I think it’s extremely challenging to do JIT for grocery stores, and they’re basically building a black swan nest, no matter how careful. Spoilage in exchange for consistency is what I pay them for: removing that risks removing the value they deliver me.