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Interesting and clear explanation, thanks! Do you also see this as a possible driver for general inflation? Or is this JIT production mostly restricted to the a

Interesting and clear explanation, thanks! Do you also see this as a possible driver for general inflation? Or is this JIT production mostly restricted to the automotive sector? On a tangent: Is there any good place to learn about the current state of supply chains? I searched youtube occasionally, looking for talks / interviews with people who have in depth insight in what is happening right now (/during the last year) but I could barely find anything. Shouldn‘t this be one of the hottest topics right now?!

mschuster91 6y ago
> Or is this JIT production mostly restricted to the automotive sector? JIT is a major trend everywhere where logistics are involved, but in car manufacturers it's the most pronounced - simply because the sheer physical size of many components required for a car would mean that car manufacturers would need big warehouses, which they have torn down or sold many decades ago. Instead, society has picked up the cost of storage - by building ever more and more bigger highways for all the trucks.
- DougN7 6y ago
  Not sure about jit requiring bigger highways. The components all need to be shipped sooner (and warehoused) or later (jit). Name amount of matter is transported either way.
  - fomine3 6y ago
    But trucks should not delay, so they stops/drives near manufacturer.
  - WanderPanda 6y ago
    Holy sh*t. It is so obvious. Yet I have been deceived by the media that the evil autocorps jam our roads to save a few bucks. It is very tiring that at this point we have to be sceptical about every statement that is dealt to us and peel it apart from first principles. I thought that would be the job of proper journalists...
    - mschuster91 6y ago
      It's not as easy. In ye olde times, car manufacturers had railway uplinks for shipping stuff around... they still have these, but trucks are (way) cheaper than railway.
Spooky23 6y ago
JIT is used everywhere, as it improves financial indicators because companies aren’t carrying inventory on the balance sheets. It’s also a big reason why companies in an industry cluster, as proximity to the supply chain de-risks jit. The shift to modern inventory management coincided with offshoring. It became easier to source parts in Northern Mexico and now China as a result.
ksec 6y ago
> Or is this JIT production mostly restricted to the automotive sector? It has more to do with Human side of things. No one wants to take the blame. Or similar to the old saying, no one gets fired for buying IBM. The concept is a lot easier to understand once you have worked in a large enterprise and witness it firsthand. It you put too much inventory as backup. Someone will point the finger at you why are we having so much inventory. The world is at peace. We dont need that many. Your CFO doesn't like your department? Great!. You have now given them enough ammunition to fire the bullet in your direction. Your inventory might also depreciate in price. How do you know if your component won't drop price in three months time? Although that is also the case with hiking price. But politics is more about protecting your downside, not upside. You want to put a contract that keep stable supply for at least a year with an accurate forecast of your sales. Which department is in-charge for that forecast? Let me tell you one little secret. There is no such thing as "forecast", but only educated guess. You want a stable supply and guarantee? But your manufacture will also have to safe guard their Interest. You cant just forecast your buying volume to be 10M / year and only buying 6M, leaving 4M capacity that were allocated for you but now going empty. If you dont fulfil those requirement, you have to paid a penalty. And If you follow news around Apple, you might have heard Apple paying Samsung this penalty because their OLED panel did not meet the contract's minimum target. In most circumstance, unless your Vendor absolutely hate you, your penalty will be paid back to you and deducted in your next order over large unit volume. i.e You are paying less for the same component next year. So your manufacture will be happy to keep you as a customer for a longer period of time. None of these are specific to silicon or tech. Substitute the above with Walmart, Cargrill or any player from any industry. Supply Chain and Logistic are pretty much the same everywhere.
- icegreentea2 6y ago
  I broadly agree, especially with your description of internal politics. But I also think it's important to admit that JIT actually has real benefits. It's not "just" a finance or paper magic exercise. JIT is an approach to answering to the question of "how much inventory do I hold at each stage of distribution", where inventory held really IS money that you can't spend else where. As in, it's money you can't spend on salary, or R&D or line expansion or anything. The risk management part is where shit goes astray.

mschuster91 6y ago

> Or is this JIT production mostly restricted to the automotive sector? JIT is a major trend everywhere where logistics are involved, but in car manufacturers it's the most pronounced - simply because the sheer physical size of many components required for a car would mean that car manufacturers would need big warehouses, which they have torn down or sold many decades ago. Instead, society has picked up the cost of storage - by building ever more and more bigger highways for all the trucks.

DougN7 6y ago
Not sure about jit requiring bigger highways. The components all need to be shipped sooner (and warehoused) or later (jit). Name amount of matter is transported either way.
- fomine3 6y ago
  But trucks should not delay, so they stops/drives near manufacturer.
- WanderPanda 6y ago
  Holy sh*t. It is so obvious. Yet I have been deceived by the media that the evil autocorps jam our roads to save a few bucks. It is very tiring that at this point we have to be sceptical about every statement that is dealt to us and peel it apart from first principles. I thought that would be the job of proper journalists...
  - mschuster91 6y ago
    It's not as easy. In ye olde times, car manufacturers had railway uplinks for shipping stuff around... they still have these, but trucks are (way) cheaper than railway.

Spooky23 6y ago

JIT is used everywhere, as it improves financial indicators because companies aren’t carrying inventory on the balance sheets. It’s also a big reason why companies in an industry cluster, as proximity to the supply chain de-risks jit. The shift to modern inventory management coincided with offshoring. It became easier to source parts in Northern Mexico and now China as a result.

ksec 6y ago

> Or is this JIT production mostly restricted to the automotive sector? It has more to do with Human side of things. No one wants to take the blame. Or similar to the old saying, no one gets fired for buying IBM. The concept is a lot easier to understand once you have worked in a large enterprise and witness it firsthand. It you put too much inventory as backup. Someone will point the finger at you why are we having so much inventory. The world is at peace. We dont need that many. Your CFO doesn't like your department? Great!. You have now given them enough ammunition to fire the bullet in your direction. Your inventory might also depreciate in price. How do you know if your component won't drop price in three months time? Although that is also the case with hiking price. But politics is more about protecting your downside, not upside. You want to put a contract that keep stable supply for at least a year with an accurate forecast of your sales. Which department is in-charge for that forecast? Let me tell you one little secret. There is no such thing as "forecast", but only educated guess. You want a stable supply and guarantee? But your manufacture will also have to safe guard their Interest. You cant just forecast your buying volume to be 10M / year and only buying 6M, leaving 4M capacity that were allocated for you but now going empty. If you dont fulfil those requirement, you have to paid a penalty. And If you follow news around Apple, you might have heard Apple paying Samsung this penalty because their OLED panel did not meet the contract's minimum target. In most circumstance, unless your Vendor absolutely hate you, your penalty will be paid back to you and deducted in your next order over large unit volume. i.e You are paying less for the same component next year. So your manufacture will be happy to keep you as a customer for a longer period of time. None of these are specific to silicon or tech. Substitute the above with Walmart, Cargrill or any player from any industry. Supply Chain and Logistic are pretty much the same everywhere.

icegreentea2 6y ago
I broadly agree, especially with your description of internal politics. But I also think it's important to admit that JIT actually has real benefits. It's not "just" a finance or paper magic exercise. JIT is an approach to answering to the question of "how much inventory do I hold at each stage of distribution", where inventory held really IS money that you can't spend else where. As in, it's money you can't spend on salary, or R&D or line expansion or anything. The risk management part is where shit goes astray.