13 ms·

> "Just-in-time" means "no buffer". Just in time doesn't necessarily mean no buffer, the goal is to minimize excessive stockpiling and keep enough for continuo

by yskchu 5y ago

> "Just-in-time" means "no buffer". Just in time doesn't necessarily mean no buffer, the goal is to minimize excessive stockpiling and keep enough for continuous production, increasing stockpile when required. Toyota, some might say THE pioneer of Just-in-time manufacturing, was one of the car manufacturers least impacted by the component shortage precisely because they started stockpiling very early on after they saw the upcoming issue. Here's a quote from another Bloomberg article specifically on Toyota[1]: "Toyota asks its Tier 1 suppliers to input detailed information about their most obscure parts and materials providers in a complex database that it maintains. Using this system to glean information about, say, a single headlight Toyota purchases for one of its cars, it can get information as granular as the names and locations of the companies that make the materials that go into surface treatments used on those headlights’ lenses and even the producers of the lubricants used on the rubber pieces in the assembly, Toyota spokeswoman Shiori Hashimoto says. These lines of communication alerted the company early on that it needed to stockpile chips." [1]: How Toyota Steered Clear of the Chip Shortage Mess - https://www.bloomberg.com/news/articles/2021-04-07/how-toyota-s-supply-chain-helped-it-weather-the-chip-shortage https://www.bloomberg.com/news/articles/2021-04-07/how-toyot...

Spooky23 5y ago
The difference is that Toyota is a uniquely intelligent company with respect to supply chain. The average American manufacturing company is run by a CFO operating with reports out of SAP or Peoplesoft. Their performance is measured by fiscal performance, so running to the penny and having no inventory benefits them more than making the company resilient. Wall St rewards quarterly performance, not resilience.
- fennecfoxen 5y ago
  Being a resilient company only means that when it’s time for an industry bailout you get less than your competitors because you’re doing better. Private profit, socialized risk.
  - skybrian 5y ago
    On the other hand, companies that have inventory right now get to increase market share over those that didn’t think ahead and have nothing to sell.
    - grp000 5y ago
      But if the optimal strategy only falls apart for uncommon events that you can't determine when they happen, how much of an incentive is there to run a conservative/gambling strategy like that?
      - Nevermark 5y ago
        Uncommon events are uncommon individually but common in aggregate. Maintaining resilience and designing antifragile systems usually pays off in missed disasters and unique opportunities. Alternately, to save money without buffers is to continuously gamble.
      - Retric 5y ago
        Depends completely on the risk vs reward. Black swans are more common than can be assumed from modeling past data so in general a slightly more conservative strategy than industry standard is more likely to win. For example COVID style shutdowns could be reasonably modeled at X% per year after talking to a disease specialist. But, not all of them are going to be from diseases.
      - Spooky23 5y ago
        It depends on your objectives. One bad event can put many companies out of business. The auto industry is a good example because US-Canadian border issues and snow can fubar things for half the year. Look at companies like Boeing with absurdly complex supply chains. The inventory numbers look good, but the factories are idle when a truckload of magic bolts is stuck in a blizzard in South Dakota. It also increases actual cost. I supported a GE business unit as a supplier for awhile. We hosed them for stupid last minute orders due to this sort of thing. They would pay more for expedited shipping, overtime, waste money on leasing stuff to avoid capex, etc.
gauravjain13 5y ago
Seems like a low-on-details article with PR-like flavor. According to this, Toyota cut production by 40%, though it does acknowledge that Toyota took less of a hit vs industry: “New cars often include dozens of microchips but Toyota benefited from having built a larger stockpile of chips - also called semiconductors - as part of a revamp to its business continuity plan, developed in the wake of the Fukushima earthquake and tsunami a decade ago.” https://www.bbc.com/news/business-58266794 https://www.bbc.com/news/business-58266794
xxgreg 5y ago
All of the car companies, dialed down orders at the start of the pandemic. Now they are all trying to stockpile chips, due to not enough supply. I imagine (no data to support) the increased size stockpiles are a large part of what makes the problem worse. Kinda like TP really. Also, Toyota is now cutting 40 percent of global production due to chip shortage. https://www.bbc.com/news/business-58266794 https://www.bbc.com/news/business-58266794
- deleted 5y ago
  [deleted]
- lobocinza 5y ago
  Tail whip effect
  - xxgreg 5y ago
    hmmm interesting - here's an article. https://qz.com/2004569/the-global-chip-shortage-can-be-explained-by-the-bullwhip-effect/ https://qz.com/2004569/the-global-chip-shortage-can-be-expla...
    - lobocinza 5y ago
      Oh, true! English is not my main language. I meant bullwhip effect, not tail whip (pokémon move). ;)
  - visarga 5y ago
    An interesting failure mode of free markets. Inherent instability.
    - namaria 5y ago
      Any system with signalling delay will experience this effect. Changes will get amplified across layers. That's also a common way to die from a viral infection: your immune system goes into overdrive from too many signals of infection from different tissue cells. A common treatment is steroids, which dampen immune response.
jonahrd 5y ago
This is actually also discussed by Nassim Taleb in his book which I assume the parent comment is referencing. He says Toyota is one of the few examples where just-in-time was not distorted and warped. So Toyota implements true just-in-time, which can be robust, with buffers. But most other companies implement a half-assed version that is very fragile.
- sokoloff 5y ago
  While attending a training event, I talked to a pilot who flew cargo for a Tier 1 supplier to North American auto manufacturers. He had several stories of flying a jet with just a handful of boxes on board to avoid the line-down penalties. My favorite was tower advising them they’d be fined for a departure during local curfew. “Roger, we better get our money’s worth then” and did a max performance takeoff and turn on course with whatever parts they were carrying.
  - bombcar 5y ago
    Heh there are airports that have curfew fines that all the airlines just pay.
    - DavidSJ 5y ago
      Sometimes those curfew fines actually cause flights not to depart. Some years ago, I was sitting on the tarmac at John Wayne for about an hour, hoping to make it just under the nighttime curfew, but ultimately the flight was canceled and I had to get a shuttle to LAX and an alternative flight in the morning.
      - toast0 5y ago
        It's been a while, but flying into Long Beach from a connection in Phoenix, the scheduled plane was delayed somewhere, they had boarded us on a replacement and then realized the plane was too loud, so they rushed us to a different plane (in the next terminal) that had the right noise reduction equipment. Also, my Dad once had a late-ish flight to Long Beach that got diverted to LAX because delays pushed it past the curfew.
temac 5y ago
The thing is that you can not apply this method (suddenly stockpile because of anticipated shortage) globally. Now of course, putting gratuitous buffer everywhere would not be the panacea either. But some buffers may be needed to improve global resiliency. One has to optimize to reduce fragility, but when massive chip (or anything else) shortages start to appear for extended periods it is obviously already way to late. And way too downstream if your strategy was just a punctual stockpile decided by a single company. Because that probably would have been impossible for everybody to apply this punctual strategy at the same time...
- nine_k 5y ago
  One advantage of starting to stockpile ahead of a crisis is that production is not yet affected much by the crisis, and the total amount buffered could be larger.
- Sunfllowerfly 5y ago
  They started stockpiling key components after the earthquake roughly 8 years ago. You could do this globally if everyone took the Toyota approach and only stockpiled components likely to suffer disruption.
domnomnom 5y ago
What's the quote about selling someone a product whose faults will occur when you're years gone and half way around the planet? I wonder how this mentality is avoided/regarded in Japan.
- kqr 5y ago
  When many of the quality-focused companies in Japan took off they focused on gaining market share primarily through gaining repeat customers. A lot of their sales machinery was constructed around the idea of building a personal relationship with the customer to predict their needs as they arise. This was in part because the domestic Japanese market was so small. Of course, it needs support from quality development and manufacturing. But it's also efficienct because it's much cheaper to sell something to someone who trusts you than to get it out by cold calling.
xyzzy21 5y ago
It PRIMARILY DOES mean this as it's IMPLEMENT in 99.9% of businesses. Toyota's implementation is NOT NORMAL OR COMMON.
- bestham 5y ago
  The Toyota Production System is /the/ precursor to “Lean Manufacturing”, you could say that Toyota wrote the book on “lean”. While there are many companies that try (and fail) to replicate TPS, the Toyota Way is the standard by definition.
  - ben_w 5y ago
    That makes it the archetype, it doesn’t contradict the claim it is uncommon. (I have no idea if it is common or not, just that this doesn’t contradict that claim)
sixQuarks 5y ago
What you fail to mention (although you linked to an article that covers it) - is that Toyota was prepared due to the setbacks they suffered in the Tsunami. If it wasn't for that, they would not have stockpiled for and been ready for a pandemic. Even so, they are now dealing with chip shortages as well.
- namaria 5y ago
  A system that turns set backs into lessons and better future performance is praise worthy...
deleted 5y ago
[deleted]
8ytecoder 5y ago
I think this papers backs up pretty well and goes into a lot more details of why it matters to focus on the flow. In fact it’s crucial that such issues that stop production including predicting and identifying demand-supply mismatch is essential for a smooth flow of operations. BUT, humans are humans and we plan for the best case scenario without giving due consideration for failure modes. Manufacturing is hardly an exception. https://businesswales.gov.wales/sites/business-wales/files/Standing-on-the-Shoulders-of-Giants.pdf https://businesswales.gov.wales/sites/business-wales/files/S...
listenallyall 5y ago
"least impacted" = 360,000 Toyotas not being built this month, or 40% of normal production. https://www.bbc.com/news/business-58266794 https://www.bbc.com/news/business-58266794
- kalleboo 5y ago
  As your link says Toyota has not been materially impacted until now, whereas all the other manufacturers had to scale back their production way earlier (I'm seeing articles from January and March). 8 months longer runway than everyone else is a pretty good deal.
juskrey 5y ago
Toyota is underwater like everyone else. When you have signal, it is already too late
sails 5y ago
I wonder if they track the financial status of these far upstream suppliers. I've been doing some work with supply chain monitoring and often smaller companies in Europe are hesitant to share information on financial performance etc
afarrell 5y ago
Just-in-time, done mediocrely, still means “no buffer”. What Toyota does is not all that relevant to the discussion.

by yskchu 5y ago

Spooky23 5y ago

The difference is that Toyota is a uniquely intelligent company with respect to supply chain. The average American manufacturing company is run by a CFO operating with reports out of SAP or Peoplesoft. Their performance is measured by fiscal performance, so running to the penny and having no inventory benefits them more than making the company resilient. Wall St rewards quarterly performance, not resilience.

fennecfoxen 5y ago
Being a resilient company only means that when it’s time for an industry bailout you get less than your competitors because you’re doing better. Private profit, socialized risk.
- skybrian 5y ago
  On the other hand, companies that have inventory right now get to increase market share over those that didn’t think ahead and have nothing to sell.
  - grp000 5y ago
    But if the optimal strategy only falls apart for uncommon events that you can't determine when they happen, how much of an incentive is there to run a conservative/gambling strategy like that?
    - Nevermark 5y ago
      Uncommon events are uncommon individually but common in aggregate. Maintaining resilience and designing antifragile systems usually pays off in missed disasters and unique opportunities. Alternately, to save money without buffers is to continuously gamble.
    - Retric 5y ago
      Depends completely on the risk vs reward. Black swans are more common than can be assumed from modeling past data so in general a slightly more conservative strategy than industry standard is more likely to win. For example COVID style shutdowns could be reasonably modeled at X% per year after talking to a disease specialist. But, not all of them are going to be from diseases.
    - Spooky23 5y ago
      It depends on your objectives. One bad event can put many companies out of business. The auto industry is a good example because US-Canadian border issues and snow can fubar things for half the year. Look at companies like Boeing with absurdly complex supply chains. The inventory numbers look good, but the factories are idle when a truckload of magic bolts is stuck in a blizzard in South Dakota. It also increases actual cost. I supported a GE business unit as a supplier for awhile. We hosed them for stupid last minute orders due to this sort of thing. They would pay more for expedited shipping, overtime, waste money on leasing stuff to avoid capex, etc.

gauravjain13 5y ago

Seems like a low-on-details article with PR-like flavor. According to this, Toyota cut production by 40%, though it does acknowledge that Toyota took less of a hit vs industry: “New cars often include dozens of microchips but Toyota benefited from having built a larger stockpile of chips - also called semiconductors - as part of a revamp to its business continuity plan, developed in the wake of the Fukushima earthquake and tsunami a decade ago.” https://www.bbc.com/news/business-58266794 https://www.bbc.com/news/business-58266794

xxgreg 5y ago

All of the car companies, dialed down orders at the start of the pandemic. Now they are all trying to stockpile chips, due to not enough supply. I imagine (no data to support) the increased size stockpiles are a large part of what makes the problem worse. Kinda like TP really. Also, Toyota is now cutting 40 percent of global production due to chip shortage. https://www.bbc.com/news/business-58266794 https://www.bbc.com/news/business-58266794

deleted 5y ago
[deleted]
lobocinza 5y ago
Tail whip effect
- xxgreg 5y ago
  hmmm interesting - here's an article. https://qz.com/2004569/the-global-chip-shortage-can-be-explained-by-the-bullwhip-effect/ https://qz.com/2004569/the-global-chip-shortage-can-be-expla...
  - lobocinza 5y ago
    Oh, true! English is not my main language. I meant bullwhip effect, not tail whip (pokémon move). ;)
- visarga 5y ago
  An interesting failure mode of free markets. Inherent instability.
  - namaria 5y ago
    Any system with signalling delay will experience this effect. Changes will get amplified across layers. That's also a common way to die from a viral infection: your immune system goes into overdrive from too many signals of infection from different tissue cells. A common treatment is steroids, which dampen immune response.

jonahrd 5y ago

This is actually also discussed by Nassim Taleb in his book which I assume the parent comment is referencing. He says Toyota is one of the few examples where just-in-time was not distorted and warped. So Toyota implements true just-in-time, which can be robust, with buffers. But most other companies implement a half-assed version that is very fragile.

sokoloff 5y ago
While attending a training event, I talked to a pilot who flew cargo for a Tier 1 supplier to North American auto manufacturers. He had several stories of flying a jet with just a handful of boxes on board to avoid the line-down penalties. My favorite was tower advising them they’d be fined for a departure during local curfew. “Roger, we better get our money’s worth then” and did a max performance takeoff and turn on course with whatever parts they were carrying.
- bombcar 5y ago
  Heh there are airports that have curfew fines that all the airlines just pay.
  - DavidSJ 5y ago
    Sometimes those curfew fines actually cause flights not to depart. Some years ago, I was sitting on the tarmac at John Wayne for about an hour, hoping to make it just under the nighttime curfew, but ultimately the flight was canceled and I had to get a shuttle to LAX and an alternative flight in the morning.
    - toast0 5y ago
      It's been a while, but flying into Long Beach from a connection in Phoenix, the scheduled plane was delayed somewhere, they had boarded us on a replacement and then realized the plane was too loud, so they rushed us to a different plane (in the next terminal) that had the right noise reduction equipment. Also, my Dad once had a late-ish flight to Long Beach that got diverted to LAX because delays pushed it past the curfew.

temac 5y ago

The thing is that you can not apply this method (suddenly stockpile because of anticipated shortage) globally. Now of course, putting gratuitous buffer everywhere would not be the panacea either. But some buffers may be needed to improve global resiliency. One has to optimize to reduce fragility, but when massive chip (or anything else) shortages start to appear for extended periods it is obviously already way to late. And way too downstream if your strategy was just a punctual stockpile decided by a single company. Because that probably would have been impossible for everybody to apply this punctual strategy at the same time...

nine_k 5y ago
One advantage of starting to stockpile ahead of a crisis is that production is not yet affected much by the crisis, and the total amount buffered could be larger.
Sunfllowerfly 5y ago
They started stockpiling key components after the earthquake roughly 8 years ago. You could do this globally if everyone took the Toyota approach and only stockpiled components likely to suffer disruption.

domnomnom 5y ago

What's the quote about selling someone a product whose faults will occur when you're years gone and half way around the planet? I wonder how this mentality is avoided/regarded in Japan.

kqr 5y ago
When many of the quality-focused companies in Japan took off they focused on gaining market share primarily through gaining repeat customers. A lot of their sales machinery was constructed around the idea of building a personal relationship with the customer to predict their needs as they arise. This was in part because the domestic Japanese market was so small. Of course, it needs support from quality development and manufacturing. But it's also efficienct because it's much cheaper to sell something to someone who trusts you than to get it out by cold calling.

xyzzy21 5y ago

It PRIMARILY DOES mean this as it's IMPLEMENT in 99.9% of businesses. Toyota's implementation is NOT NORMAL OR COMMON.

bestham 5y ago
The Toyota Production System is /the/ precursor to “Lean Manufacturing”, you could say that Toyota wrote the book on “lean”. While there are many companies that try (and fail) to replicate TPS, the Toyota Way is the standard by definition.
- ben_w 5y ago
  That makes it the archetype, it doesn’t contradict the claim it is uncommon. (I have no idea if it is common or not, just that this doesn’t contradict that claim)

sixQuarks 5y ago

What you fail to mention (although you linked to an article that covers it) - is that Toyota was prepared due to the setbacks they suffered in the Tsunami. If it wasn't for that, they would not have stockpiled for and been ready for a pandemic. Even so, they are now dealing with chip shortages as well.

namaria 5y ago
A system that turns set backs into lessons and better future performance is praise worthy...

deleted 5y ago

[deleted]

8ytecoder 5y ago

I think this papers backs up pretty well and goes into a lot more details of why it matters to focus on the flow. In fact it’s crucial that such issues that stop production including predicting and identifying demand-supply mismatch is essential for a smooth flow of operations. BUT, humans are humans and we plan for the best case scenario without giving due consideration for failure modes. Manufacturing is hardly an exception. https://businesswales.gov.wales/sites/business-wales/files/Standing-on-the-Shoulders-of-Giants.pdf https://businesswales.gov.wales/sites/business-wales/files/S...

listenallyall 5y ago

"least impacted" = 360,000 Toyotas not being built this month, or 40% of normal production. https://www.bbc.com/news/business-58266794 https://www.bbc.com/news/business-58266794

kalleboo 5y ago
As your link says Toyota has not been materially impacted until now, whereas all the other manufacturers had to scale back their production way earlier (I'm seeing articles from January and March). 8 months longer runway than everyone else is a pretty good deal.

juskrey 5y ago

Toyota is underwater like everyone else. When you have signal, it is already too late

sails 5y ago

I wonder if they track the financial status of these far upstream suppliers. I've been doing some work with supply chain monitoring and often smaller companies in Europe are hesitant to share information on financial performance etc

afarrell 5y ago

Just-in-time, done mediocrely, still means “no buffer”. What Toyota does is not all that relevant to the discussion.