6 ms·

I keep seeing that argument every single time and keep wondering, isn’t there reason to implement JIT? Something like cost benefits outweigh the resilience risk

by mrtksn 5y ago

I keep seeing that argument every single time and keep wondering, isn’t there reason to implement JIT? Something like cost benefits outweigh the resilience risks? It’s not like people start dying on the streets, simply things are getting expensive and hard to get during disturbances. Are there calculations demonstrating that JIT the risks of optimization are more harmful than helpful in the long run?

lisper 5y ago
It's a value judgement. You can optimize for the normal case at the cost of disruptions when the unusual happens, or you can optimize for the unusual case at the cost of inefficiency when things are normal. But you can't do both.
unilynx 5y ago
Well only a decade ago Moore's law ensured that keeping any amount of stock on CPUs/GPU/memory would cost you a lot of money, as that would depreciate fast. JIT was a good idea until it wasn't
- whatshisface 5y ago
  The Moore's law argument does not apply to low performance embedded chips which are whatever the engineers want them to be, but must be exactly what the engineers wanted them to be. The chips themselves were often the same between different models of the product, but even though demand for them was a very predictable function of the number of products made, and stable over time (pursuant to the stability of demand for the product), everyone's inventory consisted of whatever was in the box that was being carried from the loading dock to the pick and place machine.
- deleted 5y ago
  [deleted]
- q-big 5y ago
  > Well only a decade ago Moore's law ensured that keeping any amount of stock on CPUs/GPU/memory would cost you a lot of money, as that would depreciate fast. This clearly holded for PC components, but rather not for, say, microcontrollers for conservatively developed products with a much longer service life and/or duration of sell. Consider, for example, a stock of microcontrollers for an industrial machinery that * will be used for 20 years by the customers, * will be sold for the next 10 years, * after these 10 years, for the remaining lifetime of the machine, the customer will still be able to buy spare parts.
gumby 5y ago
JIT assumes a steady state, so squeezes all the buffering out of the system. But buffers are useful. > It’s not like people start dying on the streets Well, that’s a good example: there was a huge rise in need for masks and other protective gear about 20 months ago and the supply chain couldn’t handle it. That was why people were encouraged to use makeshift cloth masks, to leave the surgical masks and respirators for medical personnel who had the greatest exposure. Eliminating buffering cuts cost and can lead to lower prices as well. But at best it merely pushes the buffer elsewhere. Another way of looking at it: leaving seatbelts out of cars would save money and really, most cars are not involved in accidents so are they really needed? Pass the savings on to the customer!
- mrtksn 5y ago
  I know the benefits of having a buffer but do we need buffers everywhere? As in your example, wouldn't be much better to have a buffer in the hospitals(or maybe some kind of regional emergency organisations) as a precaution for an outbreak instead of advocating for buffers across the textile industry? I like the way you put it, JIT simply pushes the buffer elsewhere. However, this seems like a very good thing to have because those who cannot afford running out of something can do a buffer themselves instead of blindly everyone keeps buffering.
  - tablespoon 5y ago
    > I know the benefits of having a buffer but do we need buffers everywhere? As in your example, wouldn't be much better to have a buffer in the hospitals(or maybe some kind of regional emergency organisations) as a precaution for an outbreak instead of advocating for buffers across the textile industry? The problem with that specific kind of stockpile buffer is that it can become quickly depleted. No mask stockpile would have been sufficient for the COVID pandemic. From my layman's perspective, you need stockpiles and excess production capacity to weather a supply shock. It's sort of like backup power in a data center: you have UPS batteries (stockpiled power) to fill the gap until the generators (extra production capacity) can come online.
    - 5y ago
aidenn0 5y ago
I don't think anybody actually did the math on this though. It's more like "I get a fat bonus if I decrease inventory without a significant effect to sales over the next 3 quarters" so as long as the near-term risk is worth it, it gets done. [edit] There's also the "If I don't implement JIT, I'll get replaced with someone who will" effect in a lot of cases too.
- Guest42 5y ago
  That’s the impression I get, not so much JIT but rather limiting supply budgets as much as possible. A lot of companies tout Toyota as the pinnacle of manufacturing without realizing that they are not Toyota and there was more to Toyota’s success than JIT.
Naga 5y ago
The problem JIT is solving is that raw materials inventory ties up capital (it costs money), and having warehouses of materials is money sitting that could be used for different purposes (capital expenditures, salaries, dividends, etc). Then, if for some reason the raw materials aren't worthwhile anymore (spoilage, tech change, etc), you've wasted money on something that needs to be disposed of. In theory, the goal would be to have no inventory at all. JIT is a firm level decision, not a society level. It's up to each firm to decide how much of something they are buying.
tablespoon 5y ago
> I keep seeing that argument every single time and keep wondering, isn’t there reason to implement JIT? Something like cost benefits outweigh the resilience risks? Just think about evolution: species specialize for short(er) term benefits, but then conditions change and a lot of those specialists go extinct. JIT is specializing for an extremely reliable and undisrupted supply chain.
Spooky23 5y ago
JIT is a boogeyman in some cases. Ultimately it doesn’t make sense to stockpile parts most of the time for financial and other reasons. If Intel had a warehouse of 1Gb chips, they would have a disincentive to invest in 10Gb, for example. The dysfunction is the accounting games that companies are incentivized to keep stuff off of their books. Every company wants to look like a software company and avoid stuff like inventory. Some of this is absurd - many companies don’t “own” property, for example, they lease through entities that are sometimes only nominally separate. Sometimes companies will outsource processes and fulfillment to layers of other entities, each of which do the same thing. Disruptions cascade - I had one issue last year where a supplier’s supplier had issues getting boxes, and a two week delay there delayed downstream fulfillment by 6 weeks. All because the people who ship the end product couldn’t deliver, and the “principal” outsourced the actual management of the process to a third party. If the principal controlled it, they would have gotten it done, as they were punished severely by the contract penalties. They bet on everything working out ok and lost.
- laumars 5y ago
  Ironically the biggest two IT companies in the world, Apple and Amazon, are ones that go out of their way to control the entire supply chain.

by mrtksn 5y ago

lisper 5y ago

It's a value judgement. You can optimize for the normal case at the cost of disruptions when the unusual happens, or you can optimize for the unusual case at the cost of inefficiency when things are normal. But you can't do both.

unilynx 5y ago

Well only a decade ago Moore's law ensured that keeping any amount of stock on CPUs/GPU/memory would cost you a lot of money, as that would depreciate fast. JIT was a good idea until it wasn't

whatshisface 5y ago
The Moore's law argument does not apply to low performance embedded chips which are whatever the engineers want them to be, but must be exactly what the engineers wanted them to be. The chips themselves were often the same between different models of the product, but even though demand for them was a very predictable function of the number of products made, and stable over time (pursuant to the stability of demand for the product), everyone's inventory consisted of whatever was in the box that was being carried from the loading dock to the pick and place machine.
deleted 5y ago
[deleted]
q-big 5y ago
> Well only a decade ago Moore's law ensured that keeping any amount of stock on CPUs/GPU/memory would cost you a lot of money, as that would depreciate fast. This clearly holded for PC components, but rather not for, say, microcontrollers for conservatively developed products with a much longer service life and/or duration of sell. Consider, for example, a stock of microcontrollers for an industrial machinery that * will be used for 20 years by the customers, * will be sold for the next 10 years, * after these 10 years, for the remaining lifetime of the machine, the customer will still be able to buy spare parts.

gumby 5y ago

JIT assumes a steady state, so squeezes all the buffering out of the system. But buffers are useful. > It’s not like people start dying on the streets Well, that’s a good example: there was a huge rise in need for masks and other protective gear about 20 months ago and the supply chain couldn’t handle it. That was why people were encouraged to use makeshift cloth masks, to leave the surgical masks and respirators for medical personnel who had the greatest exposure. Eliminating buffering cuts cost and can lead to lower prices as well. But at best it merely pushes the buffer elsewhere. Another way of looking at it: leaving seatbelts out of cars would save money and really, most cars are not involved in accidents so are they really needed? Pass the savings on to the customer!

mrtksn 5y ago
I know the benefits of having a buffer but do we need buffers everywhere? As in your example, wouldn't be much better to have a buffer in the hospitals(or maybe some kind of regional emergency organisations) as a precaution for an outbreak instead of advocating for buffers across the textile industry? I like the way you put it, JIT simply pushes the buffer elsewhere. However, this seems like a very good thing to have because those who cannot afford running out of something can do a buffer themselves instead of blindly everyone keeps buffering.
- tablespoon 5y ago
  > I know the benefits of having a buffer but do we need buffers everywhere? As in your example, wouldn't be much better to have a buffer in the hospitals(or maybe some kind of regional emergency organisations) as a precaution for an outbreak instead of advocating for buffers across the textile industry? The problem with that specific kind of stockpile buffer is that it can become quickly depleted. No mask stockpile would have been sufficient for the COVID pandemic. From my layman's perspective, you need stockpiles and excess production capacity to weather a supply shock. It's sort of like backup power in a data center: you have UPS batteries (stockpiled power) to fill the gap until the generators (extra production capacity) can come online.
  - 5y ago

aidenn0 5y ago

I don't think anybody actually did the math on this though. It's more like "I get a fat bonus if I decrease inventory without a significant effect to sales over the next 3 quarters" so as long as the near-term risk is worth it, it gets done. [edit] There's also the "If I don't implement JIT, I'll get replaced with someone who will" effect in a lot of cases too.

Guest42 5y ago
That’s the impression I get, not so much JIT but rather limiting supply budgets as much as possible. A lot of companies tout Toyota as the pinnacle of manufacturing without realizing that they are not Toyota and there was more to Toyota’s success than JIT.

Naga 5y ago

The problem JIT is solving is that raw materials inventory ties up capital (it costs money), and having warehouses of materials is money sitting that could be used for different purposes (capital expenditures, salaries, dividends, etc). Then, if for some reason the raw materials aren't worthwhile anymore (spoilage, tech change, etc), you've wasted money on something that needs to be disposed of. In theory, the goal would be to have no inventory at all. JIT is a firm level decision, not a society level. It's up to each firm to decide how much of something they are buying.

tablespoon 5y ago

> I keep seeing that argument every single time and keep wondering, isn’t there reason to implement JIT? Something like cost benefits outweigh the resilience risks? Just think about evolution: species specialize for short(er) term benefits, but then conditions change and a lot of those specialists go extinct. JIT is specializing for an extremely reliable and undisrupted supply chain.

Spooky23 5y ago

JIT is a boogeyman in some cases. Ultimately it doesn’t make sense to stockpile parts most of the time for financial and other reasons. If Intel had a warehouse of 1Gb chips, they would have a disincentive to invest in 10Gb, for example. The dysfunction is the accounting games that companies are incentivized to keep stuff off of their books. Every company wants to look like a software company and avoid stuff like inventory. Some of this is absurd - many companies don’t “own” property, for example, they lease through entities that are sometimes only nominally separate. Sometimes companies will outsource processes and fulfillment to layers of other entities, each of which do the same thing. Disruptions cascade - I had one issue last year where a supplier’s supplier had issues getting boxes, and a two week delay there delayed downstream fulfillment by 6 weeks. All because the people who ship the end product couldn’t deliver, and the “principal” outsourced the actual management of the process to a third party. If the principal controlled it, they would have gotten it done, as they were punished severely by the contract penalties. They bet on everything working out ok and lost.

laumars 5y ago
Ironically the biggest two IT companies in the world, Apple and Amazon, are ones that go out of their way to control the entire supply chain.