4 ms·

I’m not sure this is the case. The problem is that RoE is a metric that can be gamed for short term gains while incurring long term risks. This is more likely t

I’m not sure this is the case. The problem is that RoE is a metric that can be gamed for short term gains while incurring long term risks. This is more likely to be an issue with short term career-oriented leadership. Founders are more likely to have a concern for the long-term success of the business. Simply put, founders are not the people sacrificing their own companies’ long term success in exchange for enhancing their personal careers. A lot of the JIT fashion came from Toyota, and yet Toyota doesn’t seem to suffer from these issues as much as others. I don’t think it’s any coincidence that most of the senior executives of Toyota have all been at Toyota for longer than many of us have been alive, and that the company president is the grandson of the company founder.

Invictus0 5y ago
JIT works nicely in isolation--when everyone relies on it is when it starts to break down. It basically offloads the responsibility of forecasting your inventory needs to the supplier, who has absolutely no knowledge of your inventory needs.
- andrekandre 5y ago
  > the supplier, who has absolutely no knowledge of your inventory needs. that would seem to assume a not close relationship with said supplier... ...doesnt jit work better if you have good relationships with them and they know well what your expectations are and can adjust accordingly?
darawk 5y ago
This is exactly right. It's about the term length of incentive alignment. Most founders have a long term reputational stake in the company they founded. Hired CEOs generally do not.
quartesixte 5y ago
Toyota has over the years adjusted how their JIT operates, and are now known to stockpile certain critical parts. This is pure speculation, but I also wonder if Japan’s geography + slightly more diverse economic landscape (lots of small businesses that do nothing but make components) help make their JIT more resilient to shocks. With Osaka, Tokyo, and Nagoya all within an area less than the length of California, it’s far easier to “in-time” material.
- Kye 5y ago
  My understanding is this kind of alignment is essentially what makes Shenzen in China such a manufacturing powerhouse.
- nickff 5y ago
  Toyota became significantly less JIT after the 2011 earthquake and tsunami, which severely disrupted their supply chain. That said, JIT involves many useful lessons for organizations with higher inventory levels as well.
- tootie 5y ago
  I was thinking this thread was basically explaining kanban
ajsnigrutin 5y ago
JIT works just fine with stuff that's simple to make or close by geographically. Car seat covers? Many textile firms around you? Sure, do it JIT... if one of them fails or gets wiped out by a tsunami, there are ten more than can take over the production. Computer chips? Made only in one company in china? Trying to get someone else to make them, means weeks or months of production line changes + waiting time + other customers... good luck. If they're far away (eg. china), and the transport system is fucked up, you're basically fucked up too. Even a huge company like toyota can't make a chip factory "overnight" anywhere.

Invictus0 5y ago

JIT works nicely in isolation--when everyone relies on it is when it starts to break down. It basically offloads the responsibility of forecasting your inventory needs to the supplier, who has absolutely no knowledge of your inventory needs.

andrekandre 5y ago
> the supplier, who has absolutely no knowledge of your inventory needs. that would seem to assume a not close relationship with said supplier... ...doesnt jit work better if you have good relationships with them and they know well what your expectations are and can adjust accordingly?

darawk 5y ago

This is exactly right. It's about the term length of incentive alignment. Most founders have a long term reputational stake in the company they founded. Hired CEOs generally do not.

quartesixte 5y ago

Toyota has over the years adjusted how their JIT operates, and are now known to stockpile certain critical parts. This is pure speculation, but I also wonder if Japan’s geography + slightly more diverse economic landscape (lots of small businesses that do nothing but make components) help make their JIT more resilient to shocks. With Osaka, Tokyo, and Nagoya all within an area less than the length of California, it’s far easier to “in-time” material.

Kye 5y ago
My understanding is this kind of alignment is essentially what makes Shenzen in China such a manufacturing powerhouse.
nickff 5y ago
Toyota became significantly less JIT after the 2011 earthquake and tsunami, which severely disrupted their supply chain. That said, JIT involves many useful lessons for organizations with higher inventory levels as well.
tootie 5y ago
I was thinking this thread was basically explaining kanban

ajsnigrutin 5y ago

JIT works just fine with stuff that's simple to make or close by geographically. Car seat covers? Many textile firms around you? Sure, do it JIT... if one of them fails or gets wiped out by a tsunami, there are ten more than can take over the production. Computer chips? Made only in one company in china? Trying to get someone else to make them, means weeks or months of production line changes + waiting time + other customers... good luck. If they're far away (eg. china), and the transport system is fucked up, you're basically fucked up too. Even a huge company like toyota can't make a chip factory "overnight" anywhere.