6 ms·

The reason just-in-time is to blame, is that JIT assumes you have a reasonably stable flow (yes, I worked in manufacturing where we studied JIT a lot). Yes, it

The reason just-in-time is to blame, is that JIT assumes you have a reasonably stable flow (yes, I worked in manufacturing where we studied JIT a lot). Yes, it was a shift from services to goods that provided the current shock, but it was JIT that meant the system could not adapt to shocks. If you have no buffers (or very small ones), then you cannot quickly adapt. If you put a vase on top of your car and drive away, it's irrelevant which bump in the road causes the vase to fall off; it was bound to fall off eventually. The global supply chain was optimized for efficiency, to the point of fragility, and whether it was a pandemic or a war or something else, a shock was coming eventually. With climate change, we can expect more frequent weather-induced changes in the future. A supply chain which cannot handle frequent, large changes is too fragile, and that's what's wrong with JIT.

xyzzy21 5y ago
Exactly! When I took inventory and supply chain course, JIT scared the shit out of me because it's was so obviously fragility.
deelowe 5y ago
Yep. The push for zero inventory, just in time, outsourced manufacturing created a traffic jam when there was no buffer to absorb the shock.
- eitland 5y ago
  It might be worth nothing that Toyota - from where the JIT idea came - hasn't been as much affected by it as many others.
  - jjk166 5y ago
    JIT may have originated at Toyota, but Toyota's version of JIT is not what is nowadays commonly referred to as JIT. Toyota's production sytem is a lean manufacturing method where stages of production are rate matched (ie operation B is using parts at the same rate operation A is producing them), but there still are buffers of inventory between stages. The goal is to make the whole system communicate in such a way that when one part needs to change rate, everything else changes rate at the same time. In conventional JIT, the goal is specifically to minimize inventory by minimizing the time between when something is produced and when it is consumed. This is good from an accounting perspective as money that would be tied up in inventory can be put to other uses such as investments. JIT is about eliminating the variability for which you would need buffers, really the opposite of what Toyota does.
    - eitland 5y ago
      Which was my point: JIT might been have misunderstood.
  - mamurphy 5y ago
    Do you have any sources your can share or more info about this? I Googled and the first result was "Under delta, supply chain strains, Toyota slashes production."[0] Many similar results[1][2][3]. Six months ago they were getting temporary reprieve because they monitored supply and snapped some up[4], but now, six months later, they seem to be having to slash production like everyone else. [0]https://apnews.com/article/lifestyle-technology-business-health-coronavirus-pandemic-a89b86a18861a7a48fd87939913c23af https://apnews.com/article/lifestyle-technology-business-hea... [1]https://www.caranddriver.com/news/a37364490/toyota-cutting-global-production-not-tundra/ https://www.caranddriver.com/news/a37364490/toyota-cutting-g... [2]https://www.pbs.org/newshour/economy/toyota-slashes-production-as-pandemic-strains-supply-chain https://www.pbs.org/newshour/economy/toyota-slashes-producti... (pbs reiterates AP report) [3]https://www.thestreet.com/phildavis/stocks-options/thursday-failure-supply-chain-issues-force-toyota-to-cut-40-of-production https://www.thestreet.com/phildavis/stocks-options/thursday-... [4]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...
  - rossdavidh 5y ago
    Toyota historically has worried more about keeping a close relationship with their suppliers, which means keeping them afloat during hard times. American automakers historically are less interested in that. My understanding was that Toyota's cuts in orders for parts were less drastic than their competitors.
cbdumas 5y ago
I'm definitely outside my wheelhouse here, so maybe help me understand the current fixation on and criticism of JIT. Are you advocating for more buffers in supply chains generally? If the current scenario is one where goods purchases were simply deferred from early in the pandemic to later (with no real increase in total demand for goods) I can see that solving the issue to some extent. But my point is that total demand for goods has actually increased and not by a little, by a lot. Buffers in the supply chain can't help with that, can they? An increase in total throughput is needed to solve that, and that's going to take a while. Is there something I'm missing here?
- jjk166 5y ago
  The problem is JIT is all about steady state operation, and hinders the ability to scale up. If you have a substantial buffer, when demand picks up you notice that you are drawing from your buffer at an increased rate and you order things early so that you can scale with that increased demand. It's okay if your suppliers need some time to hire additional labor or buy a new machine, even at this increased rate of consumption you still have some time before your stocks run out. There is no need for you to pay your suppliers a premium to drop their existing orders from other customers to support your demand. If you don't have that extra buffer, then when demand increases there is no avoiding shortages - not only do you need to scale up to increase production and meet this new demand, but now you also have an ever growing backlog of orders that you also need to fulfill. These companies scramble to rush in material and equipment asap, which drives up prices and drains the stocks of other companies, and pushes the problem further up the supply chain. Firms that aren't actually seeing an increase in demand nevertheless must buy more to guarantee their buffers will not run out, further increasing shortfalls in production. What could have been a localized hiccup cascades into a global economic problem. However it's important to note that the pandemic was not simply a shifting in demand patterns. Early on production in many cases stopped or was extremely reduced as employees quarantined and businesses cancelled orders expecting various drops in consumer demand. Again here, JIT is a problem as it led firms to cancel orders much earlier than they should have, and it makes restarting lines much slower. For example auto makers cancelled their chip orders right away at the start of the pandemic expecting people to save money and not buy cars, but it turned out demand for cars increased, and a lack of chips grinds auto manufacturing to a halt. If the auto manufacturers had just accepted that their inventory of chips might sit on a shelf a little longer, the counter intuitive uptick in demand would have been a blessing instead of a curse.
freemint 5y ago
I disagree deeply. If you have no buffers that means you can change what you produce without waste. JIT allows you to produce a customized car as it comes of the production line. it can adapt much more quickly then any system with a lot of stock. The problem is not "the system reacts to quickly to our controls". It's "humanity when faced with uncertainty about the pandemic choose to optimize the controls over a to short time frame leading to regret". Economic ideologies also have impact on the choice of the time frame. Blaming that the system reacts to well to our controlls just because it reacting sluggisher might have had a trajectory under the same controls that would have caused less regret this time is my opinion very mistaken.
- coolgeek 5y ago
  You seem to be missing this part: > JIT assumes you have a reasonably stable flow Covid made nearly every flow unstable. You can't adapt your production process if there aren't alternative options
  - freemint 5y ago
    > You seem to be missing this part: No I am not missing that I just think that JIT done right (no true scottsman) doesn't require stable flow. At best it needs predictable flows and in the current economic system where a lot of information is lost at the company border => the only way to ensure predictability in our current system is have steadyness if things pass company borders. If we are making statements about how our economic system ought to be it we should consider either flexible pricing that actually reflects information at the company border (with all the Pareto front guarantees that can bring us) or cross company optimization of the economy (providing better guarantees).
    - coolgeek 5y ago
      This comment is so abstractly general that I can't understand it. But I'd like to. > flexible pricing that actually reflects information at the company border (with all the Pareto front guarantees that can bring us) What information is lost at the border? Why? How is pricing not already flexible?
RustyConsul 5y ago
JIT's epitome is vertical integration so i don't think so. JIT made this all much more resilient because everyone has smaller, lower orders allowing everyone to a greater percentage of the total stock. What happened was people got alittle nervous and jumped off the JIT band wagon and tried to ensure they had large inventories to weather the storm. The big guys with the biggest orders got what they wanted at the expense of us plebs.

xyzzy21 5y ago

Exactly! When I took inventory and supply chain course, JIT scared the shit out of me because it's was so obviously fragility.

deelowe 5y ago

Yep. The push for zero inventory, just in time, outsourced manufacturing created a traffic jam when there was no buffer to absorb the shock.

eitland 5y ago
It might be worth nothing that Toyota - from where the JIT idea came - hasn't been as much affected by it as many others.
- jjk166 5y ago
  JIT may have originated at Toyota, but Toyota's version of JIT is not what is nowadays commonly referred to as JIT. Toyota's production sytem is a lean manufacturing method where stages of production are rate matched (ie operation B is using parts at the same rate operation A is producing them), but there still are buffers of inventory between stages. The goal is to make the whole system communicate in such a way that when one part needs to change rate, everything else changes rate at the same time. In conventional JIT, the goal is specifically to minimize inventory by minimizing the time between when something is produced and when it is consumed. This is good from an accounting perspective as money that would be tied up in inventory can be put to other uses such as investments. JIT is about eliminating the variability for which you would need buffers, really the opposite of what Toyota does.
  - eitland 5y ago
    Which was my point: JIT might been have misunderstood.
- mamurphy 5y ago
  Do you have any sources your can share or more info about this? I Googled and the first result was "Under delta, supply chain strains, Toyota slashes production."[0] Many similar results[1][2][3]. Six months ago they were getting temporary reprieve because they monitored supply and snapped some up[4], but now, six months later, they seem to be having to slash production like everyone else. [0]https://apnews.com/article/lifestyle-technology-business-health-coronavirus-pandemic-a89b86a18861a7a48fd87939913c23af https://apnews.com/article/lifestyle-technology-business-hea... [1]https://www.caranddriver.com/news/a37364490/toyota-cutting-global-production-not-tundra/ https://www.caranddriver.com/news/a37364490/toyota-cutting-g... [2]https://www.pbs.org/newshour/economy/toyota-slashes-production-as-pandemic-strains-supply-chain https://www.pbs.org/newshour/economy/toyota-slashes-producti... (pbs reiterates AP report) [3]https://www.thestreet.com/phildavis/stocks-options/thursday-failure-supply-chain-issues-force-toyota-to-cut-40-of-production https://www.thestreet.com/phildavis/stocks-options/thursday-... [4]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...
- rossdavidh 5y ago
  Toyota historically has worried more about keeping a close relationship with their suppliers, which means keeping them afloat during hard times. American automakers historically are less interested in that. My understanding was that Toyota's cuts in orders for parts were less drastic than their competitors.

cbdumas 5y ago

I'm definitely outside my wheelhouse here, so maybe help me understand the current fixation on and criticism of JIT. Are you advocating for more buffers in supply chains generally? If the current scenario is one where goods purchases were simply deferred from early in the pandemic to later (with no real increase in total demand for goods) I can see that solving the issue to some extent. But my point is that total demand for goods has actually increased and not by a little, by a lot. Buffers in the supply chain can't help with that, can they? An increase in total throughput is needed to solve that, and that's going to take a while. Is there something I'm missing here?

jjk166 5y ago
The problem is JIT is all about steady state operation, and hinders the ability to scale up. If you have a substantial buffer, when demand picks up you notice that you are drawing from your buffer at an increased rate and you order things early so that you can scale with that increased demand. It's okay if your suppliers need some time to hire additional labor or buy a new machine, even at this increased rate of consumption you still have some time before your stocks run out. There is no need for you to pay your suppliers a premium to drop their existing orders from other customers to support your demand. If you don't have that extra buffer, then when demand increases there is no avoiding shortages - not only do you need to scale up to increase production and meet this new demand, but now you also have an ever growing backlog of orders that you also need to fulfill. These companies scramble to rush in material and equipment asap, which drives up prices and drains the stocks of other companies, and pushes the problem further up the supply chain. Firms that aren't actually seeing an increase in demand nevertheless must buy more to guarantee their buffers will not run out, further increasing shortfalls in production. What could have been a localized hiccup cascades into a global economic problem. However it's important to note that the pandemic was not simply a shifting in demand patterns. Early on production in many cases stopped or was extremely reduced as employees quarantined and businesses cancelled orders expecting various drops in consumer demand. Again here, JIT is a problem as it led firms to cancel orders much earlier than they should have, and it makes restarting lines much slower. For example auto makers cancelled their chip orders right away at the start of the pandemic expecting people to save money and not buy cars, but it turned out demand for cars increased, and a lack of chips grinds auto manufacturing to a halt. If the auto manufacturers had just accepted that their inventory of chips might sit on a shelf a little longer, the counter intuitive uptick in demand would have been a blessing instead of a curse.

freemint 5y ago

I disagree deeply. If you have no buffers that means you can change what you produce without waste. JIT allows you to produce a customized car as it comes of the production line. it can adapt much more quickly then any system with a lot of stock. The problem is not "the system reacts to quickly to our controls". It's "humanity when faced with uncertainty about the pandemic choose to optimize the controls over a to short time frame leading to regret". Economic ideologies also have impact on the choice of the time frame. Blaming that the system reacts to well to our controlls just because it reacting sluggisher might have had a trajectory under the same controls that would have caused less regret this time is my opinion very mistaken.

coolgeek 5y ago
You seem to be missing this part: > JIT assumes you have a reasonably stable flow Covid made nearly every flow unstable. You can't adapt your production process if there aren't alternative options
- freemint 5y ago
  > You seem to be missing this part: No I am not missing that I just think that JIT done right (no true scottsman) doesn't require stable flow. At best it needs predictable flows and in the current economic system where a lot of information is lost at the company border => the only way to ensure predictability in our current system is have steadyness if things pass company borders. If we are making statements about how our economic system ought to be it we should consider either flexible pricing that actually reflects information at the company border (with all the Pareto front guarantees that can bring us) or cross company optimization of the economy (providing better guarantees).
  - coolgeek 5y ago
    This comment is so abstractly general that I can't understand it. But I'd like to. > flexible pricing that actually reflects information at the company border (with all the Pareto front guarantees that can bring us) What information is lost at the border? Why? How is pricing not already flexible?

RustyConsul 5y ago

JIT's epitome is vertical integration so i don't think so. JIT made this all much more resilient because everyone has smaller, lower orders allowing everyone to a greater percentage of the total stock. What happened was people got alittle nervous and jumped off the JIT band wagon and tried to ensure they had large inventories to weather the storm. The big guys with the biggest orders got what they wanted at the expense of us plebs.