Sunday, August 13, 2006
Just in time--a critique of Just In Time (JIT) Inventory Strategies
My circa 1993 master's degree is in Engineering Management, where we got the full-throated gospel of JIT with every course. I later taught some Operations Management classes for the University of Phoenix, which let me see how widespread the religion had become. (UOP uses a standardized curriculum across its many "campuses," classrooms in corporate office parks.) I later did some consulting for Hewlett-Packard at a manufacturing facility where they made inkjets, turning truckloads of parts into pallets of printers---it seemed like you could almost feed the driver lunch and then have him drive around the other side of the plant and refill his rig with the printers made from the materials he delivered earlier.
JIT inventory management, like juggling expensive crystal goblets, is a thing of beauty . . . when it works.
But even minor energy disruptions--not to mention full-fledged price explosions--are to JIT what a swarm of bees are to a juggler . . . a show-stopper. The URL above leads to a very good article pointing out that what little manufacturing left in the US is often perilously dependent on absolute, unswerving deliveries powered by endless cheap oil . . . just the reality we're leaving behind.
Actually, even a minor inventory error can be a show stopper in this particular business philosophy that is designed to reduce inventory on hand thereby increasing the profits (less taxable goods on hand = more profits).
In practice it is a major headache.