JIT is NOT the Problem!

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Manage episode 292909246 series 2812913
By Fulcrum ConsultingWorks, Inc and Fulcrum ConsultingWorks. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.

The Wall Street Journal and the New York Times are fact-based high-quality newspapers. Each has acquired ‘political leanings’ in some of their writing, but for business articles they are widely respected.

Each has recently published a poorly researched and factually incorrect article about the impact of the current supply chain upheavals on the preponderance of Just-in-Time inventory strategies in American manufacturing businesses. The error is in believing that their sources understood JIT and had discovered some new failing.

They were right in stating that JIT was originated by Toyota. They are right in that many manufacturers are moving as quickly as they can from minimal inventories to holding significant quantities in storage to protect themselves from future supply interruptions.

The authors were wrong in believing and writing that those manufacturers ever understood JIT or had implemented the concepts wisely. JIT is so much more than lowering inventories, but few chose to do all the hard work that effective and managed JIT involves.

Why has Toyota not suffered the chip shortage the way their automotive competitors have? Because several months earlier they had acquired a significant quantity as they foresaw the potential for a significant supply issue. That wasn’t luck. That was supply chain visibility and risk management.

JIT was never intended to be an inventory strategy. It was always a means for Toyota to highlight problems in the system and address them before they could become severe. That is the point that both articles missed completely. And apparently their sources simply did not understand that incredibly basic aspect of the JIT philosophy. Which means their manufacturing businesses think they are lean but do not understand what that means at all.

So now those companies are back to high inventory dollars and all the problems that come with that. They’ve learned a lesson from the current crises, but the wrong one! It is not JIT that failed. It was the leaders who believed JIT was an inventory management system that failed.

Supply chain visibility is not a digital transformation catch phrase. It is one element of building a resilient manufacturing business.

As you analyze what works and what doesn’t for your manufacturing company, always dig deep to understand WHY. Luck or current conditions can make you believe things that simply are not true. So can failure to identify and track the underlying assumptions you make. And sadly, so can reading Wall Street Journal or New York Times articles that rely on ill informed sources and lazy journalists.

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