CFOs rethinking cost savings of just-in-time supply chains

[Weatherman2020]

After decades of fighting against it, I stand vindicated in my retirement.
Just In Time is a manufacturing philosophy that in theory reduces cost by limiting your inventory. In theory you’re supposed to get your parts in just as you need them to complete your product, and you complete and ship your products just as the customer needs them thus keeping your inventory at zero and your expenses not paid early.

In the real world that $1.34 bolt you need is late, preventing you from completing your $136,000 product that your customer is now lacking to complete his $50M sale of his jet to United Airlines.

CFOs rethinking cost savings of just-in-time supply chains

Pandemic-related disruptions made it clear a broader strategic approach is needed even once the supply and demand equilibrium is restored.

www.cfodive.com

 

[sparky]

we can, in part, thank the 'inventory tax' for this weather dude

~S~

 

[lennypartiv]

CFOs rethinking cost savings of just-in-time supply chains​

JIT inventory systems work...unless you're getting your crap from China.

 

[Darkwind]

JIT inventory systems work...unless you're getting your crap from China.

Or Democrats decide they don't like someone and close whole countries.

 

[Weatherman2020]

JIT inventory systems work...unless you're getting your crap from China.

Yeah, that’s why you can’t buy a car of your choice.

 

[pknopp]

I also condemned this for years. I also will not benefit from moving from it if indeed manufacturers do.

 

[DudleySmith]

Using the country's highways and roads asa replacement for your own warehouses never was a good idea, it just shifted the expenses off on others. And yes, those inventory taxes are indeed ridiculous on their face, as is taxing wages as 'income'. In any case, the current backups are temporary and don't required anything drastic, just a surge that will go away. The only people panicking are the neurotics addicted to instant gratification setting their hair on fire and running aroud being their usual hysterical selves.

 

[Care4all]

Big mistake to build up inventory.... It's unprofitable to sit on goods.

Big retailers had systems built, with upc codes on every item and size, when scanned as sold, an automatic reorder of inventory is triggered, on basic items set up for reorder.

Look at who is doing best.... My Dillard's Dept Store stock was $44 a share a year ago, ($22 at pandemic low) it's $350.00 a share now.... Because they aren't carrying any "dead wood" in their inventory, they are clean, and mean and raring to go....

Getting the vendors to stock your refill inventory, is one of the most profitable things Dillard's ever did....

It's better to be short on inventory, than to be weighed down with too much inventory, and no money to buy more of hot selling items.... Or being over stocked in non selling goods, that you have to spend mark down money on, to liquidate in order to have money to buy fresh goods.

These pandemic woes are temporary.

 

[fncceo]

unless you're getting your crap from China.

Or unless your friendly-government jacks up diesel prices until the trucks and trains can't roll your parts to you.

 

[Harpy Eagle]

Big mistake to build up inventory.... It's unprofitable to sit on goods.

Big retailers had systems built, with upc codes on every item and size, when scanned as sold, an automatic reorder of inventory is triggered, on basic items set up for reorder.

Look at who is doing best.... My Dillard's Dept Store stock was $44 a share a year ago, ($22 at pandemic low) it's $350.00 a share now.... Because they aren't carrying any "dead wood" in their inventory, they are clean, and mean and raring to go....

Getting the vendors to stock your refill inventory, is one of the most profitable things Dillard's ever did....

It's better to be short on inventory, than to be weighed down with too much inventory, and no money to buy more of hot selling items.... Or being over stocked in non selling goods, that you have to spend mark down money on, to liquidate in order to have money to buy fresh goods.

These pandemic woes are temporary.

Perhaps for a retailer it is better to be short on short on inventory, than to be weighed down with too much inventory but not so much for a manufacture that has to shut down their entire production line over one tiny item they are missing.

 

[Harpy Eagle]

After decades of fighting against it, I stand vindicated in my retirement.
Just In Time is a manufacturing philosophy that in theory reduces cost by limiting your inventory. In theory you’re supposed to get your parts in just as you need them to complete your product, and you complete and ship your products just as the customer needs them thus keeping your inventory at zero and your expenses not paid early.

In the real world that $1.34 bolt you need is late, preventing you from completing your $136,000 product that your customer is now lacking to complete his $50M sale of his jet to United Airlines.

CFOs rethinking cost savings of just-in-time supply chains

Pandemic-related disruptions made it clear a broader strategic approach is needed even once the supply and demand equilibrium is restored.

www.cfodive.com

I said on here a couple months ago that JIT would be one of the casualties of COVID and I was laughed at.

 

[DudleySmith]

Oh. I bet a lot of stores now wish they had a lot of inventory on hand to sell, since they would be turning it over a lot faster during a peak shopping season.

 

[AZrailwhale]

JIT inventory systems work...unless you're getting your crap from China.

They work when everything else works perfectly, and when there are multiple sources for parts so problems with one source can be compensated for by using another source.

 

[AZrailwhale]

Big mistake to build up inventory.... It's unprofitable to sit on goods.

Big retailers had systems built, with upc codes on every item and size, when scanned as sold, an automatic reorder of inventory is triggered, on basic items set up for reorder.

Look at who is doing best.... My Dillard's Dept Store stock was $44 a share a year ago, ($22 at pandemic low) it's $350.00 a share now.... Because they aren't carrying any "dead wood" in their inventory, they are clean, and mean and raring to go....

Getting the vendors to stock your refill inventory, is one of the most profitable things Dillard's ever did....

It's better to be short on inventory, than to be weighed down with too much inventory, and no money to buy more of hot selling items.... Or being over stocked in non selling goods, that you have to spend mark down money on, to liquidate in order to have money to buy fresh goods.

These pandemic woes are temporary.

But they point out a weakness. Suppose terrorists start sinking a lot of container ships. Insurance skyrockets to where ship owners lose money on the ships that make harbor, so shipping stops. Or a war breaks out at one of the maritime choke points, or any of a hundred other things that disrupt commerce. Then Dillard’s can’t get pants to sell to you and your stock becomes worthless because their income drops well below expenses.

 

[rightwinger]

JIT inventory systems work...unless you're getting your crap from China.

JIT is based on models of how long it takes to get critical inventory.
If it is taking more time to get inventory, you need to adjust your model accordingly

 

[Care4all]

Perhaps for a retailer it is better to be short on short on inventory, than to be weighed down with too much inventory but not so much for a manufacture that has to shut down their entire production line over one tiny item they are missing.

Could you give an example of what you mean? Ohhhhh, are you talking about missing a component in manufacturing, so the production line has to be closed until the component arrives? Yeah, that is bad!!!!

When I worked in manufacturing, after my retail career, we had back up plans for if and when, something went sour in China...

We manufactured our number one selling item in China, and a handful of other foreign nations, but we also had a factory in Texas manufacturing it, using American sourced goods.... We only produced small amounts in our Texas factory, but we had all the production and assembly line equipment and components on hand and ready to expand if need be....

It cost about $4.50 a pair more at wholesale price to produce in the USA than in China, but we did it anyway.....for the just in case China manufacturing, or shipping, had problems....

So, I can see manufacturers having to spend more time in positioning key imported components in the future, but they can't go overboard, they need to strategically plan it out, and learn from these times.

 

[Blues Man]

JIT inventory systems work...unless you're getting your crap from China.

Or you have a medical emergency and can't get PPE

 

[pknopp]

Could you give an example of what you mean? Ohhhhh, are you talking about missing a component in manufacturing, so the production line has to be closed until the component arrives? Yeah, that is bad!!!!

When I worked in manufacturing, after my retail career, we had back up plans for if and when, something went sour in China...

We manufactured our number one selling item in China, and a handful of other foreign nations, but we also had a factory in Texas manufacturing it, using American sourced goods.... We only produced small amounts in our Texas factory, but we had all the production and assembly line equipment and components on hand and ready to expand if need be....

It cost about $4.50 a pair more at wholesale price to produce in the USA than in China, but we did it anyway.....for the just in case China manufacturing, or shipping, had problems....

So, I can see manufacturers having to spend more time in positioning key imported components in the future, but they can't go overboard, they need to strategically plan it out, and learn from these times.

We had a product we would die. We would make these large vats of dye (with alcohol and acid). We made 6-7 different colors. We were constantly shutting down to change colors. Now if it was just the labor, one gets paid by the hour. Much of the time was simply sitting on your butt while the cleaning solution was working.

That isn't what bothered me. It was the fact that these vats of dye would just get dumped. One it was a massive waste that the end user paid for. Maybe they saved on taxes but they paid more for the product to get it JIT but we would pretend we would get all the crap out of the water before sending it to the outfall.

 

[surada]

Or you have a medical emergency and can't get PPE

Obama had ordered stock to replenish stock in the event of an epidemic..ventilators etc.. Per the Pandemic Handbook of 2005 that was followed to manage Ebola and Zika viruses.

 

[Blues Man]

Obama had ordered stock to replenish stock in the event of an epidemic..ventilators etc.. Per the Pandemic Handbook of 2005 that was followed to manage Ebola and Zika viruses.

And yet there were still shortages