Just in Time inventory is...adequate...as far as inventory methods go, so long as literally everything in the supply chain can be accounted for. The only reason it is so overwhelmingly popular is because of the cost that is shaved off by not purchasing in bulk/not having excess inventory on hand to pay taxes on.
One rather significant downside is that if something like a pandemic happens, you're going to be fucked sideways through a wall.
It isn't just taxes, it is also cash flow since you typically pay on receipt. With many JIT systems someone else is holding the bag as far as expenditures & tax burden while you have a (theoretically) solid/guaranteed production stream.
Right, that's what I meant with the 'not purchasing in bulk' thing. I wonder if the pandemic actually caused any shift in inventory management? Probably not anything substantial
And even the leanest JIT operations have contingencies planned for according to likelihood of disruption and impact of disruption. Thinking that JIT is about having literally no stock means you have absolutely no contact with any logistics operations.
Yeah, it's about running lean to save on cost/overhead. It's not a bad system, it just becomes problematic when improbable disasters happen, and the lead times on certain inventory items go from a couple weeks to 8+ months
It's part and parcel of the "end of history" idea that everything will be neoliberal forever, so why would you account for anything like a war or major disaster disrupting critical infrastructure or crashing the economy because some vital sector was bottlenecked through a single point of failure?
Just in Time inventory is...adequate...as far as inventory methods go, so long as literally everything in the supply chain can be accounted for. The only reason it is so overwhelmingly popular is because of the cost that is shaved off by not purchasing in bulk/not having excess inventory on hand to pay taxes on.
One rather significant downside is that if something like a pandemic happens, you're going to be fucked sideways through a wall.
It isn't just taxes, it is also cash flow since you typically pay on receipt. With many JIT systems someone else is holding the bag as far as expenditures & tax burden while you have a (theoretically) solid/guaranteed production stream.
Right, that's what I meant with the 'not purchasing in bulk' thing. I wonder if the pandemic actually caused any shift in inventory management? Probably not anything substantial
Not in clinical supply chains, I can tell you that.
And even the leanest JIT operations have contingencies planned for according to likelihood of disruption and impact of disruption. Thinking that JIT is about having literally no stock means you have absolutely no contact with any logistics operations.
Yeah, it's about running lean to save on cost/overhead. It's not a bad system, it just becomes problematic when improbable disasters happen, and the lead times on certain inventory items go from a couple weeks to 8+ months
It's part and parcel of the "end of history" idea that everything will be neoliberal forever, so why would you account for anything like a war or major disaster disrupting critical infrastructure or crashing the economy because some vital sector was bottlenecked through a single point of failure?
I'm sure that will never happen though.
Not needing warehouse and storage space and the logistics to move things in and out of warehouses is another big factor.