JIT Pitfalls

The benefits have been celebrated for years but the JIT pitfalls are starting to be talked about. I have been thinking about it ever since yesterday. There is no doubt that a JIT (Just in Time Inventory) system can save companies money. With no stocking of inventory you do not need warehouse space and labor costs are minimized because you are not touching it as often.

While a company can save money in inventory costs it also means they are susceptible to price increases. The JIT system is dependent on a constant resupply of the parts. What the auto-makers are seeing is the unavailability of certain materials and natural disasters shutting down the only product regions.

The centralization of suppliers and dependence on cheap transportation work well until material shortages run rampant and fuel becomes unsustainable. Virtually everything that is manufactured spends at least a little time being pulled by a truck. What happens when the drivers are no longer available or not wanting to haul the loads.

Ask any Independent truck driver and the majority of them will tell you it is extremely hard to make a living delivering goods. Add in the fact that there may be times in the near future it may actually lose money to take a load. Would you rather stay home and protect your family or lose money driving down the road.

If the trucks stop rolling then we will suffer a melt down. What store has the capacity to store even a weeks worth of inventory? They have been built and operated on the principle that the trucks will roll. If that does not happen the entire JIT system crashes.

Are you prepared if the entire system crashes? It will require a mentality shift that should be started now as we have talked about. It may only be a matter of time as the tinderbox could prevent deliveries to certain areas.