[AT] JIT vs old tractors and long range economics

[Tom Yasnowski]

Class is dismissed! LOL!

>From: "Grant Brians" <gbrians at hollinet.com>
>Reply-To: Antique tractor email discussion group 
><at at lists.antique-tractor.com>
>To: "Antique tractor email discussion group" <at at lists.antique-tractor.com>
>Subject: [AT] JIT vs old tractors and long range economics
>Date: Fri, 12 Aug 2005 07:22:55 -0700
>
>I have a couple of  comments about JIT (Just-in-time delivery of parts and 
>supplies), both theory and practice. First, JIT while an excellent theory 
>for maximizing profits has many drawbacks even when implemented as 
>designed. The most commonly thought of is lack of tolerance for supply 
>interruptions from ANY unforeseen factor. A more basic flaw is the lack of 
>ability to build a stockpile for anticipated interruptions such as a 
>maintenance shutdown at a supplier.
>    Second, JIT means that there are no stocks of product built for 
>unexpected spikes in demand. I had firsthand experience with this on the 
>manufacturing side and was able to quantify the lost sales the company I 
>worked for experienced as a result. The losses were significant for several 
>reasons. First, in a competitive marketplace we typically lost those 
>immediate sales (and spikes in demand sales do not require the usual 
>discounts to make the deal, hence many times the profit on those sales). 
>Second, because we did not make those sales, then the accounts who bought 
>our competition's product were now locked into the competition for at least 
>part of their future purchases. Think about this as being similar to which 
>brand of tractor you collect - most people choose based on what they can 
>get when they are ready and have some cash rather than waiting interninably 
>for that particular model they MUST collect.
>    Third, and most obviously tied to antique tractors is that when there 
>is JIT, then there are no stocks of extra parts left for the repair and 
>restoration of the product in service beyond the few that were planned for. 
>This is analogous to the situation where Spencer could not get parts for 
>his Isuzu even though it was only a few years old....
>    Fourth, JIT minimizes the income from parts sales for a business.I 
>won't go into all of the reasons but suffice it to say that again I speak 
>from personal experience. The interesting part about this is that in any 
>repairable product business, parts and service typically accounts for 
>somewhere between a third and two-thirds of the profit stream experienced 
>over the life of the product! This affects Antique tractors and new farm 
>machinery significantly. Why new equipment? Because if the parts stocks are 
>insufficient (usually the case today), then the cost of moving those parts 
>from place to place rises, the time needed increases unless all is moved by 
>Next Day Air equivalents, and the amount of time a product can be kept in 
>service decreases making hte parts business less profitable and reducing 
>brand loyalty.
>    Fifth, JIT encourages large companies as suppliers and knocks out small 
>businesses because of both logistics issues and the inherent bias toward 
>big that results. This bias is a natural consequence because to survive in 
>a JIT world, you need to have enough customers and volume to make your 
>product efficiently where a batch could be done previously and used until 
>nearly gone, now this is not feasible. This is a gross oversimplification, 
>but addresses the basic issue of the biases. There are many other aspects 
>of this bias too, but they all result in the same result and penalize even 
>the most efficient small business to the benefit of the big ones even 
>though small businesses make up most of our economy.
>    Last of the issues I can think of right at this moment is that the 
>ability of restorers and hobbyists to restore and maintain most old cars, 
>trucks, tractors etc. is tied to the extra parts left at the end of 
>manufacture of the products we collect to generate the beginning of the 
>afterlife (after the end of manufacturing) of those products. This is part 
>of the reason that restoration of todays cars and tractors will be nearly 
>impossible in the future.
>    In short, there is more to JIT than meets the eye as far as its effects 
>on the economy and us. Now don't get me wrong, I am not saying JIT is 
>automatically evil, but its negative effects are major and have brought 
>down many a business. Besides which even in my vegetable farming, JIT only 
>works as far as there is a stockpile of supplies for when there is that 
>inevitable weather or labor or equipment emergency..... These are some 
>things to think about. As a side note about trains, JIT does value speed of 
>delivery over cost because consistency is the key, but any intelligent 
>variation on JIT would use a reliable rail system where it could.....
>        Grant Brians
>        Hollister, California
>
>----- Original Message ----- From: "Mike Sloane" <mikesloane at verizon.net>
>To: "Antique tractor email discussion group" <at at lists.antique-tractor.com>
>Sent: Friday, August 12, 2005 4:45 AM
>Subject: Re: Alt fuels was Re: [AT] Gasoline $
>
>
>>"Just in time" isn't about being in a rush. JIT is about reducing 
>>inventory costs to improve productivity. When you have the parts you need 
>>precisely when you are ready to incorporate them into your product, you 
>>don't have to own, inventory, and warehouse them any longer than the 
>>absolute minimum. And this extends to retail operations. Excellent theory, 
>>not easy to implement.
>>
>>Mike
>>
>>Mark Greer wrote:
>>>If the whole damn country wasn't in such a rush all the time we wouldn't 
>>>be
>>>stuck with the idea that we need JIT delivery. Maybe if we all slowed up
>>>just a bit and lived a slightly less frantic pace.........
>>>Mark
>>>
>>
>>--
>>Mike Sloane
>>Allamuchy NJ
>>mikesloane at verizon.net
>>Website: <www.geocities.com/mikesloane>
>>Images: <www.fotki.com/mikesloane>
>>
>>"As a general rule the most successful man in life is the man who has the 
>>best information."  -Benjamin Disraeli (1804 -1881)
>
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