[AT] JIT vs old tractors and long range economics

[Jim Thomson]

Grant;

  One more thing, most companies talk JIT but actually they have an 
outside warehouse store the inventory. The supplier only gets to invoice 
when the company draws from the inventory. Detroit is full of places 
like this.

Grant Brians wrote:

> 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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-- 
Jim Thomson
Riverton,Utah
L50bmg at earthlink.net