[AT] JIT vs old tractors and long range economics

[Grant Brians]

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)