Just-In-Time (J.I.T.) inventory management was a revolution for business, but when COVID-19 and its attendant government-mandated shutdowns hit, J.I.T. pipelines collapsed. Nearly every industry has been punished by its reliance on cheap, reliable transportation to get parts to the factory as they’re needed. Will consumers pay for a return to inventory stockpiling practices of the past that drives up the cost of everything?
BACKGROUND RESOURCE:
How the World Ran Out of Everything, The New York Times, June 1, 2021
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55 replies on “Can’t Get What You Want: How Just-In-Time Practices Inflame COVID-Caused Product Shortages”
We have the generator availablility problem every hurricane season down here on the coast. Especially if there’s a hurricane.
You know what, though? Generators don’t work underwater. Sometimes it is not possible to prepare adequately for a storm.
I live in Texas and am waiting for the estimated cost of my new generator. Delivery and installation will come much later. Why? Because there is a rush on generators…
I have to push back on the idea Scott got from the New York Times article, “Consumers won’t pay for resilience, when they are not in crisis”. JIT manufacturing/sourcing was not customers’ idea, it was the financial “wizards”/MBA graduates idea. Additionally, a large part of the cost of holding onto inventory, supplies and repair parts are due to the taxes imposed on those items by the government rather than just on items sold. Again, nothing to do with customers.
Prepping seems so reasonable now.
Steve suffers with freezer ice. [ note to Steve: it’s cheaper in the long run to buy 2 ice makers and have a spare–it’s not too late.] Also: It’s important to keep a variety of pasta styles available. I had to put alfredo sauce on spaghetti in 2020. ;D
Oh, the humanity! Great thought for Steve on the extra ice maker, even if just for parts.
Yes, have lots of different pasta on hand, or flour eggs oil . . .
the old adage that you should always keep 6 months of bills in liquid assets comes to mine. that’s harder to do when your young of course. it was something i knew i should have in place but never seemed comfortable doing. now retired and widowed….it’s not even an issue. covid has forced us all to reevaluate our needs against our desires and perhaps that will slow the grow industries of glutony and avarice. of course there’s always the sidebar of low interest cd rates that effects those of us who reject the stock market as we get older.
Ships in LA right now:
Someone should tell Bill that there are a bunch of new members that just might like to purchase an obsolete BW.COM t-shirt.
Do you have any in 4XL? (Asking for a friend.)
I’ll take a large or XL.
Or as a thankyou gift for new incoming members or members who have subscribed the longest, etc. Send one (or 5 or 10) per month to random members, etc. Lots of uses.
I’ve never understood the point, or need, for ice makers. Putting an ice cube tray in the freezer is one of my lesser annoyances. But then I don’t drink things that require lots of ice.
There are people, Steve is probably one of them, who are artists at mixing and presenting a cocktail. Having nice, clear ice cubes at hand is part of that sort of persona. The cubes you put in a tray don’t usually come out crystal clear, they’re kind of milky/cloudy from the dissolved gasses in the ice. Steve’s ice maker isn’t just an ice maker, it’s specific to that purpose.
I almost never use ice at all. It gets old in my freezer by the time I get to it. I’m not one of those ice maker people either, but I understand what they’re doing.
I occasionally drink something other than whisk(e)y in a Glencairn glass. It was hot enough this weekend that a perfect margarita was a good choice. Used Steve’s recipe with cloudy ice. Drink was cold a refreshing even with the cloudy ice.
Finally got an ice tray to make big cubes for an old fashioned. It does make it more attractive, and it melts slower.
For folks like Steve, the process of making the cocktail is just as satisfying as the the cocktail itself. Somewhat like me and cooking. I like the process of making the meal, not just the eating of it.
Jah, I’m not a big cocktail builder myself but I do enjoy a nice cool refreshing mint julep, margarita or whiskey sour (not the good sippin’ whiskey, usually Jim Beam or such) once in a while. Those things need ice.
There are two ice makers here but those are mostly used for filling coolers. Like for going out on the boat fishing, to keep food and drinks cool. I have the ice makers anyway and well water is free aside from the electricity to pump it so that saves me a bit of time and money stopping to get ice on the way to the dock. I also keep a couple half gallon milk jugs frozen and usually a gallon jug too. I can keep tuna sandwiches edible for a couple days or so and less perishable things even longer.
For drinks I use silicone rubber ice mold thingys. I have some that are spherical, some that are cylindrical and some that are cubic but a lot bigger than a regular ice cube.
If I want to take the time I can make that ice nice and clear like Steve’s talking about but I hardly ever do that. Because I hardly ever have a drink that would make a difference in. The above mentioned favorites are all colored/cloudy/semi-opaque.
What I do like is the size of the ice pieces. Two of the spheres fit perfectly through the mouth of my thermal water bottle and keep water nice and cold for hours of working outside. I even put a hook on the ROPS/canopy on my tractor to hang it. Here in the warm Mid-Atlantic summers that’s a very good thing to have when mowing lawn in a heat index commonly well over 105F. I have almost 4 acres of lawn to mow so it’s not something I can go knock out in a half hour.
I’m not adverse to ice or ice makers at all, I’m just not particular about it like some folks might be and for drinks I use the silicone rubber molds. Just because I like the size and shapes I get better than a regular ice cube tray. That I do not use a lot of ice means there’s little inconvenience in keeping my ice molds filled and ready.
I find that the size of the ice matters depending on the drink, so I use the big cubes in the silicon mold for any whisky drink for which I don’t want the ice to melt.
For a julep or margarita, I am much less particular. Mrs Ron goes through a lot of ice with tea and water so the ice maker on the fridge cycles through pretty quickly, but I don’t like water that cold. What comes out of the tap is cold enough and stays that way in the right thermos.
The things I’m learning here! I guess I live a pretty sheltered, unsophisticated life; I didn’t know ice-making could be an art form. I’m more of a wine or brewski kind of guy. 🙂
I’m not much for wine, though I do have some fairly decent bottles in my wine rack for guests or the occasional special dinner. I’m a big fan of craft beers though. My taste runs heavily to ales like Scottish Ale and Irish Red Ales (I just looked and there’s Founders Dirty Bastard Scottish Ale and Smithwich — pronounced “Shmiddik” — Irish Sweet Malt Red Ale in the fridge at the moment) but also I enjoy something lighter than that on a hot summer afternoon.
There was a time in my life that a case of Old Milwaukee was my choice but now I prefer quality over quantity. I spent time in Europe and Australia, both places they make great beer, and got spoiled.
The reason for the clear ice thing is that it looks beautiful in a glass with an amber or clear liquor poured over it and it doesn’t alter the flavor of the booze, other than watering it down of course.
Tap water tends to have a lot of dissolved gasses and impurities like iron and calcium in it. This can affect a drink’s characteristics quite a lot. I used to own a house in the country with a well that even after being softened and coming out of the faucet crystal clear the tap water and tap water ice turned a bourbon and water (commonly called a “bourbon and branch”) drink into something that looked like root beer. It should have been a light amber yellowish color.
Now that you’ve seen this discussion pay attention the next time you see a liquor ad, the ice will be crystal clear.
What is amiss? I am no longer receiving the video.
Aesop ! , That was like 20 years ago, man.
I remember when the company I worked for switched over to JIT. We had a catalog of over 5k medical devices, so storing the gazillion parts needed was just not feasible with the amount of warehouse space we had. We did a hybrid version of it. For example, we would place an order with a vendor for say, 1k parts when our monthly usage was 100. The vendor was contracted to store the remaining quantity at their location. As our bin would empty, we’d send out a notice and they’d ship out the next 100. When we got down to the last 100, it would trigger a new order for another 1k. This would at least give us a 10-month supply to draw from for each order placed.
I do know how to can, but haven’t for several years now. I guess its time to get out the water bath canner and pressure cooker again and sweat, sweat, sweat 😐
Steve! You sir, are in luck!
I happen to be an ice-monger! I can offer you a competitive price on the finest ice, freshly carved from local ponds last winter!
I shall make my way to your house in my trusty horse-drawn wagon, twice weekly, to deliver my product.
Of course, I will also need to sell you an ice-keeper (ice-box) and a full set of the finest ice-picks with which to chip shards from the block.
What say you, sir? Can I count on your bank draft, through the postal service?
<sarc::10>
11
Cash is acceptable; gold bullion preferred.
When the Evergreen container ship got stuck in the Suez Canal, My first thought was wondering if anything I had ordered was in one of those containers or on board one of the ships that were waiting to get thru. Maybe some of Scott’s furniture was!
When my mother was looking at a big colonial house that was for sale, there were over 100 jars of canned peaches in the basement labeled 20 years ago and most of them were still adequately sealed! There were also patent medicines from the 20’s there. That’s when I learned about cough medicine with cocaine in it.
LOL, good one! Coca Cola’s original formula had cocaine in it too. That’s where the “Coca” in Coca Cola comes from. Used to be it really was The Pause that Refreshes, now it’s just a nasty caffeine jag.
But consumers ARE going to pay one way or the other. In money, in time, or in both. There is no existing scenario where payment is not made.
People still can stuff (in jars), lol. My sister does it because she enjoys her home grown produce and lives in an area where things grow well. She cans because her family doesn’t eat the volume of produce from the garden, before it would spoil. If I lived in that climate, I would also can (jar). Instead, I have about 6 months worth of prepper food in storage in the basement. We were also raised by Grandparents who were kids during the Depression.
In point of fact, having all M?BAs preaching the same damned thing is what has caused 99.44% of the economic troubles in the West. Central Planning sucks. And not in a particularly pleasant way.
When I was still working in the operating room, the boss tried to reduce “on shelf dollars” and rely on JIT deliveries. Several people tried to explain that we just don’t know how many cases of a particular sort would be coming in during a given week. She insisted on cutting inventory with predictable results. (We would pay for taxis to pick up and deliver “borrowed: supplies. What a CF.)
I supervised hospital blood banks for about 30 years. Towards the end of my career the “Just In Time” inventory bug was starting to bite the facility I was working in. It was an unmitigated disaster. I agree that in some aspects of our society, the JIT philosophy works well and when the worst happens it is an inconvenience. Health Care is not one of those aspects. We knew that we could not staff and stock for worst case scenarios but neither could we staff and stock for the day in and day out needs exclusively. All it took was one massive 50 car pile up on the interstate to drive that home to the MBAs running the hospitals! On a side note. The worst thing to ever happen to American healthcare was when doctors stopped running hospitals and MBAs started!!
Back in the 80s the Prime Interest Rate was as high as 20%. Yes, TWENTY.
A man wrote a book on efficiency in manufacturing called The Goal. And it took the manufacturing world by storm. If you ever attended a training session where you were looking for “Herbie” you were exposed to this book.
One of the items discussed that Controllers loved was the idea of reducing inventory, since you were paying 1 to 1.5% per month to carry that inventory. Seemed like a good idea to reduce inventory and save cost, increase profit.
Fast forward to the mid-90s and Prime is down to 7-8%. Half of what it was. But we were still measuring inventory levels and driving them down.
I went to work for a company in the power industry. Our main competitors had lead times in excess of 40 weeks. We had a big pow wow about increasing sales and decided that if we could consistently deliver in 12 weeks, we could gain market share. Since it took 6 weeks or less to complete the manufacturing cycle, that left design and material procurement.
We standardized designs so that we could stock inventory and started quoting 12 weeks. We boomed.
That company is now one of the largest in its industry.
Oh, and in the 00s, Prime was between 4 & 8% and has been <5% for the past decade plus.
Reducing inventory need not be done now, but we are slaves to the way we have always done it.
To Bill’s point about the electrical grid: Our grid could be taken out in major cities with little effort and the time to replace critical equipment would be a large portion of a year.
I was at a talk a few years ago on the security, or lack thereof, of our electrical grid. Frankly, I’m surprised that some bad actor hasn’t doen it already
I have had conversations with a retired “operative” that I know, who has had conversations with his former compatriots about how to utterly cripple a major city. Water, power, transportation.
They decided that it could be done in one day by a team of six individuals. I was not given details, but I do NOT doubt this man…
I believe that team has some redundancy built in. None of those systems are hardened against a low tech, direct attack. And with the interconnectivity of our grid, the ripple would be felt throughout the country.
ACTS can chime in but the threat of ransom-ware attack on those systems from a high-tech standpoint is probably real and if done when the peak heat wave hits will be devastating. Would make the pipeline seem like a nothing burger.
Yes, ransomware is a serious threat to all non-hardened computer systems.
The reason bad actors use that kind of attack is for the obvious financial motivations and security for the attackers.
A low tech attack team with rifles or RPGs or catapults has the disadvantage of requiring operators on the ground in the vicinity of the target. There is no way to rule out capture of at least one team member. Random chance is a real bitch when it comes to operational planning and execution and Murphy’s Law is always in effect.
Capture of an attacker means that operational security will be compromised. Some information will be lost to the captors. It doesn’t have to be direct, actionable information either. Anything that provides a clue to the entity behind the operational team is valuable and you might be surprised how much can be garnered with very little information. I’m not going to say any more about that.
Using a remote attack such as ransomware allows the operational personnel to remain safely behind both a foreign border and whatever state assisted masking may be available.
As a rule a ransomware attack is a random thing. The vector is usually a “phishing” email that looks fully legitimate and those emails are sent to many, many recipients.
The ransomware malware can also be picked up in a “drive by” fashion when someone in the organization visits compromised websites without sufficient protection on the local system. Favorite sources for that kind of attack are gambling and porn websites as in order to use those sites the victim usually has to disable or circumvent protection intentionally anyway.
If the object of interest is something specific like a pipeline or power grid then a slightly different method is used called “spear phishing”.
Spear phishing is an email or other access to the outside world beyond the local network’s security perimeter and targeted to a specific person, location or operation. This requires considerable more effort than just blasting random Spam all over the internet looking for a hit. Spear fishing is an intentionally malicious act against a specific target.
There are other methods, lots of them, such as DNS cache poisoning etc.
The point is that a remote attack via IT resources can be as or more damaging than shooting rifles or lobbing big rocks and it’s a lot safer for the attacking entity than having people on the ground nearby the target who run the risk of capture and interrogation.
That’s not to say that an operational team on the target is not effective. The Iranians just had a couple very suspicious fires and I would not be at all surprised to learn it was Israeli fingers that lit the matches. The Israelis are masters at that kind of operation and more power to ’em for it.
In 2013, PG&E’s substation in the rural area of South San Jose was attacked with gunfire for 19 minutes. Damage was extensive and took weeks to repair. Here’s the report in the Mercury News:
https://www.mercurynews.com/2014/06/18/pge-upgrading-substation-security-after-san-jose-sniper-attack/
PG&E noted that upgrades would be an “opaque fence”, cameras around the perimeter, and observation every 20 minutes of the perimeter via cameras, andcloseby trees might be removed if necessary.
Even then, when I read the reports, I thought that was not enough. I live 30 min away from this particular substation which I am very sure provides much of the power to homes and businesses in Silicon Valley. This substation is at the narrow part of Santa Clara Valley, surrounded by high dry grassy hills on both sides. On either side the hills are close enough to shoot rifles into the compound, over the “opaque” fencing. Funny, there wasn’t then, or even today, any mention of using something like ShotSpotter technology to pinpoint the location of the shooters.
Then again, and this goes to the heart of the “Just in Time” topic of the R/A video, this substation was attacked by gunfire in 2013. It’s 2021. 7 years and no other incidents. Why invest in somehting that probably won’t happen again, PG&E might think.
Think about the stated actions to take for that one substation and multiply it by several thousand. And those are the big substations. Most people don’t notice the ones right nearby. A catapult with large rocks would cause sufficient damage to knock one out for a week.
There are other reasons to can things other than to have them in the winter, period. If you get fresh out of your backyard, or nearby they taste better. Then means you get better tasting, and preservative free food in the middle of winter. Lots more work, but I’d you’ve ever tasted it, I’d bet you think its worth it. (Or at least to pay someone else to do it)
Honestly this is not something I’m terribly worried about.
It’s not that consumers “won’t pay the extra money for on-hand inventories” It’s that consumers will follow the market and if someplace sells the same thing cheaper than some other place, that’s where people will buy it. Why would they not do that?
The biggest issue for me is not necessarily the immediate availability of a thing but the knowledge of how long it’s going to take to obtain it. If I knew my wet bar ice maker drain pump was going out because it was making a weird noise and it takes a while to get one — Then I’d probably order one well before the pump actually failed.
This doesn’t work for everything, sometimes things just break unexpectedly and you’re stuck improvising with ice balls (which can be made in a regular freezer and are nice and clear also) or one of the other methods of making nice clear ice for cocktails (look it up on YouTube, the one where you freeze ice in a small cooler or pan works very good). I don’t drink cocktails, I drink whiskey “neat” with no ice, so my guests will just have to suffer improvised clear ice for as long as it takes.
It’s not only the “just in time” nature of modern inventories here either. It’s also the fact that we’ve gotten so used to getting something in a couple days that waiting longer seems a hardship.
I remember when it took 3 to 6 weeks for something to come from the Sears catalog. Once ordered you might as well forget about it until it comes because if you expect it in the mailbox every day you’re going to be disappointed for a lot of days.
I know that makes me sound old and that would be because I am old. I’m old enough to realize how safe, cheap and convenient it is to live in this day and age and appreciate it.
When the suppliers are all overseas (i.e., China and India), and have put all the little guys out of business…
If all of the suppliers, and the only ones, are overseas, this would be bad. One needs to look at some context of what is coming into the US from Asia that could not be somewhat easily replaced. My current company ships to China. And Mexico.
The Mexico plant builds for the US. Most multi-nationals who have factories in China don’t sole source those items. Too much danger of having everything nationalized. This happened to a company I worked for in the late 80s in the Dominican Republic. Guys in fatigues with machine guns showed up and said the owner was no longer the owner. We had two other locations for this reason. Lost some inventory and tooling, but we had a contingency plan.
The same thing happened with ARAMCO in the Middle East. One morning Saudi Arabia etc. rolled out of bed, looked around and said “It might be America and Britain that discovered, spent the money to develop and build all these oil fields but … They’re ours now.”
So they nationalized their oil industries and voila! Ownership changed by magic.
And ARAMCO is one of the largest and most profitable companies in the world.
And then didn’t Venezuela follow suit?
Yes, I believe Venezuela did exactly the same thing.
The hydrocarbon energy industry is all too prone to being gobbled up by a foreign government after Americans and others have done all the hard work and gone to all the expense to develop extraction and refining.
Which is another good reason to keep our own energy needs supplied by North American land and offshore resources that are not likely to be nationalized.
I’ll always remember as a kid in the 70s my grandparents having a closet full of canned food. While not to teh same extent, I now keep stores of canned food in our basement
Dumb question, but am I not seeing the link to where those t-shirts are being sold?
Not sure they are still available. But I have my Fleece with “The Common Sense Resistance” (dot) com on the back of the collar and a silhouette of a cool guy on the front.
Again, stupid question, but if Bill has leftover shirts why not put them for sale on the site?
I just emailed BWDC HQ Shelley if I could buy 2 for a one time donation “earmarked” t-shirt. My day perked up when I heard Bill mutter “I still have inventory. ” My black color short sleeve t-shirt with cool guy on the front was worn to tatters.
I’d buy at least one.
LOL – I did the same thing – I went looking for the link to buy a t-shirt.
So…. if there really are a bunch of leftover shirt – put ’em up for sale.
Good idea! I’d sure buy at least one if not more.
During the yellow fever outbreak there were bodies piled up as whole families were wiped out. During the great 2020 pandemic, there were Amazon boxes piled up outside as whole families waited the 3 day the CDC recommended for the virus to dissipate from them.
The humanity!
Ah, I remember those days. We had to walk the whole one hundred yards to the mailbox and back, barefoot, in the snow in July and uphill both directions.
Kids these days don’t know how good they’ve got it.