Posted on 10/31/2021 9:36:46 PM PDT by lightman
JIT was adopted by the Japanese because of real estate for warehouses is in short supply and very expensive. For most American businesses to adopt the process it’s like wearing a raincoat in the desert, we have plenty of land and real estate was fairly reasonable until the communist inflation showed up.
The taxes on holding inventory are horrendous.
I remember my dad saying decades ago it got so bad his company made them totally Destroy brand new engines to keep from having to pay the sky-high inventory taxes.
Yea, it always struck me as STUPID, and hopefully that wonderful system will end. We have TONS OF ROOM for warehouses here in Texas and while they do cost money to operate, they also have advantages, such as allowing bulk purchases.
Also, the idea that car companies could fall flat on their faces over COMPUTER CHIPS, of all things. One could probably fit all the chips used by Toyota in a year in a single Home Depot, as they’re not exactly hogs when it comes to storage volume. No excuse for that. Tires, seats, fuel tanks, yea...they do take up room. Not chips.
Remember when every small automotive shop had an array of V=belts and serpanitine belts hanging high on a wall fetched down by an extension pole?
They weren’t depending on the local NAPA doing JIT!
No purchasing agent in the world will be getting fired for excess inventory or laying in safety stock that would have been unthinkable 2 years ago.
Excellent point on inventory taxes—and they vary by location.
The smart business (imho) will keep a large inventory—but go wherever they need to find a location (including offshore if necessary) where it will not be subject to tax.
Just In Case, eh? ...prepping hits the business environment.
JIC was always the norm November - March in the northeast snowbelt.
Now it is just year ‘round.
lol, are they calling JIC new? Then there was “safety stock”
bkmk
Ping
That is certainly a component, but there are other things in play, such as tying up more capital (a major one), supplies getting old (which applies to more than you might think), an extra step in storing and relocating, and paying taxes on the stuff sitting in the warehouses (a very major one).
Prepping is a JIC accounting system.
JIT is usually based on the delusion that everything is always available, the supply chain works perfectly all the time, nothing will fail testing, and there is no adverse weather.
JIT often expose failures within a company, from inbound loading dock to store back rooms. Instead of fixing the problems, the companies lie to themselves about how effective their systems were.
The CORE PROBLEM WAS OFFSHORING US INDUSTRY TO THE 3rd WORLD.
Tariff is NOT a four letter word.
A really high import tariff would knock the legs out from under Free Traitor grip on the economy.
The main benefit of JIT is less inventory costs. One of these is tax as mentioned above. Also, lost opportunity costs as well as storage costs. If you are paying for that inventory you can not make profits doing something else with that money. We may have room but you have to pay for the use of that room. I guess there are more costs also.
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