Posted on 10/31/2021 9:36:46 PM PDT by lightman
It isn’t JIT if your company is in the US and your suppliers are in China. The Japanese companies, like Honda, located their suppliers as close as possible to the manufacturing facility.
It was never a good idea to rely on China for everything.
Suddenly Ford’s old River Rouge plant looks better and better. Wood and iron ore came in one side and Model T’s drove out the other side.
I’m not sure everyone knows this - but companies are TAXED on held inventory!
That’s why you see stores ‘doing inventory’ on a yearly basis, usually in August, or having pre-inventory sales - car lots do this usually in October, to shed last year’s models. You know - back when dealerships had more than 15 cars on the lot? *SNORT*
(OT - talked to a friend yesterday who sells campers & RVs. They have FIFTEEN on the lot right now; usual inventory is 200!)
So, you’re TAXED when you purchase the item wholesale, you’re TAXED when you re-sell the item to your customer and you’re TAXED if it sits in your inventory for a year!
It’s insanity! I have managed two multi-million dollar businesses for others, I have NEVER truly understood how any of us manage to make a living with all the TAXES we had to deal with!
Also payroll TAXES, property TAXES, your employees pay TAXES on the income they earn from you, etc. It’s MADNESS when you look at the big picture and compare it to your bottom line, let alone having in stock what everyone wants or needs at any given moment!
Here’s an idea! Quit TAXING businesses to DEATH. That might go some ways to solving some of the problems Mother Government creates for the rest of us in the FIRST place! Grrrr!
I am old enough to remember working in an auto parts store where one person did the job of “INVENTORY”.
He had a card for every item in the store.
When purchases were received from vendors, he added the amount to the cards.
When sales were made, he subtracted the items from the cards.
At any time, he could see how many of whatever were in the store.
LONG before UPC codes, also.
Someone asked me how old my can of heavy axle grease was....
I answered: “WHEN did UPC codes start? This can has NOT got a UPC code number”.
They just looked at me. Axle grease still good in closed can...also Johnson Paste wax.
End the inventory taxes....Keep the warehouse.
Wasn’t even NAPA then......
I worked in a couple of those stores.
Even in one machine shop that still had SOME Flathead parts...but people only called for those when they got Bonneville Flats fever.
ABSOLUTELY
"Until the stability returns, the panic will continue,"LOL. The new normal, panic. Government LOVES this. It lives for panic, and will create panic where none exists. Need more government to get less panic, says the government.
Only the laws of nature will prevail. Reason is out the window,
IF your JIT inventory is sitting on a ship in the Atlantic-—you are NOT making any money on it, either.
You cannot even match a packing slip/purchase order & vendor invoice when nothing is moving.
Profit is affected by the cash flow velocity. Holding inventory is generally negative on profit.
Losing sales is the other side of that gamble.
There is good commercial value to being nimble, able to ramp it up and turn it off on demand.
There are other benefits to JIT, typically that quality issues are nipped in the bud, reducing those losses. Also, design evolution can result in substantial inventory losing value - who wants last year’s garbage?
Costs and prices will go up as business migrates toward JIC
JIT tries to offload risk and cost to suppliers.
In order to satisfy JIT requirements, the supplier has to maintain inventory and spare production capacity. This works, until it doesn't and the supplier is forced to say "Sorry, we are unable to deliver".
It's similar to the 2008 derivatives debacle. Derivatives were a way to re-package risk, so that risk-averse institutions could put the financial risk on others. This worked until a big contra-party was unable to fulfill it's obligation and went bankrupt, sending shock-waves across the financial system.
There is a true accounting of the time from mining, through smelting, through foundy, fabrication, and out the door as a car - dirt to car in two weeks, I think.
Ford River Rouge in the early 1900's. Vertically integrated JIT. Incredible product velocity.
oh.. it’s you again..
Let me ask you a serious question..
Why don’t we make more things in the USA?
What is the reason why we don’t build more manufacturing plants here?
Greedy profiteering in the age of nil import tariffs. The labor "savings" is pocketed and goes to increase profit. The end consumer sees nothing but closed factories, shortages and devastated local economies..
No protective import tariffs to eliminating the cost advantage of exploiting 3rd world labor and charging first world retail prices.
I see you are going to spit out the old union rhetoric again..
No, labor is actually a very small cost in the manufacturing process.
It is also a one time only expenditure in the building of a manufacturing plant.
So, lets try again..
Why aren’t we building more manufacturing plants in the USA?
Then why are you so fixated on labor costs?
Labor cost is a small percentage of expense in the cost of a product.
Only the union spits out the rhetoric you keep spitting out.
So, lets try again.
Why are we not building more manufacturing plants in the USA?
JIT = Just in Time = OSWO = Oh Schiff We’re Out
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