Inventory became evil decades ago. “Just In Time” logistics became the norm instead of having warehoused inventory on hand. The beancounters all decided inventory was money that was sitting around not doing anything and maintaining the warehouse space cost more too. Can’t have those costs on the balance sheet. So speed in receiving smaller shipments more often is now the norm, along with ordering when you need them instead of ordering ahead of time, because some beancounter isn’t gonna be happy about extra inventory.
The beancounters are right about the costs. What they’re not right about is the risks. JIT supply chains are much more fragile, and to achieve some degree of resiliency, even sophisticated manufacturers will often mantain stockpiles of some critical goods. And things get even more funky when there’s only one good supplier for something, or the cost of switching suppliers is high.
Worked in two factories since Covid. The first stockpiled components we produced in house, and relied in JIT logistics for external components. Which was basically the stupidest arrangement they could have cone up with. They had 10+ years worth of parts they could make in house, clogging up their warehouse. And couldn’t ship anything because they were waiting on suppliers.
The other built two new warehouses to stockpile external supplies, and never let up on production.
Yeah, if you ever need stories on just how stupid senior managers can be, look at supply-chain case studies. And don’t blame the accountants: it’s their job to report costs, but it’s the job of the managers to deal with risk. And running ultra-lean JIT comes with the risk that a five-minute delay in delivery of some critical component can shut down your line. It’s not the beancounters’ job to have appropriate plans in place to prevent that from happening. It’s the biz-school bell-ends who are asleep at the wheel or thinking that they’ll just pretend there’s no risk and hope they’re lucky enough to translate those low running costs into their quarterly bonuses. And the contingency planning if the supply chain does glitch? Often it goes no deeper than having a scapegoat lined up.
Inventory became evil decades ago. “Just In Time” logistics became the norm instead of having warehoused inventory on hand. The beancounters all decided inventory was money that was sitting around not doing anything and maintaining the warehouse space cost more too. Can’t have those costs on the balance sheet. So speed in receiving smaller shipments more often is now the norm, along with ordering when you need them instead of ordering ahead of time, because some beancounter isn’t gonna be happy about extra inventory.
The beancounters are right about the costs. What they’re not right about is the risks. JIT supply chains are much more fragile, and to achieve some degree of resiliency, even sophisticated manufacturers will often mantain stockpiles of some critical goods. And things get even more funky when there’s only one good supplier for something, or the cost of switching suppliers is high.
as these tariffs start kicking in, companies are really going to regret not having local inventory.
Worked in two factories since Covid. The first stockpiled components we produced in house, and relied in JIT logistics for external components. Which was basically the stupidest arrangement they could have cone up with. They had 10+ years worth of parts they could make in house, clogging up their warehouse. And couldn’t ship anything because they were waiting on suppliers.
The other built two new warehouses to stockpile external supplies, and never let up on production.
Yeah, if you ever need stories on just how stupid senior managers can be, look at supply-chain case studies. And don’t blame the accountants: it’s their job to report costs, but it’s the job of the managers to deal with risk. And running ultra-lean JIT comes with the risk that a five-minute delay in delivery of some critical component can shut down your line. It’s not the beancounters’ job to have appropriate plans in place to prevent that from happening. It’s the biz-school bell-ends who are asleep at the wheel or thinking that they’ll just pretend there’s no risk and hope they’re lucky enough to translate those low running costs into their quarterly bonuses. And the contingency planning if the supply chain does glitch? Often it goes no deeper than having a scapegoat lined up.
It’s always the fucking accountants.