by the48thronin » Wed 22 Apr 2009, 23:51:27
$this->bbcode_second_pass_quote('OutOfGas', 'I') still work in manufacturing. We have reduced the amount of raw materials and finished goods we keep in stock to reduce costs.
We frequently run out of raw materials now.
Our customers are also ordering smaller amounts and are going to LTL shipping. Customers are also running of of product more often.
JIT will be doomed with the next oil price spike and resultant increase in shipping costs. Look for local manufacturing to increase in the comming years.
Shipping costs have not increased... Not to the actual providers of the shipping anyway. Ships are now willing to carry containers for pennies on the dollar compared to last year this time. Truck freight is paying about 70 percent what it paid last year. Even rail road rates are down. All of these are being mashed flat by the realities of diminished utilization.
The J I T system is going to break because in these chaotic conditions no one will be able to keep trucks, ships, or even railroads available long. The ship owners, truck owners, and even the railroads that just last year were predicting a collapse due to over utilization are facing a crisis as they fight for market share in a shrinking market and are buffeted by demanded lower rates.
The dc yards will be full of trailers, ( some empty, some parked as extra storage like the containers at the back of the store). BUT J I T requires everyone to be in time like a well run group of dancers in a chorus line.
Your customers and your company are breaking the rhythm. You are starting to require a stop and go effort from your suppliers, and giving your customers stop and go service. You no longer can support a transportation system that runs on a tight schedule.
You are abandoning the J I T trucking model to LTL just when LTL is going down also. ( you might want to check those LTL companies freight volumes some of which are DOWN 78%). The survival of the LTL mega fleets is almost impossible to have any faith in.
My own specialty is in as bad a situation as most trucking. Many of my customers are like your company no longer selling enough product to fill a trailer, but fortunately for me, they cannot for security and "time definite" and service reasons try LTL carriers, so instead they try to beat down the rate because sometimes their orders fill less than 8 feet in a 53 ft trailer. The "time definite" and security concerns defeats any attempt by them to use LTL just as it defeats any attempt by me to make any LTL adjustments to their rates.
The discussion here is of J I T failing. This does not mean that with adjustment to a non JIT system of procurement that supplies cannot be had at all, IT does mean that some disruption in the availability will happen or we will go back to local or warehoused supply meaning an increase rather than further decrease in supply on hand.
The system devised to make production on an island more profitable will not stand on this continent without the luxury of transport on demand and on schedule.. That is the basis for my statement that JIT is coming apart.