7 ms·

One big advantage of low inventories is you do not have to fix or trash lots of parts if they were made out of spec. In the case of chips the odds are they are

by zeke 5y ago

One big advantage of low inventories is you do not have to fix or trash lots of parts if they were made out of spec. In the case of chips the odds are they are all good. It is just the cost of ownership but not the cost of refitting.

throwaway0a5e 5y ago
>One big advantage of low inventories is you do not have to fix or trash lots of parts if they were made out of spec Instead you either stop/slow production or shove them in your products and hope for the best.
- hef19898 5y ago
  You know a function called Supply Chain Management exists, right?
  - throwaway0a5e 5y ago
    It should go without saying that there are nuances in implementation. What I'm describing here is a fundamental tradeoff of JIT systems. If you get the wrong thing delivered it throws a bigger wrench into things because you don't have the buffer. Can you make this rare enough that the amortized cost is low enough to make JIT overall cheaper? Of course, that's why everyone does JIT.
    - Jtsummers 5y ago
      > If you get the wrong thing delivered it throws a bigger wrench into things because you don't have the buffer. JIT, in Lean, does not mean no buffer, it means as little of a buffer as you can get away with. If you have issues with delivery like this on a regular basis, then you'd increase the buffer size (at least temporarily) and also take your suppliers to task for sending the wrong thing over and over. The buffer size should be increased if any upstream supply issues exist that regularly cause a shortage. Ideally, you should address those issues themselves, but if you have and they can't (or won't) be fixed then you increase your buffer to accommodate reality. However, the shortage is itself a signal. Too high an inventory permits supply issues to persist without being addressed for a long time because you never get the signal about the issues with them (the downstream production slowdowns).
      - cptskippy 5y ago
        > JIT, in Lean, does not mean no buffer, it means as little of a buffer as you can get away with. Eh... I would argue that JIT means making that buffer someone else's problem. I was doing EDI at a logistics firm that contracted with Seagate who provided HDDs to Hitachi for their SANs around 2006. Hitachi was doing JIT for their manufacturing, Seagate however was just speculating Hitachi's demand and literally stockpiled HDDs in this firms warehouses geolocated next to Hitachi's factories. We would pickup stock from Seagate and ship it to these warehouses where they would remain Seagate's property until Hitachi requested it, then we would simply transfer ownership to Hitachi. Interestingly, we used rail shipping as a buffer to reduce warehouse size by sending freight on slow/cheap/indirect routes.
        hef19898 5y ago
        The last bit works, as long as the slow transportation is closely controlled. I tried it once, in the end warehouse space was cheaper. EDIT: What you describe sounds more like VMI, vendor managed inventory, than JIT. Both require half way reliable forecasts and collaborative planning so to worl properly. Have to agree so that both solutions tend to push inventory risk to suppliers. Done correctly, overall inventory does decrease so.
        cptskippy 5y ago
        JIT and VMI go hand-in-hand, they aren't mutually exclusive. Implementing JIT is to impose VMI on your suppliers. The interesting thing was that Seagate avoided managing inventory by outsourcing to the logistics firm. The stock was technically Seagate's until it was ordered by Hitachi but the logistics company took immediate possession as pallets rolled out of the factory. > The last bit works, as long as the slow transportation is closely controlled. It didn't need to be controlled, just scheduled. You knew you need x units by d. The factory output n per week, so you could stagger shipments by way of different lines. All of the inventory was tracked by serial numbers and it was interesting to watch it move because supply was often delivered to the warehouse out of order or shipments weeks apart arrived simultaneously.

by zeke 5y ago

throwaway0a5e 5y ago

>One big advantage of low inventories is you do not have to fix or trash lots of parts if they were made out of spec Instead you either stop/slow production or shove them in your products and hope for the best.

hef19898 5y ago
You know a function called Supply Chain Management exists, right?
- throwaway0a5e 5y ago
  It should go without saying that there are nuances in implementation. What I'm describing here is a fundamental tradeoff of JIT systems. If you get the wrong thing delivered it throws a bigger wrench into things because you don't have the buffer. Can you make this rare enough that the amortized cost is low enough to make JIT overall cheaper? Of course, that's why everyone does JIT.
  - Jtsummers 5y ago
    > If you get the wrong thing delivered it throws a bigger wrench into things because you don't have the buffer. JIT, in Lean, does not mean no buffer, it means as little of a buffer as you can get away with. If you have issues with delivery like this on a regular basis, then you'd increase the buffer size (at least temporarily) and also take your suppliers to task for sending the wrong thing over and over. The buffer size should be increased if any upstream supply issues exist that regularly cause a shortage. Ideally, you should address those issues themselves, but if you have and they can't (or won't) be fixed then you increase your buffer to accommodate reality. However, the shortage is itself a signal. Too high an inventory permits supply issues to persist without being addressed for a long time because you never get the signal about the issues with them (the downstream production slowdowns).
    - cptskippy 5y ago
      > JIT, in Lean, does not mean no buffer, it means as little of a buffer as you can get away with. Eh... I would argue that JIT means making that buffer someone else's problem. I was doing EDI at a logistics firm that contracted with Seagate who provided HDDs to Hitachi for their SANs around 2006. Hitachi was doing JIT for their manufacturing, Seagate however was just speculating Hitachi's demand and literally stockpiled HDDs in this firms warehouses geolocated next to Hitachi's factories. We would pickup stock from Seagate and ship it to these warehouses where they would remain Seagate's property until Hitachi requested it, then we would simply transfer ownership to Hitachi. Interestingly, we used rail shipping as a buffer to reduce warehouse size by sending freight on slow/cheap/indirect routes.
      - hef19898 5y ago
        The last bit works, as long as the slow transportation is closely controlled. I tried it once, in the end warehouse space was cheaper. EDIT: What you describe sounds more like VMI, vendor managed inventory, than JIT. Both require half way reliable forecasts and collaborative planning so to worl properly. Have to agree so that both solutions tend to push inventory risk to suppliers. Done correctly, overall inventory does decrease so.
        cptskippy 5y ago
        JIT and VMI go hand-in-hand, they aren't mutually exclusive. Implementing JIT is to impose VMI on your suppliers. The interesting thing was that Seagate avoided managing inventory by outsourcing to the logistics firm. The stock was technically Seagate's until it was ordered by Hitachi but the logistics company took immediate possession as pallets rolled out of the factory. > The last bit works, as long as the slow transportation is closely controlled. It didn't need to be controlled, just scheduled. You knew you need x units by d. The factory output n per week, so you could stagger shipments by way of different lines. All of the inventory was tracked by serial numbers and it was interesting to watch it move because supply was often delivered to the warehouse out of order or shipments weeks apart arrived simultaneously.