Creating an Environment for Job Creation, Outdated Models

There are several avenues in this particular subject because we have consistently developed numerous different models of doing business, but seemingly have failed to realize when these models did not pan out as designed.

One of those models is "just in time inventory" which historically has caused plant shutdowns due to numerous different problematic assumptions.

First, the concept of just in time inventory supposes that all aspects of the model do and will function exactly the way necessary to function.  We know this not to be true simply because we have come across a continually growing set of circumstances which impair the ability of this function.

I've gotten to the point of calling just in time inventory "its about damned time inventory" whereby the lack of product has become built into the delivery.  Every system which has a flaw will ultimately have that flaw exploited by circumstances, causing greater and greater failure rates due to that inherent flaw.

Just in time assumes that all systems involved with delivery are optimum, that no intervening circumstances can adversely affect delivery, and that once arrival of product has been achieved, there are operational systems in place to offload that product and get it out of the way for the next delivery.

All of the above factors are a fallacy in design, and actually don't even fit the least assumption, which means that any flaw, as I said, will, under natural cause and effect, be exploited to the detriment of the model.

There are no methodologies that allow for everything to work in lockstep time and time again, ad infinitum without fail.  Such is an impossibility, even in a manufacturing environment where most all aspects are strictly controllable and run fairly well.

It is on the outside of the system that creates the problem.  Trains derail, planes don't always run on schedules, and trucks can run out of available fuel.  Since we have gone global after the development of this just in time environment, the entire world itself imposes itself upon the prospects of being able to maintain an already failed model.

Where we fail is our inability to recognize a failed system, much less come up with the creation of new systems that allow growth.

We are hunkering down without investment, without even the basics of a desire to recognize those failures.  And part of those failures are extremely hard to look at because, like just in time, our models are more important than our historical data.

It is easier to continue to support a failed model, suggesting that such a model can be tweaked and returned to a viable system when the design of the system was itself flawed from the beginning.

And I must add that any system designed to operate upon the state of roads, railroads, and trucking in a just in time delivery system ignores the fact that those roads, railroads and trucking are now 30 years older without the proper maintenance to support the initial model design.

So what we are seeing is a conflagration of multiple failures, allowed to grow over time due to the lack of maintenance, and we still expect to see auto parts getting to the car manufacturers, we fail to see steel, now coming from China, to get to new construction locations, and we fail to see any recognition of the problem from the people who have been elected to stave these types of problems off.

This created a new model to combat the old, failed model, which in turn, created new avenues of failures.

Since we could no longer depend on just in time delivery of inventory, business decided to start up these big club stores, where purchasing in excess of one's individual needs was drummed up because people couldn't expect to go to the store during an emergency and buy toilet paper.

This is one of the strangest manifestations of trying to fix a failed model with another failed model, but the ramifications spread like a virus in a number of industries that placed Americans in peril.

For instance, you can't go to a club discount store if you don't have the vehicle to move the product to your house.  Well, you can, but to what purpose?

Once you get the product home, you have to be able to store it, which no one has had since the days of the cellar (no, not a basement, a cellar to store root vegetables and so forth).

Cheap loans caused people to move up to larger houses with greater storage availability even when they didn't require the greater living space.  But the apparent trend of HAVING caused the requirement to store what you had, and history isn't really kind when the obvious is presented.

This is one of the failures of the original "just in time inventory" even though it was originally designed to offer manufacturers the ability to have minimal storage facilities for parts, and it turned into having maximum storage facilities for product to the consumer.

Of course, the offset is that one has to trim some other item out of their lives, such as certain larger homes becoming parts of a "controlled access" gated community, and the greater size of the house ate up the available land, causing people to lose the ability to park their own vehicles.  Many of these communities have no parking on the street, so the owner has given up the ability to maintain friendships and community due to the lack of parking.

This is a major problem, particularly when trying to maintain a level of family in a house big enough to allow for a nicely sized family event, and yet you can't use the house because of the lack of parking.

When my family converges upon my sister's house for Christmas, the whole block is shut down.  Its not like she doesn't work out accommodations with her neighbors, but again, because the larger housing necessitates a smaller availability of parking we actually impose ourselves upon her neighbor's lives.  In fact, all of us have become pretty friendly with her neighbors because they all have become a part of the family.

These are all big and little ripples of the concept of just in time inventory, or more specifically, due to the failure of the model of just in time inventory.

I recognize that to some, this might be a stretch, but facts are facts.  I have a small house, but I also have enough street parking available that we have had a few jazz parties where everyone gets not only a chance to park, but a chance to sing.  We easily had 50 people in the house at one time.

I can't go to my sisters-in-law's house and do that even though the house would accommodate a larger group of people than mine.

And the point I'm trying to make is that 30 years of a failed system of moving product to market specifically to cut costs in the manufacturing process has failed the American people, on the whole, by the ripple effect.

It doesn't just stand in this particular circumstance, but to recognize that such is the case one has to actually do the work and figure out just how much over the past 30 years we have been manipulated into doing our normal things in the manner they desire.

Would anyone from 50 years ago buy a case of tomato sauce?  Is it necessary to have packages of toilet paper so big that one needs a minivan to get it home?  Do we need cases of Pepsi or Coke?  Do we need a "refreshment" refrigerator for kid's drinks in addition to the one?  Cooking shows even support the idea of a refrigerator for storage and one for  interim cooking steps.

Don't get me wrong.  I understand the idea of a pantry, even if it is twice the size of a 1930's kitchen, but how has the extrapolation of housing storage helped create the house hungry world in order to HAVE a month's worth of toilet paper?

Let's face it. These efforts made by people;  to buy a minivan, to purchase a new, bigger house even though parking is limited;  the concept of storing household products rather than buying them when you need them, is all a recognition of the fact that you may not have "just in time inventory" work for you.

So we have to be aware that new business models are being presented to us via the ripple effect, and it seems that the greater mistakes these business models make, the greater adverse effect it has on the people.

Comments

[Bill Perkins]

Roger, your link of JIT and job creation, or JIT and house size or JIT to club retailers confounds me. Cosco's and Sam's and Office Depot and other similiar stores selling in larger quantities wouldn't exist if there wasn't a market for them. The advantage generally is price per unit vs. buying onesies or twosies at other retailers. That's why many mom and pop commercial outfits, such as restaurants, buy tomato sauce by the case or franks by the gross and families with small tykes buy paper products by the case there, etc. There are enough diverse customers who need certain items in quantity such that it supports such a model. Otherwise they wouldn't last. What's wrong with that? If you want to buy one can of tomato sauce, there are unlimited number of places for you to do that. But you'll recall that one of the lead marketing efforts when Sam's came on board was to cater to small business.

Are you suggesting that your sister bought a larger house in order to store all the stuff the club stores mandated her to buy? I don't see a link. If your sister wanted to entertain lots of folks, she could have spent a fortune for a one acre parking lot behind her house--but that probably made no sense. What's wrong with the occasional party in a big house with cars parked down the street? How is that a failed system? The same logic suggests that you screwed up because you have lots of parking for your parties, but you have too small a house to function ideally. Neither circumstance do I see as a societal or industrial ripple "failure" and both seem to work just fine for the occasion, at least as you describe it. I guess it would be ideal for you and your sister to have both big houses and big parking areas, is that your point? Is that where JIT somehow failed you?

There are always circumstances that foul up supply lines to manufacturers. No supply system can defeat a Katrina/Irene double whammy, or the Japanese tsunami. But companies using variations of JIT also go to extremes trying to predict logistical problems and use moving average assumptions of delivery times, etc. to factor in the routine road, weather and scheduling issues such as the UAW's contract with Ford is expiring on X date and we know what that could mean.

There may be mistakes in business inventory models, but none the consumer does deal with in a hurry. Ultimately, the consumer rules, and if the manufacturer f's up, he either fixes it or he's a goner. And that's the way it should be. It is when we permit the delivery of goods and services by monopolies and cartels that you see adverse impact on the people.