During a recent appearance on GearDown the Podcast, our CEO Matt Fain was asked an interesting question by co-host Grace:
Could the pop.capacity model actually save just-in-time delivery?
Why yes. Yes, we think it could.
Just-in-time became popular decades ago in manufacturing as people took notice of the Toyota Production System (TPS). Taking delivery of just what you need, just in time for you to deploy it, was part of the larger TPS philosophy to cut out unnecessary costs – in this case, the cost of inventory.
You really couldn’t claim to be doing Lean manufacturing if you weren’t doing just-in-time. And over time, the same became true of retailers, who also recognized the savings they could enjoy by eliminating inventory as much as possible.
Of course, just-in-time is a difficult system to maintain when supply chains are snarled and it’s extremely difficult to be confident of a delivery date – especially a quick one.
Over the course of the past year, just-in-time has given way to just-in-case, as everyone from manufacturers to retailers began stockpiling products as a hedge against large demand and not enough parts or products on hand. The Institute for Supply Management reports that lead times on orders in June rose to an average of 186 days, which ISM describes as an all-time record.
Far from just-in-time, businesses are ordering as far in advance as they can. It appears that the current supply-chain crunch has left just-in-time in the past.
But Grace makes an interesting point. It just may be that microfulfillment can give just-in-time another life.
The problem with just-in-time in the current environment is that you can hardly order a product that might have to come from China and expect it to arrive on a quick turnaround. Between idling ocean carriers, congested ports and the shortage of truck drivers, you’re risking a plant shutdown or empty retail shelves.
Microfulfillment, on the other hand, relies on shorter hauls between local warehouses. If you can find the part or product you need in the next town over, then you can do just-in-time. And the pop.capacity platform makes that possible because it allows shippers to find the warehouses they need – in the right locations, with the right specifications – so they can make parts and products more readily available through a quick local run.
When a shipper needs to be sure a customer has quick access to certain parts and products, the pop.capacity platform finds the warehouse that not only has the space but can be that effective link in a fulfillment chain that provides easy access for the customer.
You may not be getting parts and products direct from the factory. And there is some inventory cost involved with warehousing. But the pop.capacity model offers at least some potential for manufacturers and retailers to reduce or eliminate on-site inventory. That’s getting them closer to the TPS model, which is still the standard for Lean operations.
So nice observation, Grace! You’re right. Just-in-time is not dead. It just needs a way to overcome the current issues in the supply chain. And pop.capacity could very well be the answer.