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Two Letters Re: Kanban: America's Ubiquitous "Just in Time" Inventory System--A Fragile House of Cards
Jim,
I recently shared "Letter
Re: Propane Shortage and Rationing in the Frigid U.S. Northeast" with
several friends. Surprisingly, a new friend who does not know that
I am into “Prepping”,
sent back the following. - Douglas in C. in Connecticut
Hi Douglas,
I work in the grocery industry. I can tell you first-hand that this
industry (as most others) has expended incredible amounts of time and
energy over the last 20 years into streamlining the supply chain.
More than anything else, this means reduction of inventory held within
the system – starting with the raw materials on the manufacturing
end, all the way to the shelf in the grocery store. Back Room
stock in the store (formerly called "safety stock") is especially
targeted through automated ordering and demand forecasting tools. I
design database systems to facilitate this type of analysis.
Of course, as companies seek to squeeze maximum efficiency from their
investment, the capacity to cope with unusual demand spikes is often
overlooked or simply eliminated. I was out of the country during the
sleet and icing that we had last week in Connecticut, but my wife tells
me that as soon as it became evident that there was a potential for
bad
weather,
the local stores were packed and being rapidly stripped of certain
commodities. And this was for a very minor event.
I can promise you that in a major event -- whether it's an act of terrorism,
war, civil unrest, an accidental overload of the infrastructure, labor
strikes or just plain old harsh weather -- you can not be assured that
your local grocery store will be able to supply your needs. You can
not count on the bank to have your money accessible (this also means
you can't count on credit cards to work). You can not be certain that
you can refuel your vehicles. You may not be able to get heating oil
at times, and your light switch might not do anything for you.
Please consider the many thousands of potential points of failure (and
their associated domino effect) that can seriously alter your daily
life. Think about where you and your millions of neighbors will find
clean drinking water if storms or floods contaminate the public supply.
Consider how an ice storm or a power plant accident can force you to
find ways to stay warm,
to keep your food safe and to prevent the pipes in your house from
bursting.
What will you do if the grocery stores can't get resupplied? Or, what
if there is food on the shelf but they cannot process non-cash payments.
When these events happen, it is our responsibility individually to
deal with them. If the stores in your area can't supply you food for
the next week, will you be OK? What about the next month?
Mr. R.:
I just thought I'd weigh in on on the concept of JIT logistics.
Just so it's clear where I'm coming from, I've worked in the infrastructure
side of the shipping/distribution/logistics business for the last
decade. I have insight into a lot of this, but am by no means an expert.
On 9/11/01, I was working in Virginia for a major food supplier, at
a fresh food (FDA "fresh",
i.e. refrigerated to below freezing but not hard frozen) distribution
center. I was called in, and told to get
the rest of the team in. The goal was to try and reroute everything
on the road to New York City (NYC),
anticipating bridges being closed or down, and the city being stranded
for at least a few days. This
was
a very
vertically
oriented company, shipping it's product via it's own dedicated truck
fleet. I didn't get my whole team in, some of my key personnel had
family in the affected areas, and understandably put priority on learning
their status. But we were able to reroute a lot of product right
into traffic jams and closed bridges. If it wasn't in NYC
right after the event, it didn't make it in for a while. I say that
to say this. The average person doesn't understand how much effort
it takes to keep a JIT system running on a day to day basis, under
relatively optimum conditions. Throw a monkey in the wrench and things
go south (or actually sit in gridlock trying to go south) really darn
quick. I had a dedicated, talented team; who's base efficiency dropped
like a rock under strain. Our communications to dispatch, operations,
and individual trucks fell apart, and lots of goods simply 'disappeared'
from our tracking for a while as drivers with no instructions and in
unfamiliar territory got lost. Procedure was ignored, contingency plans
forgotten, and individual effort replaced organized method. The problem
is, individual effort moves a truckload, organized effort moves tonnage.
I don't know what system military or civil authorities use, but one
would imagine that it's at least somewhat subject to the same strains.
It's the nature of the beast. And before we talk about the military's
ability to do stuff under adverse conditions, let's face the fact that
shipping ammo and supplies overseas from US bases with the base and
surrounding infrastructure intact is one thing; trying to do the same
without roads and bridges is another. The problem after [Hurricane]
Katrina wasn't the latent ability to respond, it was the practical
logistics
of route
planning and delivery of mass tonnage of personnel, support equipment
and supplies that had to be done over the new and unmapped landscape
of chopped up roads, downed bridges and nonfunctional port facilities.
Then think about the bulk of the quantities of anything that 8 million
people need, daily, post disaster.
I echo the concerns of JH, but I'll take it one step further.
Realistically, drop the bridges across the Hudson, NYC is pretty cut
off. But New Jersey has good port facilities, so does Brooklyn, and
to some extent Manhattan. While not ideal, with enough supply getting
to
eastern New Jersey, NYC could be resupplied. And there are lots of
warehouses staging goods, and manufacturing facilities making the goods
is in
Jersey. But the problem with JIT is it works throughout the supply
chain. Just as the final user stores and is supplied with as little
as they expect to need until expected resupply, the manufacturer stores
as little raw material and spare parts as possible to fulfill orders.
That means that after a day or two of resupply, the primary
supplying distros will be empty, and the manufacturing plants out of
material.
Now, drop a couple of bridges and tunnels in Pennsylvania and Delaware,
and New Jersey is practically an island. Now where do the supplies
come from? Pennsylvania is a massive ship-through state for goods from
the Midwest going to east coast ports. And Pennsylvania"s transportation
infrastructure,
since the decline of railroads (again, as JH mentioned) truly sucks.
A minor ice storm storm a couple of weeks ago shut down 80 miles of
one of only two major East-West highways in the state, stranding some
motorist for days. You could turn it around, ship through upstate NY
or the Great Lakes, or swing materials to other east coast ports like
Baltimore or Norfolk, but doing that dance on the fly isn't easy, which
leads to my final point.
The other part of the equation is, JIT relies heavily on communications,
to intelligently track levels, forecast needs to plan materials ordering
and production, and distribute goods where there's
the most pressing need. If communications are disrupted, the
system becomes grossly inefficient, sending goods where they're
not needed while other places starve, and making production planning
a craps shoot. On a good day at my current job, we have to dedicate
a phone line to lost truckers; if we didn't a significant portion of
our material would wander for who know how long. Now try that without
the phone, GPS,
Google maps, real time traffic reports, and throw in some random bridge/road
closures.
Sorry for the long ramble. To sum up, JIT can, and does, work as a
business solution. Quite well in fact. It saves significant cost, and
can provide better, more responsive service. But it's also a tightly
coupled system, therefore very sensitive to disruption, and doesn't
heal well afterwards. You can put in contingencies and redundancies
to make it more robust, but those that think that such a system can
truly be bulletproof are kidding themselves. - Rayster
