The Death of Just-In-Time Manufacturing?

In My Humble Opinion (IMHO)
#9

This is a major misconception. Modern cars are incredibly complex carefully engineered machines that require computer control for optimal efficiency.

You can’t take a modern automotive component and slot in some random used cpu that wasn’t designed for it. It’s not about cpu power on some artificial benchmark. The cpu in the automotive part has a whole set of capabilities that are extremely likely not present on the Apple chip.

It’s also crazy to design an automobile around the idea that you’ll use whatever chips happen to be lying around after people upgraded their phones.

#10

just today a relative of mine just about dropped dead and has to shelve a project until lumber prices go down

He bought a “build your own storage shed kit” for about 250 or so … and all he has to buy is about 10 or so 2x4s and about 10 smaller blocks of wood for support, now normally he says this wood purchase would be between 80-125 or so … Well he went in today and said if he’d bought the wood at current prices it would be around 300 dollars …so the sheds now on hold

#11

LOL! :face_with_monocle:

#12

I regret starting this hijack. But obviously I know you can’t just swap parts ad hoc. My point is that a car manufacturer could design their systems from the ground up to use a specific chip/SOC that is known to have a very high availability on the wholesale recycling market. There are literally hundreds of millions of Intel/Apple/ARM chips in known specs floating around.

And no, no car on the market except for Tesla requires even close to what a modern smart phone requires.

#13

Just-in-time has worked relatively well for several decades. One bad year, caused by a once-in-a-century epidemic, does not necessarily invalidate the concept.

#14

Deleted animated GIF, not allowed according to board rules.

Hari Seldon's moderation
#15

I work in the embedded software industry. Among the customers I work with are numerous automotive component manfuacturers. I assure you that you are extremely incorrect about this. There is a lot more custom silicon with varying uses in a modern car than there is in a smart phone.

#16

I think what you should have said is that the pandemic caused some gaping holes in the supply chain. The global supply chain should not be set up to constantly handle a once a century pandemic.

#17

There’s a built in assumption in some of these responses that there is a problem here that must be solved. That may be true, but I’m not sure we have all the data yet to support that. Or, we certainly don’t have it in this thread.

Reducing JIT to “maximizing profits” is something you can say about any more efficient way of doing something and it seems overly cynical to frame it like that unless you’re making a claim of price collusion between automakers too. Incentivizing efficient production is one of the central claims to fame of the market economy system.

So, are the shortages and corresponding price hikes of components more costly than the benefits accrued by using JIT for however long we’ve been using it? The answer isn’t obviously “yes”. It’s not obviously “no” either.

If I just shrugged the whole situation off and said “yeah, it’s expensive to build a house or buy a car right now, but so what?” and that we can just wait for it to resolve itself given enough time along with continuing with JIT, would I be wrong? If so, why? And would mandating not using JIT make us better off?

I can see the case for stockpiling and “strategic reserves” of basic items that threaten national security or could cause starvation or massive societal disruptions. But just for large temporary blips in the economy? That’s a justification that needs some numbers behind it. If you optimize for the once in a century event you’re doing a worse job during normal times. Have enough saved so that you survive the once in a century event, sure. But “survive” encompasses quite a lot, including having to put off that kitchen renovation for another year.

#18

Also don’t forget that JIT gives you more flexibility to react to sudden changes. How many companies now are making masks and hand sanitizer? How many companies were doing so two years ago? If your business is built around the assumption of warehousing things for a year, then it’ll take you at least a year to pivot your business.

#19

That’s a different statement than what I said. Custom yes…more demanding, no. For a simple example, the ECUs use something in the range of 1-5 MBs of RAM. These don’t NEED to be custom, but as @What_Exit noted car companies are very used to expecting this kind of stuff from their suppliers. In general, the computer chip recycling industry is under-utilized across most industries.

#20

Other events can impact supply chains. This is an extreme event, but that doesn’t mean it doesn’t expose vulnerabilities to different events.

#21

I think this is the key point, but I want to amplify why it is may be perceived as ‘good’ especially in the US. During COVID, a huge number of raw and finished goods and materials were suddenly hard to get, or more expensive. People complained, but still bought them as soon as they were available again, and sometimes at vastly inflated prices.

Very, very few people changed their preferred ‘brands’ due to a shortage. And what most people were and are complaining about is price. People, overall, seem less concerned about having to wait for something if the delay is explicable, but will cry to the heavens if it becomes more expensive. And JIT helps keeps prices down while maximizing profitability. Not that the two always go hand in hand, far from it, but it does enable more competitive pricing in non-monopolistic areas.

#22

No one is proposing any government intervention.

The question is is businesses will stop relying so heavily on JIT now that a globally disruptive event is no longer a hypothetical.

Many smaller companies have gone out of business due to the lack of inventory. Maybe that could have been prevented and some start-ups will adjust in the future.

If car and computer prices are goning up across the board, the company who planned ahead for a supply chain disruption would be at a major advantage. The free market would reward them for investing in a more resilient resource plan.

#23

But my point is that the free market may very well punish them for being less efficient during normal times when components are easy to source. Normal times are more, er, normal so the shocks to the system would need to be frequent or huge to completely guard against that. I’m not saying that I’m sure that isn’t the case, but I’m not convinced it is either.

#24

This is not what I observed. It’s a poor example admittedly, but the shortages in toilet paper, masks and sanitizer were the problem. Not the price gouging. People may not have been willing to go to the black market for it, but they would have been fine spending significantly more if they’d have just been able to get it.

People are furious that you can’t get your hands on Xbox’s, PS5 and graphics cards. They aren’t pissed about a price increase from the manufacturer, they are pissed because no store has inventory.

People are tolerating the price increase on lumber and home construction is continuing. If there was no lumber to buy anywhere and projects were going belly up or people couldn’t repair damages you’d see a national emergency.

#25

My car is two years old and wasn’t the bleeding edge at the time. It still has a cell phone connection as fast as my phone’s, front and rear facing cameras like my phone, a giant touch screen just like my phone, a second monitor (which my phone lacks), GPS just like my phone, numerous accelerometers (to run the stability control system and airbag systems) of which I think my phone just has one, stereo speakers like my phone, a wifi chip like my phone, radio receiver like my phone, etc. I can’t think of any system my phone has that my car doesn’t. Unlike my phone, it also has a remarkably complicated electronic stability control system, various driver aids to keep me from getting killed (including even more cameras), various airbags, sophisticated engine management and transmission control systems, etc., all of which my phone lacks. My car has never had to reboot during operation. My phone has crashed at least five or six times during the pandemic, which would likely to translate to at least one real crash if my car had the same performance. I suspect carmakers know more about getting cars to run dependably than you.

You seemingly give credit to Tesla for using bleeding edge technology. In fact, they relied a lot on off-the-shelf processors and memory to run their Model S and Model X cars although even they weren’t dumb enough to buy used components of dubious provenance. The result of their genius move was that the components failed after a few years leading to bricked cars, thousands in repairs for owners, and an investigation by the NHTSA into whether they must recall the cars. I’m sure had they used old cell phones though, it would have all worked out great.

Back on topic - Just-in-Time isn’t going anywhere. In most situations it will save billions per year. So in normal times, if you aren’t doing it and everyone else is, you will lose billions, be uncompetitive, and lose your job running a car company. If everyone is doing it, no one is at a competitive disadvantage by doing it. If everyone is doing it, no one gets fired for doing it too, even if it causes a short term disruption. Even if you abandoned Just-in-Time, the advantage of storing a week’s worth of parts (or even a month’s) is minimal when the shortages persist for months or a year. You can’t store enough parts to make a real difference.

If you stored all the parts you might need for, let’s say, a year’s production “just in case,” you would have finance it, insure it (or eat the risk of loss), store it, secure it, and inventory it, which all adds up to money. All that so you have the dubious advantage every once in a while of writing off and throwing away a few billion of essentially worthless inventory when you misjudge how popular a particular model of car is going to be. Automakers have gotten smarter than that. Yes, they’ve been hurt a bit by production problems in this economy but they have over the life of just-in-time inventories saved multiples of what they have lost recently.

#26

I would say more, but in an attempt to say on topic I’m keeping it brief. Not a single one of those systems is equivalent to what’s in your smart phone. Be it bandwidth, screen resolution, camera resolution/zoom/HDR etc, GPS precision or any other feature, the phone’s version of the tech is years ahead. It’s quality not quantity.

#27

Add in that they push their vendors to reduce costs themselves - they want the best product, right now, at the lowest price. The vendor takes all the risks - including that next month Big Customer will find another vendor. And then are SHOCKED when the vendor is like “you know, I don’t make any profit selling to you, I think I’ll make hand sanitizer.” I’ve worked with a few companies who were thrilled to get their product into Target or WalMart - and even more excited to get out of Target and WalMart and open up more profitable avenues.

I don’t think JIT is going anywhere, but I think there might be a better understanding of where the risks are - they’ll still ignore them because it keeps costs down.

#28

It’s not that it’s a poor example, but I didn’t make my case clearly enough. So my bad, not yours. People complain less when it’s explicable, so for example when everything is out. If brand X is available, when brand Y is always gone, people are going to reconsider brand Y . . . unless brand X is 20/30/40% more expensive all the time, when brand Y is always cheaper when it’s in stock.

A better example of this comes in various types of organic foods during COVID. If you wanted alfredo sauce in my area (and a few others by reporting) all of the store and major brand names were off the shelves. But some of the expensive, foo-foo $8+ dollars a jar brands were still in stock. But few people wanted Alfredo quite that badly.

That’s why during the worst days, if there was a food I wanted really badly, I’d check Whole foods first - sure, it was noticeably more expensive, but more likely to be in stock. But the moment availability was back on a less expensive but still satisfactory option, I went with that. And that’s what I’m seeing for the most part - there are going to be tons of exceptions where someone falls in love with a replacement, cost be damned. But the biggest driver for most US shoppers always has been price, and JIT is a tool to keep prices low. (and make tons of profit, natch)

But again, I was being to simple and too flip in my earlier post, so lots of room for miscommunication.