Does Just-in-Time Just Move Inventory Upstream?

Warehouses on Wheels? ... Last week's Dispatch, Phantom Warehouses Are Baaack, (Nov 6) about Dell's two-hour plant inventory, generated many thoughtful responses. First were those complaining about having to wait weeks for a new, just-in-time computer order to be fulfilled. Uh-oh. Second, there were those suggesting that manufacturers might actually want an inventory of parts in a warehouse to prevent terrorism from disrupting production.

Patrick G. O'Healy with Cushman & Wakefield in Long Beach, CA, writes that warehouse demand may be falling, but it's not disappearing. "As supply chains are becoming more efficient, the requirement for warehouse space is going down, but postponement operations take up a significant amount of space. ... While the materials arrive just-in-time, the inventory has been shifted upstream to the suppliers. The automotive industry is an example of just-in-time, and the stock of components are upstream in the SUPPLIERS' WAREHOUSES."

Joe Soter from Tustin, CA, writes an amusing story he heard about just-in-time manufacturing in Japan's heyday. "Literally, when you opened the rollup door, the right truck with the right materials or parts for that time was there waiting to be unloaded. ... In order to make their JIT contractual requirements, companies expanded their truck fleets to ensure that lags in production were cushioned by the amount of products in transit. The unexpected side effect was that a huge fleet of trucks clogged the streets of Tokyo, Osaka and the other major manufacturing centers. One study at the time indicated that 20% to 40% of all output was either in transit or sitting in a truck waiting for a rollup door to open. Warehousing had moved to the roadways."

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--Peter Pike