A grocery store is a retail establishment that sells food products. Typical supermarkets sell fresh produce, meat, and dairy products as well as non-perishable goods and frozen foods. Grocery stores usually sell cleaning supplies, paper products, and toiletries in addition to food products, and many grocery stores sell other merchandise as well, such pharmaceuticals, cosmetics, and cookware.
"Kanban" Just in Time: Interdependent Fragility of the Grocery Store Distribution System
The grocery store chains of supply are lengthy and fragile. Most American and European grocery store business models are based on a "just in time delivery" or "JIT" or "Kanban" as the Japanese inventors called it in the 1960s. The JIT inventory control of the retail and food distribution system is both interdependent and fragile.
The world's biggest chain of grocery stores, Wal-Mart, is proof that we live in a fragile society. The kanban or "Just in Time" inventory system was developed in Japan and became popular in America starting in the 1970s. It is now ubiquitous in nearly every industry. The concept is simple: Through close coordination with subcontractors and piece part suppliers, a manufacturer can keep its parts inventory small. Kanban is a key element of lean manufacturing. Manufacturers order batches of parts only as needed, sometimes ordering as frequently as twice a week. Companies now hire Six Sigma consultants and Kaizen gurus, they buy sophisticated data-processing systems, and they hire extra purchasing administrators, and these expenses actually save them money at the bottom line.
The downside is that lean inventories leave companies vulnerable to any disruption of supply, for instance in the food distribution system or food production system. If transportation (UPS, post office, Fedex, trucks, ships, railroad, and airplanes) gets snarled due to a trucker strike or bad weather or a disaster, or if communications get disrupted, or a parts vendor has a strike or a production problem, then assembly lines grind to a halt. Just one missing part means that no finished products go out the door.
Threats to the Grocery Store System of Distribution
- Trucker strike
- Labor union strike
- Prices of a barrel of crude oil and hence the price of gasoline and diesel
- Man-made disasters such as war and terrorism
- Natural disasters such as storms, tornados, hurricanes, earthquakes, etc.
- The Japanese invented the "just in time delivery" or "JIT" inventory control system called "kanban" in Japanese.
- Christopher Steiner, 20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better, http://www.amazon.com/20-Per-Gallon-Inevitable-Gasoline/dp/B0046LUJCS Accessed December 15, 2014