Just in Time or JIT or Kanban is a modern system of inventory control of goods and their product and distribution.
"Kanban" Just in Time: Interdependent Fragility of the Grocery Store Distribution System
The retail store chains of supply are lengthy and fragile. Most American and European 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 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.
Just In Time inventory systems have several advantages: less warehouse space, less capital tied up in parts inventory, and less risk of parts obsolescence.
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.
The kanban concept has also been taken up by most of America's retailers (with Wal-Mart leading the way), most notably its grocery sellers. In the old days — say, twenty years ago — grocery stores had well-stocked back rooms, with many extra cases of dry goods. But now in most stores the back room has been replaced with just a pallet-breakdown area. Merchandise comes in from distribution centers and it all goes immediately to the consumer shelves out front. Thus, what you see on the grocery store shelf is all that the store has on hand. What you see is what you get. The barcode scanners at the checkout counters feed a complex reordering system. If Mrs. Jones buys three jars of pasta sauce, that could trigger a reorder for three more jars. As long as communications and transportation work smoothly, then the entire system hums along like a Swiss watch. But what happens when the transportation infrastructure gets disrupted? Panic buying can clean out supermarket shelves in a matter of hours. People are therefore well-advised to get prepared in advance. Consumers may not be able to count on being able to buy anything to provide for themselves and their families during or after a disaster.
Threats to the Just in Time System of Distribution
Some examples of threats to the modern grocery store "JIT" style goods and food distribution system include:
- 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.
- Supply chain
- Bullwhip effect
- Wal-Mart and Costco
- Food distribution system: Transportation (trucks, ships, railroad, and airplanes), warehousing (such as Amazon.com, Costco), and retail facilities (such as Wal-Mart) which move food from the food production system to consumers.
- Food production system: Modern industrial big Agri-business versus Permaculture
- ↑ 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, https://www.amazon.com/20-Per-Gallon-Inevitable-Gasoline/dp/B0046LUJCS Accessed December 15, 2014