Wednesday, March 30, 2011

Just in Time Inventory as a Symptom of Late-stage Bull Market Complacency

"Just in Time Inventory ranks as one of the great articles of faith promulgated in the late great Bull Market."


Taylor Conant said...

On the other side of the spectrum is the GM model, where you produce just for production's sake and the entire process has a lot of inventory momentum because you've already ordered a lot of stuff so it actually costs you more to not assemble it into stuff and try to sell it than it does to stop production.

What do you propose as a "sustainable" inventory/manufacturing model going forward?

whydibuy said...

Just in time has always been a pet peeve of mine. I worked in the auto industry and always voiced my objection to jit.

jit assumes a perfect world. As we all know, the world isn't perfect. Machines break down as does tooling. Deliveries get derailed. Trucks break down and end up in ditches.
Inventory is insurance against this imperfect world rearing its ugly head.
jit was/is a ivory tower concept thought up by guys who don't try to function within the real world.

I told off more than one "expert" who came to the plant with their rosy theories.