Volcano Throwing Off Just-In-Time

The Associated Press reports that firms which use the Just-in-Time system are experiencing problems due to the Iceland volcanic eruption. The strategy of keeping inventories lean paid off for U.S. manufacturers during the recession. Just-in-time delivery of parts makes even more sense when budgets are tight.Now that a giant ash cloud from a volcano in Iceland is disrupting global air freight, some manufacturers are finding that this strategy is backfiring. Nissan suspended production at two Japanese auto assembly plants Tuesday and BMW was forced to idle three plants in Germany because of shortages of critical parts. Computer maker Dell is experiencing delays in getting notebook computers to European customers.

These kinds of production delays could lead to higher prices for a number of everyday items — from cell phones to seat covers, experts say. And some say the disruption from the volcanic ash cloud will lead companies to make changes in the way they do business.

That would be a mistake. JIT is an integral part of Lean Production, you can’t have Lean without it. Lean pays off every day, 24/7/365. Well, perhaps 24/7/365-days lost due to volcanic activity. The difference in total cost over any reasonable period of time between carrying “just in case of a volcano-type event” inventory and JIT will be hugely in favor of JIT. Let’s hope industry can avoid swallowing the silly pill and stick with what has proven itself to be a success over a period of decades, rather than overreacting to a once in several decades event.

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Author: Thomas Pyzdek

Consultant, author, owner of The Pyzdek Institute

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