September 11: When Just-In-Time Bec

September 11: When Just-In-Time Becomes Just-In-Case
LEAD STORY-DATELINE: The Wall Street Journal, October 22, 2001.

The tragic events of September 11, 2001 shook all parts of the United States. Business was affected directly in a number of ways, but one of the larger problems now facing many firms is how to deal with disruptions along their lean supply chains. Just-in-time (JIT) strategies have suddenly become much riskier than was previously the case.

The major issue is disruption of deliveries at the U.S. border. Many companies moved operations or are outsourcing across borders during the last few decades in search of lower manufacturing costs. These more far-flung supply chains could still use JIT because border crossings were predictably short (usually a wait of only minutes) for trucks, boats, and planes bearing parts meant for U.S. plants.

With the attacks of September 11 came a new attention to security at the U.S. border crossings with Canada and Mexico as well as at U.S. ports. Trucks reportedly waited 18 to 20 hours at some crossing points. Not only did crossing times increase but, more importantly for JIT, they became unpredictable. As long as transportation times are predictable, the system could still work, even with very long ones. But unpredictability makes it hard for logistics managers to plan. Further complicating the situation were rules requiring truckers to drive no more than 10 hours per day. If many of those hours are spent at the border, not enough may remain to get the trucker to the destination on the other side.

The delays are a particular problem for perishable products and those that are part of JIT systems. JIT systems have been adopted in the U.S. on a widespread basis over the past decade. Martha and Subbakrishna, in their article, estimate that the auto industry alone has saved over $1 billion per year through use of JIT methods.

A smooth-running JIT system can allow a company to operate on a lean basis with minimal inventories. When the system does not operate smoothly, firms need to hold more inventory "just in case" vital parts don't arrive in time or with an appropriate quality level. The consequences of a disrupted JIT system were seen during September when General Motors, DaimlerChrysler, and Toyota all had to stop production for a period of time. Ford was the most affected company with five plant shutdowns and an estimated 120,000 lost units.

When the risk of disruption is low, JIT can work as intended with low inventories, deliveries just as needed for production, and high efficiency. But as the authors claim, "any perception of an increase in risk tilts the balance away from JIT and in favour of JIC, the 'just-in-case' strategy of holding inventory against the risk of an unexpected disturbance in the supply chain."

Even with an increase in JIC inventory at the expense of JIT principles, however, business can still strive to be as efficient as possible with inventory levels. The source articles for this exercise suggest several strategies for handling the potential supply chain uncertainties.

Increase inventories/buffer stocks. This seems obvious, but the accompanying idea that only critical inventory items should have inventory levels increased is not. Firms should identify the most important items, especially those that have the potential to slow down or stop the production process, and ensure they have appropriate just-in-case inventory on hand.


Dual sourcing. Firms should ensure that they have more than one option for key parts and components. Identifying at least one domestic source, rather than all foreign suppliers, is particularly important.


Alternate transportation choices. The auto industry already held a meeting with government representatives in Detroit on September 19 to push their case for action on the problems with border crossings, but contingency plans could still help even if things improve. An ability to use ground, air, or water transport as needed is important, as is an openness to employ options such as freight rather than passenger vehicles. DaimlerChrysler was able to take advantage of a previous agreement with the Canadian Pacific railroad to send parts (110 trailers) through a tunnel between Windsor, Ontario and Detroit, Michigan, avoiding the delays of passing all those trailers by truck across the busy Ambassador Bridge.
TALKING IT OVER AND THINKING IT THROUGH!

The article points out that with interest rates way down, the need for JIT systems has decreased. Given what you know about inventory management and the costs of carrying inventory, can you explain this statement?


ABC Analysis is implicit in the suggestions for managing potential JIT disruptions. Explain how ABC could be employed to help in these circumstances.


A different way of viewing the situation is that the new situation requires using not only JIT inventory management principles but also some Theory of Constraints concepts. Explain how TOC ideas such as bottlenecks and buffers could help to manage supply chain disruptions.


The problem with the delays at the border is not so much the time taken but the unpredictability. Explain why variation in delivery times is more important in a JIT system than the length of delivery times.
THINKING ABOUT THE FUTURE!

One of the key questions about the current situation at the borders is whether the delays and disruptions are temporary or permanent. Do adjustments need to be made permanently or are these just short-term measures? Most of the articles cited in this exercise seem to lean toward a middle view-things will change in the long-term making supply-chain management harder, but the current state of alert will not persist. What do you think?

Hasil (Bahasa Indonesia) 1:

September 11: Ketika Just-In-Time menjadi hanya-di-kasusLEAD cerita-DATELINE: Wall Street Journal, 22 Oktober 2001.Peristiwa tragis 11 September 2001 mengguncang semua bagian Amerika Serikat. Bisnis yang terpengaruh secara langsung dalam beberapa cara, tapi salah satu masalah besar sekarang menghadapi banyak perusahaan adalah bagaimana untuk berurusan dengan gangguan sepanjang rantai pasokan ramping mereka. Just-in-time (JIT) strategi telah tiba-tiba menjadi lebih berisiko daripada sebelumnya yang terjadi.Masalah utama adalah gangguan pengiriman di perbatasan Amerika Serikat. Banyak perusahaan dipindahkan operasi atau outsourcing melintasi perbatasan selama beberapa dekade terakhir untuk mencari lebih rendah biaya produksi. Ini lebih luas sekali rantai pasokan bisa menggunakan JIT karena perbatasan penyeberangan yang diduga pendek (biasanya menunggu hanya menit) untuk truk, kapal, dan pesawat bantalan bagian-bagian yang dimaksudkan untuk US tanaman.Dengan serangan 11 September datang baru memperhatikan keamanan di penyeberangan perbatasan AS dengan Kanada dan Meksiko juga di pelabuhan AS. Truk dilaporkan menunggu 18 sampai 20 jam di beberapa titik persimpangan. Tidak hanya melakukan persimpangan kali meningkatkan, tetapi lebih penting lagi untuk JIT, mereka menjadi tak terduga. Selama transportasi kali diprediksi, sistem bisa masih bekerja, bahkan dengan yang sangat panjang. Tetapi tidak dapat diramalkan membuat sulit bagi manajer logistik untuk merencanakan. Yang lebih rumit situasi adalah aturan-aturan yang memerlukan sopir truk untuk drive tidak lebih dari 10 jam per hari. Jika banyak jam yang dihabiskan di perbatasan, tidak cukup mungkin tetap untuk mendapatkan sopir truk ke tujuan di sisi lain.Penundaan adalah masalah tertentu untuk produk-produk tahan lama dan mereka yang merupakan bagian dari sistem JIT. JIT sistem telah diadopsi di Amerika Serikat secara luas lebih dari satu dekade. Martha dan Subbakrishna, dalam artikel mereka, memperkirakan bahwa industri otomotif saja sudah menyelamatkan lebih dari $1 miliar per tahun melalui penggunaan metode JIT.Sistem JIT halus berjalan dapat memungkinkan perusahaan untuk beroperasi secara ramping dengan persediaan yang minimal. Ketika sistem tidak beroperasi lancar, perusahaan perlu mengadakan persediaan lebih "berjaga-jaga" bagian penting tidak tiba dalam waktu atau dengan tingkat kualitas yang tepat. Konsekuensi dari sistem JIT terganggu dilihat selama September ketika General Motors, DaimlerChrysler dan Toyota semua harus menghentikan produksinya untuk jangka waktu. Ford adalah perusahaan paling terpengaruh dengan lima shutdowns tanaman dan diperkirakan 120.000 unit hilang.Ketika risiko gangguan rendah, JIT dapat bekerja sebagaimana dimaksud dengan persediaan rendah, pengiriman seperti yang diperlukan untuk produksi, dan efisiensi yang tinggi. Tetapi karena para penulis mengklaim, "apapun persepsi peningkatan risiko miring saldo dari JIT dan mendukung JIC, strategi 'hanya-di-kasus' memegang persediaan terhadap risiko gangguan yang tak terduga dalam rantai pasokan."Bahkan dengan peningkatan JIC persediaan dengan mengorbankan prinsip-prinsip JIT, namun, bisnis dapat masih berusaha untuk menjadi seefisien mungkin dengan tingkat inventaris. Sumber artikel untuk latihan ini menyarankan beberapa strategi untuk menangani potensi pasokan jaringan ketidakpastian.Increase inventories/buffer stocks. This seems obvious, but the accompanying idea that only critical inventory items should have inventory levels increased is not. Firms should identify the most important items, especially those that have the potential to slow down or stop the production process, and ensure they have appropriate just-in-case inventory on hand.Dual sourcing. Firms should ensure that they have more than one option for key parts and components. Identifying at least one domestic source, rather than all foreign suppliers, is particularly important.Alternate transportation choices. The auto industry already held a meeting with government representatives in Detroit on September 19 to push their case for action on the problems with border crossings, but contingency plans could still help even if things improve. An ability to use ground, air, or water transport as needed is important, as is an openness to employ options such as freight rather than passenger vehicles. DaimlerChrysler was able to take advantage of a previous agreement with the Canadian Pacific railroad to send parts (110 trailers) through a tunnel between Windsor, Ontario and Detroit, Michigan, avoiding the delays of passing all those trailers by truck across the busy Ambassador Bridge.TALKING IT OVER AND THINKING IT THROUGH!The article points out that with interest rates way down, the need for JIT systems has decreased. Given what you know about inventory management and the costs of carrying inventory, can you explain this statement?

ABC Analysis is implicit in the suggestions for managing potential JIT disruptions. Explain how ABC could be employed to help in these circumstances.


A different way of viewing the situation is that the new situation requires using not only JIT inventory management principles but also some Theory of Constraints concepts. Explain how TOC ideas such as bottlenecks and buffers could help to manage supply chain disruptions.


The problem with the delays at the border is not so much the time taken but the unpredictability. Explain why variation in delivery times is more important in a JIT system than the length of delivery times.
THINKING ABOUT THE FUTURE!

One of the key questions about the current situation at the borders is whether the delays and disruptions are temporary or permanent. Do adjustments need to be made permanently or are these just short-term measures? Most of the articles cited in this exercise seem to lean toward a middle view-things will change in the long-term making supply-chain management harder, but the current state of alert will not persist. What do you think?