When ‘Just-In-Time’ Isn’t

For whatever you’re manufacturing, getting the right part at the right place, just in time is a great idea.

Henry Ford was the first

But Ford was a control-freak in the best sense of the word. He made absolutely everything except tires, and they came from Harvey Firestone, his good friend and camping companion, not all that far away.

Ford’s River Rouge plant is too long a story to tell here, but iron ore, coal and lumber came in by ship at the top, and finished automobiles came out at the bottom. In between was a steel mill that turned out the raw material for engines, transmissions, bodies, and miscellaneous metal parts. Wool fabrics were the end-product of Henry’s sheep farms and it included extensive woodworking and glassmaking facilities.

I had the pleasure of visiting Rouge sometime after I bought my Ford Mustang in 1965. The plant was 1.5 miles (2.4 km) wide by 1 mile (1.6 km) long, including 93 buildings with nearly 16 million square feet (1.5 km2) of factory floor space, a sight to behold. The car was great as well, I wish I still had it.

Then came Taiichi Ohno

It remained a good idea in the 1950s, when Taiichi Ohno, an engineer at Toyota, inspired by Henry Ford, defined it as a way of eliminating “waste.” By this he meant stockpiles, extra workers, and unused minutes in both the production and movement of goods.

Instead of wasting time, labor, and money by storing parts along the assembly line or warehousing goods, as manufacturers had done for decades, his idea was that suppliers could deliver these just as they were needed. This would increase profits, reducing the amount that businesses spent on maintaining inventories and paying for additional labor.

At the time, no one said “Oh, no” to Ohno because the world seemed a simpler place back then and Ford’s idea was already fifty years old. Even so, it was a pretty good indicator that Ohno had never been stuck in traffic or had his canoe wedged sideways in the Suez Canal. A good idea in the fifties, when the population of the world was two billion, doesn’t work so well at eight.

Globalization didn’t help

Neither did a worldwide pandemic, that added further pressure on getting software manufactured in China to an automobile plant in North Carolina just in time.

Some saw the probabilities that lay somewhere in such a dangerous future dependence, but they were few and far between. One was Elon Musk, but Elon looks decades ahead. He manufactures or controls the manufacture of nearly everything in a Tesla automobile, which is why he was able to deliver 241,300 units in the 3rd quarter of 2021.

The just-in-time model quickly took over every type of goods and service production. Suddenly each supplier, big or small, had to deliver products promptly to the next buyer. Speed was the deal to reduce labor and warehousing costs.

As any racing car driver will tell you, speed has its own costs, but those costs are not borne by those in the stands—in this case, the buyers. Just-in-time was a silent wage-killer, offering less-substantial jobs, with workers recruited only when they would be needed.

This just-in-time squeezing of workers gave us a 24/7 work culture with zero-hours contracts, no benefits, no dependable income, and the mental health problems that go with all that pressure.

The demise of just-in-time might be a gift to the middle class

Leaving aside manufacturing for the moment, retailers like Walmart and Amazon are under increasing pressure to deliver more and more quickly. That’s just another face of just in time.

Their problem isn’t how to do that, they understand the metrics of that commitment very well. Their worry is employee burnout and a workplace that causes high rates of turnover. Losing workers and training their replacement is a major expense when you have 1.3 million employees on your payroll.

That’s an open sore and the historic bandage for open sores has been unionization. Our friend Mr. Bezos has been fighting that, but he’s already working with unions in Europe and it’s a fight in the U.S. that he will not win.

Amazingly, increased wages, working conditions and benefits bring enhanced productivity, loyalty, and worker satisfaction. When you need that many hires and the need is growing exponentially, it’s a good thing to have a million and a half recommendations coming from your company workforce.

Aside from that…

Corporations are very quickly tuning away from the outdated and destructive Milton Friedman definition of corporate purpose from the 1950s. Friedman actually got a Nobel Prize in economics for destroying much of South America and infecting his native country’s economic health

Uncle Milty claimed that the sole purpose of the corporation was to maximize stockholder returns. The modern definition, as best espoused by Jamie Dimon of JPMorgan Chase and the Business Round Table, is…

Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.” (see the complete statement)

That doesn’t sound like Amazon or Walmart, Facebook or Uber, but some companies are leaders and others will always be followers.

There is another pandemic afoot in the country and its virus is decades of wages and benefits neglect. Fortunately, it doesn’t need hospitalization or a lengthy recovery. A simple shot-in-the-arm will suffice.

That shot is a decent living wage, something around $26 per hour and enough time off to reflect on your life, go fishing with your kids and give your neighbor a hand with whatever needs doing.

Let’s hope it comes just in time.

 

 


Image Credit: Ford Motor Co.

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