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[Iduno]

There are numerous records of factories that have had to shut down - with significant cost - due to the shift to just-in-time.

It turns out warehouses were invented for a reason. Same with the "new" trend to renting server time long-term. It's great until you want to be in control of your computer, or don't want to rely on an outside internet connection, or...

As long as you sell the change, not the effects, you can apparently make a lot of money by selling "the next big thing."

[SalmonGod]

JIT is seriously shitty.  Perfect territory for pulling examples of how the incentives of capitalism lead to stupid, wasteful, inefficient behaviors.

I work in freight forwarding and the customer I've mainly worked with ships a lot of audio & infomedia unit components for the automotive industry.  It's often completely fucking bonkers out of control stuff.  We're talking insanely expensive emergency shipments happening on a daily basis to prevent factory shutdowns.  I've seen some ridiculously extreme measures take place.  Like proposals to fly a helicopter out to a container ship to pull out a few small boxes, attempts to stop trains, 300 kg of cargo strapped to handcarts and checked in on passenger planes as baggage by teams of couriers, planes chartered for $50k+ to save an hour or two on moving 100 kg of stuff a couple hundred miles.

It's mainly about cost-cutting pressures, and the asymmetrical leverage involved in the supply chain business contracts.  Suppliers are often forced to promise delivery windows as narrow as a specific hour as condition for doing business, and if the factory shuts down because the supplier doesn't fulfill that promise, then it's the supplier who ends up contractually obligated to absorb those losses.  And the blame/cost-shifting chain doesn't necessarily stop there, but you get the idea.  And every step of the way is lubricated by salespeople who don't know how things really work pitching unrealistic promises to executives who don't know how things really work.  So while this supply chain model is highly disruptive to their productivity and real societal utility, it's not actually much financial risk for the end-product businesses who are making the decision to use it.  They're saving money.  Losses are externalized to smaller fish several steps removed in the chain of business relationships.

The one valid argument I've heard for it is that automotive production cycles are so small that inventory becomes obsolete too quickly to take advantage of warehoused parts.  Every make/model is re-designed every year, and only in production for a few months before everything gets re-tooled for the next iteration.  So given that, it's internally logical to avoid keeping extra parts on hand that will go obsolete and have to be liquidated so soon.  To micromanage exact quantities on tight schedules instead.  But the broader view is that it's just another layer of insanity that there's so much pressure to iterate so quickly and cause so much waste.  We could materially do so much better by slowing down and maybe making larger leaps less often, involving people with operational knowledge in decision making, and approaching business relationships more cooperatively.  But that approach isn't geared towards quarterly number drives.

[Naturegirl1999]

I don’t know why people think new cars are needed each year. Cars last much longer than a year, the same can be said for phones. I hear there are places filled with old cars. Part of the problem is also that some consumers assume newer is always better.

[Dunamisdeos]

Who the hell buys a new car every year. That's a next-level amount of waste.

In small package delivery we also see the processes/effects Salmon describes. There's a ton of examples, but right now the model that Salmon describes where salespeople who don't understand how things work sell unrealistic services to executives who don't understand how things work really hits the nail on the head.

Now we ship small packages, which sounds like small problems. But we have medical shit that people need to live being shipped regular mail to people's houses weekly under the expectation that there will never be any delays for any reason. Think about that.

Mark my words we're creating a logistical bubble with this era of online convenience and either things are going to be revamped from top to bottom (sure ok) or it's going to pop. People are creating entire industries around the idea that their delivery process is just a couple people grabbing something from a warehouse and delivering to their door within 24-hours, but it's a ramshackle, unstable mess behind the scenes with a hundred different things that can go wrong before it gets to you. The people at the top see this as a simple profitable endeavor where the gains outweigh the risks, but they are quickly becoming responsible for reshaping the way things move for our whole economy, and they are not qualified for or interested in that level of responsibility.

[Naturegirl1999]

Ah yes, people pretending they know what they’re doing selling things to people who pretend to know what they’re doing without contacting the people who actually know what they’re doing is a huge problem. I thought people who managed a company used to be in other areas of the process. This is apparently not the case. Maybe salespeople and executives need education from the shipping companies as to what actually goes on

[SalmonGod]

I thought people who managed a company used to be in other areas of the process. This is apparently not the case.

This is very rarely the case, actually, in my experience.  It may have been in the past, when a decent number of companies still counted their founders and founder's families among their leadership, who at least operated close to the grunt work when the company was small.  But now those people have mostly been replaced by rich kids whose qualifications are nepotism and privilege, and backgrounds are in charisma, buzzwords, reading reports, and socialite circle-jerking and intrigue.  That may sound like bitter hyperbole, but I've operated at a high enough level in my workplace to have a decent amount of direct and second-hand interaction with these people.  It's for real.

[smjjames]

Re buying new cars: You forget that you're looking at a market of hundreds of millions (going into billions worldwide) with cars of all kinds of ages, thus there will always be a chunk that is looking for a new car just because it's old.

To no surprise, it's already happening again. This time out of Ukraine, much like many other things regarding this current administration.

Isn't Odessa on the Crimean penninsula? I wouldn't be surprised if the person doing that was being paid by the Russians.

For the just in time stuff, it seems like it would work better for perishable items where you do want to get it to market ASAP, but yeah, as I've seen salmongod (and a few other forum members who work in shipping or customs or similar) mention in the past and I think I've read articles on it, the JIT system may be efficient (actually, not sure about the efficiency argument), but it leaves absolutely no room for disruptions.

[Cheesy Honkers]

Odessa is in southwestern Ukraine. It's a big port city.

[Reelya]

Mass producing generic items and distributing them in bulk is faster and cheaper than taking individual orders and sending them to the proper location.

I think the hypothesis here is that it's "faster and cheaper" but that it also contributes to the boom-bust business cycle.  Perhaps we'd be willing to accept slightly slower availability, slightly more expensive goods if we eliminated recessions?  I'd be willing to consider that trade.

Yeah, i don't think it really *contributes* to the boom-bust cycle, but there is a perception that it's related. Faster and standardized production is more nimble and able to scale up or down to meet changes in demand, while being able to clear backlogs more easily. But, reacting quickly to a crisis doesn't contribute to the problem it tends to mitigate the problem. The reason that the housing market crashes so hard is because it's hard to quickly scale-back the supply of houses to prevent the price crash. The housing bubble takes down the entire economy precisely because housing isn't fast-and-cheap to clear.

[smjjames]

Odessa is in southwestern Ukraine. It's a big port city.

Oh right, I may be thinking of another port city in Crimea or something.

They apparently have links to Russian stuff, which may or may not be coincidential and it's hard to tell whether the intent really is to screw the elections or whether the intent is to just troll. Either way, it appears to be a massive one that Facbook utterly missed.

[McTraveller]

Yeah, i don't think it really *contributes* to the boom-bust cycle, but there is a perception that it's related. Faster and standardized production is more nimble and able to scale up or down to meet changes in demand, while being able to clear backlogs more easily. But, reacting quickly to a crisis doesn't contribute to the problem it tends to mitigate the problem. The reason that the housing market crashes so hard is because it's hard to quickly scale-back the supply of houses to prevent the price crash. The housing bubble takes down the entire economy precisely because housing isn't fast-and-cheap to clear.

Maybe it depends on the particular good or service?  There is no such thing, for instance, as just-in-time agriculture; if you don't store stuff up, you get slammed by famine. If you do have excess storage, you don't.  So if I was doing business, I would count storage as a type of insurance.  Blame our tax system that taxes inventory like inventory instead of allowing some about to be taxed like "insurance reserves."

You could, in fact, argue that the price crash of housing during the downturn was a feature not a bug.  I'd say the bug in the system is that housing is not a directly productive form of investment, so having the availability of capital tied up in the housing market is demonstrably hazardous.  What I mean by directly productive is: if I spend money to build a generator, that increases the supply of available energy.  If you spend money to build a house - you don't really directly increase the supply of anything.  You may influence the supply of building materials, you may influence the supply of labor in a geographic area, yes - but a house is not a "productive" asset.  Also consider that if you spend twice as much money building generators you can probably get twice (or more!) the generation capacity.  But if you spend twice as much money on houses you may not get twice the productivity from it.

[Lord Shonus]

The housing price crash was a reversion to mean - one of the things that helped cause the housing bubble that kicked off 2008 meltdown was an unreasonably high cost of housing. A major factor in this was the "flipping" fad, where people would pick up a property, put a little work into it, and sell it at a profit. On the TV shows that started the phase, the houses were usually in serious need of a facelift, and the people doing the work added significant real value to the property to justify their profit. On the ground level, you had a lot of people doing little more than slapping a coat of paint on the walls and maybe doing some half-assed landscaping, then adding 20%+ to the price. Often, this would get bought by another flipper. who did the same thing. End result was properties that should be selling for 30K were marketed for 80K or 90K, and the market priced itself out of existence.

[nenjin]

You may influence the supply of building materials, you may influence the supply of labor in a geographic area, yes - but a house is not a "productive" asset.  Also consider that if you spend twice as much money building generators you can probably get twice (or more!) the generation capacity.  But if you spend twice as much money on houses you may not get twice the productivity from it.

Or you....rent it. Landlording is one of the oldest and most secure forms of wealth. When you can't sell homes you rent them, and once you own enough of a block that is paying you continual rent, you're now a figure to be reckoned with in your own little fiefdom.

[smjjames]

You may influence the supply of building materials, you may influence the supply of labor in a geographic area, yes - but a house is not a "productive" asset.  Also consider that if you spend twice as much money building generators you can probably get twice (or more!) the generation capacity.  But if you spend twice as much money on houses you may not get twice the productivity from it.

Or you....rent it. Landlording is one of the oldest and most secure forms of wealth. When you can't sell homes you rent them, and once you own enough of a block that is paying you continual rent, you're now a figure to be reckoned with in your own little fiefdom.

That could have been a viable alternative to what happened in 2008, though it was before things like AirBnB took off.

[thompson]

2008 was really a consequence of lax lending standards and gambling risky investment strategies made by just about every Wall St bank. Once the economy entered a (perfectly normal) cyclical downturn people started defaulting on loans, then once Lehmann Brothers went belly up everyone just lost it.

In other news, google turned up nothing so I'd like to introduce a new word to the English language:

Saudimasochism (noun) 1. One who willingly inflicts harm on themselves or their nation for the gratification of Saudi Arabia. 2. A derogatory term for the US's foreign policy in the Middle East, emphasising perceived deference to Saudi Arabia's interests.

Bonus points to anyone who can use it in a sentence.