either a company has a product or it doesn ’ t ,” he says .” There ' s just no way you have a perfect just-in-time infrastructure .” He adds : “ Obviously , to optimise cost structures you ’ ll strive not to have too much inventory in your network . if you ' re good at demand forecasting you can get as close as possible to just-in-time , but it ’ s not the same thing .”
A much better fit for JIT is the automotive sector , says Schafer .
“ You order a car , they give you a date when you ’ ll get it and then they organise supply around that ,” he says . “ The sourcing of parts , warehousing , everything . It ’ s an almost perfect just-intime industry .”
It ’ s ‘ make to order ’, rather than ‘ just in time ’ As for Rey-Marston , she feels that rather than talking about ‘ just-in-time ’ and ‘ just-in-case ’ it ’ s more meaningful to talk in terms of maketo-stock and make-to-order .
“ If I ' m a make-to-stock company I build my own inventory of things . But within this model you have companies that hold on to inventory .
Staying with Schafer ’ s example of the automotive industry , she says that some automakers hold on to inventory “ because the cost of holding a finished car is much higher than holding components " Others , though , won ’ t .
“ They say , ‘ I ' m confident of selling these cars , so I ' d rather not have an inventory of anything ’. But both approaches are still make-to-stock .”
Make-to-order is different , she says . “ Take Tesla ,” she says . “ Tesla is a maketo-order company . They start collecting pre-orders even before making a product available to the public , They ’ re capturing demand signals . With make-to-order your inventory policies on components have to be very different , because you have far more certainty that you ’ ll get revenue from them .”
The language of supply has changed a great deal in 40 years , but then so has the nature of supply itself . supplychaindigital . com 87