[yskchu]

> "Just-in-time" means "no buffer".

Just in time doesn't necessarily mean no buffer, the goal is to minimize excessive stockpiling and keep enough for continuous production, increasing stockpile when required.

Toyota, some might say THE pioneer of Just-in-time manufacturing, was one of the car manufacturers least impacted by the component shortage precisely because they started stockpiling very early on after they saw the upcoming issue.

Here's a quote from another Bloomberg article specifically on Toyota[1]:

"Toyota asks its Tier 1 suppliers to input detailed information about their most obscure parts and materials providers in a complex database that it maintains. Using this system to glean information about, say, a single headlight Toyota purchases for one of its cars, it can get information as granular as the names and locations of the companies that make the materials that go into surface treatments used on those headlights’ lenses and even the producers of the lubricants used on the rubber pieces in the assembly, Toyota spokeswoman Shiori Hashimoto says.

These lines of communication alerted the company early on that it needed to stockpile chips."

[1]: How Toyota Steered Clear of the Chip Shortage Mess - https://www.bloomberg.com/news/articles/2021-04-07/how-toyot...

[jonahrd]

This is actually also discussed by Nassim Taleb in his book which I assume the parent comment is referencing.

He says Toyota is one of the few examples where just-in-time was not distorted and warped. So Toyota implements true just-in-time, which can be robust, with buffers. But most other companies implement a half-assed version that is very fragile.

[sokoloff]

While attending a training event, I talked to a pilot who flew cargo for a Tier 1 supplier to North American auto manufacturers. He had several stories of flying a jet with just a handful of boxes on board to avoid the line-down penalties.

My favorite was tower advising them they’d be fined for a departure during local curfew. “Roger, we better get our money’s worth then” and did a max performance takeoff and turn on course with whatever parts they were carrying.

[bombcar]

Heh there are airports that have curfew fines that all the airlines just pay.

[sokoloff]

We have a local field with an 11P-7A curfew (landing/takeoff surcharge technically).

I’m not sure it does much to keep the airport quiet as I’ve been in a holding orbit of three low-altitude airplanes from 6:45 AM to 7:00 with all of us waiting to avoid the curfew fee.

So, instead of slipping relatively quietly into the field from a random route to a straight-in, neighbors got to hear me orbit for three rectangular patterns over the same ground points plus two other airplanes doing the same low-altitude holding. If I were a neighbor, I’d much rather the simple straight-in to be encouraged.

The sports teams all just pay the fee; I never had to break the 11PM side while I was based there, but I would have as well. (It was less than an hour’s worth of gas, so it wouldn’t make sense to divert and reposition later.) I suspect the curfew makes people feel good while making the actual experience worse.

[angry_octet]

The curfew at Sydney is $1M (USD 730K), so large that airlines go to considerable lengths not to violate it, making sure they have accurate forecasts for the winds from LAX and running predictive models for various landing scenarios. They will really burn avgas if they can squeak it in before curfew, and they have been known to divert flights to Canberra or Brisbane and put the passengers into a hotel overnight rather than risk it.

https://www.infrastructure.gov.au/aviation/environmental/cur...

[ric2b]

But those extra 15 min in the air cost money, so it's still an incentive to not plan on arriving before the curfew ends.

[DavidSJ]

Sometimes those curfew fines actually cause flights not to depart. Some years ago, I was sitting on the tarmac at John Wayne for about an hour, hoping to make it just under the nighttime curfew, but ultimately the flight was canceled and I had to get a shuttle to LAX and an alternative flight in the morning.

[bombcar]

John Wayne is more forceful than some for sure. I flew a small plane their once and took off just at curfew - the runway lights went off the moment my wheels left the ground.

[sokoloff]

If they turned off before you passed the departure end, I’d raise that as safety concern (ASRS at a minimum, but this is something that I’d probably take straight to the FSDO).

[toast0]

It's been a while, but flying into Long Beach from a connection in Phoenix, the scheduled plane was delayed somewhere, they had boarded us on a replacement and then realized the plane was too loud, so they rushed us to a different plane (in the next terminal) that had the right noise reduction equipment.

Also, my Dad once had a late-ish flight to Long Beach that got diverted to LAX because delays pushed it past the curfew.

[listenallyall]

...and Long Beach's stubbornness about that curfew and other things is a big part of the reason JetBlue packed up and moved all its operations to LAX

https://crankyflier.com/2020/10/08/jetblues-two-decade-run-i...

[tharne]

This is not quite accurate. Toyota began stockpiling materials a while back after having its supply chain disrupted. Having extra inventory, no matter how well-implemented, is actually an anti-pattern in lean manufacturing -- the good folks at Toyota are simply wise enough to know when they they should embrace lean vs. when they should back off it a bit.

[PontifexMinimus]

> Having extra inventory, no matter how well-implemented, is actually an anti-pattern in lean manufacturing

Arguably lean manufacturing is an anti-pattern.

[tharne]

> Arguably lean manufacturing is an anti-pattern.

When taken to the extremes that modern business has taken it to, it is 100% an anti-pattern.

[MonaroVXR]

Which book?

[phosfox]

I'm not sure, but I guess it's "Antifragile"

[jiveturkey]

so, like Agile then

[Spooky23]

The difference is that Toyota is a uniquely intelligent company with respect to supply chain.

The average American manufacturing company is run by a CFO operating with reports out of SAP or Peoplesoft. Their performance is measured by fiscal performance, so running to the penny and having no inventory benefits them more than making the company resilient. Wall St rewards quarterly performance, not resilience.

[fennecfoxen]

Being a resilient company only means that when it’s time for an industry bailout you get less than your competitors because you’re doing better.

Private profit, socialized risk.

[skybrian]

On the other hand, companies that have inventory right now get to increase market share over those that didn’t think ahead and have nothing to sell.

[grp000]

But if the optimal strategy only falls apart for uncommon events that you can't determine when they happen, how much of an incentive is there to run a conservative/gambling strategy like that?

[Spooky23]

It depends on your objectives. One bad event can put many companies out of business. The auto industry is a good example because US-Canadian border issues and snow can fubar things for half the year.

Look at companies like Boeing with absurdly complex supply chains. The inventory numbers look good, but the factories are idle when a truckload of magic bolts is stuck in a blizzard in South Dakota.

It also increases actual cost. I supported a GE business unit as a supplier for awhile. We hosed them for stupid last minute orders due to this sort of thing. They would pay more for expedited shipping, overtime, waste money on leasing stuff to avoid capex, etc.

[Nevermark]

Uncommon events are uncommon individually but common in aggregate.

Maintaining resilience and designing antifragile systems usually pays off in missed disasters and unique opportunities.

Alternately, to save money without buffers is to continuously gamble.

[namaria]

There is no optimal strategy because there is no perfect knowledge. That's why good CEOs are paid their weight in gold. A vision and steady hands can pay off handsomely.

[Retric]

Depends completely on the risk vs reward. Black swans are more common than can be assumed from modeling past data so in general a slightly more conservative strategy than industry standard is more likely to win.

For example COVID style shutdowns could be reasonably modeled at X% per year after talking to a disease specialist. But, not all of them are going to be from diseases.

[namaria]

Depends entirely on the time frame. If you have a superior capital allocation scheme, by all means, capture all the value left on the table then.

[xxgreg]

All of the car companies, dialed down orders at the start of the pandemic. Now they are all trying to stockpile chips, due to not enough supply. I imagine (no data to support) the increased size stockpiles are a large part of what makes the problem worse. Kinda like TP really.

Also, Toyota is now cutting 40 percent of global production due to chip shortage.

https://www.bbc.com/news/business-58266794

[fomine3]

It's not mainly due to chip shortage, but other parts made in ASEAN. https://asia.nikkei.com/Business/Automobiles/Toyota-to-cut-g...

[lobocinza]

Tail whip effect

[xxgreg]

hmmm interesting - here's an article.

https://qz.com/2004569/the-global-chip-shortage-can-be-expla...

[lobocinza]

Oh, true! English is not my main language. I meant bullwhip effect, not tail whip (pokémon move). ;)

[visarga]

An interesting failure mode of free markets. Inherent instability.

[namaria]

Any system with signalling delay will experience this effect. Changes will get amplified across layers. That's also a common way to die from a viral infection: your immune system goes into overdrive from too many signals of infection from different tissue cells. A common treatment is steroids, which dampen immune response.

[lobocinza]

Is an inherent instability in any system with long/slow information chains. It's more a failure mode of central planning than of free markets. We had a few companies making bad decisions based on bad demand forecasting. This is a problem mitigated by stock exchanges (commodities).

[sixQuarks]

What you fail to mention (although you linked to an article that covers it) - is that Toyota was prepared due to the setbacks they suffered in the Tsunami. If it wasn't for that, they would not have stockpiled for and been ready for a pandemic. Even so, they are now dealing with chip shortages as well.

[namaria]

A system that turns set backs into lessons and better future performance is praise worthy...

[temac]

The thing is that you can not apply this method (suddenly stockpile because of anticipated shortage) globally. Now of course, putting gratuitous buffer everywhere would not be the panacea either. But some buffers may be needed to improve global resiliency.

One has to optimize to reduce fragility, but when massive chip (or anything else) shortages start to appear for extended periods it is obviously already way to late. And way too downstream if your strategy was just a punctual stockpile decided by a single company. Because that probably would have been impossible for everybody to apply this punctual strategy at the same time...

[nine_k]

One advantage of starting to stockpile ahead of a crisis is that production is not yet affected much by the crisis, and the total amount buffered could be larger.

[Sunfllowerfly]

They started stockpiling key components after the earthquake roughly 8 years ago. You could do this globally if everyone took the Toyota approach and only stockpiled components likely to suffer disruption.

[gauravjain13]

Seems like a low-on-details article with PR-like flavor.

According to this, Toyota cut production by 40%, though it does acknowledge that Toyota took less of a hit vs industry:

“New cars often include dozens of microchips but Toyota benefited from having built a larger stockpile of chips - also called semiconductors - as part of a revamp to its business continuity plan, developed in the wake of the Fukushima earthquake and tsunami a decade ago.”

https://www.bbc.com/news/business-58266794

[domnomnom]

What's the quote about selling someone a product whose faults will occur when you're years gone and half way around the planet? I wonder how this mentality is avoided/regarded in Japan.

[kqr]

When many of the quality-focused companies in Japan took off they focused on gaining market share primarily through gaining repeat customers. A lot of their sales machinery was constructed around the idea of building a personal relationship with the customer to predict their needs as they arise.

This was in part because the domestic Japanese market was so small. Of course, it needs support from quality development and manufacturing. But it's also efficienct because it's much cheaper to sell something to someone who trusts you than to get it out by cold calling.

[8ytecoder]

I think this papers backs up pretty well and goes into a lot more details of why it matters to focus on the flow. In fact it’s crucial that such issues that stop production including predicting and identifying demand-supply mismatch is essential for a smooth flow of operations. BUT, humans are humans and we plan for the best case scenario without giving due consideration for failure modes. Manufacturing is hardly an exception.

https://businesswales.gov.wales/sites/business-wales/files/S...

[sails]

I wonder if they track the financial status of these far upstream suppliers. I've been doing some work with supply chain monitoring and often smaller companies in Europe are hesitant to share information on financial performance etc

[listenallyall]

"least impacted" = 360,000 Toyotas not being built this month, or 40% of normal production.

https://www.bbc.com/news/business-58266794

[kalleboo]

As your link says Toyota has not been materially impacted until now, whereas all the other manufacturers had to scale back their production way earlier (I'm seeing articles from January and March). 8 months longer runway than everyone else is a pretty good deal.

[juskrey]

Toyota is underwater like everyone else. When you have signal, it is already too late

[afarrell]

Just-in-time, done mediocrely, still means “no buffer”. What Toyota does is not all that relevant to the discussion.

[xyzzy21]

It PRIMARILY DOES mean this as it's IMPLEMENT in 99.9% of businesses. Toyota's implementation is NOT NORMAL OR COMMON.

[bestham]

The Toyota Production System is /the/ precursor to “Lean Manufacturing”, you could say that Toyota wrote the book on “lean”. While there are many companies that try (and fail) to replicate TPS, the Toyota Way is the standard by definition.

[ben_w]

That makes it the archetype, it doesn’t contradict the claim it is uncommon.

(I have no idea if it is common or not, just that this doesn’t contradict that claim)