Just-in-Time pull-based inventory management was a great idea when it first became fashionable – and it still saves companies millions of dollars.
But more than a technology or a business process, JIT is about eliminating the need for forecasts.
Consider: If we could forecast exactly how and when each specific item in our supply chain will be sold with 100% accuracy, we will not need a pull-based system. Since we know our forecasts cannot be accurate, we attack the problem from the other direction and try to minimize the need for inventory – and hence forecasting – in the first place.
I was reminded of this while reading an article in the Economist about publishing books-on-demand. As the article explains: “Estimating the demand and thus the print run for a book has been a guessing game since Gutenberg’s day. This means that the industry’s supply chain is exceedingly wasteful. About 30% of books in America are returned to the publisher.”
I love the way the forecasting problem is being addressed not just by improving forecasting techniques, but by improving delivery mechanisms to the point where forecasts become unnecessary.
As they say, sometimes the best defense is not to be there…..