In the early days of covid, when the first shortages started, I think I said something about how Just-In-Time manufacturing was going to take a big hit in this new world. Apparently the New York Times and the Wall Street Journal agreed. But, Gene and Steve are here to tell us why we are wrong. At least wrong when JIT is done well.
#^The Idealcast | Episode 20Exploring COVID-19 and Just-In-Time Supply Chains, Chaos Engineering, and the Soviet Centrally Planned Economy
In this episode of The Idealcast, Gene Kim speaks with Dr. Steven Spear on his critiques of several articles from the NY Times and the Wall Street Journal, and their characterization of the impact of Just-In-Time (JIT) supply chains and the widespread shortages caused by the COVID-19 global pandemic. While the unprecedented health crisis created a widespread shortage of almost everything—from toilet paper to semiconductor chips to raw materials vital for medical materials—with results that impacted everyday life on a global scale, Dr. Spear makes the claim that JIT lessened the severity of shortages, as opposed to causing them.
The discussion is informed by Dr. Spear’s work on accelerating learning dynamics within organizations and the Toyota Production System, and from his time observing and working directly with a tier-one Toyota supplier. Kim and Dr. Spear dive deep into supply chain dynamics and why they are important to society. The discussion delves into how JIT manufacturing not only revolutionized manufacturing but also the entire manufacturing supply chain and how it increased (not decreased) resilience, productivity, efficiency, and prosperity.
They also explore the structure and dynamics of these JIT supply chains, as well as the similarities of the famous Netflix Chaos Monkey, famous for helping Netflix build resilient services that can survive even widespread cloud outages and the larger, emerging field of Chaos Engineers (arguably, a subset of resilience engineering).
Additionally, they explore Toyota’s manufacturing and how its history helped it become one of the least impacted by the semiconductor shortages. They follow that with an examination of the JIT’s antithesis and how it’s similar to the dynamics found in the Soviet’s centrally planned economy, particularly with its IT structure and dynamic results. Kim and Dr. Spear tie these things into the three basic tools of finance: net present value, option theory, and portfolio diversification.
