A RECENT WALL STREET JOURNAL FEATURE REMINDED US
that there may be little new under the sun, but that there is plenty of history being newly discovered. The “aha!” moment for the
Journal’s intrepid sleuth, a professor from the University of New
Hampshire, was the finding that suppliers, Procter & Gamble in
this case, are being encouraged by that disruptive force, Amazon, to
place operations adjacent to Amazon warehouses. Diapers are the
select product. But we will not follow the obvious line of criticism
here, including nappy jokes.
Our reaction is actually a collective and protracted “Well, duh!”
Others may be wondering, “How long has this been going on?”
LINKS TO THE PAST
The good professor reaches way back into World
War II for an early example in a superficially unrelated, but parallel, application. In the case in question, the U.S. Navy was busily engaged in being
slightly too successful. Early in the war, after we
recovered from the shock of the Japanese attack on
Pearl Harbor, we discovered that our hit-and-run
tactics were limited by the necessity of returning to
Hawaii to refuel.
Some genius conceived a great solution, and this
was some 40 years before we could even say “supply
chain management.” Step One: Capture an island
held by the enemy. Step Two: Station oil storage facilities there,
replenished by the Navy’s capacity-constrained oiler fleet. Step
Three: Attack, return a short distance, refuel, and attack again. Step
Four: Repeat Steps One through Four, only closer to Japan.
But success led to another outstripping of capability and capacity.
Ultimately, a scheme in which oilers met carriers at predetermined
forward locations and refueled while in forward motion solved the
problem. Thus was born what is just now being called “co-location”
of supplier and distributor facilities. Some have called the solution a
“just-in-time” supply chain.
JUST-IN-TIME?
WWII logistics eventually influenced private industry’s material
handling, then physical distribution concepts in the post-war period. What we forget is that the legendary Taiichi Ohno built the
Toyota Production System (Lean manufacturing) on a foundation
laid in his 1946 visits to Ford.
The Japanese manufacturing approaches, kaizen, kanbans, and the
BY ART VAN BODEGRAVEN AND
KENNETH B. ACKERMAN basictraining
Those who cannot remember the past
are condemned to thinking they have
invented the future
lot, were relatively late in development, were often
borrowed from American practices, and owed
much to prophets without honor at home (e.g., W.
Edwards Deming). They made their way early into
the automobile industry and later into other types
of manufacturing—and still later into a spectrum
of nonmanufacturing practices. And so we more
or less adopted relevant components of just-in-time—some 30 or more years ago.
In Japan, a significant enabling feature of just-in-time success was the formation of keiretsu, a
collection of trusted key suppliers located near or
adjacent to production facilities. The idea was not
inventory reduction, but a recognition that short distances meant
short times—times to respond,
times to change over, times to
tweak quantities and schedules.
Sounds, in action, very much
like co-location to us; does it to
you?
WAS JUST-IN-TIME SLAIN OR
MERELY MAIMED?
While the terminology has continued in use until the present day, the reality
of offshore manufacturing significantly altered
the core premises of just-in-time. Global marine
transport wiped out the short distance/short time
advantage, and uncertainties in supplier reliabil-ity, factors of time and distance, and vagaries of
weather (not to mention the beady-eyed tactic
of slow steaming) demanded markedly higher
inventories in order to maintain service levels to
customers. Sell-through of a fixed order quantity became a de facto operating standard given
the slow response to tweaks in continuous-flow
replenishment.
At least in certain industries. But consider this:
The largest of the big box retailers required its
vendors to locate forward inventories near access
points of entry into its internal distribution network. Does that sound like co-location? How
