Do you run JIT or IRS? How is your kanban doing?
Global supply chains are contracting but many are missing this. “The 36% drop in import volumes reported earlier this month has not materialized domestically yet and may not for several months, depending on your place in the supply chain.”
Link to article from the Global Supply Chain Industry.
When you push your suppliers as far away from you as possible then system cannot buffer sufficiently to respond to demand falloff or recovery. You end up in a yo yoing state as you try and adjust rapidly to demand peaks and troughs. This was described by Ohno as “supplier bullying”. I call it Mean Lean. Other’s may call it Robbing Peter to Pay Paul.
However you describe it, demand has already contracted in many sectors, and inventories are overloaded. The impacts are not being felt by consumers, but it’s coming.
“There is already sufficient evidence both in data and in company reports to support declining orders. Inventories have grown at record levels since February. Trucking demand has already experienced a sharp decline, causing spot rates to fall 19% since January. The S&P 500 has dropped 20% over the past six months.
Consumers are spending more on services. Inflation is still not under control and has inspired the Fed to increase interest rates faster than it had in 28 years. Companies like Target have reported inventory gluts that will lead to greater discounts in the second half of the year. ”
The whole staff shortages problem is another Mean Lean example. Fire all your folks in lean times, let them go get new jobs that are often better paid and less stressful (this is evident in the airline industry), and then bemoan your inability to hire when the recovery comes.
Toyota learned this lesson in the two oil crises of the 70s which is why factory workers were doing TPM and other non manufacturing related jobs in the 2002 and 2008 financial crises. In Burnaston, UK, they were painting buildings and gardening around the plant and doing community projects. Toyota fired nobody apart from contract labor, which is called a flexible workforce.
Note: Images in this article scroll.