Just In Time and Natural Disaster

https://www.hmoperationsmanagement.com/post/just-in-time-and-natural-disaster

Natural disasters happen. And it will cause damage.

Every time disaster happens, “Just in time” production stops as it is designed to be. Yet, some media or academics criticize for low inventory levels. (In Japan, typical.) I didn’t see them this time, but that was because of a national holiday.

But we should take a more careful look.

1???Why do we assume that “inventory” is safe? Is your inventory kept in a “safe” way?

As far as I know, inventory is fragile. It breaks when a disaster comes. Too many assume that the disaster won’t impact those safety stocks. Disasters will equally destroy safety inventories, just like any other assets.

There is a saying in Japan that places with “water” in their name have some history of water disasters in the past. There, we should avoid it. Bad news. Residences and offices take “good” places. Locations available for warehouses are at cheaper places. And it will be damaged when natural disasters come. I am not sure if such a saying exists outside Japan. But when I was looking for a home in the US, the real estate agent said, “This area is slightly high in elevation. It is safer from floods. (That’s why it is more expensive.)” The city's warehouse is located on the shoreline, where it flooded when a storm came. Too many people working in fancy corporate offices and universities assume the warehouse is also built with the same risks. Typically, they are not. The location is picked because it is cheap, and there is a reason.

On top of location, warehouse operations need to be considered. The warehouse is a busy place. There are always open boxes and unwrapped materials. Those racks claim that they can hold significant weight. However, it doesn’t guarantee safe material conditions when a natural disaster applies extreme force from different directions. Have you seen the video of stores and supermarkets after an earthquake or flood? Multiply that by ten times, and that will damage the warehouse. One time, a typhoon hit where I lived. The town flooded, and merchandise was flowing through the city. None was useful—just pure junk. Typical cardboard will become trash instantly. Can we create disaster-safe packages and operations? And what is the cost?

I am not saying we don’t keep any inventory. But when we keep the inventory, we need a strategy for locating the warehouses in diverse locations. That comes with a cost and complexity. Yet otherwise, you can’t say it is a safety stock for natural disasters.

2???What is wrong with stopping operations in response to natural disasters?

Yes, I know. Some operations need to keep going even when the disaster comes. They provide a social lifeline. It is necessary. Those were the first to return to work, even during the COVID pandemic.

But that came with tremendous stress. And I'd like to know if this stress has been resolved.

What is wrong with stopping operations in response to natural disasters?

Workers are part of a community. Can they cut that and come back to work instantly? Give us some time to grieve and recover. Nothing is more stressful than the need to work, especially when something terrible happens. There was a place where a disaster came. The office workers were allowed to stay home, but production & warehouse people were forced to work. The frustration was enormous. That decision broke so many trusts.

3???The objective of “Just In Time” and waste elimination is to generate “Extra power.” “Extra power” is the only thing that will recover from disaster.

The objective of TPS isn’t just inventory and cost reductions. Taiichi Ohno mentioned the need to generate “Extra power.”?[The detail of “Extra power” in my other post.] ?It is part of Toyota Way 2020.

The safety stock doesn’t recover your business from a disaster. It buys time to recover. The competition will take over if you can’t recover in that time.

The “Extra power” is the only force that recovers. It is the “free” people who are capable and psychologically healthy. It might be extra machinery and tooling. Inventory alone will not heal by itself. You need free people and machines to process the materials. It would help to have people and equipment to deliver those goods to the required areas. Without such people and machines, materials are just “Painted rice cake” in Japanese, meaning it looks good but doesn’t do any good.

Most of such resources are hidden behind waste, especially overproduction and downtime. When people don’t trust each other, they tend to hide more. The true Just In Time builds trust among supply & customer processes, multi-functionalities, and management & people. If not, something is wrong with the methods of implementation. Just In Time generates “Extra power.”

“Extra power” is not “hire more new people.” New requires training. Every time an earthquake hits Japan, many volunteers. Yet, these volunteers eat, use limited toilets and energy, and cause traffic jams. Today, these volunteers are coordinated and trained. Untrained personnel might do more harm than good.

The benefit of this “Extra power” is highlighted in this article . The earthquake and the disaster at the Haneda airport stopped the air traffic. Yet, the bullet train was able to increase the service to transport those passengers stuck without flight. The bullet train operates every 3.5 minutes. But they were able to add more trains. That is because the management knows how much more they can add, tested during standard days, and trained people and trains are ready for such operations.

So what do these “Extra power” people do during regular days? Kaizen and training. And this training shouldn’t just focus on skills that sustain everyday operations. It should include training for abnormalities and emergencies. JAL crews were praised for the evacuations and the annual training that these crews go through gained attention. What kind of training do we need for your operations? For example, do we train on how to rebuild damaged production lines? It might be similar to a start-up of a new product or a plant, but it can’t take that long. It will be an excellent simulation to do ahead of time instead of facing that for the first time when the disaster happens. Some simple processes, such as confirmation of the safety of employees and their families, should be standardized (Yes, I know that it might not work due to destroyed infrastructure, but it is better to have one than trying to figure it out from scratch). The more you prepare, the more likely you are to recover fast.

Natural disasters will happen, so don’t underestimate them. And are you ready for them?