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Just in time: why we keep running out of everything | It's Complicated - YouTube
Channel: The Guardian
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toilet rolls petrol microchips we've run
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out of all of them in the last couple of
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years but it's not like products aren't
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being made and it's not like there's
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nowhere to store them so why do we seem
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to be running out of everything
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in the last 50 years the way we make and
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store goods to meet demand has turned on
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its head
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largely thanks to this man toyota
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executive taiichi ohno
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traditionally companies stored enough
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stock to meet current demand
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but also kept an extra amount in case
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there was a problem or a sudden increase
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in demand for their product
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this was called just in case
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but in the 1970s ono realized that
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storing excess parts and components cost
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toyota money
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so he devised a system where instead of
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storing parts
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the company only ordered what was needed
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making sure that parts arrived just in
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time the moment they were required
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and so just in time was born
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the results were spectacular just in
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time increased toyota's profits and
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freed up enormous amounts of capital
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that had been tied up in expensive
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warehousing
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this enabled toyota to reinvest expand
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and stay ahead of the competition
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today just-in-time systems are
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everywhere from supermarkets to our
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health services
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and from airplanes to motor vehicles as
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almost every area of business have gone
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in search of the spectacular
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efficiencies that just in time systems
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promise
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but there are limitations within the
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system that make it really quite fragile
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there are two main ways that a
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just-in-time system can go wrong
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firstly if a problem occurs anywhere in
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the supply chain such as materials not
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arriving when they're needed then
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because there's no excess reserve
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supplies the production simply stops
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and secondly if there is a spike in
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demand at any time because again there's
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no stockpiled goods the business cannot
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respond to the surge
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the covert 19 global pandemic really
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laid bare the fragility of the
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just-in-time system
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where businesses around the world saw
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anomalies in both supply and demand
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on a local level the toilet paper
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shortage we saw at the start of the
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outbreak was a spike in demand
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caused simply because toilet paper is a
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bulky and low profit item that
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supermarkets don't want to waste money
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storing
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so when some people bought just one more
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pack than usual or in some cases a lot
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more
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shelves emptied quickly and they stayed
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empty until the next scheduled delivery
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on a global level the online spending
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sprees that many of us went on during
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lockdown also created a spike in demand
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for goods
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and this is continuing to put additional
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pressure on an already overstretched
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shipping industry
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the reason that something as basic as
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shopping sprees can have an impact on a
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global transport network is because the
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shipping industry is a finely balanced
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system that has come to be dominated by
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just in time
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for example a just-in-time supply chain
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might see raw materials leave australia
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and get supplied to china for specialist
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refining
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which are then supplied to germany for
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manufacturing
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which are then supplied to retailers all
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around the world
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including back to australia
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so when a problem occurs anywhere in
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that chain such as multiple chinese
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ports closing because of covert then the
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entire system quickly backs up in nearby
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shanghai are also seeing the worst
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congestion in at least three years
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just in time relies on smooth running
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throughout the supply chain
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so if companies are suddenly faced with
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changes like spending time filling out
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more forms as has happened with brexit
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then the result is unfulfilled orders
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and empty shelves
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the global supply chain is struggling
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just in time has spread to every aspect
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of our lives including areas where it's
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not suited
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in the armed forces it led to a lack of
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flak jackets and machine guns during the
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iraq war
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and in the nhs just-in-time supply of
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ppe failed during the pandemic
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leaving thousands of medical staff
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unprotected
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it's even infiltrated job recruitment
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which is eroding labor rights
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so if just in time isn't working out
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surely we can go back to the way things
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were right
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well companies are starting to slightly
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increase their infantries spreading risk
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by having backup suppliers and using
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technology to manage bumps in the supply
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chain but it's not easy to make the
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switch
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just in time simply out competes other
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systems when it comes to efficiency but
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there is one thing that could force
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companies to return to just in case and
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that's the climate crisis where just in
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time will likely find itself unable to
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keep up with the pace of change
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making at least a partial return to a
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justin case system almost unavoidable as
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companies face up to an uncertain future
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