Abandon Just In Time Manufacturing to Save Audio Industry?
JIT Manufacturing
One of the most colorful people that I’ve ever met in the
audiophile hobby/business is named Craig Pease. He was the audiophile pioneer
who saw the market for high-end desktop audio at a time when computer monitors
were a few feet thick. That was a long, long time ago. His brand, Evett &
Shaw, was about the most extreme that I’ve ever encountered in that each and
every part had to be the single finest known to man. The rectangular, Elan,
desktop speakers were handmade in Salt Lake City, Utah with sides that included
exotic woods, colorful “polymers” (like Spinal Tap’s record label) or even
organic stone. The “plinths” that the small speakers sat on were often
hand-cut, thin chunks of polished real stone like samples that you might find
at a kitchen design boutique. The feet on the speakers put Goldmund cones to
shame. But get this… the speakers actually came packed in a Zero Halliburton
metal suitcase that you could actually use later for your next Miami Vice-style
future drug deals. That was a lot of insight, creativity, performance and value
for a $2,200 per pair desktop speaker – especially back in that era.
There was, however, an issue with Evett & Shaw and specifically their increasingly popular, Elan speakers. They were kinda hard to build. It wasn’t that the team in Utah couldn’t build them as they could and often did to bespoke specifications. The issue was having all of the over 120 parts in hand to actually be able to finish the speakers. Simply put, 20 plus years before today’s COVID-19 inspired supply chain issues – these speakers often were one out-of-stock nut or one resistor (or something) short of being able to ship. Think about the image from this past fall with all of those GM cars sitting in a parking lot in Michigan waiting for microchips. That was Evett & Shaw in the early 2000s but with speakers colored like a “Blueberry iMac” instead of electric cars but the problem remains the same.
In the 1990s, every business school was enthusiastically promoting the concept
of JIT (aka: just in time) manufacturing. An excellent example of this in
practice was how Porsche turned their entire company around in the mid-1990s
from delivering one of the most flawed cars coming off the production line to
ultimately one of the most reliable car brands in the world today. Porsche
accomplished this with the help of two “retired” Japanese auto-maker CEOs
showing them how to use more modern manufacturing techniques and JIT
manufacturing to build a better car. What nobody saw coming was when demand increases,
as it has in the COVID era, that there might be severe shortages of parts
needed to make a final product. Just like it can be hard to find toilet paper,
Clorox wipes or baby formula at times. The internal parts needed to make AV
components also can be in short supply.
Every company that builds a physical product aims to be as efficient as possible and Just In Time manufacturing speaks to that endless goal but there are times when having finished inventory is just more important than penny pinching on parts costs. There is one recent, COVID-era success story in the performance-value loudspeaker business from a company who acted on their hunch that more people might want their speakers and subwoofers thanks to COVID so they loaded up on inventory. With transducers coming from China, like most everything else that we consume in our economy today, it takes months to make, ship and organize inventory to be able to fill orders under the best of circumstances. This AV company’s leadership decided to buck up and stock up, and what a good idea that was. While other companies are clean-out of product to sell – they are flush with speakers and subs that can ship now for your newly built AV man-cave. And they are raking in the bucks big time now.
The Audio Industry Much Needed Change
Perhaps it is time to reconsider how high end audio products are built, made, packed and sold?
Could it be time to simplify audiophile products? Could it be time to order enough parts to be more flush with manufacturing inventory so that you can always build more product? Could it be time to use more and more domestically sourced products ranging from parts to cabinets to shipping boxes, packing etc..?
It is very hard to be in business when you don’t have something to sell.
From the balcony of my house, you can see at least a dozen
container ships floating in the Pacific Ocean waiting to unload at either The
Port of Los Angeles or Long Beach – where 40 percent of all goods arrive for
consumption in this country. A lot of media hype has been made of the backup at
the ports and rightfully so. There are real-world problems with the way
truckers are paid for their time, thus many have taken their chance to be part
of “The Great Resignation” by leaving countless $100,000 per-year jobs open for
those looking for a new career. The bigger issue is that the economy has
drastically changed at the global level. Economists suggest that we’ve moved
from a 70-30 split between “services” and “products” to more of a 50-50
balance. In the most basic assessment, there are more pressures on the ports
today because there is a much larger volume of products coming into the country
for us to buy. You don’t have to dig too deeply into any of our lives to see
how we all have changed our spending habits. For me, I am trying to play The
Top 100 Golf Courses In America (Golf Magazine list 2013-14). I have 73/100 and
19 of the top 20 as of now but I haven’t played a new Top 100 in over 18
months. Hell, I haven’t been on an airplane in 23 plus months when I used to
fly 12 to 15 plus times per year. I also don’t go to NHL hockey games anymore.
I don’t really eat out unless it is outside and even that is rare. The money
that I used to spend on services and experiences is now invested more in say
kitchen appliances, a new “used” car and so on. Tangible items. I bet the same
goes for you too.
There is always room to make for a better audiophile experience but it is hard
without really fantastic AV gear. Much of the best audiophile gear is made here
in the United States but it is close to impossible to build said products
without parts/chips/etc… made in China. If you don’t have a healthy reserve of
them on hand – then good luck to you for making a living or keeping your
company going and-or growing.
If the goal is to find and cultivate a new crop of audiophiles that are younger than 45-plus-year-old Gen-Xers (like me) then seeing huge increases in the price of gear is a recipe for failure. Econ 101 teaches us that if supply is low then the prices are going to be high. Take a look at used car prices for a modern example of that. Imagine a world where more audiophile components are made domestically but there is ample supply to feed a younger generation’s love for music (and hopefully higher performance audio playback gear). That would be a very happy place.
See also:
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Recent Forum Posts:
highfigh, post: 1552209, member: 36433
Environmental policies sometimes involve nothing more than quitting something- whether it's driving less, using less energy for heating or for industries, it doesn't cost users anything, aside from a bit of comfort. Anytime air, land and water need cleanup, it's gonna cost a lot of money because the land & water are holding a lot of pollution that was leftover from many decades/hundreds of years of dumping.
The idiocy is in people who don't know the facts telling people how to live, what to do and where they can go. Like the heads of governments and environmental experts who flew to a recent environmental summit in private jets. And Greta Thunberg, Ethanol, etc.
Some environmental policies are sound. Some are completely ludicrous. I'm going to use an example that we're currently fighting with. A few years back, Californika introduced new rules with regards to what ingredients were allowed in lubricating grease, the intent being to restrict lubricants being used in the manufacturing process of a variety of products. It was to prevent groundwater contamination. A good idea, right? Yep. But then some moron got ahold of the legislation and decided it MUST be applied to all greases used in ALL things mechanical, chiefly automotive. Now the chances of grease moving from a wheel bearing or CV axle on your car and getting into groundwater is so slim that it can't even be calculated. However, they went ahead with the legislation, and several other “green” states followed suit. The end result is that all wheel bearings, tie rod ends, U-joints, CV Axles, etc etc must be manufactured with this particular grease, as spec'ed out by the green states if you want to sell your product into those states.
Since the green states in the US account for almost half of all automotive parts sold in North America, it did not make economic sense to attempt to manufacture one set of parts for the green states and one for everyone else. Unfortunately the grease freezes at temperatures colder than -20, leading to extremely short lifespans of the parts in question. So now a CV Axle lasts 20 or 30000 kms instead of 200,000. Prices have risen on these parts due to warranty claims, and the pollution involved in the manufacture of these parts has increased FAR past what little pollution would have resulted from grease evacuation from your car to the groundwater.
Sorry for the length of my post, but this is what I mean when I talk about environmental idiocy. Ill conceived rules made by people who just don't have the necessary intelligence or knowledge to be making them. It costs North American firms a great deal of money to keep up to some of these rules that should have never made the books in the first place, and it takes away money that could be used to do a proper job of environmental stewardship.
Rod
Push, post: 1552042, member: 98064
Absolutely JIT saves money and introduces many efficiencies, but right now with our off-shore sourcing of parts, it has also left us vulnerable. We seem to be under the impression that the Asian countries who have taken over our manufacturing processes are our pals. They may be friendly, but at the end of the day, they are all about enlightened self interest and they will do what is in THEIR good, not necesarily ours.
As we in North America are prone to excess, so we have been with JIT. Big batch processing may not have been the answer, but neither is JIT if you want to ensure your company can weather supply blockages. So why can't we in North America realize that there is a middle ground? A happy medium? Its time for us to find it.
As for environmental processes, you'll notice that I said “ill-concieved” environmental rules. For every valuable AND necessary rule, there is another one somewhere in the books that costs money, jobs and provides NO benefit to the environment. Thats what I mean by environmental idiocy. And unfortunately, we've allowed it to run rampant in North America, so much so that the intelligent and thoughtful environmentalists are now being ignored too.
Rod
Americans want a lot, but mostly in material things. Far too many refuse to think about the consequences of the actions of themselves and others who they're grouped with, so when they and their co-workers yell “WE WANT MORE!”, they refuse to think about what happens after. We want cheaper goods- always have, since the availability of cheaper alternatives became possible, yet dealt with the reduction in quality, then clamored for something better. FF to China being given ‘Most Favored Trading Partner’ status and they became our #1 supplier, largely because they manipulate their currency to make the conversion rate better for themselves.
Environmental policies sometimes involve nothing more than quitting something- whether it's driving less, using less energy for heating or for industries, it doesn't cost users anything, aside from a bit of comfort. Anytime air, land and water need cleanup, it's gonna cost a lot of money because the land & water are holding a lot of pollution that was leftover from many decades/hundreds of years of dumping.
The idiocy is in people who don't know the facts telling people how to live, what to do and where they can go. Like the heads of governments and environmental experts who flew to a recent environmental summit in private jets. And Greta Thunberg, Ethanol, etc.
slipperybidness, post: 1552056, member: 56559
JIT is just 1 leg of the Lean Manufacturing Principles.
This Is EXACTLY correct! JIT has values in some of the other replies listed but one of the most important is cash flow which is not a direct correlation of profit (and the maximizing of it). Often, the search of maximizing profit (by blanket purchase orders and many other factors) puts a squeeze on CASH FLOW, which is the lifeblood of a company’s survival, even more so than the percentage of profit..especially for small manufacturers. The reliance on specialty components or a narrow supply source has the same effect on the ability to ship, whether lean or not. Sure, singular metrics can be measured (per-unit discounted costs, etc). But even with such benefits, UNLESS you can physically take possession of all the materials in a BOM and can actually ship components, cash flow will be affected.
Push, post: 1552034, member: 98064
Sorry dude, you have the cause and effect wrong. Yes, investors drove manufacuring off-shore. Why? Because it was cheaper to manufacture off-shore, thus driving profits up. Why is it cheaper to go off-shore? Primarily because unions drove North American wages sky high, and the costs associated with some of our ill-thought out environmental regulations went through the roof. Thats an over simplification of course, as some of those environmental regulations are necessary to prevent the destruction of an eco system, just like some union regs are valuable, but as always in our land of excess, things got out of control, so Japan, Malaysia, Korea and China took control of the processes.
Horseshit.
Parts that arrived at noon would be in new products shipping by noon the next day or sooner. The logistical challenges to do this, though, at that level is incredibly hard to achieve.
If you have the monetary clout to do JIT, it's very efficient and saves the company a lot of money in inventory taxes. If you aren't a giant corp, though, it's advantages aren't nearly as clear cut.
For a small company, being at the mercy of supply chain problems and varying prices due to that is not necessarily great. The down side about not doing it is that you may need to use short term loans regularly to buy products in bulk and still pay your employees.
This is not a simple problem to solve and has no simple answer.
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