When? Wasn’t that invented by Toyota in the ’70s?
Yes, the Just-In-Time (JIT) philosophy or Just in Time method, began to be applied in industry more than 40 years ago. The main idea was to coordinate the entry of materials into the factory in time and quantity with their needs, at the right time, so that inventories were drastically reduced while financial resources were released. Similarly, the costs related to the movement of materials in the production plant were reduced.
But, in my opinion, it stayed halfway. Not for lack of ingenuity but of technological advances. And now, with Industry 4.0 and Digital Transformation, it is possible to take it to another level and apply JIT to the entire existing value chain between customer, distributor and manufacturer. Enabling any individual with initiative and entrepreneurial mentality, can offer the market their products with minimal financial resources, and practically no structural costs. This is my vision, and I will try to explain it with an example, in which we are going to market a new product in the market. It is still an exercise in imagination, so I invite you to join me as partners in our new business.
The first thing we need is a product, so we must assume the role of Product Manager and define a strategic plan for it. We are talking about analyzing the environment, the customer to whom the product will be directed, the differential values that will allow it to be unique in the market, the potential volume of business, the price, the objectives we pursue and the initiatives that will allow us to achieve them. We have already defined our product, we will call it PX.
Next is a distribution channel. As we do not want to have structural costs, we will implement an e-Commerce system. But not only this, we have to be prepared for when the first order enters, so we will need an ERP that allows us to register it and that helps us in the subsequent management processes. This ERP software must be integrated with an e-Commerce system, or be easily integrated. It must be a business management software that contains the processes of buying / selling / shipping the product, be able to communicate with the third parties necessary for our PX product to reach the customer at the time he expects, and to do everything practically alone, because we have no intention of increasing our structure. Come on, we need the computer system to be Plug & Play, Self-Driving, with some artificial intelligence and Cloud, at least, all elements that allow us to assume today the business management software.
We already have the first order, as well as the corresponding authorization for its collection. Of course, we will charge when we send the product to the customer, not before. We therefore need someone to manufacture PX and immediately, because we have to deliver it on time. This is where Smart Factories come into play, and the theory is very simple. Our ERP for industrial production communicates with the business APIs of these state-of-the-art factories, requests a quote for our need, and chooses the one that offers the best relationship between delivery time and price. From here, and in a completely automated way, our PX product is manufactured by the Smart Factory selected by the industry software itself and is ready for shipment, at which time we will have to make the payment.
In our JIT world, the key to business success is to synchronize the following elements:
- The collection of PX to our client with the payment of PX to the Smart Factory.
- The shipment to our client, indicating the mode of shipment in which the collection of the merchandise is made in the factory, and registering in our ERP Software for industrial management the tracking identifier of the package to be sent.
- Automatic communication to our client that PX is on its way.
- Payment to the transport agency.
If all went well, what we will have achieved is:
- Selling something that does not exist except in our mind.
- Not having to resort to any type of financing.
- An economic margin, after payment to the factory and the carrier.
And all this without making investments. Yes, it is true that monthly we will have to pay a fee for the use of the computer system, that business management program that is what has allowed us to carry out all the management in an automated way and with hardly any structure. But if the product strategy defined for PX is correct and our product has the expected degree of acceptance and therefore makes a place in the market, who cares to assume that cost for the ERP?
And having said that, and after thanking you for your attention, I ask you, when do you think this will happen? What impact do you think it will have on large manufacturers and distribution channels?
And, most importantly, can you wait?