Geoff,
1. I said nothing even remotely suggesting that Intel is running JIT inventory. I was attempting to show only that inventory reduction is not a zero sum game. If a boxmaker like Dell speeds up its inventory velocity, it may facilitate Dell's suppliers speeding up theirs too. We have no grounds for assuming Dell's move toward JIT imposes costs on Intel. One can imagine scenarios in which the opposite is true.
You said....
Occasionally you will hear someone claim that the main idea behind JIT is to force the upstream suppliers of a firm to bear its inventory burden - and absorb the costs. I think this is totally wrong. It looks at inventory control as a zero sum game. It assumes that if firm A carries less inventory, then firm B - a supplier - must carry more. The truth may in fact be just the opposite: if A moves closer to JIT, it may also allow B to move closer too.
I'm sorry, I must have misunderstood. Perhaps you could clarify for me.
2. The one-day system I assumed for Dell, and which you had so much fun with, was clearly labeled as hypothetical. I never suggested it would work with Intel's fab process. I discussed it only in terms of the effect on Intel's finished goods inventory. I never said it was doable.
??? So your postulating ideas which aren't even doable to respond to our doubts? I don't understand this type of discussion.
....If Intel takes on more customers, its need for inventory probably goes up. However, this is not relevant to the issue. Why? Because the issue with Dell is whether it imposes special costs on Intel due to its frequent inventory turns.
So the need for Intel to inventory goods (either fixed or raw) isn't passed onto their customers based upon they're business practices? Are you implying that CPQ is helping pay for Intel's inventory and forcasting issues created by DELL? I don't think CPQ would allow that to happen and furthermore I don't believe the Intel sales team would either.
The costs you refer to aren't special. In your example each of the 6 boxmakers imposes costs on Intel. When any one of them enters the picture, Intel's need for inventory goes up.
Yes, but moreso if the customer's buying behaviors are not known and are not predictable. If a new customer comes on line and purchases "x" number of chips every 3 months Intel can plan accordingly. Purchases every week are not predicatable and may cause Intel to inventory chips or raw materials in order to meet this unknown demand. If they don't they risk losing the customer.
OG |
