A recent Wall Street Journal feature reminded us that there may be little new under the sun, but that there is plenty of history being newly discovered. The "aha!" moment for the Journal's intrepid sleuth, a professor from the University of New Hampshire, was the finding that suppliers, Procter & Gamble in this case, are being encouraged by that disruptive force, Amazon, to place operations adjacent to Amazon warehouses. Diapers are the select product. But we will not follow the obvious line of criticism here, including nappy jokes.
Our reaction is actually a collective and protracted "Well, duh!" Others may be wondering, "How long has this been going on?"
LINKS TO THE PAST
The good professor reaches way back into World War II for an early example in a superficially unrelated, but parallel, application. In the case in question, the U.S. Navy was busily engaged in being slightly too successful. Early in the war, after we recovered from the shock of the Japanese attack on Pearl Harbor, we discovered that our hit-and-run tactics were limited by the necessity of returning to Hawaii to refuel.
Some genius conceived a great solution, and this was some 40 years before we could even say "supply chain management." Step One: Capture an island held by the enemy. Step Two: Station oil storage facilities there, replenished by the Navy's capacity-constrained oiler fleet. Step Three: Attack, return a short distance, refuel, and attack again. Step Four: Repeat Steps One through Four, only closer to Japan.
But success led to another outstripping of capability and capacity. Ultimately, a scheme in which oilers met carriers at predetermined forward locations and refueled while in forward motion solved the problem. Thus was born what is just now being called "co-location" of supplier and distributor facilities. Some have called the solution a "just-in-time" supply chain.
WWII logistics eventually influenced private industry's material handling, then physical distribution concepts in the post-war period. What we forget is that the legendary Taiichi Ohno built the Toyota Production System (Lean manufacturing) on a foundation laid in his 1946 visits to Ford.
The Japanese manufacturing approaches, kaizen, kanbans, and the lot, were relatively late in development, were often borrowed from American practices, and owed much to prophets without honor at home (e.g., W. Edwards Deming). They made their way early into the automobile industry and later into other types of manufacturing—and still later into a spectrum of nonmanufacturing practices. And so we more or less adopted relevant components of just-in-time—some 30 or more years ago.
In Japan, a significant enabling feature of just-in-time success was the formation of keiretsu, a collection of trusted key suppliers located near or adjacent to production facilities. The idea was not inventory reduction, but a recognition that short distances meant short times—times to respond, times to change over, times to tweak quantities and schedules.
Sounds, in action, very much like co-location to us; does it to you?
WAS JUST-IN-TIME SLAIN OR MERELY MAIMED?
While the terminology has continued in use until the present day, the reality of offshore manufacturing significantly altered the core premises of just-in-time. Global marine transport wiped out the short distance/short time advantage, and uncertainties in supplier reliability, factors of time and distance, and vagaries of weather (not to mention the beady-eyed tactic of slow steaming) demanded markedly higher inventories in order to maintain service levels to customers. Sell-through of a fixed order quantity became a de facto operating standard given the slow response to tweaks in continuous-flow replenishment.
At least in certain industries. But consider this: The largest of the big box retailers required its vendors to locate forward inventories near access points of entry into its internal distribution network. Does that sound like co-location? How about this? A third-party logistics service provider (3PL) for a tier two automotive supplier assembling wiring harnesses worked inside the customer's facility, integrating the flow of its component into a deliverable component for the ultimate manufacturing and assembly customer. Co-location? You bet!
The first example dates back some 15 years; the second has been in place for over a dozen. So, how new is this co-location concept, anyway? And is it stretching a point to try to tie this "new" development to an event that, while it may be current events for us, is likely ancient history to you?
ON AND ON ...
More likely, we think, is that this vaunted co-location is just part of the continuously evolving way we execute processes and concepts of long standing in our profession. Just-in-time, for example, didn't go away; it merely put on a new dress. And it wasn't new in the early '80s when we thought we imported it, along with some Datsuns and Toyotas, from the land of the Rising Yen.
We keep, like some sort of perverse Groundhog Day, repeating this rediscovery and reinvention process. A few years ago, we—the trade press, the movers and shakers, and the consultants—fell in love with the concept of fulfillment. And that was well before information technology and omnichannel whatever. What we forget is that a little catalog retailer out of Chicago built a fortune that endures to this day by doing fulfillment. Customers sent in orders, with some arrangement for payment, and people fanned out inside an enormous distribution center, selected the ordered item(s), and shipped it/them to the customer.
The differences? Orders arrived via U.S. mail, no information technology assigned shelf locations in the facility, pick waves were not computer-generated, and a shipment might arrive by Railway Express. No computers, no FedEx, no Androids or iPhones, few complex algorithms, no Excel, no control tower. But the company, the brainchild of a fella named Sears, somehow managed to satisfy customers, shipping brassieres, long johns, hammers, automobiles, and even entire houses.
Cool your jets, cowboy. What's new under the sun may not be nearly as important as making what we've got work better. That approach has served us, planetwide, pretty well—to the point at which we can scarcely recognize what we started with.