A LOT OF TRENDY MANAGEment philosophies come and go with little effect. But Dan Kiurski credits Just in Time, the Japanese manufacturing concept, with reviving his business. "If it weren't for Just in Time," declares the general manager of Central Detroit Warehouse Co., "the warehousing industry in Detroit would still be in a recession."
JIT may actually be saving the very business it was designed to kill. Under a JIT system, raw materials and work in progress should flow from start to finish without stopping. They arrive where needed "just in time," rather than becoming expensive inventory that occupies costly warehouse space. Automobile makers are at the forefront of U.S. industry in adopting JIT, borrowing from Japanese competitors.
But for Kiurski's warehouse, JIT has meant a 15% boost in revenues and several new jobs for service people. Ron Murrell expects his new business, named, paradoxically, JIT Distribution Center Inc., to pick up $1 million in revenues in its first year. "The concept of JIT would preclude any kind of interim warehousing," admits Murrell, who hopes to expand into Atlanta and New Jersey. "But in the real world, we have recognized a need."
That need may be the automakers' doing. They have announced plans to switch to JIT without laying the groundwork, such as producing accurate schedules so suppliers could coordinate shipments. Rather than eliminating inventory, they have pushed it onto their suppliers. "They tell their supplier, 'You are going to be on a JIT delivery system and the fact that you are located far away is just tough," says Ed Heard, a JIT specialist. "If he wants the business, his only choice is to rent warehouse space in Detroit."
The warehouse industry isn't complaining. "The notion of the warehouse may change," says Scott Whiting, president of Whiting Distribution Services Inc. "But warehouses won't disappear."