Is this better? JIT: Just in time when a reasonable amount of things go wrong?
Well, pessimistic is better than misrepresentational.
Basic economics. You're going to get burned. You can't avoid that, no matter how much stock you allocate. And buying all that up will be
incredibly expensive. Let alone doable at all; lots of things age in stock. You can't hold it forever. Is this what you are proposing as the alternative? Surely not!
So it's going to go wrong. Well, how wrong is it going to go? Assign a dollar value. Economics.
And now you can do statistics on it. How often does it go wrong, and how badly? (Important detail: is there any knock-on or power-law scaling associated with that "how badly"? Evolutionary example: "punctuated equilibrium".)
And what is the opportunity cost of that? How expensive is it to buy up that stock? And to hold it? (Aside: if you're holding a lot of stock anyway, could you profit from reselling that stock given market fluctuations?*) How much does production suffer, or sales, or service, from that shortage?
And what possible alternatives can you engage, and how fast? How much does it cost to change things over -- engineering hours, production tooling, etc.?
*Aha, so that's the market value-add of scalpers. (Excuse me if this is more obvious than it seems. But, I haven't seen it phrased this way before, so maybe it's worth remarking on.) In effect, they're taking the opportunity to provide JIT for you -- at some additional margin, of course. The difference being, instead of spending ahead of time to buy up what stock you need, you pay spot price now. A price that's exploded due to speculation, manipulation, etc.. Basically, supply volatility has been converted to price volatility; you can
still get the parts, but you might not be so willing to buy them. The downside being, buyers
still just need the goddamned parts, parts that aren't able to be used while they're being held -- overall utility has dropped. It would seem, if this process can be conducted by, say, futures instead -- assigning stock ownership without restricting the flow of actual product -- utility can be maintained while still using market forces to self-regulate supply/demand/price. Maybe that's not worth the overhead, I don't know.
But yeah, point is, you can prepare for that in many ways. You can hold zero stock, and be 100% at the mercy of speculation. You can hold some stock, and sometimes be at the mercy of scalpers, and sometimes hold too much stock yourself. Or you can hold all the stock, and waste a lot of money up front -- but be prepared for the inevitable, and survive where all your competitors die of drought.
Notice the underlying assumption here: that there is a continuum between no stock and all stock, and that there exists a global minima between those extremes. And if no minima exists -- then simple as that, it seems JIT doesn't apply to your market.
I can imagine markets where each option is feasible. Like uh, food production, anything that's perishable, I mean you don't have any choice there, right? At best you can freeze it, but freezing degrades the quality some, and that won't be acceptable for every product. Can't exactly make a salad from frozen spinach blocks. Most manufactured goods, probably somewhere inbetween, hence the automotive origin. Probably, something with low quantity production, but very volatile supply, would fit in the stocking category; the most volatile electronic components might be examples, like flavor-of-the-year RF transistors, or LCDs. Companies like Newhaven make a lot of money doing this (at least, I assume -- this is a rather big assumption, granted, but so as to say, it's a
possible process by which they function), making displays and such available consistently to western markets---at some markup of course.
And, the above responses give some more examples and perspectives on all this, too.
Tim
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