A recent ad by Dunzo, a hyperlocal delivery app goes as “Ab Fridge ka Kya Kam hai” (what’s the use of the fridge now?)
Time for a lesson on operations management. Here we go!
Seems like the 10-minute delivery proposition erodes the utility of a fridge.
It is a battle of inventory Vs JIT (Just in Time)
We hold inventory to eliminate variability. In short the vagaries of the supply chain. Do you sense a shortage? Hoard more!
Holding inventory requires some planning and accurate forecasting. You need to take into account the quantity and time factors here. When to order and how much to order. Needless to mention the active monitoring, how much garlic do we really have in stock?
Forecasting takes into account the trend of past consumption. All this leads to the frequency of ordering. I and my wife have set this frequency to once a week. We order on Sunday evening and get a Big Basket delivery on Monday morning.
The downside of inventory?
Holding costs. We might unnecessarily hold items that might not be consumed immediately. What’s the point of ordering paneer on Sunday evening if I am not going to consume it until Thursday noon.
The second big challenge is that human estimates are subjected to errors. I might order fruits that I might forget to consume. Or I might forget to order fruits altogether.
Actually, inventory is a waste. We maintain inventory because we have not yet cracked the equation to match supply and demand in real-time. (at household level)
And that’s where JIT or just in time comes into the picture. Japan mastered this art in the 70s and attacked the west on its own home turf. Overnight eroding the competence of giants like Ford. But that’s a different story.
Coming to the present.
The fridge is like a micro warehouse that holds inventory.
The 10-minute delivery is JIT.
Holding the inventory needs planning, forecasting skills, time, and effort to order many things at one go and at a set frequency. This also comes with slippages and waste.
JIT works on a whim, you are out of lemons and coriander? Just order it now! JIT gives you the power of now. Don’t plan, just order.
So it all boils down to the human behavior of Planning Vs Impulse.
The power of now will win in the long term. Because the sticky behaviors are the ones that are easy to adopt.