IT 'Creation' Threatened by High Fuel Costs
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One of the ways IT revolutionized business is in just-in-time delivery, in which sophisticated programs figured out exactly when and where a product can and will be delivered. Now, just-in-time deliveries are being threatened by a non-IT reality: the soaring cost of oil. |
Just-in-time delivery operations have exploited cheap transport costs. That's no longer the case. Reporting in The Wall Street Journal Monday, Justin Lahart wrote:
Since the mid-1980s, U.S. businesses that rely on quick delivery for time-sensitive products—from sushi restaurants to flower shops to manufacturers that use just-in-time delivery strategies—have benefited from inexpensive transportation costs. Now, with oil closing at a record $140.21 a barrel on Friday, those businesses are being hit hard.
Over time, the increasing expense of moving goods could lead to a broad restructuring in the way America conducts commerce. But for now, businesses pinched by lower profits are just looking for ways to survive.
Indeed, transportation companies and independent truckers might not be able to adhere to just-in-time delivery schedules because they simply cannot afford to do so. Is there an IT solution to this problem?
See related story: Will IT Weather Stormy Economic Conditions?
