Just-In-Time (JIT) or Lean Production manufacturing calls for producing goods in small batches driven by customer demand. This has many benefits others have explored. However one of its major costs is the difficulty vendors have supplying materials in small batches on short notice as it requires. Well-known JIT manufacturers such as Japanese automakers "encourage" suppliers to locate warehouses near their factories; yet still physical delivery is a problem.
What if deliveries could be transported in minutes from suppliers anywhere in a major metropolis? What if they didn't need to wait for a driver to arrive, and were delivered directly to a work cell on the factory floor? SkyTranFreightDelivery will do exactly this. Yet it will probably cost less than package delivery today; since demand for passenger transport will pay to extend the system to every corner of the city, its suburbs, even farms and other cities hundreds of miles away.
Just In Time manufacturing's barriers to entry in its current implementation have restricted it to well-defined product lines of major manufacturers who can justify organizing the supply chain it requires. However, once virtually every manufacturer in a city is on the SkyTran network, most of these barriers will disappear. Rather than needing to build a dedicated facility for each customer, suppliers can serve manufacturers all over the city from one facility. Even small manufacturers can call on suppliers throughout a city, and sell to many more.
What are the effects likely to be? There will be a great demand for software to exchange orders and notifications between companies and route supplies, but these will only increase demand for things we basically know how to do.
Human obstacles will probably loom larger. Lean manufacturing runs on trust. A large manufacturer deliberately puts itself at the mercy of dozens of single-source suppliers, any one of which could seriously disrupt production if it failed without warning. To make this work, they invest hundreds of hours checking out a supplier: send engineers to help them fix problems, buy a significant quantity of their stock and put representatives on their boards. On the other side, all the costly investments the suppliers make to win these large, multi-year contracts -- the long negotiations and extensive interaction, building dedicated facilities, maintaining dedicated inventory -- reinforce the critical importance of supplying high-quality product when required. The large company takes a risk in trusting the small supplier, but from the supplier's perspective, their risk is far larger -- one serious screw-up without warning and they may well be out of business.
How well is this model likely to translate to many more players, far smaller barriers to entry, less human contact, and much less time to check each other out? If the barrier of transportation is removed, production will certainly become leaner, but will these human and business issues stop most production from taking full advantage of it?
First of all, the network most players see may not be that overwhelming. The tailor in LittleShopOfWonders may deal with dozens of suppliers, but that's a large part of her job -- she may not even own a sewing machine. Even the owner of a small garage today deals with dozens of vendors: parts stores and dealerships, junkyards and transmission rebuilding shops -- and they quickly learn who they can trust. Also, while manufacturers who need a diversity of parts may order from suppliers across the city, suppliers in a limited range of interacting businesses such as producing custom clothing may well cluster in a limited area. So many of the members of a complex supply chain spread out over tens of miles may be individuals who know each other, remember years of interactions with each other and meet regularly face to face (especially when it is very fast and cheap to do so.
Second, virtual marketplaces like EBay have developed reasonable automatic versions of interpersonal attributes like reliability and trustworthiness. Knowing you are likely to deal with each other again and being just minutes apart from meeting in person should make them much more reliable. If the electronic credentials are fair and complete, they will improve even old-fashioned face-to-face negotiation. If a supplier missed his delivery date five times last year or a large customer was three months late paying many of its vendors in the last recession, impartial figures may tell the story best.
Another result may follow from the claim that countries that are members of a supply chain don't go to war against each other. If a large part of business becomes Just-In-Time based on open disclosure and deep mutual dependence, of necessity business morals will improve in many important respects.
Another result, if indeed extreme Just-In-Time manufacturing is a big success story, it should translate into significant competitive advantage, which will become a major driver for other cities to build SkyTran systems.
Finally, ExtremeCustomization on a scale of hours will also provide a permanent advantage for dense metropolitan areas over diffuse ones, because they can turn around parts and subassemblies many more times a day, permitting a finer division of labor. Companies can become extremely specialized and efficient, coordinating with many others to produce a huge variety of products efficiently and in a matter of hours.