Watch a recently rediscovered Steve Jobs lecture where he talks about leaving Apple and what he’s learned about management (AAPL)

[Are you sending your manufacturing overseas?]

“I heard that rumor too, no, it couldn’t be further from the truth. We love manufacturing at NeXT. When I was at Apple I had the good fortune to lead the effort to build the Mac factory.

We designed, and built, and operated that factory. And it was a real breakthrough. It was the best factory in the industry until we built the one at NeXT.

We made a lot of mistakes, though. As an example, I remember walking through it, one of the things you learn when you start building factories is that warehouses are really bad, right? Warehouses are bad, because you tend to put things in them. And inventory is really bad.

Inventory is really bad, because if it’s defective, you don’t find out about it for a while. And you don’t close the quality feedback loop with the vendor, and correct the problem, until they’ve made a zillion of them.

What you want to do is find the problem, the first one that comes in the door, and stop them from making more until you fix the problem.

Warehouses also cost money, because you put all this stuff in them. And the stuff, you have to go borrow money from the bank, or use money that could be used in a more productive purpose, so warehouses are bad.

And you want to go to [just-in-time.] I’m sure you’ve studied this all, and studied examples.

I was walking through the Mac factory one day, and the two biggest pieces of automation we put in were a giant small-part storage and retrieval system. It was these totes that ran around.

And the second one was this giant burn-in system at the end. A few tens of millions of dollars worth of equipment. And I realized, unfortunately too late, that both of them are warehouses.

They’re just high-tech warehouses.

So when we looked at NeXT, we said no warehouses of any kind. We have a true JIT factory. Stuff comes in, and is delivered right to the point of use on the factory floor. There is no warehouse. Deliveries are made daily, sometimes more frequently than that.”