Just‐in‐time: Supplier‐side Strategic Implications
| Date | 01 March 1990 |
| DOI | https://doi.org/10.1108/02635579010142636 |
| Pages | 12-17 |
| Published date | 01 March 1990 |
| Author | Yohannan T. Abraham,Thomas Holt,Yunus Kathawala |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
12 INDUSTRIAL MANAGEMENT & DATA SYSTEMS 90,3
A
JIT system makes several demands on
suppliers: frequent deliveries, smaller
quantities, and exacting quality.
Just-in-time:
Supplier-side
Strategic
Implications
Yohannan Abraham, Thomas Holt and
Yunus Kathawala
Introduction
A management philosophy, as well as an operational
method, Just-in-time, has gained considerable popularity
in recent
years.
Stated simply
from
an operational aspect,
it calls for materials and parts
to
reach the production point
when they are needed and not before. As to its attribute
as a management philosophy, the system calls for a total
integration of a firm's internal and external resources.
The literature is replete with success stories of firms
reporting significant savings and operational efficiencies.
While a few of these success stories are reviewed here,
the focus of this article is to look at some of the major
strategic issues and problems facing suppliers who are
to meet the requirements of their customers,
who
in turn
have their customers and so on to satisfy, in the
manufacture/process
linkage.
Furthermore, the article also
will
examine the manner
in
which firms have tackled some
of these problems and provide additional insights for
making the JIT system a functioning reality.
Having had its beginnings in Japan, JIT (Kanban) is an
integrative approach aimed at solving certain age-old
operational problems that beset firms whose operations
depend on the timely availability of raw material, semi-
finished goods, tools, equipment, and other
supplies.
The
idea of course is to have material readily available closest
to the point of production with a minimum of inventory
in the pipeline.
The integrative aspect concerns the co-ordination of all
intra-organisational resources and activities (people,
facilities and functions) on the one hand, and, equally
importantly, the co-ordination of as many suppliers that
the firm
is
dependent
on
and their suppliers
ad
infinitum.
Any
bottleneck
in
the chain means costly slowdown in the
reverse order and consequential cost of untold proportions.
The benefit, of course, from successful JIT is that
inventory-related costs are kept to a minimum with
accompanying economies in operation for all parties
concerned. In the process, one also would presume that
the resulting cost savings will have an ultimate impact on
the customer's pocket book as well.
There are many examples
of companies with successful
JIT policies
Among the reported cases[l,2] of successful JIT
implementation and operation are:
● Harley-Davidson Motor
Co.
cut its in-process and
in-transit inventory
by $20
million at the company's
York, Pennsylvania, plant.
● Navistar, Chicago, reports $500 million inventory
reduction and productivity increase of
14
units per
employee compared to eight units per employee
in 1981.
● General Electric
Co.
was able to trim inventory
by
70 per cent with an accompanying productivity of
up to 35 per cent in 40 of its plants.
● Hewlett-Packard reduced it computer workstation
printer manufacturing space from
10,000
square feet
to 2,500 square feet, over a two-year period.
● According to a former Chrysler executive, JIT
permits Japanese automobile manufacturers to
carry only $150 in work-in-process inventory
compared to an average of
$775
for an American
car manufacturer.
● Ford Motor Company has reduced its in-process
inventory from 40 days in some plants to just two
or three days.
● An American assembly plant will require at least
2 million square feet for
a daily
output of 1,000 cars;
in Japan the same can be handled in about 1.5
million square feet.
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