JIT and the Automobile Industry

Many car manufacturers have implemented the JIT philosophy since the late twentieth century. In these industries, players focus on supplier relationships as essential tools for JIT implementation success. Example is the Italian Fiat company that established partnerships with suppliers who supply specific parts of the final products. Through the partnerships, Fiat recognized the importance of increasing quality as and decreasing costs. Advantages of supplier partnerships result from the difficulty of suppliers to trust customers with aggressive market relationships due to competitive bidding and short-term contracts. The suppliers feel that building partners with manufacturers will improve their coordination and communication. Another perspective that Fiat uses is decrease in vertical integration due to increased eternal sourcing. Vertical integration helps to reduce market transactions costs thereby protecting valuable assets although it may lead to high costs of production. Long-term partnerships and investments with suppliers help to reduce this vertical integration and with increase in technological changes, firms can increase partnerships that will further reduce vertical integration (Manna).

In Japanese systems, suppliers assume crucial responsibility, with in depth communication with process and product engineers. In the U.S, many car manufacturers are limiting the number of suppliers they use and embark on a full outsourcing of many car parts from limited suppliers. An example is the General Motors who chose only five suppliers to attend to do the interiors of their cars. Moreover, Mercedes, BMW and Chrysler have at times relied on high qualified but few suppliers to maintain their competitive edge. Suppliers who take these roles have to have a global presence and due to high demand from car manufacturers, they need to be well concentrated. These suppliers ensure innovation, brand identity as well as reducing discrepancies in quality and delivery. For effective partnership, both companies and suppliers need to have constant and efficient communication and exchange of information (Manna).

In the motor industry, JIT implementations have been successful and companies have gained a lot in building on their competitive advantage. The only disadvantage in the motor industry application of JIT is the tendency of companies failing to diversify supply services from a different supplier. Over reliance in one supplier is more costly in comparison to diversifying suppliers.

JIT has also seen considerable application in the electronics industry with Samsung Company utilizing it since the late 1970’s. Through establishment of tight partnerships, closer supplier proximity as well as spreading the philosophy in the entire chain, great efficiencies result that increase productivity through organization and utilization of people and technologies in more ways (Manna). JIT in electronics have many advantages that companies like Samsung have benefited from for years.

First, Samsung keeps few suppliers who allow synergies to exist, eliminate variations and ensure timely delivery of crucial parts. This involves a rigorous and constant evaluation of suppliers’ quality in order to achieve this goal. Apart from having fewer suppliers, JIT enables companies to have close suppliers who reduce transportation costs especially for bulky materials.

JIT further allows incorporation of many firm levels into the chain to ensure a constant flow of processes. In the chain, efficiency is achieved through sharing of information and constant communication about one another’s production process. The communication should be real time and accessible to all. Example, Samsung have a Global Samsung Business Network, which is a worldwide portal that that enables the company and its global partners subsidiaries and customers to have a real time information on orders, sales, inventory and shipping (Manna).

The disadvantage of applying JIT in electronics is the high cost associated with its implementation. Many companies are still shy to implement JIT due to the cost implications. Moreover, the issue of trusting one supplier is hard for many companies who want to safeguard their businesses from any breakdown or withdrawal of the main supplier.

JIT in Healthcare

Healthcare institutions have embraced the use of JIT due to the difficulties that result from delivery of service in unplanned schedules and time limits. It is very difficult for a hospital to make prediction of the expected number of patients it expects in a particular day. The services further require varied materials, equipment, supplies and medication. Planning the inventory is rather difficult and hospitals always have equipment and supplies for extra and emergent medical cases. This complicates JIT application in the healthcare services. The complication increases when the hospital has any doctors with unique preferences in equipment and supplies making supplier partnerships rather hard to form. These are some of the disadvantages of applying JIT in health care. Furthermore, many hospitals find it hard to trust one supplier for medical supplies due to the nature of their work.

Even with these difficulties, hospitals are embracing JIT philosophy by entering long-term contracts with a single supplier who provides all medical supplies mainly with daily deliveries. The contracts with these single suppliers expire after particular time and are normally open for renewal. Although this prevents chances for competitive bidding, it helps hospitals to embrace the JIT philosophy and enjoy its benefits in attending to the patient’s need effectively (Manna).

JIT in Steel Industry, a case study of Industries in Bangladesh

To analyze the extent of application of JIT in steel industry, a research study on steel industries in Bangladesh was carried and results analyzed. The study by Sukumar Mitra also sought to evaluate the empirical relationship between JIT implementation and performance as well as identifying the application of JIT in today’s competitive environment (Sukumar).

Sukumar Mitra came up with three research hypotheses: there is a positive relationship between the level of JIT implementation and business performance. There is also a positive relationship between JIT implementation and financial business performance as well as a positive relationship between JIT implementation level and non-financial business performance.

He used a survey design through collection of primary data from companies in steel industry in Bangladesh. He also designed a survey questionnaire to test the hypothesis by collecting specific information on manufacturing operations, JIT implementation s well as perceived firm performance and respondent characteristics (Sukumar).

Due to constraints of time and finances, the survey involved five companies. Distribution of questionnaires was through mail and email to the companies with follow up telephone calls. He then presented findings in order of sample firm’s profiles, descriptive statistics of the main variables and the statistical associations between JIT implementation and performance.

JIT performance he measured using a seven-item instrument with a scale ranging from least extent to great extent. Using literature, he used six manufacturing practices that reflect JIT practices and although not all inclusive, the practices were: ‘sampling check, supplier access to production schedule, manufacture after receive order, use of single cell production, quality checks on raw materials and delivery of goods based on company’s production schedule (Sukumar)’.

To test the business performance, he used a five point Likert scale ranging from poor performance to excellent performance. This test used an eight items instrument comprising of profits, cost savings and timely delivery among others.

Findings and analysis

His findings indicate a moderate implementation of the JIT philosophy in the whole sample population. The overall mean is 3.42 showing the moderate level of implementation. The highest mean at 3.75 is in delivery of goods variable while the lowest is 2.66 in supplier’s access to production schedule as shown in the table below. The most implemented JIT practice was timely delivery of goods based on the company’s production schedule while the least applied practice is the supplier accessibility to company’s production schedule. Results further indicated that on average, firms had a better performance as compared to their competitors especially with respect to saving space and cost as well as delivery time and product quality.

In testing his hypothesis, he found that there was a significant correlation between JIT implementation and overall performance. The overall performance (r=0.488) at significance level 0.01 with a correlation between financial performance and JIT implementation was also significant at (r=0.438) as well as the correlation with non-financial performance suggesting further analysis to the tests. These results are shown in the table below.

Further analysis using regression analysis indicates a positive relation in the three variables to JIT implementation. A final analysis using the multiple regression analysis indicate a relationship between performance to several JIT variables like supplier access to production schedule and timely delivery of goods based on a company’s schedule of production (Sukumar). The following table displays the results of the regression analysis showing the positive relation between the hypotheses and the results.

The purpose of his study was testing the relationship between JIT implementation and business performance. From the hypotheses formulated, there is an above average performance in all the indicators used except innovation. Results of the correlation and regression analyses show a significant relationship between JIT implementation and performance in steel companies of Bangladesh (Sukumar).

The study experiences various limitations, first the cross section survey research that ensured data collection was on a single point. Second limitation involves only manufacturing firms and uses a non-random sample that may not be very inclusive. Moreover, majority of the respondents in the survey were middle level managers and not senior managers as was the initial plan. This creates a possibility that the respondents might be unfamiliar with the questionnaire and there are possibilities of having different perceptions in managers of different level. The instruments used were made from available literature that might not have represented real company practices. Furthermore, the sample size was too small to make valuable conclusions. In view of these limitations, further research was therefore necessary to find out the relationship between JIT implementation and business performance (Sukumar).

Even with the limits, the study shows that JIT affects company’s performance by increasing profitability and reducing unproductive and cost building activities. Even with the vast advantages of the JIT philosophy in a company, some steel industries are yet to implement it and governments should therefore sensitize them to take the right steps ad have JIT in their system in order to reap is valuable benefits. In the business world we are in, JIT is a paramount step in manufacturing industries as we have seen for companies who seek to build a competitive edge over their rivals.

It can be concluded that Just in time is production concepts that leads to produce the needed items with very high quality and minimum cost. JIT system achieve great in elimination the wastes. Wastes means all the items that are not valid to the products in any company. For example, defects products, late delivery and transportation. JIT is a system for problem solving. Quality is required in JIT because without it JIT will fail. Quality means in plan and action, process and checks. Additionally, JIT has its power to produce , schedule, plan, and order in the production firm. JIT contain Kanban System this power the manufacturing company to depend on workers, suppliers and customers. Their goals is make a trust between teamwork to have a friendly workplace environment, giving more training in JIT process lead to success and also when employees and managers treated equally will help too. They will give more effort to cooperate with each other to analyze and find solutions in addition, any company who give their employees the power, employees will encourage to find the solutions and solve the problems. Rather than wait for the top management too require and ask for changes. The aim of that is to let employees get involved in the problem. Just in time is significant operational management for production supplying company.

JIT system is complex system, mangers should rethink about the entire work in the company, from the beginning, raw material to the final finished products. Supply chain need to have a relationship with many different suppliers, companies can supply raw material with advanced technology. Organizations organize small amounts of good and service that can be difficult to meet the customer demand. As a result, this will require to have different way or contract to break up a very big order through different time or different manufacturer. Goods and services should meet the quality to avoid the defect products. Employees should be aware of the whole process of the production to meet customers satisfaction. Also they must understand the size the cost of the products before they implementing just in time, finally, the dangerous of the system is never gain footing with corporate culture.

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