How benefited the implementation of Just in Time approach

When we look back the history of Just in Time (JIT), Taiichi Ohno, the Vice President of Toyota introduced and formalized the Just in Time approach to ensure the cost production is minimize. At the same time he wanted Toyota meet the various demand from the customers (A.Z Keller and A. Kazazi, 1993). The main objective of the implementation of Just in Time approach is to control the flow of manufacturing stage by removing the non-production activities as stated in the management accounting book 2012 version. Once a company formalized the Just in Time approach, they can able to achieve the benefited of Just in Time where:

1) Reducing the Inventory level2) Improving product quality and reducing cost of scrap3) Eliminating unproductive and worst suppliers4) Occupying more space with less Work in progress (WIP)

Reduce inventory level

Main goal of Just in Time approach is to reduce the level of inventory to almost zero (Akhbar Javadian Kootanaee, Dr. k. Nagendra Babu, Hamidreza Foolado Talari, 2013). Other than that, the company can avoid cost related to inventory such as storage cost, handling cost, insurance cost and carrying cost. Field work at Chun Long Frozen Food Industry Sdn Bhd also shows that low inventory level able the company to save variable cost related to inventory. They are also able to reduce the space for inventory which is difficult to maintain in the long time because it will incur the cost of maintenance. The company also have more time to focus on the other process of improvement rather than focusing on the management of inventory cost.

Research made by Bin Srinidhi and Giri Kumar Tayi, 2004 shows that lower inventory level will provide two benefits: 1) Information benefit. It determine the actual state of production system on how efficiency they operate2) Incentive benefit. It creates a creative, smarter and competitiveness manager to manage and cope any situation occur under the Just in Time approach.

Improve product quality and reduce cost of scrap

Philosophy of Just in Time is contain of ability to meet the exact quantity with needed quality and required quality at the right time and place by using the central focus of manufacturing (A.Z Keller and A. Kazazi, 1993). This shows that quality aspect is an important to the manufacturing. Successful executed of Just in Time approach will contain the programmes of quality management where it able to improve the quality product and at the same time reducing the cost of scrap (Patricia J. Daugtherty, Dale S. Rogers and Michael S. Spencer, 1994). Field work at Chun Long Frozen Food Industry Sdn Bhd shows that Just in Time really improved the quality of product especially in the industries like food industries. They able to monitored and improved the quality of food produced by selecting the best raw materials. Scrap production also was reduced due to high quality inspection made by the employee. Using the Just in Time approach, any issues arise regarding quality will occur immediately. This is because the defective outputs will be the input to the next manufacturing stage. Moreover, this method will determine the defective quality before the end of processing stage which is proven to reduce scrap product.

Eliminating unproductive and worst suppliers

According to A.Z. Keller, A. Kazazi and Carruthers, Just in Time environment able the company to reduce the number of suppliers and focusing on the productive and cooperative suppliers. This situation will create the beneficial relationship between the company and the suppliers. The company and the suppliers must be able to produce the best communication to ensure the flow of material support is in the best flow. Research shows that many companies such as Xerox (USA) was gained much from the long term relationship by focusing the supply management. Part of benefit they gained is reducing of lead time from supplier to 50 percent and cut inbound logistics costs by 50 percent (A. Kazazi and Carruthers, 1993). We are also giving the question to Chun Long Frozen Food Industry Sdn Bhd during the fieldwork either they gained the benefit form eliminating the worst supplier and focusing on the supply chain management, they response positively and said they getting more than benefit of long term relationship between them but they also gain an improvement of quality of product. This is because suppliers more appreciate the relationship agreement between them and focusing more attention on providing the best raw material to them. As a result they able to improve the quality of food while giving more choice of products to the customers. Moreover, Chun Long Frozen Food Industry Sdn Bhd also able to meet the demand from various customers because of the efficiency of the suppliers management toward large raw material needed from the company.

Less Work in Progress, occupy more space

The characteristic of Just in Time is containing of pull method of coordinating production. Pull method is a message sent to the manufacturing stage on how many materials and parts are needed at the final assembly. The message is sending on the form of kanban, a card which is indicating the number and type of part requested from the preceding work centre. So, if there is no signal received from work centre through kanban, the manufacturing will not initial. As a result, no parts are produced until they needed, no inventories build up and manufacturing stage is likely to stop until further requirement are made, so, it will eliminate the work in progress between the production stages. This will also reduce the waiting time and provide more space that can be used by another important process (Gill mould, 1996). Research made by Bin Srindhi and Giri Kumar Tayi shows that the good organizing of delivery inventory in a week and several times a day will result compactness of plant layout and only small percentage of storage space provide for part and work in progress inventory. Moreover, a field work shows that, the company do not stored any work in progress in a long period because it will affect the quality of product such as food product. Thus, they only provide minimal space for work in progress product. So the company does not need to focus on this particular thing but they can give more attention to another important development of product.

Conclusion

After looking all aspect that relate to the Just in Time approach, we conclude that, if a company want to implement the Just in Time approach they need to take a deep analysis and determine is it suit enough to implement the Just in Time approach in the company. More importantly, they need to organized and managed the resource allocation in the long time. The manager and the employees also need to have in mind of Just in Time approach. They need to understand each aspect of the approach. Other than that, logistic problem must be managed efficiently to avoid delay of receiving raw materials and avoid problem of meet various demands from various customers. After all, even Just in Time is only part of value chain and only focus on the cutting cost of production, it will also can actually bring the satisfaction to the customer by providing the best quality of product.

References

1. A.Z Keller and A. Kazazi, Just-in-Time Manufacturing Systems: A Literature Review, Volume 93 Number 7, 1993.2. A.Z. Keller, A. Kazazi and A. Carruthers, Impact of Implementing Just-in-Time in a European Manufacturing Environment, 1997.3. Patricia J. Daugherty, Dale S.Rogers and Michael S. Spencer, Just-in-time Functional Model: Empirical Test and Validation, Vol. 24 No. 6, 1994.4. Gill Mould, Benefits and Problems of JIT Implementation, June 1996.5. Akbar Javadian Kootanaee, Dr. K. Nagendra Babu, Hamidreza Fooladi Talari, Just-in-Time Manufacturing System: From Introduction to Implement, Vol. 1, No. 2, March 2013.6. Bin Srinidhi and Giri Kumar Tayi, Just in Time or Just in Case? An Explanatory Model With Information and Incentive Effects, Vol. 12, No. 7, 2004.