Just In Time And Supply Chain Management

Abstract

An explanation of lean manufacturing and quality measures are also highlighted in relationship to green supply chain management. The literate also talks over the benefits of JIT which are enjoyed by the service sector as often as by the manufacturing sector and there is more scope of maturation and development in it. Some prominent issues of JIT are raised as well.

Although there has been a lot research done on JIT, more research needs to be done on aspects beyond the production line as the supply chain management is now more than just managing the different stages from raw materials acquisition to customer service.

Introduction

The idea of making items with right quantity, right quality, and right place and on the right time has brought a well-substantiated explanation of just in time manufacturing. This is mainly followed in those company`s who wants to minimize their costs and minify the waste products increasing the potency and effectiveness of the organization. With the increasing competition many firms are adopting this method for advancing and improving the standard and increasing the phenomenal degree of productivity. In the territory and domain of supply chain management, “Just in time” is relevant to an inventory scheme that it is applied to ameliorate business’s return on investment with the help of decrease in the stock and all associated monetary value.

This literature review through empirical observations analyzes the point and magnitude to which “Just in Time” and supply chain management, are mutually related and how powerful and strong they are for a booming and successful business.

JIT PRODUCTION CONTROL SYSTEMS

According to Jarvis et.al (2007) the just in time production control involves the element of the system which makes logical connection, co-ordinates and directs the action of workers and machines. The three most frequently employed elements of production control in JIT are Kanban, Mrp and Lead times. They are applied for setting an order of operations, the amount of product to be produced and the line leading to the production flow. Ling and Durnota (1995) have explained the process below of kanban systems in JIT.

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This involves filling orders and forwarding them to the stock point which are then later transferred to the containers ready for delivery to different work centres. Now after receiving the goods, kanban and container are separated into lots. Writer further added the issue in implementing these systems such as validating and verification because it is necessary to validate the stipulations to make certain, that behaviours and actions are consistent with the actual operations of the kanban System.

Moreover, Gupta, Turkey and Perry (1999) said that kanban system is extremely flexible to deal successfully with unsure and unplanned disruptions. The writer explains that after studying; the comparison of kanban with traditional JIT system the performance of kanban was greater in rank, of better effects and results as compared to traditional JIT system.

Whereas Mrp and Jit are the strong management tools that can find out the reasons of success and failures in a manufacturing system (Shi and Benton, 1997)

Hence designing and programming is an inferred idea itself as manufacturers use Mrp, and kanban to make the output stable and also by reducing the lead time with the purpose to put into equilibrium, to create willingness to work with suppliers and to set up a smooth flow of information in JIT process. Therefore these production-inventory control systems can complete each other in many aspects and scenarios instead of being reciprocally exclusive.

JIT’s Role in the Supply Chain

Aghazadeh (2003) describes the premises of just in time in connection with supply chain as fabricated by Toyota in Japan. This involves the following:

Quality production that thoroughly, systematically and continually fulfills the need and requirements of the consumers.

Creates a connection among manufacturer, customers and suppliers.

It reduces the level of the items in the stock and prevents from the effects of Inflation, unwanted material, out of date inventories and also the damages.

Vollman et al (2005, p. 754) in reporting Mistry`s study, laid emphases on the effective management of the supply chain, which reverberates the convergence between financial and operations management with the aim of lessening and removing all non value added cost that occurs, and Is related to the JIT process system which covers the same functions of minimizing the waste.

Just-in-time manufacturing system has long been an integral part of the supply chain management. It plays a vital role in enhancing the supply chain processes of any company and is very important to be looked upon in a very careful manner. In this literature review, we also look at the role of JIT in the supply chain from three perspectives; quality, buyer-supplier relationship and customer relationship.

QUALITY

Youssef (1994) suggests that the JIT systems are a very important tool for the companies to ensure quality improvements. He suggests that Just-in-time environment helps in enhancing the quality at almost all stages in a supply chain. He talks about vendor quality, product quality, design quality and manufacturing workmanship. Hence, according to him, just in time not only enhances product quality, it improves the quality of a supply chain as a whole.

In another study by Kannan & Tan (2007), quality in JIT is referred to as JIT Quality (JQ) and they examine how the JQ enhances quality in a supply chain. In their study, they try to find out the relationship between JQ and product quality and it was found out that there is insignificant evidence that JQ enhances product quality which is completely in contrast to the study described above. This shows us that there has been a paradigm shift in JIT’s impact on quality and its role has changed over the years in the supply chain.

BUYER -SUPPLIER RELATIONSHIP

Just-in-time inventory management is essentially a function of “pull systems” in which goods are delivered only when they are needed but they have to be delivered on time (David & Eben-Chaime, 2003). The research tells how far the buyer and supplier should go in terms of finding out how much and at what point in time should they be delivered with goods. It was deduced in this research that using the delivery index enables the suppliers and manufacturers to be flexible in order quantities and hence maintaining the required level of inventory. The figure below is a pictorial description of the levels of inventory of the buyer and the supplier.

In another study, Landry, Trudel & Diorio (1998) say that notions like mutual trust and partnership are extremely important between buyers and suppliers in a JIT environment. They highlight the transactional cost economics in their study and how the relationship between the buyer and the supplier is affected as a result of this. They talk about the balance of power in buyer-supplier relationship and propose that the organisations’ strategies should be such that the balance of power doesn’t shift to one side. They also say that JIT system reduces costs of additional unnecessary inventory for an organisation but there has to be enough independence for the suppliers and buyers to be flexible in terms of quantities and frequency of delivery.

CUSTOMER RELATIONSHIP

White & Pearson (2001), in their research paper try to examine the use of JIT in terms of enhancing customer services and fostering the flow of materials along the supply chain, hence improving the value chain. They say that it is very important to have a customer focus on whatever an organisation produces and it needs to be carried out in a very effective manner. They propose that the firm first needs to define the customer requirements which then are incorporated into their value system which is solely based on the JIT systems that they use. They also say that looking at subsystems is not appropriate and the whole system has to be looked upon as a whole. All the activities should be carried out according to what the customer says and hence the strategy for the supply chain and JIT should also be devised.

According Wong & Johansen (2006), the JIT system is achieved only through high levels of coordination and smooth product flow. They propose that in order to achieve effective JIT retailing, the retailer and the manufacturer need to work in high levels of coordination and the levels of interaction among the two has to be very high. This would enable the retailer to meet customer demands and replenish inventory Just-in-time. This in turn would improve customer satisfaction and the supply chain would be more effective. The figure below is a depiction of how the network in the supply chain works with JIT system; ensuring customer requirements are being met.

The above literature gives evidence and a clear picture that JIT-driven Supply chain process is leading towards a better planning and production in bringing some good financial performances. Also associative relation is formed of successful implementation of JIT which establish and enact a positive effect on the operation and execution of SCM.

JIT ISSUES IN A SUPPLY CHAIN

There are a number of issues that need to be looked upon when an organisation in a JIT environment as shown in the figure above and these need to be tackled very carefully whilst ensuring that the JIT system in an organisation works in the best possible manner (Matson & Matson, 2007) . Some of the issues as highlighted above include on-time delivery, forecasting, inventory management and lead time. The suppliers, when tackling with a JIT manufacturing firm, need to keep a check on the orders that they receive and they should ensure timely delivery (Cebi & Bayraktar, 2003). Matson & Matson (2007), talk about the fact that a lot of issues are created by the aspect of forecasting. If the forecasting is not done accurately and through rigorous analysis, there are a lot of problems created such as inventory shortage, delays in delivery, excess inventory, longer lead-time and many other problems related with labour and the whole supply chain would be disturbed greatly. Hence, in order for a JIT environment to work in an extremely effective way, the above issues need to be tackled so that the costs are minimised and the supply chain works effectively with all the supply chain partners/areas managed appropriately.

JIT IN THE SERVICE INDUSTRY

White, Pearson (2001) arduously emphasized on the importance of just in time in the integration of the assorted various activities in the supply chain process. The viewpoint of the author is on the service industry and how “JIT” helps gaining the competitive advantage.

“JIT” helps to connects and join the customer services with the help of material flow. The last forum for the JIT manufacturers is the precise location for pulling and developing the material to fulfil the demand of the consumer and get higher customer satisfaction in the least possible time. Customer service is the driver to total value in gathering customer information.

According to Yasin, Small & Wafa (2003) JIT system reaped higher success in the service sector and the involvement of supply chain process in JIT`s implementation for both manufacturing and service is characterized by careful evaluation and judgments. Moreover in the example of service organizations the engagement of customers provided evidence of being relatively more significant for the success of JIT then the involvement of suppliers which gives extra weight to the need for service industry to maintain effective customer preferences and attitudes even on the periods of new technology implementation such as JIT In their service procedures.

Ethics and Environment

Environment

Molenkopf, Stolze, Tate and Ueltschy (2010) highlights the concerns regarding the climate change, pollution, non renewable resources, ecology alert and every environmental considerations which are in focus of production and circle of attention throughout the entire world. It is increasing the force applied on the environmental management because at times organizations attempt to cut costs in product development at the cost of environment. So many firms are now incorporating environment friendly practices that are taking a JIT idea of supply chain management which supports healthy environment.

The figure is displaying the rising region and field of green, lean and supply chain worldwide. It is depicting the firm bonding, intersection and deviation and is proving a foundation for future environmental researches in just in time production. In Sarkis & Zhu`s (2004) Study Theyel, 2001, p.269) states that environmental concern is important for managers because of explanations ranging from regulative and binding agreement, to public sensing, quality, and competitor advantage but Sarkis & Zhu`s (2004) doubt the scope of “JIT” benefits and speaks with pragmatist thought, According to him the benefits gained from just in time, hurts the environment instead of giving benefits that other techniques might.

Hence to provide the basis, the degree of environmental impact, in part, is dependent on two factors, Quality Management and proper JIT program adoptions.

ETHICS

Unethical behavior activates the mental warfare and expands the issues commonly addressed. Austin and peter (1995) talk about Ethics and say that it should cover more than the traditional economic feature and aspect of the JIT in terms of proper treatment of employees, respecting employees, respecting and treating other shareholders evenhandedly, providing quality life in the community and other corporate social responsibility events. Because the minimal expectation people have from the business is to generate profit and to follow and obey the moral values and rules.

Conclusion

There has been extensive research done on the JIT area in a supply chain and it shows that it is one of the most important aspects of supply chain management. It enables a company to ensure that it doesn’t incur unnecessary costs of holding inventory and provides an effective framework to manage its manufacturing practices. It also makes it easy for the retailers to meet customer demands and provide them with what they want as JIT is essentially workable in pull systems. Besides this, there are a lot of problems that need to be looked into while having JIT in place as there are a lot of requirements for this system to work efficiently. Research shows that JIT’s horizon is now broadening beyond just the manufacturing companies and is also evident now in the service sector. Issues like ethics and environment have been highlighted indirectly related to JIT, but introducing a global visual percept and feature to lean-green initiatives make an addition to the complexity carrying off the supply chain because of regulatory deviations and differences across the globe. Although there has been broad literature on environment but research on those strategies has not yet come out and, hence more research needs to be done as it is the age where CSR and sustainability are the buzz words.