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 level
2) Improving product quality and reducing cost of scrap
3) Eliminating unproductive and worst suppliers
4) 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 operate
2) 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.