European Journal of Technology and Advanced Engineering Research ISSN: 1433-2248 Issue 2 (2011), pp.29-39 EuroJournals Publishing, Inc.

. 2011 http://www.eurojournals.com/EJTAER.htm

Just in Time (JIT) Inventory Management for Enhanced Operational Efficiency: An Indianised JIT Strategy for an Agro Machinery Manufacturing Unit in Kerala
Manoj P K Faculty (Techno-Management), Dept. of Applied Economics Cochin University Science and Technology Kochi, Kerala 682 022 (INDIA) E-mail: manoj_p_k2004@yahoo.co.in Abstract Just in Time (JIT) production system offers good prospects for enhancing operational efficiency and productivity through minimization of inventory. Though JIT is yet to pick up momentum in a significant way in Indian manufacturing companies, probably because of high level of bottlenecks in obtaining the critical inputs, some less stringent forms of JIT (sometimes called, Indianised JIT) are being practiced meaningfully by many companies whereby the inventory is maintained at substantially low levels, though not to the extent that an ideal JIT production system requires. In the above context, this paper (i) makes an overview of JIT, its major features, benefits, key prerequisites, and also the status of JIT implementation in Indian companies; (ii) makes a detailed study of inventory management system at KAMCO, an agro machinery manufacturing company based in Kerala state of Indian union; (iii) locates the need for scientific inventory management through JIT in view of the significantly lower inventory turnover ratio vis--vis main competitor firm and national benchmark, and (iv) finally suggests strategies for adoption of JIT production system in a systematic and phased manner, for better operational efficiency of the company. Keywords: Inventory Turnover Ratio, JIT, Benchmarking.

1. Introduction: Concept and Significance of JIT Production System

Just-in-Time (JIT) production systems were developed in Japan to minimize inventories, especially work-in-progress (WIP). In fact, WIP and other types of inventory are treated as a waste by the Japanese and accordingly these should be minimized or eliminated. Ideally, a JIT production system should produce and deliver exactly the required number of each component to the downstream operations in the manufacturing sequence just at the time when that component is needed. Thus, the JIT delivery discipline ensures that each component is delivered just in time and this minimizes WIP and manufacturing lead time as well as space and money invested in WIP. JIT as an emerging cost management philosophy offers good prospects for enhanced operational efficiency of any manufacturing company. JIT is a key building block for modern approaches to manufacturing planning and control. In reality, JIT is both a philosophy and a set of techniques. It reduces the complexity of detailed material planning, the need for shop-floor tracking, work-in-process inventories, and transactions associated with shop floor and purchasing systems. These benefits in turn require more tightly co-ordinated manufacturing processes both inside the company and with suppliers. Prompt

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supply of the input materials being a pre-requisite, efficiency at their level and adequacy of infrastructure facilities for prompt supplies are equally significant. Ideally, in a JIT set up the inventory in hand may be sufficient for a few hours production only. JIT orientation involves: (i) Reduction of set-up times and lot sizes, (ii) no-defects goal in manufacturing, (iii) Focus on continual improvement, (iv) Worker involvement, (v) Cellular manufacturing.

2. Previous Research and Research Gap

Regarding the status of JIT adoption in India, there have not been many studies. Two empirical studies on JIT implementation in India are (i) Mahadevan (1997)[6], and (ii) Chandra, S (1998)[5]. Both these studies have pointed out that progress of JIT implementation in India is not satisfactory. In a joint research effort, the present author and Namboodiri have identified the need to improve the inventory management system at KAMCO an agro-machinery manufacturing unit based in Kerala state in India in view of the constant decline in its profitability and operational efficiency (Manoj and Namboodiri) (2009) [8]. The desirability of adoption of JIT system in place of the current system has been pointed out. The major objectives and findings of the above three studies are discussed below. This is followed by the research gap that has prompted to take up this study. Mahadevan (1997)[6] has pointed out that though in India there have been attempts to implement quality circles in 1980s, and also JIT in the more recent past, the progress in JIT implementation has not been satisfactory. TQM has been observed to be one of the most important factors for JIT implementation. Experiences of JIT implementers as per by his study are given in Exhibit I. Exhibit I : Experiences of JIT Implementers a Summary. Of the 22 companies which had undertaken JIT efforts at the time of the study, 13 companies reported adhoc JIT efforts like experimental and adhoc modification of systems whereas 9 companies reported major JIT efforts. Most of the firms with adhoc JIT efforts started the same only recently (viz. around mid1990s) while those with major JIT programmes started the same as early as in 1986. Firms with major JIT programmes had an implementation lead time of over three years. Supplier development, Employee involvement, and Top management commitment were prominently listed as critical success factors. Training, task force formation, re-layout, and pilot study were indicated as among the first four steps taken in JIT implementation. Three most important reasons for embarking upon a JIT implementation programme were gaining competitive advantage in the market place, simplifying the production planning & control, and curbing rising inventory levels. Proximity of suppliers, stable production plan, or high volume repetitive manufacturing, were never mentioned among the main reasons for JIT implementation. Firms reporting major JIT efforts have done so after carefully evaluating its strategic nature. On the contrary, firms reporting some adhoc modification and experimental efforts did not do any strategic planning exercise. JIT efforts were initiated by middle management because the top management asked them to do so.

(Source: Adapted from, Mahadevan, B (1997) [6], p. 89).

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Table I: Concern Factors on JIT Implementation for Various Categories of Organizations.

Manoj P K

Concern Factors JIT Purchasing, TPM, Kanban, Small Lot Size JIT Purchasing, TPM, TQM, Vendor Development JIT Purchasing, TPM, TQM JIT Purchasing, TPM, TQM, Kanban, Stable Production Schedules Machine Tools & Capital goods JIT Purchasing, TPM, TQM, Stand and Containers, Stable Production Schedules Process Industry JIT Purchasing, TPM, TQM, Stable Production Schedules, Small Lot size. 03. Ownership Pattern Private JIT Purchasing, TPM, TQM, Set-up time reduction Multi-nationals JIT Purchasing, TPM, TQM, Kanban, Multi-skilled work force. (Source: Adapted from, Mahadevan, B (1997)[6], Are Indian Companies Ready for Just-In_time?, Management Review, July Sept., 1997, p.90). [Notes: Major denotes major JIT programmes reported; Some denotes Adhoc modification / Experimental JIT efforts; and None denotes no JIT programmes.]

Sl. No. Major Classification Sub-Classification 01. Nature of JIT Efforts Major Some 02. Sector of Industry Automobiles & Ancillaries Electrical & Electronics

Mahadevan (1997)[6] has further observed that there have been differences in the nature of JIT efforts pursued according to the type of organizations viz. (i) Major organizations that reported major JIT programmes, (ii) Some organizations that report adhoc modification, experimental JIT efforts, and (iii) None organizations with no JIT programmes. These variations persisted in the nature of efforts as well as in the quantum of benefits realized. Accordingly, companies that have initiated major JIT programmes have very different concerns from those who merely think about JIT. Only in respect of two factors viz. (i) Employee involvement and (ii) Standard containers, the three broad categories of organizations as above have some degree of agreement among themselves. The factors of concern experienced by the various categories of organizations as observed by him are given in Table I. Concluding his study, Mahadevan (1997) has given es some guidelines for successful JIT implementation. Firstly, firms have to inevitably go for certain system level changes, like introduction of Kanban, Cellular manufacturing, and Set-up time reduction. Secondly, the nature of efforts to be employed differs from case to case, as it depends on complexity of manufacturing, the sector and the ownership. Thirdly, major JIT efforts will be successful only when it is a part of a strategic planning exercise, which in turn ensures top managements active role and commitment. Lastly, clarity and priority is utmost important, the lack of which may lead to confusion and wasteful expenditure. Chandra, S (1998) [5] has pointed out that JIT manufacturing systems have attracted industries all over the world and so do those in India. The author has attempted to examine the benefits of JIT and elements for its feasibility in Indian industries. It has been noted that despite for the profound interest of prospective managers and researchers, the extent of JIT implementation in Indian industries so far is not satisfactory. The real challenge before Indian managers is to establish priorities among potential JIT techniques to achieve best possible advantage of JIT implementation. In the above context, the author has attempted to evaluate the relative importance of decision attributes, based on a multiattribute decision model using an analytical hierarchy process (AHP). Thus, the justification for JIT in the Indian context has been studied. The study has concluded that the benefits of JIT manufacturing system are manifold. The major benefits of such a system in the descending order of significance are as follows, (i) Increased Productivity, (ii) Increased Profit Margin, (iii) Improved Competitive Position, (iv) Quality Improvement, (v) Reduction in inventory. Manoj & Namboodiri (2009) [8] have made an analysis of the inventory management system at KAMCO vis--vis VST Tillers Tractors (VST, in short) the major competitor and also the industry leader. It has been observed that the inventory management performance of KAMCO is constantly on the decline and this has resulted in its declining profitability. The growing gap between the performance of KAMCO and VST (in respect of market share, sales growth, profitability etc.) have

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also been pointed out. Accordingly, the desirability of adoption of JIT system for enhanced operational efficiency has been pointed out in the study. 2.1. Research Gap In view of the foregoing discussions on JIT studies in the Indian context, it has been observed that empirical studies in the context of the ongoing reforms era in India (which in turn is characterized by fierce competition) are quite scarce, except for the preliminary study viz.Manoj & Namboodiri (2009)[8] noted above. Hence, this paper seeks to build upon the above case study of KAMCO with a view to assess the feasibility for a JIT system, major problems in implementation of JIT system, and finally to suggest an operational (working) plan for JIT implementation at KAMCO.

3. Research Questions
(i) Is there any significant difference in the inventory management performance of KAMCO vis-vis the major competitor and industry leader, VST? (ii) Is there any significant difference in the inventory management performances of VST and KAMCO vis--vis Sundaram Brake Linings Ltd. (SBL) (taken as the Benchmark)? (iii) What are the major problems faced while going for JIT implementation at KAMCO? (iv) Is JIT a solution for KAMCO and what ought to be the strategy for JIT implementation?

4. Objectives of the Study

(i) To make an overall review of JIT, its major features, benefits, key pre-requisites, and also the status of its adoption in the Indian scenario; (ii) To make a detailed study of inventory management system at KAMCO an agro-machinery manufacturing company based in Kerala; (iii) To benchmark the performance of KAMCO with the industry leader (VST), and the best among the manufacturing companies in India that adopted JIT (SBL, taken as Benchmark); (iv) To make a feasibility study of the implementation of JIT system at KAMCO for enhanced competitiveness, including a study of the major problems to be encountered; (v) To suggest strategies for adoption of JIT inventory system at KAMCO, for enhanced operational efficiency and competitiveness of the company.

5. Hypotheses of the Study

(i) The inventory management performance of KAMCO is poorer than that of VST (ii) The performance (inventory management) of both KAMCO and VST is poorer than SBL.

6. Research Method
The methodology is basically exploratory. It is descriptive-analytical also to the extent that it seeks to study the benefits of JIT adoption, Indian experience in this regard, best experience (benchmark) in Indian context etc. Popular statistical tools like, t test, regression line etc. are used, and a Benchmarking approach has been followed by taking SBL as a Benchmark. The period of study is chosen as FY 2002 to 2007. For comparison purpose and benchmarking this is FY 2004 to 2007.

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Manoj P K

7. JIT in the Indian Context: the Case of Indianised form of JIT

In India, there are quite less number of instances of companies practising JIT or lean manufacturing. In fact, they are maintaining adequate inventory to meet instances of delay in supplies. This in turn results in lower operational efficiency and profitability of Indian companies. In spite of relative disadvantages for Indian companies, a few progressive Indian companies like Sundaram Brake Linings Ltd (SBL) have outperformed even Japanese counterparts. SBL has put in place n Indianised form of JIT, by modifying JIT to suit Indian conditions. The present practice of inventory management in Indian companies has got its adverse cost implications funds get blocked unnecessarily in huge inventory, thus resulting in lower cost competitiveness of operations and profitability of companies. Often inventory required to offset a few days to few weeks supply is maintained by companies. The situation is quite different in countries like Japan where even a days disruption of supplies would lead to a complete chaos. But, in the Indian scenario, there are some exceptions. Sundaram Brake Linings Ltd. (SBL) has an impeccable track record of excellent productivity and operational efficiency. It has meaningfully implemented JIT system, in spite of the handicaps faced by Indian industries in this regard, particularly in the form of infrastructural bottlenecks. In the Indian scenario, though JIT in the strict sense may not be feasible because of systemic inadequacies, at least an Indianised form of JIT could be very meaningfully adopted as proven by SBL. A brief account of the operational efficiency attained by SBL through JIT and other emerging techniques is given below.

8. Sundaram Brake Linings Ltd. (SBL): An Indianised form of JIT

In India, there are very few instances of companies dropping their inventory levels to a few hours of production. Only where the source of supply is in close proximity have the Indian companies resorted to hourly supplies. They, instead, seem to be comfortable with a stock of a days production where the suppliers are located not too far off or have their warehouses at a reasonable distance. In instances where the suppliers are located at a distance say 500 km or more, some corporates have resorted to holding safety stocks. This Indianised form of JIT is not most efficient, especially when they have to compete in the global market with the best in the world. As already noted, in spite of the relative disadvantages for Indian companies, SBL is one of the best among the very few progressive companies that have adopted JIT system. In fact, SBL could outperform even its Japanese counterparts, in spite of its handicaps in India. SBL could better even its Japanese counterparts in handling supply shocks, through an Indianised form of JIT. It has adopted JIT by modifying it to suit Indian conditions. Unlike in Japan where things run to perfection, Indian entrepreneurs have to reckon with several layers of risk while adopting JIT which can be in the form of infrastructure, labour, politics etc. In mature economies, better infrastructure and considerably less supply shocks enable enterprises there to manage with very low inventories. They thus have a competitive advantage. On the delivery side too, corporates have been maintaining warehouses at locations close to the buyers so that the bottlenecks do not upset their delivery schedules and hence their credibility. This also costs money. Indian companies have successfully hit a formula with regards to inventory control. One that obviates the need to carry huge inventory while at the same time takes care of the risks inherent in India. 8.1. Operational Highlights of SBL: Excellence in Productivity and Profitability. The financial highlights of SBL (FY 2003 to FY 2007) are given in Table II. From the Table it may be noted that the inventory turnover is quite high (about 20) and moreover it is showing an increasing trend over the years. As of FY 2007, this ratio is 20.7 which means that nearly two times a month it turns over, or in other words the holding period is just above 15 days ( month) , as an inventory turn over of 24 corresponds to 15 days ( month). Almost all major financial parameters (EPS, PAT, RONW etc.) are quite good and are showing an increasing trend.

Just in Time (JIT) Inventory Management for Enhanced Operational Efficiency: An Indianised JIT Strategy for an Agro Machinery Manufacturing Unit in Kerala
Table II: Operational Highlights of SBL (FY 2003 to FY 2007).

34 (Rs. in Lacs)

Particulars FY 2003 FY 2004 FY 2005 FY 2006 Sales & Other Income 10,195 12,075 13,367 14,560 Export Sales 5,339 5,251 5,878 5,482 Profit before tax (PBT) 1,020 1,335 1,536 1,634 Profit after tax (PAT) 734 909 1,015 1,039 Net worth (NW) 3,572 4,188 4,814 5,518 Return on Net worth (RONW) 20.50% 21.70% 21.10% 18.80% Earnings per Share (EPS) (Rs) 27.03 33.50 37.41 38.30 Sundry Debtors (in Days) 86 76 84 88 Inventory Turnover (Times) 16.30 19.50 21.30 19.10 [Source: Computed from published Financial Statements of SBL for the respective financial years]

FY 2007 18,983 5,490 2,166 1,377 6,491 21.20% 50.76 85 20.70

9. Present Inventory Management System at KAMCO: ABC Analysis

KAMCO follows the conventional ABC method of inventory management. The criterion used for classification uses Delivery Ratio (DR) showing promptness in delivery and Quality Ratio (QR) showing the level of quality, both being given equal weightage (50%). Assessment made is reviewed at quarterly intervals as per the above criterion and accordingly the ABC classification already made is changed, in case of variations observed in the total value of individual items. (Table III)
Table III: ABC Classification of Inventory at KAMCO Methodology
% of Number of % of Value of Items Items A 10 70 B 20 20 C 70 10 (Source: Compiled from, Purchase Department Records, KAMCO) Classes Criterion for Classification (DR = Delivery Ratio and QR = Quality Ratio) [(DR*0.5) + (QR*0.5)] = 0.9 or more. [(DR*0.5) + (QR*0.5)] = between 0.70.9 [(DR*0.5) + (QR*0.5)] = less than 0.7

10. Inventory Management Performance of KAMCO: A Study

For the purpose of assessing the effectiveness of inventory management at KAMCO Inventory Turn over ratio (ITR) has been used. ITR denotes the speed at which the inventory is converted into sales, thereby contributing to the profits of the firm. Other factors remaining constant, higher the ratio, better the inventory management. ITR is computed as the ratio of Net Sales to Average Inventory (expressed as so many times). Table IV shows the ITR of KAMCO. Table V gives a comparative picture of KAMCOs ITR vis--vis VST (industry leader) and SBL (Benchmark).
Table IV: Inventory Turnover Ratios of KAMCO (FY 2002 2007)
Financial Year Net Sales (Rs. Lacs) FY 2002 6745.14 FY 2003 7342.89 FY 2004 6815.40 FY 2005 7934.39 FY 2006 8003.69 FY 2007 9121.74 (Source: Annual Report 2001-2002 to 2006-2007) Av. Inventory (Rs.Lacs) 1299.71 1426.42 1617.31 1789.42 1994.85 2078.32 ITR (Times) 5.19 5.13 4.21 4.43 4.01 4.39

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Table V: Inventory Turnover of KAMCO: Benchmarking with SBL and VST
FY 2006 4.01 6.06 19.1 FY 2007 4.39 6.18 20.7

Manoj P K

Inventory Turnover (Times) FY 2004 FY 2005 KAMCO 4.21 4.43 VST (Industry Leader) 5.19 5.59 SBL (taken as Benchmark) 19.5 21.3 (Source: Computed from Annual Reports of FY 2004 to FY 2007)

Average 4.26 5.76 20.15

Figure I: Trend of Inventory Turnover Ratios (KAMCO Vs. SBL & VST) (FY 2004 2007)

21 y = 0.14x + 19.8 (SBL) 15 Trend of Inventory Turnover (KAMCO Vs. VST & SBL) 9 y = 0.344x + 4.895 (VST) y = 0.012x + 4.23 (KAMCO) 3 FY 2004 FY 2005 FY 2006 FY 2007

Comparing the inventory management performance of KAMCO with SBL (taken as a Benchmark, in view of its excellent performance in inventory management and business profitability) and also with VST (industry leader, with constantly growing market share and profitability), it is observed that KAMCO is lagging behind VST and much more behind SBL. Besides, KAMCOs trend (regression equation) is the least impressive of all. Thus, KAMCO has to struggle a lot to catch up even with VST, its growth rate being the slowest. Though VST growth rate is the fastest, it has to catch up a lot to reach SBL (Table V, Figure I).

11. Testing of Hypotheses

Hypothesis I: The inventory management performance of KAMCO is poorer than that of VST. The inventory turnover ratios in respect of KAMCO and VST (for the four years period, FY 2004 to 2007) can be compared usingt test to assess the significance of the difference.
Table VI: Performance of KAMCO Vs. VST (Industry Leader)
Company Observations (n) KAMCO 4 VST 4 (Source: Computed from the figures in Table V) Mean (x) 4.26 5.76 tvalue (Calculated) 6.06 t- value (Critical) (Table) 2.447 (at 5 % LOS and 6 DOF)

Since the calculated value of t statistic (6.06) is higher than the critical value (2.447), the inventory management performance of KAMCO is significantly poorer (inferior) to that of VST (Table VI). Thus, the first hypothesis is accepted. Hypothesis II: The performances (inventory management) of both KAMCO and VST are poorer than SBL.

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The inventory turnover ratios in respect of KAMCO and SBL (Benchmark) are compared using t-test to assess if there is any significant difference in their performance (Table VII). It may be noted that the calculated value of t (30.48) is quite higher than the critical value (2.447). This indicates that there is significant difference in their performance. Or, SBL is significantly better.
Table VII: Performance of KAMCO Vs. SBL (Benchmark-National)
Company Observations (n) KAMCO 4 SBL 4 (Source: Computed from the figures in Table V) Mean (x) 4.26 20.15 tvalue (Calculated) 30.48 t- value (Critical) (Table) 2.447 (at 5 % LOS and 6 DOF)

Table VIII:

Performance of VST Vs. SBL (Benchmark-National)

Mean (x) 5.76 20.15 tvalue (Calculated) 25.68 t- value (Critical) (Table) 2.447 (at 5 % LOS and 6 DOF)

Company Observations (n) VST 4 SBL 4 (Source: Computed from the figures in Table V)

Similar exercise is done between VST and SBL (Table VIII). Here also, the calculated value of t (25.68) is quite higher than the critical value. This indicates that SBL is significantly better than VST too. Hence, both KAMCO and VST (the industry leader) have their inventory management performance significantly poorer than SBL, the Benchmark (National). Thus, the second hypothesis is also accepted.

12. JIT Adoption at KAMCO: a Reality Check

Based on the experiences of progressive Indian companies like SBL and also in the light of evidences from earlier studies (Appendices I and II), an attempt is made in this section to study as to what should be the strategy of KAMCO in this regard. In fact, KAMCO has just started adopting JIT in a small way in FY 2007 and right now 09 components are under JIT system. As inventory turnover ratio of KAMCO is decreasing over the years which is not advisable, KAMCO should adopt JIT approach for better inventory management. However, initially a phased approach is advisable, till its infrastructure becomes adequately developed to support JIT. Besides, the inadequate capacity of the suppliers (vendors) of various critical items is another hindrance that prevents from adoption of JIT in full swing. Table IX shows feasibility of KAMCO for adoption of JIT production system. The major hurdles that the company faces while implementing JIT (like, inadequate capacity of the suppliers, preference that it gives to timely availability to reducing holding costs, etc.) are shown in Table X.
Table IX: JIT Adoption at KAMCO: a Reality Check
JIT Requirements Prompt Supplies Position in respect of KAMCO Good rapport with most suppliers Bulk Procurement on annual basis Not-so-good inventory management Trained and skilled manpower Satisfactory industrial relations, HRM Public sector company Remarks KAMCO should preferably go for JIT adoption in a bigger way to better manage its inventory costs. Generally satisfactory situation for embracing JIT. Though a PSU, it has reasonably good HR systems.

Worker Involvement

(i) (ii) (iii) (i) (ii) (iii)

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Table IX: JIT Adoption at KAMCO: a Reality Check (Continued)

Manoj P K

Current production system conforms to KAMCOs production system can high quality standards and as such no reasonably support JIT system in spite of defects production is almost in place. the PSU legacy of the company. (ii) Philosophies like continual improvement is also within reach. Already JIT is being employed in a small way To the present group of 9, another 5 may and 09 components are within JIT. The join within the next Quarter. KAMCO requisite infrastructure (like, computerized plans to make the total number 50 by the next year-end. (See AppendixIV, Para inventory management) are in place. Thus, adoption of FIT in full-swing is easier. III & IV). [Source: Compiled by the Author, based on known details and facts collected from KAMCO]

No defects production / Continual Improvement / modern techniques like Cellular Manufacturing (CM). Conformity of the present JIT system in KAMCO with ideal JIT requirements Ease of installing full JIT

(i)

Table X:

Major Hurdles in JIT Implementation at KAMCO: An Overview

Why? (Reason) Way out (Solution) Capacity of the vendors to supply the Only a phased approach will work out. items as per companys demand is Radical change is not possible. inadequate. Vendors should upgrade their capacity Inventory carrying cost is accorded Availability of critical parts is more Policy decision is required to go for top less importance vis--vis stock-out important than reducing inventory level tie up with the vendors so that cost carrying cost. For many parts, JIT is availability (prompt supplies) is thus not preferred. ensured before switching over to JIT [Source: Compiled by the Author, based on interviews with principal officers of KAMCO]

Problems faced Availability problem may arise, especially for the critical items

13. Present JIT System in KAMCO and Roadmap for (Phased) JIT Adoption
As already noted, inventory management system at KAMCO is least impressive and it needs to catch up substantially to attain the status of VST the leader of its own industry (agro-machinery) in terms of market share, profitability etc. Furthermore, to attain the status of SBLthe best company among the manufacturing firms in India in respect of inventory management, profitability etc. JIT system has been in vogue in KAMCO since FY 2007, though in a small way. The companys current policy is to consider only A category items (as per ABC Analysis) alone for JIT adoption. These A category items are further analysed as to their ranking based on such criteria as (i) Capacity of the suppliers, (ii) Distance to the suppliers, (iii) Quality of the items supplied, (iv) Promptness in supplies etc. Only such items that rank sufficiently high as per the above ranking are considered for JIT. Accordingly, at present 09 A category items (out of the total 83 A items) have been brought under this system. These items along with values are as follows: (i) Cylinder Frame (Rs.3500); (ii) Main Handle (Rs.625); (iii) Front Frame (Rs.1200); (iv) Wheel Rim (Rs.600); (v) Fly Wheel (Rs.2000) (vi) Wheel Cover (Rs.250); (vii) Fuel Tank (Rs.500) (viii) Belt Cover Assembly (Rs.400); (ix) Silencer Assembly (Rs.400). In quarterly intervals, KAMCO makes a review to decide as to whether the components under JIT have to be increased or decreased based on their latest rankings as per the prescribed criteria. 13.1. JIT Implementation Strategy for Selected Five Components Apart from the existing 9 items as discussed in last paragraph, the company may very well go for including another 5 items, based on relevant considerations (Table XI). This immediate strategy would ensure that by the end of the next Quarter (viz. Sept. 2010) another 5 components gets into the JIT system, thus making the total number 14 (ie. existing 9 items plus 5 new items)(Table XI).

Just in Time (JIT) Inventory Management for Enhanced Operational Efficiency: An Indianised JIT Strategy for an Agro Machinery Manufacturing Unit in Kerala
Table XI: Strategy for Adoption of JIT System (Five Components, for the Next Quarter)
Components (All A Location Distance Quality, Promptness Type) (Value in Rs) (Supplier) (km) & Other Remarks Blade Shaft (1500) Okkal 6 Good, Prompt Tyre (1200) Kozhikode 180 Good service Tube (200) Kozhikoe 140 Good service Chain (550) Coimbatore 130 Established, Prompt Rear Wheel Bracket Ernakulam 25 Very good service (500) [Source: Compiled by the Author from Official records of KAMCO]

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Strategy for the next Quarter (beginning, July 2010) All these 5 items are locally available, and that too from reliable suppliers. These 5 items may be brought under JIT in the next Quarter of the current fiscal. Then, Total = 9 (existing)+5(proposed)=14 (by Quarter end, Sept. 2010)

13.2. Strategy for JIT Implementation for the Next 03 Years (Oct. 2010 to Sept 2013)
Table XII: Strategy for Inclusion of More Items into JIT System (for the Next 3 Years)
Year 1 Year 2 Year 3 JIT Implementation Strategy Q1 09 Nos A Q1 11 Nos A Q1 14 Nos B In Year 1, 36 items (9 each in four quarters) to be included so Q2 09 Nos A Q2 11 Nos A Q2 14 Nos B that cumulative number becomes 50 at the year-end. In Year 2, Q3 09 Nos A Q3 11 Nos A Q3 14 Nos B 44 items (33 A & 11 B). In Year 3, 56 items (B). Q4 09 Nos A Q4 11 Nos B Q4 14 Nos B Cum. Total = Cum. Total = Cum. Total = By end of Year 3 = 150 Items (83 A & 67 B) (14 + 36) = 50 (50+44) = 94 (94+56) = 150 [Source: Formulated by the Author based on relevant facts and logical assumptions.]

Considering the current policy of the company to bring in 50 items into the JIT fold within one year (Sept. 2011), 36 items may be brought into JIT system (9 each in each Quarter beginning from Oct. 2010) (Table XII). Considering the profile of the current suppliers (primarily distance factor) and also factors like capacity, delivery schedules etc. another 44 items (11 each in all the four Quarters; comprising of 33 from A Category and 11 of B Category) in the next (second) year, ending Sept. 2012). In the third year 56 items (14 items each, in each of the four Quarters, all of B Category) be included, so that by the end of third year (Sept. 2013), total items under JIT system reaches 150 (83 of A Category and 67 of B Category). Remaining B category items and the entire C category items cannot be brought under JIT; these items should remain under the current policy.

14. Concluding Remarks

In view of the foregoing, it may be noted that because of the cut-throat competition in the industry in the wake globalization pressures, emerging management philosophies like JIT has become an imperative for survival and growth for any manufacturing company, rather than just an option. In the case of KAMCO in particular, competition from private players like VST will increasingly pose threat to this prominent PSU (Public Sector Unit, ie. Govt. owned). However, in spite of having all the handicaps of being a PSU, KAMCO has got all the requisite potentialities to come up and excel, as is evident from the formidable resilience of the company in the ongoing reforms era. Though it has lost its market share and profitability to some extent in the recent past, given the inherent strengths of the company, it can revitalize itself through adoption of modern management philosophies like JIT and lean manufacturing. Furthermore, it is worth noting that KAMCO has already initiated efforts in the above direction, along with other strategies like meticulous energy management, prudent HRM practices that avoids permanent overheads, close liaison with PSU banks for availing concessional charges etc. KAMCO has got an excellent cost management department that facilitates prudent business decisions on the above lines, and probably this department helps this profit-making PSU to tide over the hard times of without much of problems.

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Manoj P K Annual Reports of KAMCO for the FY 2002 to FY 2007. Annual Reports of VST for FY 2004 to FY 2007. Annual Reports of SBL for FY 2003 to FY 2007. Ahluwalia, I. J. (1985), Industrial Growth in India: Stagnation Since the Mid-Sixties, Oxford University Press. Chandra, S., Justification of Just-in-time manufacturing systems for Indian industries, Integrated Manufacturing Systems, Vol. 9, No.5, 1998, pp. 314-324. (Available at www.emeraldinsight.com). Mahadevan, B, Are Indian Companies Ready for Just-In-Time?, Management Review, Jul Sept.1997, pp.85-92. Manoj P. K (2008), Lean Manufacturing: Strategy for Enhanced Competitiveness of Indian Manufacturing Sector, International Journal of Management Sciences, ISSN: 0973-2101, Vol. 4. No.2, Dec. 2008, pp.85-99. Manoj P.K and Namboodiri, V.N.N (2009), Just in Time (JIT) Production System for Enhanced Operational Efficiency: Study of KAMCO, a Kerala-Based Agro Machinery Manufacturing Company, Proceedings of 24th National Convention of Production Engineers, 15-16 May 2009, Institution of Engineers, Thrissur, Kerala, India. Manoj P.K (2009), Targeting Operational Excellence through Cost Management: Some Firm Level Evidence, International Bulletin of Business Administration, Issue 5, July 2009, Euro Journals, London, UK, pp. 06-15. (Available at www.eurojournals.com) N Nagaraj, R., Growth in Manufacturing Output since 1980: Some Preliminary Findings, Aspects of Indias Economic Growth and Reforms, Academic Foundation, New Delhi, First Ed., 2006. pp. 113-124. Iyer, A, Kandaswami, K., et al., Manufacturings New Dawn: Can India Overcome the Challenges to become a Global Powerhouse?, Indian Management, All India Management Association, New Delhi, Vol.46, Issue 7, July 2007, pp.14-36.

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