Fluctuating, inconsistent customer product demand strains a company’s manufacturing and strategic operations. JITD is a system designed to address these types of problems. It utilizes data from customers and inputs the information into the system to accurately forecast product demand to the point where product can be manufactured and delivered at a rate which minimizes inventory and transportation cost on for both manufacturers and customers.
For example, with respect to the Barilla issues, particular and specific production requirements made it difficult to catch up when pastas were backlogged, but holding excess inventory was a huge financial burden to the company. Under a successfully designed and implemented JITD system, Barilla would send just what each supermarket or grocery store needed, no more and no less. A major benefit of a JITD system is that it puts order quantity and shipping scheduling in the hands of the supplier, manufacturing and shipping only what is needed to each customer. This would eliminate the accumulation of large stocks in supplier and customer warehouses, and reduce manufacturing, inventory, and transportation costs.
Challenges that surface when implementing a JITD system include resistance from sales and marketing departments and on the part of the customer. Salesmen fear the harnessing of a JITD system would flatten their sales numbers if customers are no longer purchasing high volume of product. Many sales people’s compensation are tied to sales numbers, so it’s only natural that any system that would reduce manufacturing and inventory would negatively affect their ability to reach these sales numbers. This would result in lower compensation in their minds.
On the customer side, many inventory managers are insulted by any suggestion that the supplier can manage their...