Just-in-Time Supply Chain Managment Systems and Chrysler Auto

In the article, “Chrysler Averts a Parts Crisis,” by Jeffrey Ball, in the Wall Street Journal, readers get a small glimpse of how major businesses utilize just-in-time systems and how they may be impacted during a national crisis such as September 11th. Just-in-time is getting the right quantity of goods to the right place exactly at the right time. The goal is to get products at a certain place not too early and not too late, instead, just-in-time.(1) Just-in-time systems is an inventory strategy that is relatively simple to explain and understand. In order to fully understand just-in-time systems we must thoroughly define it and answer a couple key questions. First, how does a just-in-time system minimize warehousing costs? Second, how does it minimize “quality problems” that can result when parts sit around for a long time? Finally, we will discuss just-in-time (JIT) and its implications for global operations management as brought out in the Chrysler experience. Just-in-time is defined in the APICS dictionary as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity.”(2) It can simply be described as a goal of producing the right part at the right place at the right time, in other words “just in time.” JIT applies mainly to repetitive manufacturing companies in which the same products and components are produced over and over again. “The basic elements of JIT were developed by Toyota in the 1950’s and became known as the Toyota Production System. JIT was well established in many Japanese factories by the early 1970’s. JIT began to be adopted in the U.S. in the 1980’s; General Electric was an early U.S. adopter. Today JIT concepts are now widely accepted and used.”(2) One of the main concerns that businesses have that utilize a JIT system is the elimination of waste. Waste is anything the ads cost without adding value. Things like the unnecessary moving of materials, the

References: 1. Reid and Sanders, “Just-In-Time Systems”, Operations Management, Chapter 7, 2002. 2. Schonberger, Richard, “Just-In-Time Production Systems: Replacing Complexity with Simplicity in Manufacturing Management”, Industrial Engineering, October 1984, pages 52-63. 4. Business e-Coach, “Just-in-Time (JIT) Production”, http://www.1000ventures.com/business_guide/im_jit_main.html 5. Ball, Jeffrey, “Chrysler Averts a Parts Crisis”, The Wall Street Journal, New York, Sep 244, 2001, pg. B.1.