The Role of Just-in-Time Implementation in Relation to Performance: an Exploratory Study

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THE ROLE OF JUST-IN-TIME IMPLEMENTATION IN RELATION TO PERFORMANCE: AN EXPLORATORY STUDY

By Che Ruhana Isa (PhD)* Tay Yew Keong Faculty of Business & Accountancy University of Malaya

ABSTRACT This study investigates the relationship between the level of just-in-time (JIT) implementation and performance. The study employed self-administered questionnaire survey to collect data from Malaysian manufacturing companies. The statistical tests provide empirical evidence to support the predictions that the level of JIT implementation is related to perceived performance. The results reveal that the level of JIT implementation is positively related to both financial and non financial performance.

*Corresponding author email: cruhana@um.edu.my

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THE ROLE OF JUST-IN-TIME IMPLEMENTATION IN RELATION TO PERFORMANCE: AN EXPLORATORY STUDY

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INTRODUCTION

Over the last two decades, firms globally are facing increasing pressures to attain and sustain their competitive position and performance. To survive in in today’s dynamic and competitive markets, firms need to come up with strategies consistent with its environmental demands for efficiency, effectiveness and customer responsiveness. In view of the escalating threats from global players, especially those from China, Malaysian manufacturing firms are compelled to continuously review their strategies and devise plans to improve their operations if they were to survive and prosper. Currently, products from China have flooded the Malaysian market at very competitive prices and for the Malaysian manufacturers to counter the impending threats successfully; they need to be more efficient in their operations so that their manufacturing performance could be improved. One of the strategies to improve manufacturing performance is adoption of worldclass, lean and integrated manufacturing strategies such as just-in-time (JIT) system (Fullerton & McWatters, 2002). Some of the benefits of JIT would allow companies to reduce costs, meet customer’s demands, stay ahead of competitors and minimise slack resources which are critical for survival in the increasingly competitive market (Cobb, 1993). The focus of JIT is cost reduction and excellence through continuous improvements in the business process by redefining the structural and procedural activities performed within an organization. To achieve this, constant evaluation of the changes in quality, setup times, defects, rework, and throughput time is imperative. The purpose of the research is to examine the level of JIT implementation among Malaysian manufacturing firms and to evaluate empirically the relationship between the

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JIT implementation and performance. Thus far, the literature review reveals that there is no published study on JIT in Malaysia. The findings of this study will be able to improve our understanding on the extent of JIT implementation among manufacturing firms in Malaysia. In addition, this study will shed valuable insights on the relationship between JIT implementation and performance which will assist us in to determine whether JIT firms have a competitive edge to compete in today’s intense competitive environment. The following sections of this paper is organised as follows. The next section examines the prior literature related to JIT and organizational performance and outlines the research hypotheses. Section 3 describes the research method. Section 4 presents and discusses the findings. The final section summarizes the study, and identifies limitations and further research directions.

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2. 2.1

LITERATURE REVIEW The JIT Philosophy

JIT philosophy was developed in Japan by Toyota Motor Company with the aims to continuously eliminate waste and improve productivity (Ansari and Modarress, 1990). The essence of JIT is elimination of waste through elimination of non-value added activities in purchasing, manufacturing, distribution, and manufacturing support activities of the manufacturing...
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