Measuring JIT Performance in Auto-suppliers industry in The United States

Topics: Supply chain management, Kanban, Lean manufacturing Pages: 40 (22620 words) Published: November 3, 2014
OC14094

Measuring JIT Performance in Auto-suppliers industry in The
United States
Hsien-Ho Liao
International Bachelor's Program of Agribusiness National Chung Hsing University, Taichung City, Taiwan

Abstract
The just-in-time (JIT) production system has been used in the United States for decades, often not to its full extent. Japan has also implemented JIT in many of their organizations both at home and in their manufacturing sites abroad. Many American companies that have adopted the JIT system both internally and externally did not receive outstanding results even after many attempts. Many experts point out that JIT has to be modified in order to fit in the American culture. JIT is not just a philosophy but an actual process.

The core JIT philosophy is to achieve the performance of activities based on immediate need or demand. JIT can be applied not just in the manufacturing area, but it also can be broadly used as a process that is designed to assist companies in operating cost, reduce their energy usage, processing times and material. In fact, JIT has now become popular in many industries such as hospitals, education, banks, trade, information technology and many others. This paper will focus on the JIT performance in automotive supplier industry. In chapter one, the brief history and current situation of automotive industry will be addressed, in chapter two, the previous research and observations will be covered as well as advantages and disadvantages of JIT. The qualitative survey results and survey data were collected via telephone in order to eliminated survey errors (participants can ask question if they do not understand the question). The data was analyzed by SPSS software; the researcher used the following models: Cronbath’s Alpha, Factor analysis, Pearson Correlation, Mean, and Crosstab.

Keyword: JIT, Just-in-time, automotive supplier, and JIT performance.

OC14094

Introduction
Automobile production involves two types of companies: parts manufacturing (suppliers) and vehicles assembling (automakers). Most consumers recognize the automakers, but few will pay attention to the suppliers. This is because most people believe that automakers produce everything for their products. This may have been true in the late nineteenth century or early twentieth century. However, automakers had to let parts makers handle more and more components in order to concentrate on marketing and selling their vehicles. Unsurprisingly, suppliers have more than three and a half times more employees and contribute 60% of the value of a finished vehicle. In fact, parts suppliers took on such an important role that the major factor influencing the competitiveness of carmakers is the strength and constructiveness of their relationships with their suppliers (Klier & Rubinstein, 2006). Each vehicle contains approximately 15,000 parts. Because automakers decide to have suppliers take care of producing parts, managers of purchasing department have to figure out how to promote long-term relationships and mutual cooperation with suppliers. Their interactions extend from product development to manufacturing or the other option is to rely on shorter-term contracts and competitive bidding, as well as more in-house development and manufacturing, in an attempt to lower final costs (Abernathy 1979; Monteverde and Teece 1982). Many researchers have found interesting cases on how Japanese automakers have been relying on their suppliers to boost up performance. According to Cusumano, in the late 80’s auto suppliers (including non-consolidated subsidiaries) accounted for about 70% of manufacturing costs (Cusumano, 1988) as well as over half of the engineering hours required- for new product development (Clark 1989; Fujimoto 1989). In addition, effective supplier management and supplier contributions also have been frequently cited as key factors in Japanese cost and quality advantages over The United States counterparts, not just in...

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