Just in Time, is it still a good strategy?
The following essay will critically evaluate whether the ‘just in time’ approach to production is still a good strategy and whether it has any implications. The manufacturing approach ‘just in time’ was first established in japan during the mid-1970 by Taichi Ohno and Shigeo Shingo at the Toyota Motor Company. Toyota was one of the first companies to input this approach to streamline its manufacturing and production to minimise the retention of raw materials which enable the company to be more liquid (Rajab Abdullah Hokoma, 2010). The Just in time method of production has three essential principles which are the eliminations of waste materials created by the activity, the improvement of the quality and to enhance the execution and planning of the operations of the employees (Harber et al. 1990). Therefore companies which use the tradition methods of inventory management can find themselves with a high level of unsold stock within a production process (Spencer et al. 1994). This unsold stock is dead money as the company has invested the money without turning over the stock to create the profit. Therefore the company may need to reduce the price of the products in order to sell the remaining stock, this can have a negative impact on the other products as the company perceived value will be decreased. The just in time model helps to reduce warehouse costs as the products are only bought when needed which evidently helps to maintain a the company’s liquidity. Improvement of the quality
Companies which implement the Just in time model report a higher quality of the products and raw materials. When a company receives a small order for a buyer then the company can review the quality of the products easier than if they had a large order, therefore any quality issues can be directly resolved before the products change hands rather the having the end consumer effected by the quality of the product. The employee’s quality...
Bibliography: Rajab Abdullah Hokoma. (2010). The Current Awareness of Just-In-Time Techniques. A Case Study. 1 (1), 1-2.
Harber, D., et al., 1990. Just-in-time and the issue of implementation. International Journal of Operations & Production Management, 10 (1), 21–30.
Spencer, M.S., Rogers, D.S., and Daugherth, P.J., 1994. JIT systems and external logistics suppliers. International Journal of Operations & Production Management, 14 (6), 60–74.
Please join StudyMode to read the full document