JIT systems aim to have the best quality at low costs when ordering inventory. To achieve this goal, a company relies on long-term contracts with few suppliers that are able to supply them according to their immediate needs. Additionally, since a company operates with very minimal inventory under JIT, close relationships with suppliers are imperative. In today’s competitive market, a company’s economic performance depends much on its relationship with its supply chain. A company must seek competitive strategies that optimizes that relationship. A survey was recently conducted regarding the impact of JIT systems within the context of supplier management. Surveys were mailed to more than 1600 plant and operations managers. …show more content…
The goal is to never stop improving any functions, systems and processes within an organization. The system’s objective of continuous improvement can be attributed from Japanese workers’ drive for achieving a higher standard even if a current standard is being met (Kootanaee, Kootanaee, Solehboni & Kootanaee, 2013). When Toyota experienced those shut-downs brought by earthquakes, they sought ways to mitigate those risks in the future. It made sure that multiple suppliers from their supply chain would be manufacturing each component. Additionally, it created a database of all their suppliers to monitor their activities (Kubota, …show more content…
Managers must choose and establish what method is most favorable for their company. Recent studies have revealed that the implementation of JIT system had significantly affected performance improvements, organizational culture improvement, greater employee contribution, better working environment etc. (Singh & Singh Ahuya, 2014). In manufacturing, the system has increased effectiveness by 22%, efficiency improved by 18%, lead time decreased by 83.14% as well as processing time by 12.6% and work in process by 89.47%. Manpower requirements decreased by 30% while productivity increased by 42.86% (Haq, Khan, Parkash, & Jabeen, 2016). This authenticates that companies can derive significant lead from JIT. As shown in Table 1, JIT system continues to have a positive impact on different companies (Leite, & Vieira, 2015).
Table 1 - Different companies and their results with JIT system
Company Improvements Obtained Using lean service
Taco Bell Efficiency improvement with low cost operations and flexibility.
Southwest Airlines Elimination of services costs, flow and speed of service delivery, and creation of a service experience for customers.
Jefferson Pilot Financial Company Operation improvement and increased revenue. Processing time decreased by 70%, labor costs decreased by 26% and errors declined by 40%
Tesco Retailer Quality of service improved by 96%