One of the major risks for the JIT strategy is when there is instability in the environment. For example, in the case of September 11, the airplane paralysation led to a major interruption of material transportation locally and internationally. Furthermore, the 2011 earthquake in Japan affected both the automobile and mobile industries. In such situations, stock-out costs can exceed carrying costs, which is the main foundation for a leaner inventory system. The question then arises; should companies continue to use JIT in the event of major uncontrollable environment occurrences?
According to Srinidhi and Tayi (2004), companies that are flexible enough and are able to change from a JIT system to a traditional inventory system will have a competitive advantage over other firms who do not switch. In such uncontrollable environments, the major benefit of JIT becomes a handicap with the increase in delivery times and the added data handling and coordination required in such times. This leads to a decrease in quick response time, which ultimately leads to increase in costs to the firm.
During hard economic times it may be possible for a firm to switch suppliers be it from domestic to international or vice-versa for some required materials. However, this might not be desirable for all materials. Another issue that often occurs is the delay in shipment with the transportation companies. This may require that certain parts be divided into smaller batches and shipped separately, which would increase the lead time and shipping costs.
A perceptive company with an ‘agile’ system can rapidly identify an alteration in the environment and gather useful information to quickly respond and avoid a major internal impact. This agility to quickly r...
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... 2005 are not all that rare. Other issues of political nature create a large amount of uncertainty in supply chains around the world. Therefore, companies need to be aware of this and reduce their risk by maintaining relationships with alternate suppliers.
Another effective way to reduce risk is for companies to purchase business-interruption insurance. This type of insurance used to be generally easy to obtain. Today, insurance companies require a lot more information before providing the service to companies. Not only do they require more information on a company's suppliers, the insurers also require that you have a list of multiple suppliers that, if an isolated disaster or accident occurs, wouldn’t all be affected. Companies need to maintain their JIT processes, eliminate redundancies, and at the same time keep a minimum number of suppliers to minimize risks.
Currently the primary struggle for the integrated manufacturing employees at Stryker Instruments is to meet the assembly lines demands. This struggle originates from operating under a just in time delivery system. J.I.T. delivery is a manufacturing strategy that attempts to improve a business' profitability by reducing in-process inventory and the costs associated with extra inventory, such as the taxes that are charged to all of the inventory that Stryker instruments has in stock. The process relies on clear communication between the various points in the manufacturing and assembly processes. For J.I.T. delivery to work properly, the assembly line should relay what components are being consumed to the manufacturing work centers located in integrated manufacturing. This signals the integrated manufacturing team to replenish the supply of certain high demand components.
Based on future supplier contracts, shortening lead time for delivery of parts and materials establishing leaner processes, namely addressing wastes identified through implementing a Just-In-Time (JIT) system. A centralized wharehouse system, co-located near the manufacturing plant will reduce shipping and transportation costs or look for larger space with warehousing capacity. Savings, significant enough will be a factor if space with warehousing falls within the
The basic premise for JIT is fairly simple: a company only produces an item when there is a need, or just-in-time for a company or individual to purchase it (Manoocherhi, 1988). The theory of JIT also accepts that there may be a need for an item at another work station and this would also create the need for production. Rather than utilizing the common practice of mass production and attempting to sell and distribute the products after they are created, JIT waits until there is a defined need that must be met. By doing this, JIT systems allow companies to decrease the level of production, decrease the necessary manpower hours utilized in mass production modes of supply, and eliminates the waste inherent in over-production. These techniques are especially effective for small companies, who are far less able to absorb the impact of unsold products. JIT has been shown to significantly impact reductions in overhead costs that reduce re-investments, and encourage stabilizing business practices(Manoocherhi, 1988).
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
It is basic in the present society for each business, vast or little, to create and keep up a Business Continuity/Disaster Recovery Plan (BC/DR). This sort of plan is fundamental to the proceeded with the operation of your business and gives a stage to recover from an overwhelming occasion. Likewise, with any emergency plans you create, it can be best summed up with the relationship is that It is there to remind you how to think when you are set in a position where it's difficult to think and Something that everybody can identify with. There are numerous segments to be incorporated into a BC/DR Plan, a large portion of which are altogether outfitted towards distinguishing the essential resources that keep the business running, recognize procedures
Ray, S., & Black, T. (2011, March 24). The Downside of Just-in-Time Inventory. Retrieved Janurary 14, 2014, from www.businessweek.com: http://www.businessweek.com/magazine/content/11_14/b4222017701856.htm
19. Sodhi, Sunil Chopra and ManMohan S. Managing Risk to Avoid Supply Chain Breakdown. MITSloan Management Review. [Online] October 15, 2004. [Cited: February 25, 2010.] http://sloanreview.mit.edu/the-magazine/articles/2004/fall/46109/managing-risk-to-avoid-supplychain-breakdown/.
Lin, Yong and Li Zhou. "The Impacts of Product Design Changes On Supply Chain Risk: A
Conclusion Overall, the consequences of not having a Disaster Recovery and Business Continuity Plan can become costly in the event of a disaster. Most companies will find themselves in financial disarray when having to rebuild and/or replace any portions of the IT infrastructure that were destroyed during a disaster event. Hence, companies invest in insurance to cover such costs; however, there must be a balance because even with insurance an organization may still incur high expenses. Having a good disaster recovery and business continuity plan will keep your company up and running through any kind of interruptions such as power failures, IT system crashes, natural or man-made disasters, supply chain/vendor problems and more.
In this modern era, science has made a significant change on the global. With the high technology nowadays, it has made great changes in the market environment. Many of the machinery, electronics have become more advanced with the aid of technology. UPS provide delivery and courier services to their customers; therefore the means of transportation is very important in the organization. Just in time (JIT) was practiced by the organization in order to boost their business by reducing inventory. In other words JIT is an inventory strategy performed by UPS to boost their efficiency and reduce unwanted waste with the way of only accepting the goods that are really necessary in the production operation, and hence cutting down the cost for inventory.
Inventory management system has been practiced in many organizations from various industries. Given the diverse and multi-layered supply chains handling different inventories, organizations utilizing inventory management system can still manage efficiently and effectively their supply and demand flow within crucial transactional activities. In the following discussions, this paper examines the concept of inventory management, different inventory types and inventory management processes, and the function criteria to be considered when selecting inventory management system. Inventory is comprised of an ideal resource of any form that has potential economic value and regarded as locked up capital (Saxena, 2009). From the materials management perspective,
One of the most famous systems for supervising inventory in the manufacturing environment companies is just in time, or JIT, inventory control. JIT pursue to distribute inventory to the production line just in time for use. The JIT technique convey only the definite quantities needed to accomplish the current production goal; no more, no less. JIT inventory control is deeply dependent on the capability of the business suppliers to transport on demand. In most manufacturing environments companies take advantage of JIT delivery, the supplier has a storehouse very close to the manufacturing area (Whitin,
Every year, new technologies, markets and competitors emerge causing leaders to rethink how to adapt to the pace of change. In order to create a leadership organization who can demonstrate agility not only in the top level but also in all levels, it is important to ensure strategic and tactical goals are set properly in all levels. The leaders should be connected closely with the customers, with the products, with the core functionality of the business. The connection deepens the understanding of the business value and help steer the agile framework, design quality and manage IT governance. This
Toyota has implemented many different systems such as performance monitoring software, the Just in time (JIT) inventory system, electronic quality control system, communication system and information system thought out their value chain which enable to make correct decision during the manufacturing process. They have identified that having large inventories of spares cost them extensive capital and they have implemented the Just in time (JIT) inventory system which advices the suppliers the exact spares that the product line required and provides a time frame. Toyota adopted continuous learning and embraces change allowing their staff to research and innovation (Toyota
• Small manufacturing plant. • Not enough number of workers. • Two (2) separate facilities that are miles apart. • Costly deliveries. • No inventory and checkout list.