Just-In-Time Distribution and Barilla SpA
Anybody who knows something about business had heard the term Just-in-time (JIT) inventory. It involves producing only what is need, when it is needed. The principle of Just in time is to eliminate sources of manufacturing waste by getting the right quantity of raw materials and producing the right quantity of products in the right place at the right time.(1) In this way, manufactures receive parts and materials “just in time” to meet the day’s manufacturing quota with hardly any extra.(3)
JIT is a manufacturing management method developed in Japan during the 70’s to meet customer demands. The individual most credited with the development of JIT is Taiichi Ohno, the vice president of Toyota Motor Company. After Toyota introduced JIT and was proven to be successful, it was tried by other companies shortly after and now today is widely used by many companies. JIT can be applied to almost any type of industry and channel relationships. JIT could someday become the norm of the business world.
Before the introduction of JIT, there were a lot of manufacturing defects in the system such as inventory problems, product defects, risen cost, large lot production, and delivery delays. Some other problems also included equipment breakdowns, and uneven production levels. The inventory problems included unused inventory that was unproductive and the extra effort of storing and managing it. To store inventory, it costs money called a Carrying Cost, which can be expensive. However, with the use of the JIT system, inventory costs can be reduced by as much as 50 percent if not more. For product defects, the manufactures knew that a single product defect can cause breakdown the producer’s creditability so they must have a defect-free process. Instead of a large lot production, manufactures decided they should produce more than just one good and have a diverse line of products. And finally, the way they were running things did not manage well for the fast delivery request, so there was a need to have a faster and reliable delivery system in order to handle customers’ needs.(1) With the use of the JIT system, these problems were solved and made things run a lot more smoothly with a lot less cost. To make the JIT system successful the cooperation between manufacture and its cha...
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... cooperation during negotiations and to reinforce agreements. Being a new customer they are open to new ideas, whereas the current distributors and customers are more reluctant to change. Such target markets could include the small independent shops.
Barilla isn’t the only case that has tried to implement JITD. It is being use for perishables because they have such a short shelf life and need to be shipped out fast with little to no storage. Overall, I think JITD could be useful to the right companies. Who knows maybe someday it will be as popular as the famous JIT.
Bibliography
1.) Wong, Nancy, “Conceptual Theory”, Iowa State University, http://www.clubpom.com/Student_Wing/Public/JITtutorial.html
2.) Russell, Roberta S., and Taylor, Bernard W., Operations Management, 4th Edition, ch. 11, pg. 511-535.
3.) Rosenbloom, Bert, Marketing Channels, 7th Edition, 2004, pg. 405-406.
4.)Harvard Business School, “Barilla SpA (A)”, Boston, MA; Harvard Business School Publishing, 14 June 1994.
5.) “Just in Time distribution: the time is right.”, Supermarket News, 19 August 1991. http://www.highbeam.com/library/doc0.asp?docid=1G1:11145856&refid=ink_tptd_mag&skeyword=&teaser=
Lafemina, L. (1995). Visionary companies are us. LI Business News, V2 n4 p 24. Long Island Commercial Review Inc.
In the first segment of the poem, we are introduced to Sir Gawain and the Green Knight. It is Christmas time in King Arthur's court when the Green Knight enters the dining hall. He is very large and completely green. He challenges the court to a beheading game in which one of the knights must cut off the Green Knight's head and then in 12 months and a day find the Green Knight and allow the Green Knight to chop his head off.
Sir Gawain’s first act of integrity was when he accepted the Green Knights’ challenge in place of King Arthur. Sir Gawain showed respect towards the King by taking his challenge. Gawain could have let King Arthur do the challenge, but instead took it for himself. Gawain was also respecting the code of chivalry. Gawain was humble, chivalric, and noble. Sir Gawain decided to strike the ax against the Green Knight to show respect and honour for King Arthur.
Although Arthur’s knights are initially reluctant to come forward and accept the Green Knight’s challenge, Gawain eventually comes forward; “Said Gawain to the king, ‘If you would, noble lord, bid me rise from my seat and stand at your side (Sir Gawain and the Green Knight 145, ll. 343-344).” Gawain again shows chivalrous characteristics by being both courteous and honorable. He courteously comes forward to accept Arthur’s place, seeing as how he is the king. Also he steps forward to defend the honor of all the knights present. As the Green Knight was tarnishing it during his entrance speech. He then expresses the utmost humility while coming forward: “ I am the weakest of them, I know, and the dullest-minded, So my death would be least loss, if truth should be told; (Sir Gawain and the Green Knight 146, ll. 354-355).” Even though he was the only one to step forward and take up the Green Knights challenge, he still refuses to give himself any sort of special credit, even though he may deserve it for being so
The idea of Just In Time originated in Japan. Actually this type of inventory/production was originally known as the "Toyota Production System". A man by the name of Taiichi Ohno is credited as the person who first came up with this system. He looked at the Western industries and found that the manufacturers would set up their manufacturing lines to produce a large quantity of one product before stopping and and switching to a different product. They also would order and stock an overabundance of inventory so that the right parts were always on hand.
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
Difficult to regain trust of existing loyal customers who expected high quality and performance when in competition with other firms in upper trade market.
In the early fourteenth century, knighthood represented respect and success for brave young men, and chivalry’s codes were necessary for those young men to uphold. In the book Sir Gawain and the Green Knight, the author constructs the young Sir Gawain by testing his character. These trials, given by the Green Knight, challenge Sir Gawain 's loyalty and bravery to people’s astonishment Sir Gawain 's achievement is muddled. During the test he breaks his promise and takes away the green girdle that he supposes to exchange with Bertilak just likes his bargain.
Imagine that you have just earned your business degree and have been hired as a hospital administrator at a small hospital that, like many others, is experiencing financial problems. Having studied finance, you know that efficient cash management is important to all firms in all industries to meet the day-by-day operations of the firm. One way to ensure such efficiency is to use a carefully planned and managed inventory control system that can reduce the amount of cash an organization has tied up in inventory. Being familiar with Just-In-Time Inventory, you know it is a proven system that helps reduce the costs of managing inventory.
Objectives and benefits of JIT manufacturing may be stated in two separate ways. First, in specific and quantitative terms, by published case studies and secondly, by general listings and discussion. The first case-study summary is from Daman Products in 1999 which lists the following benefits of switching to using Just in Time manufacturing practices. The cycles times were reduced 97%, setup times were reduced 50%, and lead times went from 4 to 8 weeks to 5 to 10
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).
The global supply chain variability is causing customer delivery delayed by around 40% and also experiencing quality problems that is introduced by the humidity difference between the locations of Chinese manufacturing plants. Moreover, it is taking much longer to deliver products, and the spare parts preventing any timely customer services. The goal is to come up with a faster product delivery and product cycle employing strategic and tactical changes that might improve supply chain problem and address the quality and increase customer
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 decreases in retailers, wholesalers, and physical transaction, so there is no need to have a lot of inventory. Information technology are used to apply by make-to-order manufacturing which lead to just in time inventory. Just in time (JIT) inventory is a management system in producing the product that in time of need and acquired only as demand requires, by using the needs of demand to control in production. The purpose of just in time inventory is to have zero inventory, zero lead time, and zero failures. It is also eliminate the waste, which is overproduction, waiting, transportation, processing itself, stock, motion, and making defect. The trust on just in time is effective in
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