Changes in Just in Time Systems

In: Business and Management

Submitted By adnankhan0582
Words 823
Pages 4
The advent of technology and globalization has increased the potential for earning higher profits for businesses, but at the same time it has also escalated competition and the pressure to perform better, faster and at a lower cost. In order to survive, companies are forced to find innovative ways to cut costs and establish effective supply chains to reduce their overheads. Using the Toyota pioneered Just In Time (JIT) analogy, which emphasizes the need to have just the required parts, quantities and time needed for production and distribution. Using JIT, Toyota, Boeing, Dell and HP have substantially reduced their warehousing and work in process costs. Over the past decade, JIT has transformed from a manufacturing methodology to a profound manufacturing organizational model. However, by stretching supply chains globally, as pointed out by Evans, 2011 companies are exposed to greater catastrophe because they outsource many parts of their business to suppliers or service companies thousands of miles away. If any one link in the supply chain goes wrong, it can have a huge impact on the returns. This increased fragility of supply chains can be observed with the factors mentioned below. One of the main principles of JIT is centered on reducing waste. Auto manufacturers started using common parts across multiple product lines and consolidated suppliers in order to procure parts in greater scale. These practices helped reduce waste, but also introduced risk. If any of these suppliers failed to meet quality standards, the manufacturer’s reputation could be jeopardized. Toyota’s profit and reputation take a huge hit in 2010 as a result of this. Over 10 million vehicles were recalled for safety reasons (Gilmore, 2010). Natural disasters can also cause supply chain disruptions and force industries to shutter plants and rethink their logistical infrastructure.…...

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