Just in time concept is a lean operation concept applied in supply chain management where an enterprise strives to produce only what is needed, whenever it is needed and in the amount that is needed. It allows for efficient production of quality products through complete waste elimination, avoidance of inconsistencies and also elimination of non-value addition activities within the production line. (Lieb & Miller 1988) According to (Stank & Crum 1997) the wastes that are eliminated are related to labour, where over staffing is a waste, time, in this case idle time or use of extra time to accomplish a goal is considered waste.
Just in time concept emphasizes on customer requests and avoids making decisions based on forecast. In this concept, inventory is considered as an additional cost to the process. Traditionally, it would be considered to be value adding in the system. In this case, businesses and organisations are advised to eliminate any form of inventory that does not impact any additional value to the product. The just in time concept has various benefits to a business firm or enterprise. The benefits include an improvement in the flow of goods into, within and from the warehouse.
There is also better planning and consistency in the organisation. Manpower can be reduced when production process has stopped mainly due to planned shut downs for maintenance, stocktaking activities, or any other reason (Stank & Crum 1997). This helps the enterprise to save on cost related to labour and other production overheads. When an organisation adopts the JIT concept and implements it, it helps in the production of better quality products and also increases the efficiency of production. All the aforementioned benefits are customer oriented. We therefore realise from the benefits customer satisfaction is enhanced.
This in turn has an impact on customer loyalty and improved sales by the organisation. The net effect of this is improved profits by the organisation (Swamidass 2000). Despite having all the above benefits, the outcome of the terror attacks on September 11 has cast a lot of doubt on the just in time (JIT) concept deliveries in the supply chain. In a supply chain, each organisation along the chain depends upon a supplier and therefore in case of a hitch along the chain, the repercussions are felt along the whole chain. Before the September 11 attack the “JIT” was comfortably applicable and implemented to various businesses.
Until this time, overstocking was avoided and components were delivered to the right place at the right time and in the right form with no hitch. Piling of inventory was avoided and production processes proceeded smoothly. However, the events of September 11 reversed all these, there were delays caused by grounding of aircrafts and also a longer time was required for border inspections. Transport on land was also highly affected. As an example, due to these interruptions, commodities destined for the Gap, Banana republic and the old navy stores ended up to a warehouse next to an airport.
The business environment, both external and internal will always be fluctuating. External environment like the impact from natural calamities e. g. hurricanes, snow, storms, floods, earthquakes and internal environments like strikes, affect business operations. Therefore, for an organisation with a JIT system, in case of any fluctuation in the business environment, the supply chain will be disrupted and therefore flow of products downstream will not be realized (McClenahen & Jusko 2001). For a sudden change in the business environment, the shocks will be felt throughout the supply chain.
There will be a gap that will be created along the chain at the point where the fluctuation is highly felt. It is a noble idea for businesses to consider having some safety stock on hand at each link of supply chain, which will take care of the emergencies in case of any eventuality. Since a supply chain consists of a network/series of suppliers and consumers, a hitch on one supplier side will affect the consumer who is also a supplier to the next consumer. Therefore in a business that has adopted the JIT system, it might end up being grounded because of lack of inventory to process or sell to the next stage of the chains.
It is therefore highly recommended for such businesses to develop a Just in case system, a system that allows for a safety supplies that will take care of any eventualities. Even though the JIT system has a number of shortcomings in case of shocks within the supply chain, it is important to note that organisations can still implement JIT and maintain an attractive supply chain with lean inventories even during emergencies. To achieve this, one of the moves that a firm can make is locate where there is stock piling of inventories (Lu & Kyokai 1989).
Firms can have most of its inventories stocked next to or near their locations. This will help overcome the problems due to shipment or air transport in case these modes of transport are affected. A firm can also consider having more than one supplier for a given commodity, this will be a second option during emergency situations. For an organisation to succeed in its implementation of the JIT system, major changes within the organisation need to be undertaken. The top management need to show commitment and offer full support.
They are also required to lead from the front if the benefits of the JIT system are to be realised. The adoption and implementation of the JIT system will substantially affect the mode and criteria through which carriers and other logistics services providers will be recruited by the organisation. Organisations should be able to come up with service providers who are very efficient so as to pass on the efficiency downstream the supply chain. The just in time concept is highly dependent on the speed and efficiency with which products are moving at along the chain.
It is therefore worthy to mention that the JIT system will highly affect the style of operations in the logistics industry. The number of logistics service providers to be recruited will also be determined by the success of the JIT system. According to (Ian 1988), constant and effective communication between business firms and their suppliers is another important factor that will affect the future of JIT in the global business environment. The quality of information that will be conveyed should also be put into consideration. The right information should be conveyed to the right place, at the right time and to the right person.
A successful implementation of the JIT system in the future will highly depend on additional training of the implementing personnel (Abuhilal, Rabadi, & Sousa-Poza 2006). A lot of emphasise should be on the training of the personnel that are directly involved in the implementation of the JIT concept. This should not be taken to mean that other employees in the organisation should not be trained. An elaborate training plan on this system should be unveiled and the concerned departments or functions for example, production, logistics, marketing should be given intense training.
The major areas to be considered should include: policies on JIT system, communication skills and training on commitment to the principles of JIT. The future of the just in time (JIT) system in the global environment will highly depend on the level of technology that will be embraced by an organisation. This includes both in machinery and other office operations. Adoption of improved technology for material handling is a key area that firms need to look at. They should consider embracing cross docking or flowing inventory through a distribution centre.
With an improved material handling facility, the businesses can absorb shocks easily in the event that there is disruption in the supply chain (Kreng & Wang 2005) The use of information technology is in inventory management is particularly crucial if the growth and success of the JIT system is to be guaranteed. Business organisations should utilise information technology resources both in hardware and software so as to enhance the success of the JIT system. Enterprise resource planning (ERP) modules should be adopted for inventory management and controls within the organisation.
Internet resources should be highly utilised for an effective JIT system. The most applicable resources include e-procurement, e- marketing. e-banking and e-mailing. When an organisation conducts procurement via internet, a variety of goods both in terms of quality and quantity may be obtained. The business deal is also conducted in an accelerated speed. Marketing via the internet allows for the organisation to reach many customers within a very short time and hence improve on the organisation’s sales.
Internet banking allows for faster business transactions hence delays associated with payments are reduced and therefore the supply chain is protected from such delays (Hale 1997). To ensure that the intended results of the JIT concept are achieved, it is important for firms doing business together along a given supply chain be proactive in their operations. By being proactive, it means that a consumer should be involved directly in what their supplier is producing. The consumers should be involved in product design so as to have a product of their own making.
On the hand it is very important for the suppliers to follow up and find out how their products are serving the customers. This will help in the elimination of ripples along the chain and hence easy implementation of the JIT system. The players in the supply chain should develop a culture of sharing problems when they occur at a particular point of the supply chain, this in a nutshell will reduce the overall effect that the problem would have on the entire supply chain (Titone 1996).
The just in case system is another approach that will have an impact on the future of JIT system in the global environment. It is very important for firms to have a buffer stock that can bail it out when events in the supply chain don’t seem to be favourable. The idea of having safety stocks for emergency times should not be confused by firms holding inventories. It is a different concept from overstocking.