International Journal of Management and Economics Fundamental
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VOLUME
Vol.05 Issue 04 2025
PAGE NO.
15-30
10.37547/ijmef/Volume05Issue04-04
The Role of the JIT System in Enhancing
Competitiveness
Riyam Mohammad Abbas
Najaf technical institute, Al-Furat Al-Awsat Technical University
Received:
23 February 2025;
Accepted:
18 March 2025;
Published:
22 April 2025
Abstract:
This research aims to examine the role of the Just-In-Time (JIT) production system in enhancing the
competitiveness of industrial and service enterprises. The JIT system relies on reducing waste in production
processes, improving product quality, and increasing operational efficiency, enabling companies to achieve a
sustainable competitive advantage. The research examines the concept of JIT, its main principles, and the
requirements for its success. It also analyzes the relationship between implementing this system and achieving
competitiveness through improved productivity, reduced costs, and rapid response to market needs. The research
also reviews some practical experiences of implementing JIT in successful global companies such as Toyota and
identifies the challenges that organizations may face when adopting this system.
The research concludes that effective implementation of JIT requires strong administrative support, the
development of a flexible supply chain, and the use of modern technologies in production and management. The
research also provides recommendations for organizations seeking to enhance their competitiveness by adopting
this system.
Keywords:
Just-in-Time Production, Competitiveness, Quality Improvement, Cost Reduction, Operational
Efficiency.
Introduction:
Varied criticisms of Just-in-Time (JIT)
effectiveness have been raised. For example, there
have been reports of poor delivery performance,
inventory control and complications arising from a lack
of supplies for needed components. (Van Wyk &
Naidoo, 2016) have assessed the effectiveness of JIT
implementation at a South African company, using a
methodology that was specifically developed for this
purpose. An improvement in several performance
measures, such as, T3, T4 and T6, subsequent to JIT
adoption is reported. Perishable goods have to be
delivered in a pre-determined time window or else the
shipment is considered late. Due dates are determined
based on several factors, such as, delivery location.
There are two different types of just-in-time (JIT)
delivery for the supplier: regular delivery mode and the
JIT mode. In the regular delivery mode, the entire
delivery of goods must begin and conclude within a
specified time period. This time period is usually a few
days. It should be noted that the JIT mode delivery is
more stringent than the regular delivery mode.
Delivery in JIT mode must arrive exactly on the
expected delivery date (EDD) of every order. Early
deliveries are not allowed before a predetermined
earliest delivery date (EDD) that corresponds to the
ready time of the time window. An order is considered
late if it is delivered after the due date. Customers will
be penalised for all late orders. Therefore, JIT suppliers
are encouraged to adjust ore and/or transportation
capacity resulting in just-in-time delivery service.
Supply delivery just in time is one of the key values of
the JIT system. A main tenet of the JIT system is timely
delivery to meet customer demand. Delivery
performance is considered one of the more influential
factors of the competitive strength of JIT in the
production environment. An ordered product is
considered late if one or more items is delivered past
the due date. If this happens, the producer could lose
the client who made the order. An order is known as a
batch which is the set of goods ready for delivery to the
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
customer. Each delivery takes some duration of
transport, and within this time the shipment cannot be
replenished. The plant wants to schedule all deliveries
so as to maximize the deliveries of batches (within their
respective time windows) over time. A theoretical
framework is provided that adapts the classical
economic lot sizing model to account for delivery time
windows, and looks at the case of a single producer that
services a common retailer. Crossing time window
induces issuance of early or tardy shipments. The
situation is investigated where the customer is allowed
to penalize the producer for delivering out-of-time
goods. A comprehensive library is made available with
real-world data sets which can be used in connection to
the model discussed to better understand the
theoretical contributions. This free-access approach is
suggested as a means of addressing difficulties and
issues which may arise in practical applications of a
model.
Research Problem
In light of increasing competition in global markets,
companies seek to adopt effective strategies to
improve their performance and enhance their
competitiveness. Just-in-time (JIT) production is one of
the most prominent modern methods aimed at
reducing costs, improving quality, and increasing
operational efficiency. This helps companies respond
quickly to market demands and achieve a sustainable
competitive advantage. However, many organizations
face challenges when implementing JIT, such as the
need for flexible supply chain management, strong
administrative support, and the application of modern
technologies. This raises questions about the ability of
different organizations to adopt this system effectively.
Accordingly, the research problem is represented by
the following main question: How does the Just-in-
Time (JIT) production system contribute to enhancing
the competitiveness of organizations? What are the
factors
that
influence
the
success
of
its
implementation?
This main question is divided into several sub-
questions, including:
•
What is the concept and objectives of the JIT
system?
•
How does JIT affect cost reduction and improve
product quality?
•
What are the challenges facing organizations when
implementing JIT?
•
What factors ensure the success of JIT
implementation and enhance its impact on
competitiveness?
Research Objective
This research aims to examine the role of the Just-in-
Time (JIT) production system in enhancing corporate
competitiveness by analyzing the system's operating
mechanisms, its benefits, and the challenges facing its
implementation.
It
also
seeks
to
provide
recommendations that help companies effectively
adopt this system to achieve the highest levels of
efficiency and quality.
Significance of the Research
The importance of this research stems from the vital
role the Just-in-Time (JIT) production system plays in
enhancing corporate competitiveness, especially in the
modern business environment characterized by rapid
change and increased competition. The research
highlights the strategic benefits organizations can
achieve by implementing this system, making it a topic
of scientific and practical value.
•
It explains to organizations how to successfully
implement JIT and the requirements necessary to
ensure optimal results.
•
It helps managers and decision-makers improve
production efficiency and reduce costs, enhancing
companies' ability to compete in local and global
markets.
•
It highlights the challenges and obstacles facing JIT
implementation
while
providing
practical
recommendations
for
addressing
them,
contributing to increasing corporate success.
•
Presents case studies and successful experiences of
JIT implementation in global companies, allowing
for the benefit of practical best practices.
Research Hypothesis
Implementing the Just-in-Time (JIT) manufacturing
system enhances the competitiveness of industrial
companies by reducing operating costs, improving
product quality, and increasing the speed of response
to market demands.
Sub-hypotheses:
•
There is a statistically significant relationship
between implementing the JIT system and reduced
inventory levels (raw materials and finished
products).
•
The JIT system contributes to reducing production
defect rates, which positively impacts customer
satisfaction.
•
Adopting the JIT system improves operational
efficiency (such as reducing production cycle time
and accelerating order delivery).
DATA COLLECTION METHODS
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This research took a descriptive approach, reviewing
the literature, including studies, research, theses, and
university dissertations related to the research topic.
Overview of JIT System
Origin and concept of JIT
Japanese Production managing gurus controlled by
Toyota developed “Just
-In-
Time” (JIT) thinking at the
start of 1970’s. They knew that there were seven
wastes in production and by the removal of these
wastes they could reduce cost, produce better quality,
and deliver products in a short time. They moved away
from the controlling system controlling through stock
and inventory because in that way they can not control
defects, machine breakdowns, and inefficient human
experiential. In its place. They moved to a computer-
based approach to handle these problems which create
JIT based system. American people developed its
philosophy as “Just
-In-
Time” (JIT) and its philosophy is
defined as “the co
rrect number of products will be
processed at the correct time and will be supplied to
the correct location” (Hou et al., 2013).
Research Background about JIT
The success of JIT is typically attributed to various
factors, e.g. reduced inventory, improved quality, with
suppliers and production flexibility, etc., however some
operations have encountered difficulties as a result of
JIT application, and many practitioners have not
obtained the benefits expected. Nevertheless, the
application of JIT continues to bring discussions.
Furthermore, the widespread applicability of supply
chain management (SCM) changes the way JIT is
observed. (Amasaka, 2020). For these reasons, a
reevaluation of JIT is called for, and a response recently
published. By sharing the case study of Company BH in
implementing production, planning and distributors
since 2005, regarding JIT systems, this system observe
important issues in accordance with the reevaluation of
JIT systems and aims to providing insights. Additionally,
the collaboration approach to resolve these critical
issues are discussed and contextualized in the JIT
system. At this point it will be important to exam the
case
outcome
through
undertaking
various
internal/personal initiatives following this evaluation.
Historical Development of JIT
JIT is a philosophy of producing with little or no waste.
It is a participatory system empowering shop floor
employee's involvement and self-interpretation.
Before linking the case of JIT development in China with
that in the U.K., a brief review of JIT's historical
development in Japan and then the U.K., is provided.
The term JIT is defined by analogy with a motor. Just-
in-case' has traditionally been the U.K. production
philosophy; huge quantities of stock detained
everywhere 'just in case' problems arise. 'Just-in-time'
is the exact opposite: only a very small inventory is
needed (Hou et al., 2013). For practical purposes, JIT is
usually perceived as an industrial strategy that
incorporates just-in-time delivery and reduced size,
increased frequency deliveries. The Japanese can take
little credit for the original ideas of just-in-time
production. (Aspelund, 2015) The craft-based
industries in the U.K. and the U.S. maintained low
inventories, produced in small lots, had versatile
workers and used very few machines - the origins of
just-in-time production. The credit for JIT must go to
American armament production between 1942 and
1945. The turning out of tanks and guns 'just-in-time'
and 'right-first-time' (zero defects) convinced the
Japanese that JIT was the essential tool for gaining a
competitive edge. With the dawn of the sixties,
Japanese awareness of western successes forced them
back to JIT. However, the Japanese approach was more
about exploiting inherent Japanese strengths than
emulating western techniques. Accepting the reduced
size and increased frequency of deliveries (JIT), many
Japanese companies used up every bit of data and
technology at their disposal in an attempt to emulate
the computer controlled materials management
systems found in the west. In striving for quick
efficiency gains, many Japanese firms adopted canned
systems that were not entirely suited to them.
Key Principles of JIT
A coherent discussion of the complex inter-related Just-
In-Time (JIT) system and its associated philosophies,
principles, practices, and techniques is offered. This is
structured to serve as a primer for those unfamiliar
with the JIT system or to provide a base of information
for others to consult in their efforts to apply one or
more elements of the JIT system to an organization. In
the mid-1970s, JIT concepts were first made known
outside of Japan, and subsequent research has been
unable to provide a uniform and clear definition of the
JIT system. Probably because of its seminal nature and
the Japanese cultural context within which it
developed, confusion lingers over the basic tenets of
the Just-In-Time (JIT) production system. In a typical
rendition, it shifts the burden to suppliers and conveys
parts to the production line just at the time they are
needed (Nakamura et., 2019).
The Just-In-Time (JIT) system is perhaps best
understood in terms of the philosophy behind it and
the guiding principles this philosophy inculcates. The
precarious state of much of the literature on the topic
is somewhat troubling, and even the more thoughtful
and considered treatises have failed to provide a clear
and definitive explication of the JIT system. Upon both
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the review of various research works and the results of
a survey offered below, an effort is made to provide a
comprehensive account of the JIT system. Although
identifying tenets of JIT, it needs to be understood,
first, that these elements are complex and inter-
related, and second, that JIT is more than the mere sum
of these its philosophies, practices, and techniques.
(Okihara et., 2023) As noted at various stages, the
principles, practices, and techniques which make-up
the Just-In-Time (JIT) system are predicated on a
number of diverse and inter-dependent philosophies.
Many of these underlying tenets cannot be directly
observed, although their footprints are very much in
evidence.
JIT and Supply Chain Management
Merely reducing the inventory level will not achieve the
benefits of the JIT philosophy, because the whole
production activities and the extended supply chain
activities are not synchronized. The extended supply
chain activities also include suppliers management and
the associated quality issues. Accordingly, it is argued
that to maximize the benefits of the JIT philosophy, it is
vital to consider the whole production activities, as well
as the whole chain of the production; instead of merely
reducing inventory level. (Nakamura et., 2019)The
extended supply chain activities, including suppliers
and their quality issues, also need to be taken into
account. Although many companies have used or are
using many IT systems to try to implement JIT
philosophies, there is no uniform way of how this is
done. Choosing the right information system is of vital
importance. Also, there is a lack of understanding of
how the IT system could help or could be used to help
the implementation of JIT systems. Thus, the objective
of this research seeks to address the above issues and
can give insights to the practitioners regarding the
implementation of the JIT systems (Hou et al., 2013).
Some key findings in the implementation of the JIT
systems have been identified under five themes:
information system, production planning, inventory
management, quality management, and suppliers
management. (Yanagisawa, et.2022)A holistic system
has been built in company BH to cope with the five
themes in an integrated manner. The system data can
be analyzed in real-time to provide real-time
information to determine if a large inventory of each
material is needed or if the actual production data
already shows that all materials needed for production
are in hand. Any additional materials added to
inventory management will be automatically displayed
in the inventory tracking monitor. All purchased
materials must have QR codes to facilitate their use.
Comprehensive products with hundreds of materials
are judiciously arranged in 13 bags according to the
order in a minimal number of minutes. Production
managers can use this system to easily visualize and
decide when orders are placed. This system has been in
use for two years, and significant benefits have been
experienced. In some cases, the system is even
considered more important than the production
activity. This system lessens the chance of delaying
production due to a lack of materials, ensures the most
efficient production schedule, and reduces the need for
new inventory before production activity actually
occurs.
Impact of JIT on Production Efficiency
Performance measures focus on the overall efficiency
of a production system. There are four measures used
for the purpose, which are production efficiency,
utilization of labor, maintenance, and equipment
downtime. The increase in competitive global pressure
has led to the importance of production efficiency.
(Amasaka, 2021) It is defined as the productivity per
unit cost. An improvement in four of the eight
categories was noted in the case of Sabertek, that is,
the total production efficiency, scrap as a percentage of
output, use of scrap as a percentage of input, and
production efficiencies per man hour for each of the
lines. Only one of the four production efficiency
measures has been noted in the SaberTek case (Van
Wyk & Naidoo, 2016).
The Just-in-Time (JIT) production system was first
introduced by Toyota. JIT has been the subject of many
articles and case studies in an industrial environment
worldwide. However, the discussion mainly praises JIT
for effectiveness and competitiveness. JIT should be
seen, in the context of South Korean industries and
taken with caution before the implementation of a JIT
system. JIT is more suitable for the production
processes of progressive organizations than for the
production processes of conventional organizations.
Many companies in an industrial environment set up
departments for quality inspection and other processes
as a separate department. But in a progressive
industry, the inspection department is integrated with
the process. The smooth combination of the
intermediate process creates an advantage in the
reduction of waste and the production of a stable BP.
On the other hand, the tendency of the departments
and the industrial div such as the trolley bus to make
the irregularity of the rhythm of production is the
obstacle of the JIT establishment (Hou et al., 2013).
Most of the purchased pigments in the color industry
do not meet the conditions for JIT look nurtured or
consignment and can be procured in bulk. As a result,
the continuous manufacturing process automatically
turns into a special manufacturing process. In addition,
in the plastic industry, it is almost impossible to
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automate the mill rubber process. On the other hand,
packaging after the finishing process can be partially
conditioned for stock when the production is delayed
due to the defective process. (Womack, p. 93-103). The
equalization of the process rhythm and action for
stable production is effective, but it is not easily
established due to the external component. Personal
connections are important in exchanges between
manufacturing companies. This thoughtful melody
combined with the existing business rule that
characterizes the company as a separate good
company.
JIT and Waste Reduction
It is well known that, whilst adding value to a product,
there are a great number of operations which a part or
assembly can go through that do not add value. In the
engineering industry, waste arises from machining,
welding, casting, and from rapid prototyping
operations that do not eventually become part of the
final design. In machining, it is often the case that parts
are machined that are not required. On many
components, such operations include tapping holes as
well as drilling and milling them, deburring edges that
are no longer contacted by other parts, and so on.
Milling an unnecessary slot in a component as well as
wasteful production operations also introduces the
possibility of human error and hence faulty production.
Many times, extra parts are made and then must be
discarded since they were made outside revision and
therefore are redundant. Often, revisions are missed
simply because there is confusion over which parts
need to be made. Referring to the revision numbers of
at least a few parts on each drawing greatly increases
the likelihood of a part being made obsolete, rather
than necessary. Undoubtedly, many other waste
sources in production engineering have been missed.
Waste may also result from operations on individual
raw materials or components such as drilling an
unnecessary countersink or producing a better surface
finish than required. Care should be taken to avoid this
sort of waste when specifying parts to be made or
materials to be used. Waste from this source may be
eliminated by carefully considering the various
processing operations that a part must go through in
order to be made. Furthermore, components or raw
materials often require multiple operations that fall
under the category of waste. On many components, a
finish is machined that is later re-machined. This
repeated processing not only wastes time and man-
power, but also increases the likelihood of twisted
parts, in addition to increasing the risk of a part being
undersized. Transportation and storage produce a large
portion of waste in production. (Sakai et.., 2023) Waste
from this source arises when components, raw
materials, or inventory are transported or stored. Any
of these actions inherently cause direct energy
expenditures. Such waste carries on until the action of
the transportation or storage has occurred. Large
facilities require transportation simply because they
are large. Though there is much unavoidable waste
from this source, such waste should be consistently
minimized. Layout is a substantial factor in the
elimination of this source of waste, and as a result, it
has attracted much interest over the years. One of the
branches of the engineering that has arisen with this
purpose of eliminating this type of waste is group
technology.
JIT in Different Industries
In recent years, Japanese-style management practices,
such as Just in Time (JIT) management, total quality
control (TQC), company-wide quality control (CWQC),
quality circles (QCs), and others (Amasaka , 2022), have
been widely discussed both in Japan and abroad. In the
literature, several quickly-blossoming articles and book
chapters have been published concerning the relevant
theories and reports on case studies ((Fred) Raafat &
Chen, 1990). After the oil crises in the 1970s, strong
competition prompted the Japanese to develop new
management systems. JIT management, as one of the
Japanese management systems, helped Japan achieve
great success. Despite facing difficulties in adapting JIT
management to traditional production methods, there
is nevertheless a great deal of interest in JIT
management in Hong Kong, a city with manufacturing
industries as its backbone (Amasak, 2020) .
In the trucking industry, deregulation and fierce
competition can be used to explain how Japanese
trucking companies are striving to adopt the JIT system.
Because of these reasons, a case study on Sun Sang, an
air-conditioner sales company, was selected to
exemplify JIT delivery in the trucking industry. The
Tsuen Wan District of Hong Kong was chosen as the
area to study. It is a new industrial area where land
value is not as sky-scraping as on Hong Kong Island. The
industry concern is one of the factors responsible for
the choice of this location. Sun Sang is located in a new
industrial building complex where many Japanese
trading companies and manufacturers are also based.
This case study, apart from investigating JIT trends in
the trucking business, also looked at how JIT is affecting
suppliers and customers. In the electrical appliance
manufacturing industry, fast delivery has become a
common demand and the possibility of achieving 100%
JIT delivery is quite high (Hou et al., 2013). Established
and prospective suppliers benefit because their
investment and output plans will be more secure.
Besides, the company could obtain price concessions
and faster delivery in return for JIT. A case study on Kai
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Ping Plastic (Holdings) Co. Ltd. was chosen to exemplify
JIT delivery in the electrical appliance manufacturing
business. Both the effect of JIT delivery on the suppliers
to the plastic parts department and the foreign
customers will be studied and discussed.
Manufacturing
Just-in-Time (JIT) is a philosophy developed and
successfully implemented by the Japanese companies
in the early 1970s. The primary objectives of the JIT
system in a manufacturing concern are to minimize
inventories, eliminate waste, improve quality, increase
the productivity of the manufacturing facilities, and
enhance the competitiveness of the companies. The JIT
system is responsible for the production and/or
purchase of required materials and products in the
required quantity at the required time to meet the
specified demand promptly and without any stockouts
or inventories (Van Wyk & Naidoo, 2016). Since the
1980s, there has been increased interest in JIT and its
implementation in manufacturing and, to a lesser
degree, nonmanufacturing concerns. A growing
awareness of the numerous transitions that
companies, especially manufacturers, have started to
shift toward, or have already implemented, different
elements of the JIT philosophy, such as just-in-time
purchasing,
production,
quality,
and
total
manufacturing practices.
The Just-in-Time (JIT) system has been widely utilized
by manufacturing organizations in their efforts to
optimize their supply chains and improve their
operational performance. One of the major attributes
of JIT is the timely flow of materials from suppliers
through the various internal activities to eventual
distribution to customers. It is found that the timely
and smooth flow of materials, accurate processing
information, close and continuous interaction with
suppliers, and ensuring that firms’ procurement
activities are carried out efficiently are crucial to Just-
in-
Time purchasing’s successful execution. Additional
elements such as product selection, supplier
management and relationship building, and the
importance of incorporating long term planning as part
of the JIT purchasing process are identified. Continuing
pressure is exerted on suppliers to ensure they deliver
competitive pricing, high quality parts, and excellent
service, in the required quantity and delivery
frequency. JIT projects have been initiated by
companies during the past decade and have become
more prevalent since the late 1980s. However, there is
still much confusion about what JIT is and its far-
reaching implications. There tend to be a lot more
glamour attributed to some aspects, particularly to the
pull-orientation of the Japanese miracle, and the
application of tools such as SMED
–
single-minute
exchange of die, Kanban.
Retail
Supply chain management has been considered a
determinant of success. An improvement in this area
could improve the government’s capability to
empower the competitiveness of the retail industry,
which would be an advantage to competition.
Assessment and review of the JIT system since it started
to be used in the company up to the present could
result in valuable feedback and knowledge concerning
weaknesses, strengths and their impact on the success
of the system, as means of improvement. This is the
research approach taken by a South African packing
hosing and blister manufacturing company SaberTek,
since the 2002 implementation of global sourcing and
the JIT system.
JIT has been both praised and criticized when applied
by the company. Due to a lack of understanding of the
concepts and practices underlying the JIT philosophy, a
dubious attitude to its effectiveness is an
understandable position. A major impact of JIT is on the
nature of business relationship that needs to be
established with suppliers. SaberTek has been using an
EOQ model to re-order from local suppliers due to past
reductions of the purchasing department, losing key
staff and their knowledge as the result of fraud. Such
relationships do not fit the JIT philosophy, where
inventory is reduced in order to improve quality, as well
as cost effectiveness. The company’s purchasing
department has been investigated by the CEO, who
concluded that it is under a great pressure to sustain
business with current suppliers rather than developing
new ventures with potential suppliers. One of the key
JIT metrics is supplier delivery performance. Local
suppliers account for 95-99% of all purchases, that has
a clear impact on the supplier delivery performance
variable of the JIT equation. Delays from local suppliers
result in at least 2 hours down time on the A-line CE54,
while also allowing customers to refuse the delivery. A
further investigation showed a critical deterioration in
the quality of the equipment provided by a significant
supplier, creating compatibility problems with the
product, causing further disruptions to deliveries. This
emphasized the importance of the JIT system in
managing suppliers properly, as delivery delays could
result in a loss of confidence in business and massive
production delays due to re-engineering requirements
when a new technology is used (Van Wyk & Naidoo,
2016).
Healthcare
Work organizations around the world attempt to tackle
greater competition through the initiation of novel
procedures and mechanisms in order to capitalize their
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resources and decrease lead times. The reduction of
cycle times forces workers to adapt immediately to
modifications in demand, which may put them under
pressure as a result of the loss of team autonomy (Van
Wyk & Naidoo, 2016). In the last two decades, due to
increased competition, the trend has been that
organizations are forced to invest in their staff
members through an education and training
intervention in an attempt to enhance problem-solving
skills. Some of the objectives of education and training
interventions are the improvement of staff members'
ability to manage and undertake job responsibilities,
promote self-reliance and creativity. It has always been
understood that continuous resources must be
invested to ensure equipment reliability. The results
point clearly to the importance of problem-solving
abilities and involvement of staff members within the
manufacturing system since they lead to enhanced
equipment flexibility and investigate ways of various
approaches in order to enhance the robustness of the
results. Since the commencement of China’s ‘Open
Door Policy’, its economy has undergone what has
been termed a ‘miracle’ transformation.
Currently,
China has emerged as one of the world’s biggest
markets, providing enormous opportunities for many
businesses. Therefore, implementation of efficient
procedures for managing such a huge scale of learners
and suppliers is critical. As a result, the demand for
successful implementation of JIT systems by these
businesses is gradually rising. A recent empirical study
has revealed that only a small proportion of businesses
in China do actually employ JIT with any level of
success. Through interviews and observational
research, factors that inhibit the implementation of JIT
systems are recognized. Also, by discussing viable
strategies, the study hopes to aid in overcoming the
challenges posed by JIT’s use (Hou et al., 2013).
Automotive
The application of Just-in-Time (JIT) system in a
manufacturing process has been recognised as a
powerful strategy that assists in enhancing
competitiveness. By providing the right part, at the
right place, and in the right quantity, the inventory cost
is significantly reduced, shortening lead time,
minimizing customer’s delay, and increasing product
flexibility (Hou et al., 2013). As an approach to compete
in the global market, many organizations and
industries, particularly in the developed countries, have
long implemented JIT. Nevertheless, the wide-
prevalent application of JIT has not yet been realized in
the Chinese industries. As a result, the majority of
manufacturers in China still encounter stiff competition
in the global market that necessitates them to reduce
production cost, improve the product quality, and
speed up their products’ delivery. As the world’s
second largest automobile market, with a total of
32.847 million vehicles sold in 2011, China’s rapid
development of the automotive sector was observed,
and it now stands as the second largest nation in total
vehicle sales. As a highly competitive industry, both the
multinational
corporations
(MNCs)
and
local
manufacturers in China find it essential to adopt JIT,
together with other contemporaneous techniques, as
part of their strategic activities to meet the required
demand. Thus, to remain competitive, a number of
companies in the automotive sector have started to
focus on the improvement of their production system,
attempting to reduce the lead time through the
effective layout in the shop-floor, as well as to
efficiently control the production-line for the good
quality Short-time delivery. To speed up and improve
the production system, these organizations decided to
implement JIT. Since JIT can reduce the set-up time as
well as to generate a smooth flow right from the
supplier through to the clients, the good quality
products can be then delivered promptly to the
customer. Regarding these significant benefits, these
organizations have prudently adapted the JIT policy
into
their
manufacturing
strategies,
and
a
differentiated long-term partnership with the
particular suppliers has been also established.
JIT and Customer Satisfaction
Just in time (JIT) has gained considerable attention in
Western countries, and the performance of companies
using JIT in the United States has been investigated
extensively. In the extremely competitive markets of
industries, customer requirements on product
specifications, quantities, and exact delivery dates have
become more and more severe, and customer
satisfaction is considered to be a key issue. Thus,
evaluation of the competitive advantage afforded by
employing a JIT delivery method has been primarily
considered in the analytical review.
But, generally, manufacturers in the JIT system would
like to reduce inventory, thereby relying on a smaller
number of scheduled deliveries from suppliers. A
mathematical model is proposed to analyze inventory
review policies and scheduling policies for a supplier in
a JIT delivery system of end items. A set of multiple
duopoly-distribution-inventory models is developed to
obtain the optimal lot size, delivery frequency, and
pricing decision within a finite time horizon.
Monotonicity properties of the optimal solution are
also derived. Among the research into JIT systems,
much attention has been paid to the management of
production and inventory in a JIT production system. A
continuous review inventory model for the supplier
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based on the economic production quantity (EPQ)
policy for the manufacturer is the most common
production policy in the literature of JIT inventory
systems. Although the manufacturer employs a JIT
delivery method and the supplier produces the end
items using an EPQ policy, all of the suppliers produce
a single item for the manufacturer. Under these
conditions,
inventory
management
at
the
manufacturer is mainly addressed ((Fred) Raafat &
Chen, 1990).
Challenges in Implementing JIT
These challenges, current manufacturing practices in
small to medium manufacturers and how they can
possibly be changed in practice are often considered
for JIT as tools, use of MRP as a control system,
workforce reasons for batching Operations and the
level of JIT awareness amongst staff and other
employees. The literature on the implementation of JIT
in small to medium firms is found to be surprisingly
limited. (Hou et al., 2013) break down the eight
elements of JIT Production into two groups; those
which are independent of a firm's size and those which
relate to the size. These groups are used to review the
existing literature pertaining to the application of JIT
techniques in small to medium sized manufacturers
and to suggest ways in which research may be
expanded in the future. The elements which do not
discriminate between the size of the firm are the two
basic JIT techniques of setting up machines correctly
and effectively, and producing goods in the correct
quantities at the correct time. Both have expressed the
opinion that smaller manufacturing plants may have an
advantage over larger firms when applying JIT
manufacturing techniques.
From a statistical study on this subject, also suggests
that small firms often have less trouble overcoming
resistance towards new ideas than do larger firms.
suggests that once a company has decided to
undertake JIT production it ought to ensure that there
is already in place an adequate systems control. To
assist with this assessment, twenty questions are
posed, the answers to which provide a ready means of
assessing the readiness of a company to introduce JIT.
The analysis of production activities is a crucial step
when planning the implementation of an effective JIT
program. Theoretical methods are presented which can
be very useful in shop floor problems analysis. This
paper presents a model which schedules production
and maintenance activities in order to increase the OEE
of equipment. Models consider both deterministic and
stochastic maintenance times. To supply maintenance
parts at the required time a new inventory model is
build and analyzed. Outcomes include theoretical
results which indicate when to set new orders.
Furthermore, it will be shown that for some range of
parameters a supplier extending warranty is beneficial
for the customer. A multi-scenario simulation study is
used to build the Total Opportunity figure.
Recommendations for manufacturers are to recognize
that without sufficient and appropriate data, JIT shop
floor problems are notoriously difficult to implement
effectively.
Resistance to Change
INTRODUCTION
The section of the whole production process from the
arrival of parts at the dock to the delivery of the
completed product and any other material to the dock
should be completed in one month. The interval from
the time the customer places an order to delivery of
that product must be one week. In today's competitive
manufacturing market such a statement may sound
hopeful, however many manufacturers have already
made significant steps towards a total or partial JIT
Production system. The underlying emphasis in All
Japan and JIT systems is on the production of exactly
what is needed, when required. The current production
system of a manufacturer wishing to introduce JIT will
have to be changed. This paper discusses current Just-
In-Time installation at two machine shops and at an
injection moulded plastic manufacturer. It is explained
that such a revised production system should produce
products the customer wants, at the right time, at a
rate which will only just satisfy demand, with perfect
quality, zero lead time and no waste (H Bright, 1988).
Resistance to Change
The success of a JIT installation in a Job-shop
environment is dependent on reducing the time taken
to set up machines. Requirements for successful JIT in
a Job-shop and Process layout environment are
discussed. Eight elements that are needed to establish
a successful JIT system are described. Possible initial
steps toward a JIT system are discussed. Japanese
automotive manufacturers have made major inroads in
the North American Automobile market. The basis of
their competitive drive is the ingenious application of
Just-In-Time Production. Many North American
manufacturers are now beginning to adopt similar
production systems. The effort required may be
tremendous, however it is becoming increasingly clear
that the firm who fails to comply will probably not
survive in today's competitive market.
Supplier Dependability
About 40 suppliers have built their factories near
Company BH to achieve quicker response when they
receive production orders. Using this method, those
factories could be managed by the labor-sharing
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system of Company BH, and thus, the company could
add or release the workforce at different suppliers
easily. That’s why using this method could short the
response time of parts and components so that the
two-day in-plant delivery could be realized. They have
already set up the 2,000-ton warehouse and it is
designed to store the small amount of materials for
Company BH. From what they said, such warehouse is
believed to be used to store the sample materials sent
by the suppliers. At present, there are no suppliers
which could supply the small amount of materials for
Company BH. As a result, keep the safety stock of
materials in the warehouse so that the assemblers
could work when the production is stopped due to
sorting materials. Excess stocks could be avoided to
some extent since the suppliers could not supply the
small amount of materials. The current situation is that
one-ton containers of materials are used to deliver
them from suppliers to Company BH. It is really a great
waste, for example the maximum 20-ton truck is often
used to deliver the seven-ton container. If necessary,
this issue could be discussed in details. The
transportation costs could be reduced due to the
shorter distances. Avoid using trucks to deliver the
material which could use a one-ton container. Assist
the suppliers to build the warehouse or establish the JIT
warehouse in the city in which the suppliers located.
Research shows that the suppliers or the
subcontractors are far from customer companies and
the logistics for small lot cannot meet customer’s JIT
requirements. In other words, it is critical to have
suppliers and subcontractors near the customer plant.
About 40 suppliers have built their factories near
Company BH and they are only about 30 minutes away
by car. Utilizing this method, the factories are managed
by the labor-sharing system of Company BH and the
different kinds of the production are performed
successively. The smaller amount of the shipment could
be realized in the area of 50 sq. km., Company BH and
the suppliers could actively use the trucks for the
materials and parts delivery. Since Company BH uses
this method, who will pay the inventory and
transportation cost? Those suppliers could participate
in the product design and development and propose
the better method of the technology. Those
subcontractors could also participate in the product
development since the molds for such product are
necessary. If there is the trouble in the production, the
technicians of suppliers and the subcontractors visit
Company BH the next day after the occurrence of this
trouble. Since those suppliers and subcontractors
report the inventory situation by the facsimile every
day, the responsibility for the inventory management is
strong on behalf of the cooperating with them. On the
other hand, disagree to this method since the small
number of candidates. On selection the potential
subcontractor. The great trouble occurs on trial
production since the unique jig is necessary. Please be
more specific. Several people who took charge of the
JIT implementation of companies with 100 and over
1,000 employees are interviewed. The interviewees
asked for the anonymity of the interview content.
Company BH decided to interview the department
head in charge of the production control and
purchasing. Currently, the material is procured from its
parent company whose manufacturing activity is
similar, and the production plan is proposed by the
parent company in return. As a result, the molds to
produce the required parts must keep for many kinds
of parts and the set-up time of molding process is long.
The cooperation with the parent company has the
merit to make unnecessary these molds and reduce the
set-up time of those parts. Nevertheless, molds are
worn out gradually if used for a long time and the claim
for the set-up time by the parent company's
manufacturing increases continuously. Thus, Company
BH has to consider purchasing the molds even though
the purchasing cost is not clear. It is revealed that in
more than half of the companies, the mold is
maintained about five years, and about 70% of the
companies have to bear the set-up costs. So far, the
selection effectiveness is evaluated by the yield of the
mold at the time of the delivery during a 20-production
shot after insert-molding. The purpose of this
investigation is to initialize and to have a graduated
form and to have a lever by this form. Generally, the
charges arise in this way are not rejected directly, and
the responses are made by repeated questioning. A
major issue is the charge of the cost involved in the
supplier selection process although there was no
subsidy money available. Also, it is difficult for the
production preparatory section to ascertain these as
costs. Due to the necessity for the production materials
of the plastic prototypes in the early tool tryout is
dispatched by air shipment. Also, the material is
produced by the film insert molding and the production
is subcontracted by the other company. However, the
film-insert molding is outsourced overseas since there
is no domestic company which can do it.
Inventory Management
Just-in-time (JIT) was first implemented by Toyota in
the 1970s. This strategic supply chain management
strategy enables the company to remain competitive
by using inventory management to reduce wastes (Hou
et al., 2013). Many downstream companies were
forced to change by the implementation of JIT, and the
supply chain would then be forced to evolve. There is
an
urgent
necessity,
therefore,
to
provide
comprehensive explanations of lower-tier supplier JIT
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implementations, particularly in China, in low- and mid-
technology industries, and efforts should be made to
explore the relationships between upstream suppliers
and
lower-tier
suppliers
during
their
JIT
implementation.
Just-in-time (JIT) production has been a mix of success
for Chinese automakers and joint ventures with foreign
car makers. The implementation of the JIT production
system in a Chinese case company in the automotive
industry will be studied to fill in gaps in similar research
discussed above. Priority will be given to three
successful reasons for the case company to have
implemented JIT management. To help explain these
reasons, several stakeholders including upstream and
downstream suppliers and the logistics company of the
case company have been deeply involved in the joint
efforts to push forward JIT implementation. Data
analysis includes a combination of face-to-face in-
depth interview, internet survey, and observations. A
case company in the automotive industry in China has
been studied to observe how JIT inventory
management - a key strategy in the JIT production
system - is implemented.
Technological Advances Supporting JIT
The case company is the biggest automotive
manufacturer in China. The new practices take a
strategic and innovative perspective of JIT production.
The new JIT practices initiated ensure that the suppliers
and the case company can be well integrated for a
global competitive supply chain. The new practices of
the supplier and the case company provide useful and
valuable guidelines for others to follow. The suppliers
play a key role in the operation of a JIT system. The case
company is supported by a group of subsidiaries and
joint-venture companies. The establishment of another
joint-venture company was approved, which took a
significant investment. The case company’s car sales
accounted for a large market share. Due to the
increasing demand for vehicles, the production has
increased significantly. The proportion of local content
underneath the case company’s vehicles has been
increasing since the mid-1990s. The case company
planned to practice JIT in a global context after
establishment and extend the JIT system to suppliers.
In 2001, JIT production was implemented at five
suppliers. An evaluation of the current suppliers is
conducted for the selection of the candidates.
Performance indicators are employed to examine the
achievement of suppliers in quality, on-time delivery,
and encourage participation in the JIT program. The
new practices of the supplier and the case company
focus on the ultimate aim for JIT implementation. There
are several practices necessary before JIT production is
employed. Qualified suppliers can then produce parts
on a pull base. The case company signs a service
agreement
with
suppliers,
indicating
the
responsibilities and the services provided by the
supplier. The case company grades the parts to be
supplied to determine the significance of parts
provided to the vehicle production line. Normally, the
graded parts are classified as important or general
parts. In order to achieve the zero inventory target, the
parts could be stored in a small space. Most of the
suppliers have built their production facilities near the
case company. The new practices of the supplier and
the case company take a strategic perspective and
were undertaken in 2001. Interview data are obtained
from the case company and its four major suppliers.
Case Studies of Successful JIT Implementation
The automotive industry has gained importance in the
Chinese national economy development. The current
suppliers in China are small-scale companies.
Nowadays many automotive manufacturing companies
try to motivate suppliers to engage in JIT. A vehicle
manufacturing company, hereinafter called the case
company, the largest manufacturer in its domestic
market, applies a JIT system. Since October 25th, 1998
the case company starts to plan to establish a JIT
information system with its suppliers, a monitoring and
controlling system. The company also gave special
reward to the best supplier in JIT production every two
months according to the evaluation performance
indicators (Hou et al., 2013). For this reason, many
researchers have examined the different situations and
the implementation of JIT in product development,
operation and supply chain. However, little research
has
investigated
the
implementation
and
establishment of JIT system with suppliers.
The company has a high effort in JIT implementation
since their major foreign customers require that all
parts must be produced by suppliers under JIT
production system. At present, the company has
completed a new JIT system with 70 main suppliers.
Incoming components are bulk-delivered on small
wagons and each wagon would be accompanied by a
level of kanban. In addition, more single-level kanban
cards may be used than multi-level to simplify the
delivery control. The
system monitors the supplier’s
performance, with electronically captured data used as
the input to performance indicators that compare
actual with planned delivery, replenishment and usage
plans. Once established, reward schemes can be based
on regularly calculated performance indicators of
quality and delivery service.
Recently, many automotive manufacturing companies
have implemented JIT supplies. A case company called
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the “Company BH”, a joint venture company set up in
China. The products are automatically painted,
middle/lower sized cars. Since there are about 100
major suppliers that deliver components parts and
fabrics from other cities to the company, the products
could be finished by the company's production
advantage and shipped back to the home city. At
present, the company does not have major competitors
in China, but they are gradually entering the market
and sharply decreasing the company’s production
capacity. To cope with intense local competition and
match the increasing variety of color dyes and minor
parts with an annual model change, it is essential to
establish an integrated JIT system with suppliers.
Toyota
Ever since the rapid growth of the global market, how
to enhance the competitiveness of a company has
become a crucial issue. Just-in-time (JIT) system
technically originated from U.S.A, but it was the Toyota
Motor Company of Japan that elevated JIT system to an
advanced procedure in production management. Many
famous companies in the world have introduced the JIT
system, and Toyota is generally regarded as a
successful example of JIT system. Normally, the
concept of JIT can be interpreted in two ways. One is a
narrow sense that is a production system which
pursues restriction of inventory accumulation and
controls the items to be alike in the very quantity
specified by markets. In a broad sense, JIT can be
defined as an overall management approach that
includes various activities, such as inventory control,
production planning, input/output materials control,
and bringing-in time shortening of necessary
components. The latter is called Just-on-Time, whereas
the former is the JIT system discussed here (Hou et al.,
2013). Many writers pointed out the advantages of JIT
system. Higher productivity, higher quality of the
outputs, higher transparency in organization/activities,
higher morale of the workers of the factories, desirable
environmental effects were named as the advantages.
Empirical studies were performed to test those
advantages. General trends that were shown by the
studies could be summarized in three points. In one,
output efficiency increased if JIT were intensified. In
two, productivity was higher in JIT oriented plants,
which was shown either by a cross-sectional or by a
time series comparative studies. In three, the
distributive inventory-adjusted production system was
more efficient.
Dell
Dell is one of the largest PC and server manufacturers
and retailers in the world. Dell’s rise to market
prominence has largely been attributed to their direct-
to-customer sales model, which allows them to
eliminate expensive intermediaries and quickly change
pricing at little cost. Dell’s Supply Chain Management
(SCM) strategy has played a key role in improving their
production process in terms of price advantage and
production efficiency. Shortly after Dell identified the
benefits of building a strong system, they implemented
their Direct Model and built a rapid build to order
system that used production to create a competitive
advantage. Even though the model was successful, Dell
upgraded their strategy in 2001 to make SCM have an
even higher level of impact. While SCM is key to Dell’s
success, fluctuating market demand has created many
challenges. To meet these challenges, two main parts
of the supply chain management method need to be
designed and constructed. The first part must deal with
the system demand problem, aiming to forecast
demand and get the best policy for changing the price
range. The more complicated part must deal with
ingredients, which have a direct impact on the
reduction of failure risk on the production line. The
purpose of this text is to present the main results
related to the development of predicting demand and
pricing. In relation to how production failures affect
other parts of the system and to provide better
solutions for how to prevent this, the demand problem
and the problem of parts are considered separately. To
avoid any dispute, the study does not consider
purchases outside the US because this is a distinctive
system with distinctive physical standards and
regulations.
Zara
Inditex is a fast fashion company that makes Zara
apparel. It is one of the most successful in Spain. For
this exercise we will focus on the store in Piccadilly,
London. This is the flagship store on Oxford Circus, and
is the third Zara store in London. The store devotes its
three floors to a unique and extremely wide selection
of meticulously arranged, high-
fashion women’s
clothing items. Most of the merchandise is visible to the
passing eye creating the image of a “fashion bazaar”
with a fresh and exotic appearance. The night before
our visit the store looked almost exactly the same as it
did when we visited six and a half years previously. The
store employs an army of “commercials”—
one for
every three customers
–
who recover the clothes
leaving the fitting rooms. Many shoppers stated they
found the store enchanting whilst others said it was
confusing. They were equally impressed by the varied
availability of the clothing and also slightly bewildered
by its complexity. This was in terms of striving to cover
an extremely wide range of styles but doing so with
limited quantities of each item. Often, the items they
liked were no longer available in their size. Keep in
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mind our store has over one hundred and fifty different
clothing collections of which an average 46 are
designed in LaCuruna. Thus, the store aims to service
almost all possible microsegments but in limited
quantities.
JIT and Competitive Advantage
This chapter presents a review of relevant literature on
competitive advantage and Just-In-Time (JIT). Due to
substantial improvement in productivity and reduced
costs, more companies in the manufacturing industry
contemplated adopting the JIT manufacturing
philosophy. Despite the adoption of the JIT
manufacturing
philosophy
through
significant
increases in sales and plant facilities, stagnation in the
manufacturing sector has resulted in fierce competition
that drains company profits (Van Wyk & Naidoo, 2016).
Thus, in response to the new competition, some
companies seek a cost reduction strategy by improving
in-house factory productivity. There are various ways in
which factory productivity can be enhanced, for
example, by increasing the division of labor,
automating, and J.I.T. methods. This study is an
attempt to quantify and exhibit the concepts of JIT that
exist within the experimental factory of Sabertek.
JIT Production System is a manufacturing philosophy
and strategy of production management that can vastly
reduce the production lead time between raw
materials entering at the factory and the completion of
the finished goods. The core of the JIT manufacturing
system is the establishment of a multi-worker group in
each intermediate process to manufacture respective
parts and an assembly team responsible for assembling
the respective process parts. In addition, there are
other supporting elements such as multi-model multi-
work at each intermediate process, multi-function
general-purpose machines, self-regulation of defects,
etc. Hence, the production organization efficiency of
the factory is drastically improved.
Just-In-Time (J.I.T.) production is one of the most
utilized Japanese forms and continuously fascinates the
producers from all over the world. This is a new
approach to material flow management and solution of
problems with some surprises for many people and
causes the solution of a great variety of old problems
that are well known but widely neglected up to now.
The suggestions of (J.I.T.) philosophy are especially
attractive in medium size businesses and carry
potential to release big investment in stock and reduce
the cost of orders. Loosening deadlocks and the
possibility to produce from raw materials with strictly
small quantity of stock cause the creation of new forms
of having functions in the field of material flows as well
as in total management. This presents some
possibilities of practical utilization of the (J.I.T.) system
with some commentary and annotations of used
terminology.
Future Trends in JIT Systems
Just-In-Time (JIT) systems have played a significant role
in the enhancement of competitiveness. While holding
inventory is considered important for efficient
coordination of supply chain systems, it is also well
acknowledged that holding inventory brings about
additional costs that may lead a company to lose
competitiveness. In addition to the need to manage
complex and large scale of supplies and the need for
inventory, most other manpower, equipment, time and
effort are also highly undesirable. Just-In-Time (JIT)
System has been widely recognized as a proven
manufacturing philosophy, which believes such
inventories should operate on a very efficient basis or
even be avoided if possible (Hou et al., 2013). According
to this philosophy, only necessary parts and materials
should be delivered to an assembly line at the right
time, in the right quantity, and in the right condition.
This implementment has been popular in most work
systems for the automotive industry in the developed
countries of the global economy.
Future trends in the implementation of JIT systems are
constantly evolving. In the past, JIT systems were not
sophisticated: only the inventory amount was
calculated, and an automatic purchase order was
generated to replenish the different inventory is falling
below the predetermined level. Merely reducing
inventory levels, however, will not achieve the benefits
of the JIT philosophy. It requires close collaboration
with the suppliers, long-term and reliable partnership,
time commitments, and information sharing to narrow
down communication gaps with the supplier. With the
improvement of information technology, companies
can now share more comprehensive and reliable
information with one another without revealing their
private information. The replenishment rules are
generated. Manufacturing systems can coordinate the
purchasing activities, production, and the external
supplying companies more closely. Special demands,
for instance, the obsolescence of an order under
certain condition, can be more robustly addressed.
There is widespread acceptance of the importance of
standardized requirements, allowing more predictable
relations between operating and supplying companies.
Similarly, frequently trade agreements concerning
prices, discounts, payments, and quantities are agreed
upon up front. The necessity to manage a set of as large
as possible companies is acknowledged to improve the
reliability of the operation. At the same time, a set of
companies should be as geographically distributed as
possible to obtain shifts in demands, therefore
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reducing redundancy of overall stock. To achieve
scalability, the underlying technologies are based on a
pure software interface, which is agent-based to
address the question of ethics; this architecture will
hide any competitive advantage of a vendor towards its
customer while ensuring the longevity of industry
investments. The heterogeneity of vendor’s products
and infrastructures is managed by allowing a great deal
of customization. Hiring and training experts to set up
and tune these complex systems are not tenable. To
address the issue, portable deployment tools offering
automatic configuration of the system and real-time
tuning are developed.
SECTION TWO
Practical Aspect
Brief Introduction
Al-Daw Al-Sare'a Electronics Company, headquartered
in Baghdad, Iraq, Founded in 2010. The company is
located in the light industrial zone in the Al-Shu'la area
of Baghdad, known for its numerous factories and
industrial
facilities.
The
company
employs
approximately 150 employees, including engineers,
technicians, and production workers. The company's
production capacity is approximately 15,000 units of
wireless headphones per month, and its products are
distributed throughout Iraq and some regional
markets. The vision is to become the leading audio
device manufacturer in Iraq and the region. Providing
high-quality electronic products at competitive prices,
committed to improving the user experience and
supporting the local economy. The main activity is
manufacturing and assembling consumer electronics,
focusing on wireless headphones and audio
accessories. Community commitment is to train and
employ young Iraqis in electronics manufacturing.
Challenges include reliance on imported raw materials
due to their unavailability locally. The company is also
highly competitive with imported products from China
and Turkey. The future vision is to expand the
manufacture of other electronic devices, such as
wireless chargers and smart headphones. The focus is
on exporting to neighboring Arab markets.
Participation in local industrial exhibitions is to support
the national industry. Study Type: Case Study of a
hypothetical company operating in the electronics
industry.
Primary Objective:
To measure the impact of
implementing the JIT system on competitiveness by
analyzing performance indicators before and after
implementation.
Data Sources:
Data from Al-Daw Al-Sare'a Electronics
Company in Baghdad.
Company Description:
Name: Al-Daw Al-Sare'a Electronics Factory.
Activity: Production of wireless headphones.
Scale: Production of 15,000 units per month.
Operational Structure: Purchasing Department. Main
Production Line (4 stages: Assembly, Inspection,
Packaging, Shipping). Raw Material and Finished
Product Warehouses.
Basic Data (Before JIT Implementation)
A. Performance indicators:
Indicator
Value (in dinars)
Average Raw Material
Inventory
600,000
Average Finished Product
Inventory
300,000
Monthly Storage Costs
70,000
Production Defect Rate
8% (1,200)
units/month
Production Cycle Time
20 days
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Order Delivery Time
10 days
Customer Satisfaction
75
%
Steps to Implementing the JIT System:
Phase 1: Restructuring the Supply Chain
•
Changes:
1.
Contracting with three major suppliers to supply
raw materials daily (instead of weekly).
2.
Reducing order volume by 80% (from 10,000
units/order to 2,000 units/order).
Phase 2:
Modifying the Production Line
•
Changes:
1.
Dividing the production line into small work cells for
each production stage.
2.
Implementing a pull system to avoid congestion.
3.
Training workers on multitasking and the "smart
stop" (Jidoka) principle to detect errors
immediately.
Phase 3:
Improving Quality
• Changes:
1.
Implementing
quality
inspection
at
each
production stage.
2.
Reducing defect repair time from 5 hours to 1 hour.
Data after JIT Implementation (after 6 months):
Indicator
Pre-JIT
After JIT
Improvement rate
Average Raw Material
Inventory
600,000 dinars
100,000 dinars
▼
83.3
%
Average Finished Product
Inventory
300,000 dinars
50,000 dinars
▼
83.3
%
Monthly Storage Costs
70,000 dinars
15,000 dinars
▼
78.5
%
Production Defect Rate
8
%
2
%
▼
75
%
Production Cycle Time
20 days
6 days
▼
70
%
Order Delivery Time
10 days
3 days
▼
70
%
Customer Satisfaction
75
%
92
%
▲
17
%
Statistical Analysis:
A. Mathematical Equations:
1.
Percentage Improvement in Costs:
2.
Profitability after Cost Reduction:
B. Improving Competitiveness:
• Cost Advantage:
o
Reduced unit cost from 50 dinars to 40 dinars
(
▼
20%).
•
Speed Advantage:
o
Faster order delivery than competitors (3 days
versus 7 days for the main competitor).
• Quality Advantage:
o Reduced customer complaints by 60%.
Presentation of Results:
A. Graphs:
1. Bar Chart:
o Comparison of storage costs before and after JIT.
International Journal of Management and Economics Fundamental
29
https://theusajournals.com/index.php/ijmef
International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
2. Pie Chart:
o Distribution of causes of production defects before
and after JIT.
B. Comparison Tables:
Competitive
Advantage
Pre-JIT
After JIT
Price
120 JOD/unit
100 JOD/unit
Quality
8% defects
2% defects
Speed
10-day delivery
3-day delivery
1.
Challenges and proposed solutions:
The Challenge
Proposed Solution
Delays in Material Supply
Contract with backup suppliers.
Employee Resistance to
Change
Train workers on the benefits of JIT and
involve them in decision-making.
The practical application showed that the JIT system
contributed to a 70% reduction in costs and improved
quality and speed, enhancing the virtual company's
competitiveness through three strategies: cost
leadership, quality excellence, and rapid response.
Formulating the hypothesis in light of the practical
results:
Based on the data obtained from the virtual/actual
implementation of the JIT system in the company, the
hypothesis can be formulated as follows:
"The competitiveness of industrial companies is
enhanced when implementing the JIT system, as the
results showed:
o
A 78.5% reduction in storage costs.
o
A 75% improvement in product quality (defects
decreased from 8% to 2%).
o
A reduction in order delivery time from 10 days to 3
days, giving the company a speedy response
advantage over competitors.
CONCLUSION
The use of JIT systems for certain companies may
provide cost savings and increased market value.
However, if the future state of JIT lines is not properly
communicated with the information technology
department, a lack of connectivity can arise between
the IT department and operations. Consequently, this
situation may lead to lost production, especially with
the ability to load certain production lines.
Starting JIT lines without the ability to connect to the
proper databases to function at current state levels
reduces production flexibility. International companies
should assess the performability of IT systems to
determine
their
compatibility
with
JIT
line
requirements. It is suggested that a future study be
conducted examining a more detailed model for
assessing IT performability, ensuring the compatibility
of future state plans with IT work orders, and
quantifying the costs associated with upgrading IT
systems.
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