The Impact of Jit System on Manufacturing

Topics: Lean manufacturing, Manufacturing, Industry Pages: 8 (2470 words) Published: September 10, 2013
he The impact of JIT system on manufacturing industry

By
Eric Sheh Wei Hao

Research is undertaken in HELP University
August 2013

Introduction
Nowadays, in the business world, the 1st aim in doing business is to maximize profit. The concept is to reduce cost as much as possible. The concept of ‘JIT(Just-In-Time) system has been introduced and increasingly recognized by the world. However, it wasn’t easy to apply JIT in every industry as it needs every part of the value chain to be involved. Besides, high initial investment is required for JIT implementation which also involves the long-term commitment from a company. Certain risks will be included and the success rate wasn’t fully guaranteed too. The ultimate goal of JIT will be trying to achieve zero inventories so the cost of warehouse can be eliminated. Therefore, this thesis is aim to expand the research area of impact of JIT system in manufacturing area. Finally, this research paper will be expected to complement academic knowledge on JIT system and its impact on manufacturing industry, which will be useful to several parties include manufacturing company who interested to implement JIT system, supplier, and any parties that involved in the value chain of the company. Background of the research

In the new era, customer demanding has been very aggressive and technology has been improving rapidly. Manufacturing industry normally refer to usage of human resource and raw material to produce goods for use or sales. However, it was commonly known as large scale of production where raw materials are being refined or for the production of goods. This had cause the company to seek the most effective strategies to adopt in order to achieve competitive advantages. Cost will be considered as one of the most important factors in order to achieve competitive advantages as end users – who will be ‘customer’ will tend to choose more on a better quality but with a lower pricing range of finished goods. Therefore, the company has to find ways to reduce their product cost in the same time improving their product quality. This can be realize through monitoring and controlling cost, searching for a better alternatives production inputs which save times and cost. In addition, increasing the optimal level of material usage and decrease wastage can also help in controlling cost. Thus competitive advantage is negatively correlated with production costs, i.e. acompany's competitive advantage increases when such company is able to cut its production costs (Al-sadeq, 1999).

The next factor will be ‘time’; it will directly affect the manufacturing output of manufacturing industry area as time is very crucial in this sector. Reducing the setup time, and the demand from the customers had been increasing rapidly, and a lot of money are invested in improving the product quality. Furthermore, competitive advantage can be enhanced through improving the quality of its products by considering the quality of production inputs and personnel's skills and adaptation to modern technology (Chen& H.T.Tsou). Both of them can be done through JIT system which was introduced by the Japanese largest mobile manufacturing company, Toyota or JIT also initially known as Toyota Production System. The idea of JIT was usually trying to reduce the wastage, reducing the setup time which in another way, reduce cost too. To understand the impact of JIT, we have to understand how JIT works. JIT is an advanced technique to adopt, it was not easy to implement on every company. As the setup cost is very high, the process might take a long time and the success rate wasn’t being guaranteed too. Therefore, once the JIT was implemented, it was very crucial and important for us to look at how much JIT system had brought to the manufacturing industry for so far. Literature review

JIT production was originated by Taiichi Ohno, the godfather of Toyota production system, as ” All we are doing at the time line...
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