Just in Time Distribution
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
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
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=