Logistics and Supply Chain Management - Coursework Example

Contents INTRODUCTION 2 JIT- A DEFINITION 2 JIT (JUST in TIME) IN CONSTRUCTION 3 CASE STUDIES PERTAINING TO JIT IN CONSTRUCTION 6 ORANGE COUNTY CONSTRUCTIONS 6 THE INHERENT BENEFITS 7 CONCLUSION 8 REFERENCES 9 INTRODUCTION The role of logistics and SCM (Supply Chain Management) has been manifold in a number of areas. The field of construction has been one of the biggest benefactors of the techniques of the SCM and logistics. The amount of the down time has decreased in a number of the inherent processes due to the use of a number of methodologies in construction. The proliferation of the use of these techniques can be attributed to the increasing degree of the complexity of a number of the processes involved in the field of construction. Although, the best efforts are spared in this field, there is the generation of a lot of waste in the end process. The specific topic that has been of great importance for SCM (Supply Chain Management) and logistics in construction is the use of the JIT (Just in Time) methodology (Koskela, 1992). It has allowed for a great control of the resources in a construction project. The degree of the myopia surrounding a project is very high. The use of JIT has ensured a holistic control over the complete set of resources. JIT- A DEFINITION JIT (Just in Time) is a revolutionary kind of production strategy that seeks the improvement of business by the reduction of the inventory and the quantum of the carrying costs. This method is also called as the “Toyota Production System”. The meeting of the objectives is ensured by the use of the “Kanban” philosophy (Christopher, 2002). The focus of the JIT is on the constant improvement of the process. It also aims at the improvement of the ROI (Return on Investment), the quality, the efficiency and the control of the process. The usage of the method has been widespread in the areas of construction, manufacturing, healthcare and a number of other industries. There are a number of local variations of the JIT like JIC (which stands for Just in Case). The overall growth of this methodology has been phenomenal. JIT PROCESS (Christopher, 1992, p.33) JIT (JUST in TIME) IN CONSTRUCTION The field of the construction has a number of variable costs. The bulk of the fixed costs come in the form of the materials for the inventory. The primary purpose of the use of the JIT was to engineer a change from the estimation of the demand to actual demand. The flows of the processes in the construction are mostly seen to be from upstream to downstream (the management decides the workflow, rather than the line supervisors). This leads to the build-up of the myopic approach in the construction. If the flow of the information is reversed from this form to the opposite one; the construction tends to adhere to the practical needs rather than the projected needs; as for example, the number of the workers needed in a construction site need to be assessed on a regular period. The flexibility of the process is handled in the case of a one way flow of the information. The degree of the uncertainty in the field of construction is also very high. This tends to have an impact on the complete process. This would mean that the degree of the changes is a very important. The employment of the method of the JIT would have an impact in the response to the late changes in any construction project. The use of the methods of JIT in construction assumes more importance due to the increased complexity of the construction. The relative lack of the standardization, the larger number of the stakeholders, the factors that constrain the process along with the stages involved; necessitate the use of JIT. This is also coupled with the increasing pressures of reduction of the costs, which makes this exercise very daunting. This reduction of the costs can be achieved by the use of the JIT. The field of the construction is greatly driven by the schedules. This warrants that all the constituents adhere to the schedule. The buying of the materials must be in sync with the rate of the construction (as for example, the need should trigger the demand). As for example, let us imagine the purchase of a large amount of cement in an unplanned manner before the rainy season, and the work gets halted due to the rain; it shall lead to loss of the quality of the cement and render it unusable. The same can happen in the case of the unplanned hiring of the labour. All of these would lead to financial loss to the respective organizations.JIT looks at the abolishing of the idle inventory; and supply only in cases of need. JIT also functions by the buffering of the flow process. There are two kinds of the inventories that can serve as the buffer (Ballard, 2004). The buying of the materials need to be paced out according to the project flow. They can act as the “schedule buffers”. These kinds of the buffers can be placed after the processes with the variable output. The schedule buffers can be placed between the engineering and the fabrication parts; when compared to the established protocol of fabrication and subsequent installation. The process of the fabrication and the delivery is highly predictable. The predictability is questionable only in the case of the incorrect drawings (Golden Constructions in Cape Town, South Africa have a “non-order” clause in place, unless this step is cleared). The use of the schedule buffer before the fabrication would provide more time to the engineering to finish the work in a more efficient manner. This shall also satiate the needs of the contractor for the sequencing and the quantity. The other kind of the inventory is the process of the planning of the output from the downstream processes. These processes help in the buffering by the provision of predictable flow of the work in each process. They act as the different kind of “plan buffers”. Thus, JIT essentially helps in the achievement of the “one piece flow” within the process of the construction (Scholman, 2007). The strategy for the construction using the JIT (Just in Time) uses the following strategy: The location and the sizing of the buffers are better. There is the instant implementation of the plan buffer and there are a number of ready processes before the production process. There is the methodology of the replacement of the schedule buffer by the plan buffer with the progress of the construction project. This is the application of the JIT (Just in Time) in the construction process. JIT WORKFLOW IN CONSTRUCTION (Shingo, 2008, p.269) CASE STUDIES PERTAINING TO JIT IN CONSTRUCTION DAOIKU-JIT IMPLEMENTATION Daoiku is a Taiwan based construction firm that had been a facing number of financial problems over the delays in construction projects. There was a backlog in the delivery of the projects, the worker activity was unplanned, the communication lines were broken and the company was facing supply shortage. After a thorough analysis by the experts, it was decided that the logistics and SCM need to be fine-tuned. This led to the introduction of JIT (Just in Time) in the company that led to the following changes- The combination of the flow of the material and information. The inclusion of the buffers, mostly “plan buffers” in the process. The posting of the changes in the central plan. The change of the assembly line from L-shape to U-shape (Westbrook, 2001). This led to the elimination of a number of problems that were faced by the firm. The supply of the firm became very regular and the backlogs were cleared over the course of the next few years. ORANGE COUNTY CONSTRUCTIONS This construction firm based out of Michigan, USA was having a hard time in the synchronization of the different supplies. It had inventory issues, with over months of inventory lying unsold. The NPA (Non Performing Assets) were at an all time high. The attrition was also very high among the suppliers (Westbrook, 2001). The company hired a private firm (Green view venture), to address the problems. The implementation of the JIT (Just in Time) was one of the primary changes proposed. They suggested the following changes- The regulation of the inventory by the “supply-on –demand” regime. The construction materials need to be purchased only at the final stage of the project. The re-negotiation of the supply contracts to include the non-payment clauses. The selection of a new line of suppliers within a “20 square kilometre radius”. The changes were implemented over a certain period of time. This has eventually led to a better inventory. It has also solved the associated problem of the suppliers. The NPA have also reduced significantly. THE INHERENT BENEFITS There are a number of benefits of using JIT (Just in Time) in the construction sector. They are as follows- The set-up time of the construction project is reduced. The flow of the goods to the construction site improves due to the use of the JIT (Just in Time) methods. The usage of the skills of the employees by the managers increases (Westbrook, 2001). The efficiency of the production and the workflow is synchronized according to the demand at the site of the supply. The lack of the idle inventory makes the firm to have a very close relationship with all the suppliers. The supply comes at regular points of time .This eliminates the storage space needed for the supplies. The storage space is minimized. The finances of the project can be utilized in a better manner. There is a miniscule chance of the breakage or the expiry of the inventory. CONCLUSION The field of the logistics and SCM (Supply Chain Management) is having a tremendous impact on the construction industry (Scholman, 2007). The use of the JIT (Just in Time) method is one of the testimonies of this influence. The increasing prices of the raw materials in this sector have also accelerated the process of the adoption of the cycle of JIT. There are a number of factors that have been the reason behind my choice of this area in logistics and SCM( Supply Chain Management).I have always been fascinated by the different types of the SCM and logistics techniques. There have been the theories of the TCA (Transaction Cost Analysis), the KBV (Knowledge Based view), the MLM (Materials Logistics Management), QRM (Quick Response Manufacturing) and a number of other techniques. But, a look at the evolution of the theories of the SCM and logistics would point to the fact that the impact of JIT has been monumental in the development of this field. The use of the JIT has been more pervasive than conceived by the creators (Shingo, 2008). The volatility of the prices of the raw material can be negated by the use of this method. This shields the project from a number of ill effects of the price rise during the project. The volatility in the areas of the quality and the demand can also be modulated by the use of this method. It has been seen in this study that the application of JIT has a positive impact on a number of areas of the construction. This acts as a buffer between the associated process constituents. There is the increase of the quality of the project. The idle time gets decreased by a considerable amount. The utilization of the skills is maximized by the use of this method. The financial viability of the project also increases over a sustained period of the time due to the constant improvement. Thus, it can be said that JIT (Just in Time) method of SCM and logistics has a great impact on the streamlining of the construction process. REFERENCES Bechtel, C., & Yayaram, J., (1997). “Supply Chain Management: a Strategic Perspective”. Intl. J. of Logistics Mgmt., 8. (1). Christopher, M., (1992), Logistics and Supply Chain Management: Strategies for Reducing Costs and. Improving Services. London: Pitman Publishing. Cooper, M. C. & Ellram, L. M. (1993). “Characteristics of Supply Chain Management And The Implications For Purchasing And Logistics Strategy”. The International Journal of Logistics Management. 4(2). p. 13-24. Ballard, G. & Howell, G. (1994). “Lean Production Theory: Moving Beyond Can-Do”. Proceedings of the 2nd Conference of the International Group for Lean Construction, Santiago, Chile, September Koskela, L. (1992). Application of the new production philosophy to construction. Technical Report #72, Center for Integrated Facility Engineering, Department of Civil Engineering, Stanford University, USA. Scott, C., & Westbrook, R. (2001). “New Strategic Tools for Supply Chain Management.” Intl. J. of Physical Distribution and Logistics Mgmt. 21(1) 23-33. Scholman, H.S.A.(2007).Subcontracting by Main Contractors. Amsterdam. The Netherlands. Shingo, S. (2008). Non-Stock Production. Cambridge, MA: Productivity Press. Read More