The Impact of Just-in-Time Production Practices - Essay Example

The Impact of Just-in-Time Production Practices Introduction The main objective of any business is profit making which it derives by making its products and services available to people. The business models therefore, can be described as value propositions for various stakeholders for which the management evolves strategies and methodologies to create goods and services in some particular arena and delivers the same to the desired target group or customers. It explains how the business would function, identify the goods and services that would be produced for identified customers, ensure the viability of the objectives and goals of the business to deliver values based services. In the contemporary environment of highly competitive business, innovative managerial practices become critical for increasing profitability without major capital investment. The paper would therefore focus on how the improvements in productive flow and product quality would impact on firms’ sales and profit. Productive flow and quality product Productive flow broadly defines the streamlined process of manufacturing goods and services that have minimal defects. Thus quality products are important product outcomes of productive flow within a manufacturing unit that greatly facilitate in meeting the demands of the customers. The streamlining of the various interactive processes becomes intrinsic to the quality control mechanisms that significantly help lower the overall cost of production. In the contemporary times of cutting edge competition, Juran (2000) asserts ‘all quality improvement occurs on a project-by-project basis and in no other way’. This is the foundation of quality assurance techniques and application which the organizations follow in order to meet the challenges of the time and maintain or increase their profit and sales. Byrnes (2003) asserts that product flow management is a powerful ‘profit lever that can increase earnings while raising customer service levels’. Thus, the organizations continuously make effort to identify factors and issues that would help produce the desired outcome with efficiency and unmatched proficiency. The various processes that can reduce time span and efficiently deliver results are adopted to increase profits through quality products that corroborate with the changing customers’ requirements. Small and big organizations like General Motors, Samsung, Sony, Ford etc. have all redefined their strategic goals to meet the changing equation of global business that primarily focuses on customers’ preferences and their satisfaction. How it influences the revenue/ profit Byrnes (2003) further claims that ‘product flow management ties closely with service interval management because the most costly product flow variance occurs in the core product/core customer quadrant of the customer service matrix’. The discrepancy in product development and customer requirements adversely impacts the profits. Reducing variance and improving on operational processes leads to increased sales. Thus, improvements in productivity that are intrinsically aligned to the changing preferences of the people promote sales and profitability of the organizations. Indeed, contemporary environment of recession and tough economic condition, necessitate organization to come up with quality goods at low cost thereby ensuring good profit margin. Hence, Six Sigma approach to production becomes highly desirable for improved profitability of the firms. The improvement initiatives of business processes have been major imperatives of the corporate world across the globe (porter et al., 2000; Laraia et al., 1999; Karltun et al., 1999). The traditional approach to business has fast transformed into an integration of various interacting elements of the business that work cohesively to produce optimal results. Indeed, processes like JIT (just in time), benchmarking, TQM, lean production, Six Sigma, HIKE etc. have become important ingredients of business processes that have considerable impact on the sales and profits of the firms (Karim, 2009; Russel and Taylor, 1999; Kaplan and Norton, 1996 ). The use of these initiatives in the traditional process of production significantly improves the quality and increases the performance outcome of the organizations. Indeed, Mannan and Ferdousi (2007, p.2) have correctly declared that ‘now the key to competing in the international market place is to simultaneously improve both quality and productivity on continual basis’. Lean production streamlines the production processes by identifying and removing the extraneous activities and ‘obvious’ wastes that do not contribute to the efficient product activity (Womack and Jones, 1994; Papadopoulou and Ozbayrak, 2005). The wastes are obvious and therefore easily removable. These are good initiatives for improving productive flow for small projects where low investment is the need of the hour. Six Sigma is the methodology of business processes that eliminates defects thus promoting the quality production at low cost (Mikel, 1998). It is used when the problem within the process is not obvious. It was the brainchild of Motorola that was later adopted by the auto industries so as to facilitate and improve production processes. The strategy involves simultaneous inputs from various different departments so as to measure, analyze, improve and control the production of new products and services. Integration of improvement processes within the industry Through focused approach, the companies develop dynamic business strategies to identify the critical factors of change and meet the challenges with creative inputs through collective vision and shared goals. Indeed, ‘..strategy must be a dynamic tool for guiding the development of a company over time’ (Montgomery, 2004). The changing dynamics of the global business has necessitated formation and incorporation of management strategies that go beyond the realm of individual company’s concern and plan for distinctive competencies to give the company market leadership. Case study of PACCAR is an exemplary example of how innovative practice in production of quality goods significantly impact performance and sales. PACCAR is a multinational technology company that specializes in state of the art heavy duty trucks, industrial winches etc under various brands. It maintains an exceptionally high standard of quality. Through the evolving process of entrepreneurial creativity, it has been able to assess the challenges faced by the company in meeting all its aims and objectives within the framework of its principle and professional and organizational ideologies. It has incorporated Six Sigma strategy within its various business processes. It has also complemented its six sigma strategy with HIKE or high impact Kaizen events to introduce new concepts of production flow improvement (PACCAR). Indeed, it has been innovative in its approach to tackle the wide ranging implications of the changing technology and rapid globalization process through well defined and identified strategic goals and visions. In these difficult times, the demand of products and services has drastically come down and the customers are looking for bargain products which are low cost but offer quality. The companies, therefore, are also forced to cut cost and thereby, the prices, in order to operate profitably. Ford Automobiles is another flagship organization that has maintained its market position through strategic productive flow for improved quality products leading to increased sales. It has developed dynamic business strategies that would be able to identify the critical factors of change and meet the challenges with creative inputs through collective vision and shared goals (Ford). Thus, timeliness, pricing and quality become major factors to gain leverage. Hence, new product management must include exigencies so that the three factors can collectively be approached to make the product appealing for the people while at the same time, encourage creativity and innovative practices that give a unique perspective to participatory approach of management and employees. One of the most interesting and probably the most visible strategy of quality products has been that of McDonalds. McDonald’s corporate strategy mainly relies on creating value through customer satisfaction. It has been able to gain effective leverage against its rivals by exploiting its internal resources which are: brand equity, quality products and exemplary service. It has evolved into the best fast food centre through customer satisfaction and meeting their changing preferences. The use of technology and uniformity in its products has been the hallmark of its fast food across the world. McDonald’s strategy to customize its products as per the changing requirements of the people has been its major strategic win (McDonalds). Streamlined processes and uniformity in its production processes has considerably lowered the overall cost leading to higher profitability for McDonalds even during recessive times. Samsung is another highly successful firm that relies on productive flow of quality goods to penetrate new market and maintain its market position. Currently Samsung is a market leader in the field of semiconductors, electronics and telecommunication accessories (Siegel and Chang, 2009). It is known for its quality innovative product lines which are also cost effective. Its success is founded on its speed based innovative products. The company focused on its strategy of developing research and engineering skills so that it could improve and improvise innovatively on the electrical and digital products of Sony, Phillips, Matsushita and Nokia. Samsung’s ability to launch its own products with added features with a great speed, was a huge success with the target population. Samsung had geared its teams of professionals to keep a strict watch on the people’s pulse and was therefore able to anticipate their demands and used to come up with new products and features that were envied by its rivals. Conclusion One can thus conclude that managerial leadership becomes important issue in making decisions about the improvement potential in the various business processes, especially productivity flow that could significantly impact sales and overall revenue. The fast changing dynamics of the business environment make it necessary for the firms to adapt new operational logic and flow strategy that rely on quick evaluation for improved productivity. Indeed, profit is the reward of the entrepreneur and main motive of the business. Thus, continuous improvement in productivity flow for quality products that leads to improves sales and profits becomes vital factor in the contemporary business. (words: 1576) Reference Byrnes, Jonathan. (March 2003). The Bottom Line: Profit From Managing Your Product Flow. Harvard Business School. Retrieved from: < http://hbswk.hbs.edu/archive/3350.html> Ford Motor Company. Retrieved from: Juran, Joseph M. (2000). Juran’s Quality Handbook. McGraw-Hill. Kaplan, R. S. and D. P. Norton. (1996). The Balanced Scorecard. Boston, MA: Harvard Business School Press. Karim, S. (2009). 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