Analysis of Just-in-Time Production System - Research Paper Example

Analysis of Just-in-time production system Table of Contents Introduction 3 2.Literature Review 4 3.Data and Methodology 6 3 Data Collection 6 3.2. Data Analysis instrument 6 3.3. Research philosophy adopted 7 3.4. Research approach adopted 7 3.5. Relevance of qualitative data analysis 7 4.Discussion and analysis 8 4.1. Advantages of Just in time process 13 4.2. Disadvantages of Just in time process 14 5.Conclusion 14 Reference List 15 1. Introduction Supply chain management (SCM) has gained considerable amount of importance over the recent past due to the advent of globalization which opened up number of opportunities for companies headquartered in the developed countries to minimize the cost of value chain by reducing the cost of sources (Christopher, 2000; Bruce and Daly, 2004). Over the last two decades, the need for integrating the business process among organizations has increased to a great extent. Taking into account the empirical investigations done by Gahagan (2007) and Cudney (2009), the researcher was able to identify that manufacturing companies based in developed countries such as the USA, UK and other countries belonging to the European Union outsources a segment of the entire process of manufacturing to countries which can provide the company with cheap labour. By adopting this outsourcing strategy, companies are able to minimize the cost of activities related to the value chain (Christopher and Towill, 2001). The theory of lean management mechanism is practically derived from the concepts of total quality management (TQM) and just-in-time (JIT) (Shah and Ward, 2007). According to Abdulmalek and Rajgopal (2007), the concepts that have been stated are constant value streaming activities that enable organizations to satisfy the needs and demands of customers as well as enhance the quality of product and service that is delivered to consumers (Gahagan, 2007; Taylor, 2006). An unprecedented level of changes has been witnessed in manufacturing and service industries in the contemporary world. They can be clearly distinguished from traditional services and manufacturing mechanism which were followed in the previous decades. Currently, assembly related operations are characterized by a shorter cycles of production and gradual reduction in product batch sizes. Over the past few years the ranges of products that are being manufactured have increased to a great extent. This has been possible majorly because of the improvement in the capacity of production. The improvement had to be brought about in order to satisfy the growing demands of customers. In order to be able to do so companies required their production workforce to bring down the lead times which in turn would increase the requirement for further production. The above mentioned objective can only be achieved through the implementation of a proficient manufacturing system that has the capability to expand as well as reconfigure simultaneously while the operation is still going on. This saw the introduction of just in time manufacturing process which had all the necessary attributes that can make the manufacturing process highly efficient. According to Fliedner (2011), this process has the capability to incorporate several dissimilar procedures of production in a way that investments are not wasted behind the production of outdated products. This forms the context of this research where the researcher would mainly analyse the importance of just in time production mechanism in making the supply chain operations efficient. In order to be able to do so, the researcher will be mainly considering examples of two of the leading automobile companies in the world; Ford Motor Company and Toyota Motor Corporation. This is primarily because these two companies are the pioneers who implemented the just in time process rigorously and besides being successful in making their production process efficient were also able to bring about improvements in just in time process. Thus a case study of these two companies and their implementation of just in time production process will enable the researcher to discuss and analyse the importance and contribution that this process has in enhancing the overall performance of the company. In order to be able to do so, an in-depth review of the literature has to be done in order to develop an understanding of the different aspects and dimensions of just in time process. This will enable the researcher to form a solid foundation over which a thorough analysis of the just in time production process implemented by both the aforementioned companies can be carried out and a relation can be drawn between the theories that have been provided within the exiting literatures. The following section will involve a thorough review of some of the relevant literatures published in this field of research and thereafter the methodology to be implemented in order to complete this research will be explained. Following that a detailed discussion of the just in time production system employed in the two companies will be done that will enable the researcher to come up with a thorough conclusion. 2. Literature Review As far as the service operations and manufacturing sector is concerned, lean management is done by taking into consideration a broad implementation of just in time process. This is a strategy for production that aims towards improving the ROI of a company by minimizing the process inventory as well as the cost of carrying different materials required for the process. The entire process is largely dependent on the signals relayed by the Kanban system in order to fulfil the objectives stated within the system. This mechanism proves to be extremely beneficial in terms of enabling the system to recognize the correct time for implementing the subsequent step. The main focus of the just in time process lies in bringing about constant improvement in the organizational performance thereby amplifying the organization’s ROI, quality and efficiency (Feld, 2001). Just in time process is a management philosophy primarily introduced in Japan. The philosophy is mainly applied in the manufacturing industry and it involves the delivery of right amount of materials of the right quantity as well as quality at the right location and at the perfect schedule. It has often been reported that the appropriate implementation of just in time process has enabled organizations to enhance the quality of their product, efficiency of their operations as well as productivity. In addition to that organizations by implementing just in time manufacturing process has also been able to bring about improvement in their departmental communication process and were also successful in bringing down the wastes and costs associated with holding excess inventory. The possibility of attaining benefits of such scale has compelled number of organizations to question and think about integrating this approach into their manufacturing processes. This is the reason behind the growing popularity of this concept among organizations, world leaders as well as academic researchers (Kootanaee, Babu and Talari, 2013). Even though just in time production involves the application of old ideas and theories related to management their implementation in new manufacturing organizations is a moderately new practice (Wong and Kleiner, 2001). Currently, number of organizations are rigorously studying and implementing the concept of just in time in order to attain competitive advantage in this contemporary business environment. Survival has becomes a major challenge for manufacturing companies and that is why they are resorting to the implementation of efficient and effective strategies. One such strategy is the implementation of the just in time production mechanism Wong and Kleiner, 2001. Organizations primarily based in North America are absolutely aware of the pressure that is induced upon due to the success achieved by their Japanese competitors at attaining unprecedented levels of productivity. One such Japanese company is Toyota Motor Corporation. In order to be competitive and be successful in the industry, companies based in North America are directing their focus towards enhancing product quality, uplift the benchmark of efficiency within the organization and improve productivity. One such North American company is Ford Motor Company. These two companies form the basis of this research. The companies gave to ensure the fact that they enhance the level of their productivity without compromising with the quality of their product. In the long run, just in time manufacturing and production process may prove to be an essential tool for these competing companies for achieving these goals related to manufacturing excellence (OReilly, 2008). The just in time production process has been implemented by several organizations based in Japan since the early 70s (OReilly, 2008). The concept was first introduced in the Toyota manufacturing plants by Taiichi Ohno in order to render the company capable of meeting the growing demands of their customers with the minimum possible lag (Toyota, 2013a). It is because of this fact that Taiichi Ohno is very often regarded as the father of just in time. The just in time manufacturing and production process got an extended support in the year 1973 during the oil embargo and was subsequently adopted and implemented by number of organizations based in Japan. The growing shortage of natural resources combined with the oil embargo has been regarded as the primary impetus for the worldwide adoption of just in time process. Toyota was largely successful in tackling the growing challenges in order to survive by implementing a management technique which was quite unique considering the magnitude of challenge that the company was facing at that time (Kootanaee, Babu and Talari, 2013). This approach involved directing focus mainly towards people, production system and plant. The management of Toyota realized that just in time production process will only prove to be successful if every individual working within the organization as engaged and committed to this production process. In addition, the plant as well as the production process also had to be arranged in a way that they would fetch the company with maximum productivity and efficiency. Furthermore the company also realized the importance of scheduling production programmes appropriately in order to be able to meet customer demands properly. Having implemented such an efficient production process the company was able to enhance its productivity by a huge margin and went onto becoming the undisputed leader of the industry (Kootanaee, Babu and Talari, 2013). Since then various organizations throughout the world have implemented this approach and have been successful in extracting benefits out of it. Among those companies there were few who also made significant contributions in their own way in order to develop the just in time process. One such company is the US based automobile giant Ford Motor Company. This research study mainly involves an in-depth analysis of the Just in time process implemented by Ford and Toyota thereby seeking to develop a critical understanding the significance of this process in improving the overall performance of an organization. 3. Data and Methodology 3.1. Data Collection Gathering extensive data is one of the key determinants of a robust and successful research. Analysis of extensive data enhances the readability of the research and alongside that enables the researcher maintain the appropriateness, validity and reliability of the research. This particular research only involves the analysis of secondary data which will be extracted from several reliable sources of data which includes peer reviewed journals, printed as well as electronic books, online databases and different relevant and authentic websites. The research paper will be completed in accordance with the data available from the source mentioned above and will not involve any primary data collection. Thus in order to ensure the accuracy of the data they will be compared with data provided within existing literatures and relevant websites. The researcher will try and obtain the data mainly from company websites as they are the most authentic sources. Adopting such a methodology will enable the researcher to gain a holistic vision of the issue that is being discussed within the researched and alongside that will also facilitate establishment of synergy through convenient assessment of issue that are being addressed within the research study (QAA, 2012). 3.2. Data Analysis instrument Since this research paper does not involve any primary data collection or analysis and is more of a case study approach, the main data analysis instruments are secondary in nature. For the purpose of completing this research and addressing the research issue in an appropriate manner two companies belonging to the automotive industry is chosen. The companies are Toyota Motor Corporation and Ford Motor Company. The underlying reason behind the selection of these two companies is the amount of data that is available regarding the research issue that is being discussed. That is why a case study approach has been adopted that will enable the researcher to conduct an in-depth analysis of all the relevant data available on these companies regarding the area of research. By doing so, the researcher will be able to present a thorough discussion of the research topic and will also be able to provide a strong conclusion regarding the relevance of analysing such an issue. 3.3. Research philosophy adopted Provided that the research study will involve an in-depth investigation of qualitative information that will be obtained through secondary sources that are relevant to the companies that have been selected as the sample as well as the research issue that is being discussed, interpretive research philosophy has been regarded as the most appropriate research philosophy. The underlying reason behind the implementation of interpretive research philosophy as highlighted by Mukherji and Albon (2009) is the fact that it will help the individual conducting the research to gain a thorough understanding of the reality through a subjective justification of as well as interruption in the reality. In addition to that, an additional reason behind the adoption of interpretivism research philosophy as highlighted by Somekh and Lewin (2004) is that it involves an in-depth assessment of secondary data that includes exhaustive information regarding a particular area o research. Moreover, given the fact that the research is micro sociological in nature, implementing interpretive research philosophy is of utmost importance (Plummer, 1983) 3.4. Research approach adopted In order to be able to conduct this research in an appropriate manner, inductive approach has been deemed to be appropriate. The fundamental rationale behind the adoption of inductive research approach as specified by Blaxter, Hughes and Tight (2006) is the fact that this study will involve an explanation of generalized issue at the initial phase at following that attention will be devoted towards analysing various specific aspects of the research topic. Furthermore according to Saunders, Lewis and Thornhill (2009), application of inductive research approach will prove to be extremely useful for the researcher when it comes to translating the results obtained from the research study into thorough conclusions. Given the fact that the primary requirement of the research paper is to carefully scrutinize, assess and understand the importance of just-in-time production process within the supply chain management segment of a company whereby the entire process from manufacturing to delivery can be made more efficient, adopting an inductive approach will enable the researcher to conduct such a robust research conveniently. The facts that have been set forth in this section provide a justification for the application of inductive research approach. 3.5. Relevance of qualitative data analysis The usage of the phrase, ‘qualitative research and evaluation data’ in the sphere of academic research usually provides an explanation of descriptive and raw information regarding the perception of people on a specific service, product or issue. In addition, there is another definition of qualitative research which involves an in-depth analysis of existing literatures s well as secondary data regarding a specific issue that provides the researcher with a scope to do comparative analysis and henceforth come up with a strong evidence oriented analysis. Numerous data extraction strategies have been adopted by empirical scholars but the ones which are most extensively used are written documents, open ended interviews, focus group interviews, direct observation and questionnaire survey. Another data extraction strategy which has often been applied in empirical literature is a case study approach. Information collected from case studies, interviews, observations and document reviews are categorized into themes and case examples. Constant comparison is the most favoured strategy in the field of qualitative research. Apart from the above mentioned strategies there are several other strategies that can be followed, however, that depends upon the nature and type of study that is being conducted. Numerous ways have been witnessed in empirical literatures through which the results obtained from qualitative assessment can be reported. Amongst those approaches the one which is most usually adopted is the sense of story method which is characterized by descriptive vocabulary; focus on detail, direct quotes obtained from interviews conducted with organizations as well as individual. The basic rationale behind the adoption of a qualitative research approach is the fact that it will allow the researcher to assess precise issues, cases and events in immense detail and depth. The extraction of information is not limited to predefined categories of analysis. Application of qualitative research methodologies also proves extremely beneficial for the researcher when it comes to large scale determination and measurement of attitude, ideas and beliefs. By adopting such an approach the researcher will be able to create a generalized cluster of outcomes. Qualitative research approaches also provides extensive data which are relevant to predefined number of people, companies cases which helps the individual conducting the research gain a thorough understanding of the research issue that is being investigated. 4. Discussion and analysis The charts and graphs given below suggests that vehicles manufactured by Ford Motor Company and Toyota Motor Corporation are the most favoured cars among the customers. The increasing sales volume of vehicles manufactured by these companies indicates the ever growing customers’ demands that these companies have to satisfy. The sales data depicts that Ford and Toyota vehicles are amongst the top 5 vehicles bought by customers in US. This is the fundamental reason behind these companies generating significant revenues over the last few years. Not only did the companies generate significant revenues but have also been able to maintain steady figures over the recent past. Figure 1: 20 most sold vehicles in the US (Source: The Wall street journal, 2014) The market share of Ford Motors in the United States, as depicted in Figure 2, has increased a lot from 14.2% in 2008 to 16.5% in 2011 but decreased by a certain margin to 15.3% in 2012. However, the market share is relatively been relatively stable without much fluctuation in between. This suggests that the company has been able to satisfy the growing demand of their customers very effectively by implementing a very efficient production process. The fact holds true for Toyota Motor Corporation as well which is evident from the graph provided in Figure 3. The increasing volume of sales from 2011 to 2012 suggests the growing demands for Toyota automobiles which have been met with very prudently by the management through the implementation of an efficient manufacturing and production mechanism. The vehicle unit sales for both the companies have increased from the year 2013 to 2014 (as of last month). The total sales data of both the companies have been depicted in figure 4, which also shows a comparative analysis of these companies with another two top automobile manufacturers operating in the US (General Motors and Chrysler LLC). Figure 2: Ford motor company market share in the US (Source: Ford, 2014a) Figure 3: Toyota Motor Corporation sales and production in US (Source: Toyota Motor Corporation, 2014) Figure 4: Comparative sales data (Source: The Wall street journal, 2014) Both Ford Motor Company and Toyota Motor Corporation have been able to keep up with the growing demands of their respective customer base by employing the just in time production process. Just in time process is a constituent of both the company’s supply chain management strategy. Although Just in time production process is regarded as an alternative term for the Toyota production system but Ford Motor Corporation is hugely responsible for bringing about significant enhancements of its own in the process. The fundamental concept that is followed in both these companies is termed as lean manufacturing which constitutes the just in time production mechanism (OReilly, 2008). A thorough analysis of the implementation of just in time production mechanism in both these companies enabled the researcher to gain an in-depth insight about aspects of this production process and the ways in which this process makes the entire operation efficient. The researcher was also able to identify the advantages and disadvantages of implementing such a mechanism. The facts have been explained in detail in the subsequent paragraphs. Just in time process involves the arrangement of resources, decision rules and flow of information in a way that it allows a company to appreciate the profits extracted through the implementation of this system. The process is fundamentally a business standpoint of attaining significant economical advantage which is largely based upon the plan of constant expansion as well as elimination of waste. Just in time system conducts all its operations with the help of signals relayed through a system called Kanban. Each and every module of the just in time process is very efficiently designed and are very capable of identifying any issues associated with an organization’s supply chain framework. By doing so the system is able to formulate a highly effective strategy for managing the supply chain. The components within the process are largely supported by the codes of pull production mechanism which in turn works in accordance with Kanban system (Toyota, 2013a). The primary aim of a Kanban system is to ensure total quality anagement, reduce the amount of inventory as well as inventory carrying cost by incorporating the supplier companies in the strategic planning and decision making process, reducing waste, enhance machinery capability and focus towards collaborative work. Within the Kanban system each and every part necessary for the production travels along with a card. Re-supply will be necessary in case if the existing parts have already been used. After the part issued, the card is taken away which in turn relays the signal for re-stocking the required component. Moreover, the card also contains the detail regarding the place and time where the product should be delivered (Wong and Kleiner, 2001). A pure and robust just in time process is appropriate for persistent lines of production that is engaged in producing restricted amount of routine products that have a stable demand. The concept of just in time process has continually assisted and absorbed companies as well as their management in several countries. The industry which is known to have done a rigorous implementation of the just in time process is the automotive industry. According to Das and Hanfield (1997), the idea is strongly based upon manufacturing standard products and components. Just in time production mechanism recommends that resources should be made accessible at the right time. The primary aim of the process is to facilitate flexible production and manufacturing that is characterized by providing swift response to customers’ needs and demands. Alongside that the process also aims to enhance operational efficiency and minimize costs associated with operations. Svensson (2001) stated that just in time production mechanism is designed in such a way that it enhances the quality of product as well as supervise the lead time and eliminate waste. Kanban system is an exceptionally well incorporated mechanism that is employed by Ford Motor Company and Toyota Motor Corporation in their respective system of production. The underlying rationale behind the implementation of just in time process is because of the fact that there are few parts and components which have a steady requirement. Furthermore, product exchanges rarely happen and product mix is at a very lower level. Capacity Planning is a separate that is also taken in to consideration in the companies mentioned above as far as formulating the strategy for efficient supply chain management is concerned. Figure 2: Kanban System (Source: Toyota, 2013b) Both Toyota and Ford implement their own strategies of capacity planning which is aimed towards reducing any sort of excess inventory. In order to be able to do so, both the companies have applied the pull production process effectively. At Ford Motor Company, the information technology department is largely responsible for ensuring the fact that manufacturing departments receives all the required materials just in time (Ford, 2014b). This fact can be backed by a recent development that Ford Motors have gone through in their just in time production process. The company has enlisted the RFID technology in their just in time delivery system which helps them to monitor the location of the materials as well as enables the manager to ensure timely delivery of all the required resources (Information week , 2014). This in turn enhances the entire process of manufacturing. Toyota on the other hand meets the demands of their customers promptly and efficiently by amalgamating all the production activities with the actual demand in the mart place. The just in time process in Toyota is based on finely tuned mechanism in the assembly progression where only those resources are held in the inventory that are required thereby preventing the carriage of excess inventory. 4.1. Advantages of Just in time process Reduced inventory storage saves insurance cost and rents. Considerably lesser working capital is required as resources are obtained only when needed. Inventory perishing is less likely. Prevents stock wastage when there is a slump in demand. The process focuses towards getting the entire production process work accurately at the first time. 4.2. Disadvantages of Just in time process No scope of making an error as stock is kept at a minimal level. Given the fact that the entire production process is largely dependent on the suppliers, it might get delayed if timely delivery of materials is not done. Excess materials are not left in hand in order to meet unexpected orders. 5. Conclusion As mentioned above, this research paper involves an in-depth analysis of several dimensions and aspects of one of the most important segment of a company’s supply chain management which is just in time process. A thorough study regarding the same revealed the significant contribution that just in time process has towards making the supply chain management of an organization efficient. Through this study, the researcher was able to understand that just in time process is associated with its fair share of benefits and drawbacks. The application of such a process however depends largely on the kind of organization and the sort of operations that are conducted within different working divisions. Supply chain management entails a certain level of difficulty and thus is exposed to several risk factors which in turn expose the organization to a certain degree of risk. The risk exposures are associated with both external and internal factors associated with the organization. Thus for a company to establish a highly efficient and effective supply chain management process the leaders have to implement prudent strategies in order to be able to nullify the risk factors which in turn will surely amplify their performance. The contemporary business environment is highly competitive and with every passing day the intensity of competition is increasing. In this competitive environment shorter life cycle of products, rising demands of customers and swiftly shifting business dynamics is inducing huge amount of pressure on manufacturing companies for faster response and reduced cycle times. Consequently, manufacturers relay the pressure on the supplier companies. One strategy adopted by manufacturing companies in order to ensure a rapid turnaround is to hold inventory. However, doing the same might prove to be difficult as cost of holding inventory can become prohibitive very easily. In such a context, an efficient strategy would be to increase the agility of the production process which is capable enough to adapt to variance in the customer demands. Such a strategy can be implemented through the Just in time process. Reference List Abdulmalek, F. A. and Rajgopal, J., 2007. Analyzing the benefits of lean manufacturing and value stream mapping via simulation: A process sector case study. 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