Operation Management Essay

756 words - 4 pages

Facing a challenging and fierce competitive world, most companies have to strive to gain success and remain competitive in the market. They are finding ways to meet the changing needs of customers, fulfil their demand and increase their satisfaction level. They are trying to improve the quality of goods and services delivered to customers. In order to survive in long term and maintain competitive advantage, they must pursue a good strategy in their operations which can cut the operation cost. One of the strategies is just-in-time (JIT) strategy. This strategy has been widely used and it has resulted in reduced cost, improved efficiency and quality enhancement. According to Stevenson (1993, pg690), JIT was developed by Mr Taiichi Ohno and was first adopted by Toyota Motor Company of Japan. It is also known as lean manufacturing system. Slack, Chambers and Johnston (2010, pg433) state that just-in-time is “a method of planning and control and an operation philosophy that aims to meet demand instantaneously with perfect quality and no waste”. It is a philosophy originated from Japan which is applied in the manufacturing industries. It aims to reduce inventory costs by eliminating waste and improve the effectiveness of operations with a smooth flow of production. This strategy works by purchasing and producing products on demand, which the companies start to purchase raw materials needed for the production only when they receive the orders from the customers instead of making the products in advance. There is no over-production. It means that raw materials are purchased and made when it is needed. Involvement of staff in the operation, the drive for continuous improvement and elimination of waste are crucial to JIT operations. It is also a type of inventory management. Under this system, the companies keep no buffer inventories. In a research article (Kootanaee et al. 2003), it states that JIT involves “having the right items of the right quality and quantity in the right place and the right time”. Quality is an important element in JIT.

Implementation of JIT brings some benefits to the manufacturing companies. One of them is elimination of all waste. Waste elimination is an effective way of reducing inventory cost and improves output and productivity of business. Waste is “any activity that does not add value” (Slack, Chambers and Johnston, 2010, pg435). Taiichi Ohno, which is known...

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