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Strategic Management Accounting Essay

526 words - 3 pages

Real-Life Examples of Successful JIT Systems
written by: Jack Wilson • edited by: Michele McDonough • updated: 6/29/2013
JIT manufacturing is a powerful and proven system of producing products efficiently while keeping costs low. Some of the most successful companies in the world have used this philosophy to improve their manufacturing processes and better meet customer demand.

Just in Time Manufacturing
Just in Time Manufacturing (JIT) refers to a system of manufacturing in which products are not built until the product is ordered and paid for. Some companies that have successfully implemented JIT include Toyota, Dell and Harley Davidson.

Toyota

Toyota is considered by many to be the poster child for JIT success. The Toyota production strategy is highlighted ...view middle of the document...

Important Factors to Toyota Success:

Small amounts of raw material inventory must be kept at each node in production, so that production can take place for any product. These parts are then replenished when they are used.
Accuracy of forecasting is important so the correct amount of raw materials can be stocked.
Dell

Dell has also leveraged JIT principles to make its manufacturing process a success. Dell’s approach to JIT is different in that they leverage their suppliers to achieve the JIT goal. They are also unique in that Dell is able to provide exceptionally short lead times to their customers, by forcing their suppliers to carry inventory instead of carrying it themselves and then demanding (and receiving) short lead times on components so that products can be simply assembled by Dell quickly and then shipped to the customer.

Important Factors to Dell’s Success:

Dependable suppliers with the ability to meet Dell’s demanding lead time requirements.
A seamless system that allows Dell to transmit its component requirements so that they will arrive at Dell in time to fulfill its lead times.
A willingness of suppliers to keep inventory on hand allowing Dell to be free of this responsibility.
Harley Davidson

Harley Davidson’s use of JIT is mostly characterized by its transformation in the late World War 2 era from an inefficient manufacturer that solved all of its problems with extra inventory to a nimble manufacturer able to meet demand and provide short lead times.

Results of Harley Davidson’s JIT Implementation:

Inventory levels decreased 75 percent.
Increased productivity.
Harley Davidson’s success with the implementation of JIT had a lot to do with the fact that when JIT was put into practice, process problems could no longer be hidden by costly inventory that helped to meet ship dates.

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