Just in time (JIT)originated in Japan, as recognized technique, philosophy or way of working isgenerally associated with the Toyata motor company, JIT being initially knownas the “Toyata Production System”. JIT due to increasing global competition,manufacturing entities and a vast variety of companies around the world haveaddressed more attention to customer satisfaction and competitive advantage(Gupta, 2011). Nowadays, business environmentare characterized by three aspects: competitiveness, readiness to confront andadapt to unpredictable change and fluctuations in demand, and strict customerrequirements seeking for high quality products and the fulfilment of specificneeds (Delgado, 2000). Just in time (JIT)philosophy is directed toward the elimination of waste by streamliningproduction processes, reducing setup times and controlling flow of materials andproviding preventive maintenance to equipment and machinery activities, inventoryand resources can be reduces and used more efficiently (Tan, 2005). For examplean organisation is Harley-DavidsonMotor Company a leading US motorcycle manufacturer, was struggling toincrease its bike sales in the face of rapidly shrinking market caused by theeconomic slowdown and changes in demographics after World War II. Harley-Davidson, the nation’sNo.
1 seller of heavyweight motorcycle, offered more than 30 models of touringand custom Harleys through a worldwide network of more than 1,500 dealers. HarleyDavidson faced fierce competition from Japanese companies with the entry ofSuzuki, Yamaha, Kawasaki and Honda into the American market in the 1960. TheJapanese manufactures were able to provide better quality bikes at a relativelylower price. Reacting to this, Harley-Davidson filed a dumping case against theJapanese competitors, claiming that they were dumping the bikes in the US atunfair prices. In the 1990s the Harley Davidson was credited with achieving aremarkable turnaround by adopting various operational strategies including Justin time (JIT) manufacturing, after showing less than efficient process theyturned to JIT and by having inventory on hand they lead to shorter lead timesand much more efficient services for customers. Harley-Davidson found thatthere were three most important practices of Japanese companies which differentiatedtheir production process that of others: JIT manufacturing, employeeinvolvement, and the use of statistical process control. However, theysucceeded in manufacturing high quality motor cycles at low cost. Harley-Davidsonachieve reduction of rework by 68%, inventories of WIP decreased by $22million, inventory costs have fallen by 75% and also increase of productivity.
With JIT inventory,manufactures keep only as many parts on hand as needed for immediate useinstead of large pools components and tools lying around the facility (DanielGross, the turnaround at Harley-Davidson. The adoption of MAN let Harley cutits inventory by 75% and allowed its two assembly plants to operate withoutstockrooms (Daniel Gross). The reduction of inventory cleared space on thefactory floor, thereby eliminating assembly-line bottlenecks. Since inventorycame in smaller batches, adjustments could be made before the next supply ofcomponents arrived (Daniel Gross, 1996).The major shortcomingof the JIT to Harley Davidson’s, also has weakness, the biggest problem in JITis dependency. If a supply chain is not well interconnected or something breaksanywhere, it may have negative impact on supplies and the product or theservices will not be delivered on time.
Any problem will have a chain ofconsequences for other companies relying on the one having troubles. Harley Davidson success in re-mastering theheavy motorcycle industry was the adoption of JIT system. There are lots ofadvantages of incorporating Just-in-Time inventory management in company. Ifthere is a good coordination with suppliers, the company will certainly havebenefits from JIT, and it will be reflected with more efficiency in productionoperations and will results in inventory and cost control, so it will also havepositive impact on customer’s expectations.
It means that Harley Davidsonreduces the cost of maintaining inventories and at the time the supplies werenot threatened. HarleyDavidson success with implementation of JIT had a lot to dowith the fact that when JIT was put practice, process problems could no longerbe hidden by costly inventory that help to meet ship dates. JIT might bebeneficial, but as with Harley Davidson, it has to be implemented wisely andmanagement should be aware of the possible consequences of this approach.