Conduct research to find a company that is successfully using JIT systems in its operations. (i) Describe the company briefly – product/services, locations, customers. (ii) Describe the...

Conduct research to find a company that is successfully using JIT systems in its operations.

(i) Describe the company briefly – product/services, locations, customers.

(ii) Describe the company’s operations briefly – type of process.

(iii) Describe how JIT is being used and how it has benefited this company.

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Karen P.L. Hardison | College Teacher | eNotes Employee

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JIT systems is an inventory management system that replaces the original manufacturing and retail inventory system of JIC. JIT stands for "just in time" and is contrasted to the former inventory management system of JIC, which stands for "just in case." Inventory management is applicable to both manufacturing and retail although it has a much greater magnitude on the manufacturing level with a nonetheless discernable impact on the consumer-retail level.

In the older "just in case" (JIC) inventory management system, manufacturers and retailers kept large inventories of supplies and goods "just in case" demand increased or there was a disruption of some sort in the supply chain.

An example of such a disruption in the supply chain is the 2011 8.9 magnitude earthquake in Japan that interrupted manufacture of silicon wafers and semiconductors produced by Shin-Etsu Chemical Co. Ltd. and MEMC Electronic Materials Inc. Because the earthquake suspended manufacturing operations, resource materials were not supplied to international personal computer (PC) and logic device manufacturers.

When using JIC--just in case something catastrophic were to happen--this disruption could be compensated for by drawing on built up inventory of memory chips or circuit board components. When using JIT--that delivers ordered parts just in time for them to be used--disruptions of production in dependent industries follows disruptions, like earthquakes, in the supply chain.

JIT (just in time) inventory system was introduced in Japan's auto industry by Toyota in the 1950s. It spread in popularity to the US in the 1980s. Using JIT means reducing parts and partial-assembly inventory while reducing carrying costs. Parts are ordered for and received at the time they are needed rather than being unpacked. stored and saved for some future time when they will or may be needed. This cost savings allows for more capital to be turned into product (as opposed to stored as potential product) and dramatically increases profit.

Boeing was one company that adopted JIT. Production of the Boeing 787 Dreamliner, 777, and 767 airplanes is undertaken in both Japan and the US: 35 percent of the 787, 20 percent of the 777, and 15 percent of the 767 are undertaken in Japan while the remainder is undertaken at Boeing's Everett, Washington, plant. In 1980-81, Boeing was trading on the New York Stock Exchange in the 30-43 USD range while by 2011, the year of Japan's massive earthquake, profits had increased to the 59-73 USD range. In 2014-15, Boeing was trading in the 120-134 USD range. The JIT inventory management system is credited with beginning the soaring increase in profits Boeing experienced.

Inventory management operates for raw resources used as materials, for partially assembled goods that are in progress, and for partially assembled goods manufactured elsewhere. Boeing of Everett, Washington, and Mitsubishi Heavy Industries of Japan have a supply-chain relationship in which critical one-of-a-kind parts are manufactured at Mitsubishi then sent to Boeing for inclusion in the finished airplane. For instance, Mitsubishi builds the 787 wing, which Boeing builds onto the body of the Dreamliner. Since Mitsubishi has seen the same increase in share prices related to profit increases, with the stock trading in the 34-43 USD range in 1980-81 and in the 120- 134 USD range in 2014-15, the partnership and JIT system has given both companies similar increases in profits.

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