Just- in-Time in Kalamazoo
A medium-size firm that manufactured mini motor homes in Kalamazoo, Michigan, expanded to the national level all the way to New England. With the expansion of the markets, so did the sources of supply. The majority of suppliers came from Southern California and even Michigan itself. Jim, the largest manufacturers of the U.S light trucks was also in Michigan although most of their products assemblage outside the company. Just-in-Time Systems are the kind of systems that insist on planning and scheduling for needed materials. They then deliver them “just-in-time” for their use (Boysen et al., 2008). For companies to record higher saving, inventories should then be the best minimum.
Jim Ballenger, being the president of the business had just come to the realization that transportation and inventory costs accrued to a large segment of his parts. The expenses possibly might have a chance for reduced costs. It was when he remembered the Just-in-Time (JIT) Systems. Developed by a Toyota Motor Company over five decades ago, it involved inventory leading to the production, quality control, supplier and distributor services. JIT Systems require that the vendor makes every effort to provide outstanding service and quality and establish a long-term relationship with a few of the suppliers for the company. That worries Jim because his concern lies with his relationship with his suppliers.
And also, the practice is very uncommon in the United States. The company has set quite high objectives that project zero defects for their products. Also, an advantage is because the finished products delivery is on a very short lead time. Management of the materials is set to be very expensive, and Jim expects that to happen. He also knows that some components will most probably be defective, and something is likely to go wrong with his product.
Ideally, though the establishment of the JIT Systems will require a lot of capital, it is sagacious to say that the introduction is imperative. Jim should consider adopting the company because it will lead to cheaper costs in the future after establishment. JIT will help reduce costs incurred during inventory and production, as well as supplier services. One of the tenets of JIT Systems is that it recognizes that the inventory is wasteful and the need to minimize it. Also notably realizes that the production costs should be cut down to the lowest minimum costs possible. Deliveries, when made in small and frequent occurrences, reduce costs. It is arguably logical to say that Jim Ballenger needs JIT Systems if he is to continue making reasonable sales at lowest prices possible.
Purpose of the paper
Find as much information about JIT Systems as possible to help in deciding whether Jim should adopt the company. And bring out the advantages and cons of the enterprise as a whole.
Overview of the paper
The document contains a thesis that supports the adoption of the JIT Systems into Jim Ballenger’s company. The idea is to exhaust all possible curtails to the adoption as well as the advantage. These include costs that might get higher; others will be done away with while others will decrease. All in all, a decision has to come about in the end, and Jim must make the best decision for the company.
The total annual cost of maintaining the components inventory under the current systems will be ranging between $18000 and $180,000. Under the JIT Systems, assuming there are no safety stocks requirements will be representing one week of maintenance that will be ranging from $50 to about $500. That is assuming that the company is a nearby entity and hence no safety costs (Boysen et al., 2008). JIT Systems carrying costs are higher than Ballenger carrying costs because they cover half of the total inventory contained while Ballenger carrying costs are about 20% of the total stock (Satoglu & Sahin, 2013).
Currently, Jim was using a public warehouse to maintain his inventory that requires him monthly and the costs of maintenance keep getting higher. Moreover, his firm was now producing many more varieties of items the required in high support conditions meaning are quite costly. However, JIT Systems emphasize on delivery on order. It requires for availability on demand on very rare occasions. Upgrades and frequent updates can be too many and offer a limited amount of customization. In addition, the other disadvantage of such orders is concerning security issues. Jim has to consider every option of establishing the company. From where he stands, making small and frequent shipments instead of a few large ones seems more expensive. That is because it will accrue more freight bills especially from distant suppliers. . Also, an advantage is because the finished products delivery is on a very short lead time.
Management of the materials is set to be very expensive, and Jim expects that to happen. He also knows that some components will most probably be defective, and something is likely to go wrong with his product. More often than not, Jim outdoes his competitors by buying out manufacturers that are facing out in the market. Obtaining these requires inventory in certain parts to increase non-permanently and to curtail of existing vendors. Jim has always had his products go through thorough testing before releasing them to the market. It has always been very helpful in reducing the number of faulty items and therefore placed him at an advantage in the market. There will be an introduction in the production schedule which will have a great impact on the company at large. Some occasions might require rush orders for replacement items. In this particular case, it would require him to view the supplier as part of the production team.
JIT Systems is apparently a world class organization. Whether or not Jim is sure of the performance of the company, he is bound to make a decision. The work of the subordinate team is to find out as much as they can about the business and inform Jim before he decides. JIT Systems emphasize on delivery on order. It requires for availability on demand on very rare occasions (Satoglu & Sahin, 2013). Production costs should be cut down to the lowest minimum costs possible. Deliveries, when made in small and frequent occurrences, reduce costs. It is arguably logical to say that Jim Ballenger needs JIT Systems if he is to continue making reasonable sales at lowest prices possible.
Upgrades and frequent updates can be too many and offer a limited amount of customization. In addition, the other disadvantage of such orders is concerning security issues (Boysen et al., 2008). The costs for storage of inventory (Carrying) are large, sometimes 15% of the stock. As a result, the cost of carrying inventory in the United States accrues to over hundreds of billions of dollars per year. To reduce storage costs, one avoids unnecessarily huge stocks to enhance the companies’ profitability and competitive angle.
Satoglu, S., & Sahin, I. (2013). Design of a just-in-time periodic material supply system for the assembly lines and an application in the electronics industry. International Journal Of Advanced Manufacturing Technology, 65(1-4), 319-332.
Boysen, N., Fliedner, M., & Scholl, A. (2008). Sequencing mixed-model assembly lines to minimize part inventory cost. OR Spectrum, 30(3), 611-633.
Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in pre written college essays. If you need a similar paper you can place your order from pay someone to write my research paper services.