To what extent does JIT really works in the Caribbean business environment? Which of the above factor(s) do you think are more prevalent in production that would require a JIT System? Highlight an organization that can benefit from using a JIT System based on its current mode of operation.
Just in time is a ‘pull’ system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time. This means that stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum. This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time, which includes ordering the correct stock. Information is exchanged with suppliers and customers through EDI (Electronic Data Interchange) to help ensure that every detail is correct.
Just-in-time (JIT) is an approach that focuses on the elimination of all waste in production. That is, the firm produces only what is required, in the correct quantity and at the correct time. That means that the company does not hold safety stock and operates with low inventory levels. This strategy helps companies lower their inventory carrying costs. Although JIT is a cost-cutting inventory strategy, it can lead to stock-outs.
JIT would be quite efficient in the Caribbean and would help to reduce capital tied up in inventory. However, the very elements of JIT renders it impractical for Caribbean businesses. This is mainly because most companies order items from international suppliers, and these are usually shipped via ocean. This can lead to long lead times and possibly higher cost, as a result of freight and insurance.
The following are more prevalent in production and would require a JIT System: