Academic journal article Journal of Business and Entrepreneurship

Behavioral Considerations for Small Businesses and JIT

Academic journal article Journal of Business and Entrepreneurship

Behavioral Considerations for Small Businesses and JIT

Article excerpt

ABSTRACT

JIT (Just-In-Time) has the potential to revolutionize U. S. manufacturing, through a system based on responsiveness to customer needs and the elimination of waste. However, small businesses attempting to implement JIT may not experience the same degree of benefits as larger corporations, due to the effects of three behavioral concepts: power, conflict, and cooperation. This article briefly reviews the effects of these behavioral influences and identifies related pitfalls that might be expected by small businesses implementing the JIT philosophy.

INTRODUCTION

The argument for organizations committing to a Just-In-Time (JIT) production philosophy is quite compelling. Among the more significant benefits that can result from a shift to JIT procedures include reduced inventory levels, high customer-delivery performance, improved plant efficiency, increased productivity, better product quality, and reduced warranty and service costs (Ansari & Modarress, 1987; Hannah, 1987; Haynsworth, 1984).

Small businesses may decide to implement JIT under the assumption that advantages experienced by large organizations can also be achieved by them, just on a smaller scale. However, the relationships between Just-In-Time, power, conflict, and cooperation play a significant role in realizing the benefits from the JIT system. The purpose of this article is to explain how these variables can affect the degree to which small businesses can successfully implement JIT. Additionally, the article will illustrate benefits and pitfalls that small businesses can expect through the implementation of the JIT production system.

OVERVIEW OF JUST-IN-TIME

Over the past decade, the Just-In-Time (JIT) production philosophy has been discussed extensively in the management, marketing, production, purchasing, and operations management literatures (Ansari & Modarress, 1987; Hannah, 1987; Haynsworth, 1984; Manoochehri, 1985; McDaniel, Ormsby & Gresham, 1992; Newman, 1988; O'Neal, 1987, 1989; Stamm & Golhar, 1991). Just-In-Time is a combination of purchasing, physical distribution, inventory control, and production management, based on the fundamental premise that a supplier should produce and deliver to a customer a) the precise number of units, b) of a specified product quality, c) in the necessary quantities, d) at the necessary time, and that this be done each time an order is placed. This implies that production must be quite responsive to market demand. Organizations achieve this responsiveness by eliminating unnecessary activities such as: 1) excessive storage of work-in-process (WIP), 2) excessive product movement between work stations, 3) multiple inspection of materials and products, 4) queue time between operations, and 5) idle time waiting for machine or worker availability. Elimination of waste in production and responsiveness to market demand create additional pressure on supplying organizations to deliver high quality materials in small lots with short lead times. To minimize the risk of losing a major client and to reduce the financial burden of carrying large amounts of high quality inventory, many suppliers either willingly or unwillingly incorporate Just-In-Time.

The supplier/manufacturer relationship plays the key role in the successful implementation of JIT. This interface between the supplier and manufacturer is also the point where one would expect the behavioral dimensions of power, cooperation, and conflict to play an important role in the acceptance of JIT (Newman, 1988; O'Neal, 1987, 1989). One way of viewing this supplier-manufacturer interface is considering the relationship between these two parties as simply an extension of the production system in the supplier's organization. Suppliers are required to deliver small quantities of materials and parts to the manufacturer as they are needed. Critical elements in this supplier-manufacturer relationship include: 1) reduced order quantities, 2) frequent and reliable delivery schedules, 3) reduced and highly reliable lead times, and 4) consistently high quality levels for purchased materials. …

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