Operations Management: An Integrated Approach, 5th Edition

BENEFITS OF JIT

The benefits of JIT are very impressive. For this reason, many companies rush to adopt JIT without realizing all that is involved. Many of these companies do not reap the benefits because they do not take the time to implement the culture necessary for JIT to succeed. A recent study of JIT benefits has found that over a five-year period companies using JIT have experienced an 80–90 percent reduction in inventory investment, an 80–90 percent reduction in lead time, a 75 percent reduction in rework and setup, a 50 percent reduction in space requirements, and a 50 percent reduction in material handling equipment.

TABLE 7-6 Benefits of JIT

Reduction in inventory Improved quality Reduced space requirements Shorter lead times Lower production costs Increased productivity Increased machine utilization Greater flexibility

The first implementation of JIT took place at the Toyota Motor Company in Japan in the early 1970s. Thus, much of what we have learned about JIT comes from Toyota's experience. Since then, hundreds of companies have successfully implemented JIT, including Ford, General Electric, IBM, 3M, Nissan/Renault, and many others. Even for companies that do not achieve the dramatic benefits of a full JIT implementation, JIT provides many benefits. Table 7-6 lists key benefits of JIT.

One of the greatest benefits of JIT is that it has changed the attitude of many firms toward eliminating waste, improving responsiveness, and competing based on time. Time-based ...