The Just In Time (JIT) system is a management philosophy that aims at improving productivity through the elimination of waste and improved quality. This system is based on the elimination of waste by moving goods through the production process when they are needed (Patil, 2008). Gopalakrishnan ( 2002) notes that one of the major advantages of the JIT system is cost reduction. This enables a company to remain competitive through the production of superior products at competitive prices. However, the JIT system has not been without flaws. Its overreliance on inventory and supply chain has been highly criticized. If we need to manufacture a product, the ordering of its raw materials and products should be time for the customer to use it. If the supplier is unable to supply the raw materials on time, huge losses are likely to occur. In March 2011, a major earthquake followed by a tsunami hit the northern part of Japan, and much like the Kobe earthquake of 1995, there was widespread loss of lives and destruction of property. Plants were brought down, highways blocked and people could not get to work. In addition, the Fukushima Nuclear power plant disaster that followed complicated the situation even further adding to the loss of property and disruption of the power supply. Most Japanese automotive makers remained closed for some time the most affected being Toyota and Honda Companies because their suppliers were located in the areas hardest hit. General Motors (G.M), which relies on Japanese suppliers halved its production at several plants due to a shortage of parts. Political instability and chaos are other factors that probably affected the JIT system of many companies. This was experienced in Northern Africa and the Middle East leading to interruptions in the supply chain for companies, which relied on suppliers located in these areas.
Due to the occurrence of these catastrophes, businesses have been forced to rethink their application of the JIT system. Companies are already resorting to in-hand stocks. This is in a bid to secure themselves in instances where the supplier is unable to supply when required to do so (Gourdin, 2006). JIT manufacturing requires maintaining only one supplier to save costs, but companies are now finding it more secure to rely on more than one supplier. For instance, Toyota stopped relying on one supplier after the 1977 incident where its sole supplier of brake linings was affected by a fire accident and was unable to supply. This led to the company losing millions of dollars. Moreover, firms are now sourcing suppliers who are nearest to them to prevent delays that could occur through the interruption of the transport system due to disasters. This also reduces the chances of destruction caused by hazardous material such as oil spills encountered in the B.P accident poisonous chemicals. Dubrin (2011) points out that scenario planning and business continuity planning can help businesses identify their most critical element without which they cannot operate and seek to reduce their vulnerability. Other than cultivating closer relationships with insurance companies and suppliers, manufacturing firms have also embraced contingency plans to cope with disruptions to ensure continued production and profitability even when disaster strikes.
DuBrin, A. J. (2011). Essentials of management (9th ed.). Connecticut: Cengage Learning.
Gopalakrishnan, P. (2002). Handbook of materials management (Eastern economy ed.). New Delhi: Prentice-Hall of India.
Gourdin, K. N. (2006). Global logistics management: a competitive advantage for the 21st century (2nd ed.). Malden, MA: Blackwell Pub..
Patil, S. (2008). Industrial Engineering And Management. Orland: Technical Publications.