Just-in-time production as compared to the more traditional just-in-case stock system have several important advantages and disadvantages. Starting with a brief historical excursus, just-in-time paradigm of delivering inventory was first introduced by Japanese manufacturers. This system is based on the arrival of materials and components at the production facility exactly when it is needed. In the 1980s, several U.S. manufacturing firms have decided to adopt the system, which has proven to be of great utility.
Nowadays this system is used by many firms in the West and beyond. As a result, the “inventories of both raw materials and finished goods have been dramatically reduced for these organizations, thus making capital available for more profitable uses” (Griffy-Brown, 2008, para. 2). It is very clear that the old paradigm of warehousing does not work anymore because of mounting costs. One of the biggest advantages of just-in-time system is that inventory can be held in an incomplete state until there is actual customer demand.
However, jus-in-time system has one major disadvantage. It is impossible to predict with absolute certainty when inventory will be needed, as the number of factors that can cause supply chain disruption in a globalized world is very high and increasing. Such disruptions are deadly, since “shortages caused by natural, political or technological disruptions can erode productivity and even bring business to a halt, thereby causing customers to defect, never to return” (Griffy-Brown, 2008, para. 3). It was considered several years ago that customers might tolerate an out-of-stock situation two or three times before they switch companies. As markets become more and more saturated and consumers more and more selective, even singular negative experience may propel buyers to seek products or services from another source. Indeed, “[v]ulnerability to sudden supply chain disruptions is one of the major threats of today’s companies” (Deloitte, 2004, p. 3).
It is especially true in the global marketplace, where country risks should be taken into consideration when managing cross-border supply chains. Contemporary companies usually rely on a large number of suppliers, which helps them achieve efficiency, cut costs and reach new markets. A large number of supply chain actors translates into greater vulnerability. However, techniques have been developed to counteract the risks of supply chain disruptions. They include, for example, Enterprise Resource Systems which can be implemented to ensure there is a smooth interaction between various elements of supply chain management. Companies which can organize just-in-time production effectively gain an upper hand over competitors due to the faster service and cheaper supply processes. It appears that Jaguar was able to introduce a very effective just-in-time production system, since it was able to succeed in the international market.
For Jaguar, just-in-time system is a better choice than the traditional just-in-case system for one major reason. Jaguar in a high-end, expensive car, therefore the customer demand for it is lower than for mass produced cars (like the majority of other Ford’s lines). At the same time, the cost of storage of already assembled cars is very high. Therefore, assembling a car when there is a demand for it under the just-in-time system is a much better solution for Jaguar.
Achieving a total quality culture in large organizations like Jaguar
While establishing an effective just-in-time system is a puzzle which is possible to solve, creating a total quality culture in an organization this large can be a real challenge. Total quality management (TQM) is a management philosophy that focuses on embedding the principles of quality and commitment of all company’s members to long-term success through customer satisfaction and corporate citizenship. Under TQM, stakeholders’ needs are met without violating ethical norms and rules. The foundations of TQM include customer-focused organization, leadership, employee involvement, process approach, system approach to management, continual improvement, factual approach to decision making, and mutually beneficial supplier relationships (Chartered Quality Institute, 2008).
The benefits of TQM are widely recognized by leading business consultants and practicing managers worldwide. These benefits are increased competitiveness; growth and longevity of an organization through more productive corporate culture; reduced stress, waste and friction; and partnership and cooperation at all levels of organization as well as with external stakeholders (Chartered Quality Institute, 2008).
There is a model of TQM proposed by Lakhe and Mohanty (1995) which is applicable to organization of any size. They argue that total service quality measurement (TSQM) is a function of Top management commitment response (CR), Product and process improvement (PPI), Human resource excellence, Customer orientation response (COR), and Economic advantage (EA).
Top management commitment response (CR) implies that managers and leaders of an organization incorporate quality into organization’s vision and mission. In addition, they make quality their personal preoccupation on the daily basis and allocate sufficient resources to quality management and measurement. Equation 2 represents top management commitment response, where TD is the time devoted, RA is the resources allocated and PE is the personal efforts:
“Top management should demonstrate continuously total commitment to quality and this should be used in part to motivate the rest of staff” (Witt & Muhlemann, 1994, p. 422).
The second element of the model, product and process improvement, consists of better reputation, reduced liability risks, decrease in number of customer complaints, smoother delivery of services and enhanced customer response. Equation 3 represents it mathematically, where R is the reputation, LR is the reduced liability risks, CC is smaller number of customer complaints, D is the smoother delivery system, and CR is the enhanced customer response.
Human resource excellence can be perceived as improvement in communication, training, information and accountability. Equation 4 represents this element of TQM model, where C, T, I and A stand for improvement in communication, training, information, and accountability.
Customer orientation response depends on customer satisfaction and cohesive workforce; it can be achieved through competent and committed staff. Therefore, Equation 5 presents customer orientation response as a function of customer satisfaction (CS), employee satisfaction (ES), and cohesive workforce (CWF). A sense of strategic direction, organizational alignment, and focus on effectiveness should be developed in all workers. Fostering a sense of belonging and increasing productivity can be achieved through “employee share-ownership, quality circles and excellence teams, joint labor-management consultative committees, autonomous work groups and other forms of worker participation” (Baldacchino, 1995, p. 68). It is important to note that this element of the equation was perhaps central to achieving a total quality culture and Jaguar where production line workers were given responsibility for identifying continuous improvements and were organized into smaller teams working with a group leader with significant responsibility for implementing change.
Economic advantage relates TQM to positive change in sales, reduction in costs and increase in value of products and services. This can be represented mathematically as equation 6, where CS is the change in sales, C is the reduction in costs and VS is the increase in value of service.
Implementing this model, even in an organization as large as Jaguar, can help achieve desired outcomes. It is very important that none of the elements is overlooked or implemented partially or half-heartedly. If all components of the model outlined above are paid sufficient attention to, it should be possible to introduce TQM principles in an organization of any size.
Baldacchino, G. (1995). “Total quality management in a luxury hotel: a critique of Practice.” International Journal of Hospitality Management, 14(1), 67-78.
Chartered Quality Institute. (2008). “Total quality management.” Retrieved November 26, 2009, from http://www.thecqi.org/resources/d2-4.shtml
Deloitte. (2004). “Supply Chain Risk Management: Better control of your business environment”. Retrieved November 26, 2009, from http://www.deloitte.com/dtt/cda/doc/content/nl_eng_brochure_supply_chain_risk_management_070704x(1).pdf
Griffy-Brown, C. (2008). “Just-in-Time to Just-in-Case: Managing a supply chain in uncertain times.” Graziadio Business Report. Retrieved November 26, 2009, from http://gbr.pepperdine.edu/032/supplychain.html
Lakhe, R.R., & Mohanty, R.P. (1995). “Understanding TQM in service systems.” International Journal of Quality & Reliability Management, 12(9), 139-153.
Witt, C.A., & Muhlemann, A.P. (1994). “The implementation of total quality management in tourism: some guidelines.” Tourism Management, 15(6), 416-424.
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