OCTOBER 19-20, 2012 - YMCA University of Science & Technology

Proceedings of the National Conference on
Trends and Advances in Mechanical Engineering,
YMCA University of Science & Technology, Faridabad, Haryana, Oct 19-20, 2012
5. Benefits of JIT supply chain Management
The closer approach to JIT situation, the more responsive a firm feels to its customers and the less capital have been
tied up in raw materials and finished goods inventory. The less the firm spend to store and carry inventory, the less
obsolescence have to be written off, and the better optimization of firms transportation and logistics operations.
Ultimately, this all translates into saving of huge company real money. The JIT system is aimed at improving profits,
and return on investment through cost reductions, inventory reductions, and quality improvements (Farahani
et.al.2008). These benefits explain the wide acceptance of JIT in industry. The following are some benefits of a JIT
system stated by researchers ((Dangayach,et.al 2003, Farahani et.al 2008, Garg , Deshmukh , & Kaul , 1997, 1999,
Kumar V ,2004)
• Reduce space requirements.
• Reduce inventory investment in purchased parts, raw materials, work in process and finished goods.
• Reduce manufacturing lead times.
• Increase the productivity of direct labor employees,
• Indirect support employees and clerical staff.
• Increase equipment utilization.
• Reduce paperwork and require only simple planning systems.
• Set valid priorities for production scheduling.
• Encourage participation by the work force.
• Increase product quality.
• Close supplier/customer relations
Total cost is reduced due to the above mentioned benefits of JIT while managing the supply chain of the firm.
6. Failure of JIT supply chain: A Case study
Indian automobile industries and JIT supply chain (source: The Times of India may 8, 2011 edition.)
The automotive industry in India is one of the largest in the world and one of the fastest growing globally. India's
passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual
production of more than 3.9 million units in 2011. According to recent reports, India overtook Brazil and became the
sixth largest passenger vehicle producer in the world (beating such old and new auto makers as Belgium, United
Kingdom, Italy, Canada, Mexico, Russia, Spain, France, Brazil), growing 16 to 18 per cent to sell around three
million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars,
behind Japan, South Korea, and Thailand. India is home to 40 million passenger vehicles. More than 3.7 million
automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after
China) fastest growing automobile market in the world. According to the Society of Indian Automobile
Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020.
By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the
nation's roads.
Supply chain strategies of XY Company
The supply chain process at XY starts from the costumer and ends with the customer. XY uses built-to-order system
to give their customers what they want. Customer makes their request through the dealers. The information is then
communicated to plant. The information is captured in a central data base. Bill allocation is done to determine cost of
manufacturing and deciding where the car will be manufactured. This is informed by the nature of the product, the
lead time and the cost involved. All parts are supplied on built-to-stock basis on the model life of the car and just in
time are followed sincerely. Generally vendors are local to whom company XY imparts technical support and
training to make aware of JIT programme of the firm. Company out source 90% automotive parts from its sister
concern firms. The firm also takes the aids of foreign aids to import the important parts of the automotive.
Supply chain break down
XY firm faced months of supply woes and a slump in market share and sales as a lockout at the key car factory for
50 days due to labour unrest battered volumes and profit. The shutdown of the factory, suffered a daily cost of $15
million in lost production, hampering the carmaker's performance in India's key October sales. This was the second
consecutive break down of the plant in two years. XY’s share of the passenger car market fell 8 percentage points to
40 percent by the time the strikes ended. That had recovered to 44 percent in the April-June period of this year, but a
similar slide looms. XY’s closure was especially painful because it was the only plant that makes the company's
hugely popular model of a car, which already had a waiting list of two months and in April was India's most popular
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