While there are many benefits to using Just- In- Time as a production strategy in a business, there are also some drawbacks to be aware of. When implementing any new practice to a company it is best to be aware of both the advantages and disadvantages in order to make an informed decision and to possibly stop the negative from occurring.
One of the major drawbacks of Just- In- Time is perhaps loss of face. It can be very embarrassing for companies to have to admit that the product is not yet available, not ready in time or other reasons due to errors in scheduling, delivery and so on, of goods. Aside from affecting the reputation of the company, it can also lead to loss in revenue.
When a company decides to apply Just- In- Time, they have to understand that this gives a lot of responsibility to elements outside of their control. These companies have to put a lot of dependence onto the suppliers and maintain a great relationship with them for the greater good of the company. The raw materials provided by suppliers are essential to the company when using this strategy and suppliers have a higher chance of causing harm to the company, such as causing production to terminate entirely at any given moment.
If parts are unavailable then the company is the only one that suffers. Toyota went through this experience once when a company stopped delivering break pieces to Toyota. This caused Toyota to have to shut down their entire production in Japan. It is estimated that Toyota lost sales of around $15 billion when the break parts company was eventually reinstated.
Sometimes it is not even the supplier’s fault that parts could not be delivered, could be due to natural disasters, which can cause a company to completely stop production or make them unable to deliver the goods.
It can be quite costly, time consuming and tedious to start using Just -In -Time. One of the necessities when implementing Just- In- Time, in order to save a lot of hassle, is to invest in IT that allows suppliers and companies to communicate easily and effectively via computer systems. This makes it much easier to manage orders and other important planning/ strategic details.
Also, once a company does decide to use Just- In- Time as a strategy, they have to be aware that a large, unanticipated order might not to be able to be met (should there be a flaw or un-anticipated issue) and therefore, their services will be taken elsewhere.
One of the major drawbacks of Just- In- Time is perhaps loss of face. It can be very embarrassing for companies to have to admit that the product is not yet available, not ready in time or other reasons due to errors in scheduling, delivery and so on, of goods. Aside from affecting the reputation of the company, it can also lead to loss in revenue.
When a company decides to apply Just- In- Time, they have to understand that this gives a lot of responsibility to elements outside of their control. These companies have to put a lot of dependence onto the suppliers and maintain a great relationship with them for the greater good of the company. The raw materials provided by suppliers are essential to the company when using this strategy and suppliers have a higher chance of causing harm to the company, such as causing production to terminate entirely at any given moment.
If parts are unavailable then the company is the only one that suffers. Toyota went through this experience once when a company stopped delivering break pieces to Toyota. This caused Toyota to have to shut down their entire production in Japan. It is estimated that Toyota lost sales of around $15 billion when the break parts company was eventually reinstated.
Sometimes it is not even the supplier’s fault that parts could not be delivered, could be due to natural disasters, which can cause a company to completely stop production or make them unable to deliver the goods.
It can be quite costly, time consuming and tedious to start using Just -In -Time. One of the necessities when implementing Just- In- Time, in order to save a lot of hassle, is to invest in IT that allows suppliers and companies to communicate easily and effectively via computer systems. This makes it much easier to manage orders and other important planning/ strategic details.
Also, once a company does decide to use Just- In- Time as a strategy, they have to be aware that a large, unanticipated order might not to be able to be met (should there be a flaw or un-anticipated issue) and therefore, their services will be taken elsewhere.
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