An Orchestra or Cacophony?
Varadarajan, Consultant, India
JIT works like an orchestra
where different instrumentalists know what to do when. Most often the conductor of the orchestra is an OEM.
The full benefits can be realized only when the suppliers themselves adopt JIT for their organization, which seldom happens. The suppliers support OEM's JIT by stocking up inventory.
To give you an example from one of my consulting experiences in the automobile sector: while the OEMs insisted on accepting components on a JIT schedule, the suppliers found it difficult to sustain that due to quality and scheduling issues and hence decided to operate a warehouse that supplied components to the OEM based on a JIT model. Stocking up components means increase in cost.
A concept that is meant to reduce cost and eliminate waste actually ended up increasing cost
and piled up a lot of nonconforming inventory.
So it is essential that the JIT model percolates through the supply chain to enable deriving the full benefits of supply chain cost reduction.