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Posted on June 8th, 2012, by

The modern business is progressing really fast that naturally forces companies to apply new strategies and more effective approaches to the production process, while the use of traditional and out-of-date techniques often leads to the deterioration of the position of a company and the market. At the same time, the situation may considerably deteriorated by the growing competition because the modern economy is characterized by the process of globalization which affects practically all countries and leads to the growing competition in the result of financial and fiscal barriers between countries. In this respect, the example of the automobile industry is particularly noteworthy because the current situation in the US automobile industry perfectly illustrates the extent to which the process of globalization and the low effectiveness of logistics can undermine the position of the leading companies such as Chrysler. In such a situation, the use of more effective systems of logistics, such as Just-in-time system, can improve consistently the logistics, warehousing and production process as well as the position of a company in the market at large.

On analyzing the current situation in the market, it should be said that there is a variety of factors that influence a company’s performance and its financial success, among which it is possible to single out the quality and the time as the key factors that, to a significant extent, determine the success of a company. In this respect, the application of Just-in-time system seems to be particularly effective because it contributes to the improvement of the quality and saves times.

In order to better understand, the positive impact of the implementation of Just-in-time system, it is necessary to point that the application of this system provides the company with an opportunity to save time and costs. In this respect, it should be said that many companies waste a lot of time and increase their costs substantially because of the ineffective logistics. For instance, in the automobile industry the supply of details is very important but in the result of the poor logistic system the supply may be ineffective that leads to the increasing warehouse costs because the stock of details that are not used immediately needs additional funds. Obviously, the application of Just-in-time system can lead to the improvement of the situation since it implies the more effective supply (Peter, 148). For instance, being applied in the automobile industry, Just-in-time industry provide the opportunity to minimize warehouse costs and save time due to the supply of the details to the plant to be used in the construction of automobiles. As a result, such supply when all procedures are scheduled precisely and when essential details are supplied and sent in the definite time when they are actually needed leads to the decreasing of the number of details stocked and make the production process more effective.

On the other hand, the application of Just-in-time system contributes consistently to the improvement of the quality of products and services. Returning to the automobile industry, it should be said that the storage of details or even constructed vehicles for a considerable period of time lead to the deterioration of their functionality and technical characteristics. Consequently, the longer details are stored the higher is the risk that they will never work properly that naturally threatens to the deterioration of the quality of the final product, i.e. vehicles. This means that the quality of product would be consistently lower than it could be if all details were used more effectively and in time.

This is exactly what Just-in-time system implies because the supply of all details, the provision of all service, the entire production service is scheduled (Just-in-time inventory management strategy and lean manufacturing) in such a way that the supply is practically permanent and there is no storage of some details in warehouses since from the moment of the production of a detail, it is delivered and used in the process of the production of an automobile, for instance.

Obviously, the application of Just-in-time system is particularly important for companies operating worldwide because, as a rule, they need to involve in the production process plants situated in different parts of the world, like Chrysler and other auto manufacturers do. This is why the application of Just-in-time system will be particularly cost saving because the need in storing and warehousing products decreases since they are supplied and distributed more effectively, while the quality of products remain high.

Thus, it is possible to conclude that Just-in-time system may be a really effective solution for multinational companies for which the effectiveness of logistics and production process are particularly important.

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