Operations Management Phase 2 IP

Operations Management Phase 2 IP

Introduction

Manufacturing companies around the world are heavily investing in improving their product quality. The Total Quality management (TQM) has become the most eminent landscape for manufacturing companies to remain competitive. The decade of 70's has often been viewed as quality improvement by many analysts. In the decade, of 8o's quality got a competitive advantage, when companies shifted from conventional systems to lean manufacturing systems, focusing on flexible manufacturing, just in time (JIT), demand based management, and zero inventory approaches for achieving manufacturing excellence. In the decade, of 90's companies focused on market globalization, reduction in product life cycles, and disintegration of many sectors to improve the supply chain. In the current decade, industries are working efficiently to embark on aggressive initiatives to improve their operational systems. Industry after industry is aggressively improving the supply chain functions for efficient customer services, inventory management, response time and operational cost. Companies have earned tremendous growth in supply chain management; they are working closely with end users for managing their demand side by using appropriate marketing strategy which result in total customer satisfaction and maximization of profits for the organizations. The supply chain management deals with the buy-side of the enterprise, and demand based management addresses the sell-side of the enterprise, tracking one independently and other leads to suboptimal solutions.

Discussion

How do JIT demand-based systems differ from forecast driven systems?

In today's global economy, manufacturing companies are modifying their operational techniques to be more competitive. As our company is facing intense competition from rivals we have to implement best possible system to be competitive. For that, we have to analyze and know about the pros and cons of JIT demand based systems and forecast driven system. Forecast driven system is based on forecasted sales, profits and expenses. The main benefit of this system is the availability of inventory which is always in hand, and consumer service is high because of fast accessibility of product. The main drawback for this system is the forecasting failure which can be wasteful. If company forecast sales at a particular amount of product and falls short then the excessive inventory washes out at a loss. On the other hand, demand based system or just in time (JIT) based on constant improvement in productivity with the omission of wastage from unprocessed materials till finished goods. The basic advantage of JIT system is that the less capital tied up with raw materials and finished goods inventory. Companies had to spend less on carrying and storing of inventory which result in better optimization of logistics operations. Ultimately this all translates into saving of real wealth of company. The downside of JIT system is that it is a continuum process, the closer you get to it is advantageous to business, but if it goes too far from business range than it is less beneficial. Too much or too little inventory leaves companies at cost disadvantages to their competitors.

What are the major pros and cons of JIT ...