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Just-in-time


Research paper

Just-in-time implementation issues among automotive suppliers in the southern USA
Jack E. Matson
Department of Decision Sciences and Management, Tennessee Technological University, Cookeville, Tennessee, USA, and

Jessica O. Matson
Department of Industrial and Systems Engineering, Tennessee Technological University, Cookeville, Tennessee, USA
Abstract Purpose – The purpose of this paper is to provide insight into the major supply chain issues of the automotive manufacturing industry in the southern USA. Design/methodology/approach – This paper is based on the results of a survey of automotive suppliers in Tennessee and Alabama. The survey focused on supply chain issues and demographics, speci?cally on 20 JIT-related problems and 100 company characteristics. Findings – Identi?es the extent of JIT implementation in Tennessee’s and Alabama’s growing automotive industry and the general characteristics of the companies that use JIT. Also identi?es the types of problems experienced by JIT automotive suppliers; categorizes the problems as one-time, periodically recurring, or ongoing; and identi?es the most troublesome problems. Research limitations/implications – The survey results point to several problem areas of JIT suppliers for research focus, including identi?cation of ways that small companies can resolve JIT implementation issues, the most common ongoing problem of unstable customer schedules, and the most frequently cited problems of poor production quality. Practical implications – The ?ndings of this study can help others considering a conversion to a JIT system improve the likelihood of a successful implementation by making them aware of the implementation issues experienced by the JIT automotive suppliers in Tennessee and Alabama. It also provides guidelines for speci?c improvements that could be implemented by Tennessee and Alabama suppliers. Originality/value – This paper provides a concise review of JIT literature. It also examines the growing automotive manufacturing industry in the southern USA. These smaller, primarily non-union automotive suppliers represent a research set that has not been previously studied. Keywords Automotive industry, Supply chain management, Just in time, Distribution management, United States of America

Paper type Research paper

Introduction
According to Schonberger’s de?nition, a just-in-time (JIT) supply chain should “produce and deliver goods just in time to be sold, subassemblies just in time to be assembled into ?nished goods, fabricated parts just in time to go into subassemblies, and purchased materials just in time to be transformed into fabricated parts” (Fawcett and Birou, 1993, p. 18). JIT is a strategic part of the automotive industry, and JIT procurement and production systems continue to grow in number and importance. Bartholomew reported as early as 1984 that “all of the major US automotive ?rms profess to have an ongoing JIT program at this time” (Bartholomew, 1984, p. 109). Fawcett and Birou (1993) predicted that
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“future manufacturing strategies will place signi?cant emphasis on the control of purchased inventory, increasing the value of a JIT procurement system to the ?rm” (Fawcett and Birou, 1993, p. 18). Today’s emphasis on lean manufacturing for global competitiveness further supports the need for ef?cient JIT supply chains. Therefore, it is critical that JIT suppliers identify and address performance issues as effectively as possible. This paper focuses on a survey of automotive suppliers in Tennessee and Alabama and their experiences with JIT supply chain issues. Historical perspective – automotive industry in Tennessee and Alabama The problems of the automotive industry are of particular interest and importance in Tennessee and Alabama. In Tennessee, a Peterbilt truck assembly plant opened in 1969, followed by two automobile assembly plants: Nissan in 1983 and Saturn in 1990. Prior to 1997, however, there were no automotive assembly operations in Alabama. Today, three assembly plants are in each state (with Mercedes Benz, Honda, and Hyundai in Alabama), and the assembly 432

Supply Chain Management: An International Journal 12/6 (2007) 432– 443 q Emerald Group Publishing Limited [ISSN 1359-8546] [DOI 10.1108/13598540710826362]

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

Supply Chain Management: An International Journal Volume 12 · Number 6 · 2007 · 432 –443

operations have led to an increasing presence of automotive suppliers in these states. Objective of the paper This paper addresses the production and operational problems experienced by JIT automotive suppliers, based on the results of a survey of suppliers in Tennessee and Alabama. The study began in Alabama with a research grant funded to support the growing automotive manufacturing industry, and the survey was subsequently funded in Tennessee. The survey focused on major JIT-related problems and 100 company characteristics[1]. The analysis provides insight into the demographics and common problems related to JIT implementation in the automotive industry in these states, where automotive suppliers tend to be smaller and non-union.

This survey’s results were used to verify the types of problems experienced by JIT automotive suppliers; categorize problems as one-time, periodically recurring, or ongoing; and identify the most troublesome problem. Survey administration A review of manufacturer lists from various sources identi?ed 244 companies in Alabama and 300 companies in Tennessee as potential automotive suppliers. The data collection phase of the project was divided into two parts: sample identi?cation and on-site interviews. The interviews were conducted over a two-year period. Sample identi?cation It was not expected that all of the potential automotive suppliers, 244 in Alabama and 300 in Tennessee, would operate in a JIT environment. Therefore, a preliminary telephone interview was conducted to determine whether each company met the following criteria: . the company was an automotive supplier; . the company operated in a JIT environment; and . the company was willing to participate in the survey. Because the size of the true population was unknown beforehand, it was not possible to perform any calculations to assist in sample size determination. In Alabama, efforts were made to contact 211 of the 244 potential companies during the telephone survey. Of these 211 companies, 37 were JIT automotive suppliers, 144 were not JIT automotive suppliers, and the status of 30 companies was unknown. This means that 37 (or 20.4 percent) of the 181 companies with known JIT automotive supplier status were members of the population of interest. If the same percentage holds for the entire list of 244 companies, the estimated population size is 50. Therefore, the 25 companies included in the sample represent half of the projected population size. In Tennessee, efforts were made to contact 134 companies during the telephone survey. Of these 134 companies, 41 were JIT automotive suppliers, 74 were not JIT automotive suppliers, and the status of 19 companies was unknown. This means that 41 (or 35.6 percent) of the 115 companies with known JIT automotive supplier status were members of the population of interest. Again, if the same percentage holds for the entire list of 300, the estimated population size is 106. Therefore, the 25 companies included in the sample represent approximately one quarter of the projected population size. Because of the time required for on-site visits and the travel involved, the number of interviews was limited to 25 companies in each state. On-site interviews Over a two-year period, the 50 plants in Tennessee and Alabama were visited. Two people were involved in the interviews, one in Tennessee and the other in Alabama. One of the authors trained both interviewers and went on several visits in both states to ensure consistency. Prior to on-site interviews, the survey was tested with an automotive supplier and modi?ed as suggested. During each visit, the interviewer began by reviewing the purpose of the study with the respondent. Next, the interviewer addressed the issues of whether the entire plant’s production was dedicated to the automotive industry and whether the entire plant operated in a JIT environment. Based on the responses to these inquiries, the interviewer explained the questionnaire to ensure that the respondent clearly understood the aim of each question. The 433

Survey design and administration
Survey design A two-part survey was designed to collect company-related data. Prior to developing the survey, a literature review was conducted to identify ?ndings of similar previous surveys. Including more recent results, there have been at least 48 reported surveys that focused on JIT implementation, with the ?rst survey reported in 1986. Table I provides an overview of the surveys, and Table II provides a summary of selected characteristics. Woods (1998) summarized the JIT problems identi?ed in previous surveys, which guided the formulation of the survey for this study. Company characteristics The ?rst part of the survey focused on the respondent company’s characteristics. A total of 100 demographic-related topics were covered in nine sections, as shown in Table III. The primary objectives were to determine the extent of JIT implementation in Tennessee’s and Alabama’s automotive industry and to identify general characteristics of the companies that use JIT. JIT problems The second part of the survey focused on a list of 20 potentially troublesome issues that had been identi?ed by previous surveys of JIT companies: 1 Lack of supplier support. 2 Supplier inability to deliver materials on time. 3 Substantial distance between suppliers and customers. 4 Poor production quality. 5 Poor quality of supplied parts. 6 Dif?culty establishing systems to support JIT. 7 Poor and/or inaccurate data. 8 Dif?culty establishing accounting practices to support JIT. 9 Training dif?culties. 10 Lack of JIT information. 11 Lack of top management support. 12 Lack of employee support. 13 Union dif?culties. 14 Dif?culty achieving set-up time reduction. 15 Dif?culty laying out the facility to support JIT. 16 Dif?culty implementing smaller lot sizes. 17 Unstable customer schedules/scheduling. 18 Dif?culty with large number of items produced and/or amount of material handled. 19 Forecasting inaccuracies. 20 Dif?culty justifying JIT.

Table I Overview of previous surveys
Industries included Automotive and electronics 217 Used a model to show that reduced inventory and increased skill levels of workers improve quality Studied JIT implementation in under-developing countries Investigated JIT, including problems and bene?ts 100 52 and 1,000 600 54.0 48.0 Key focus Surveys Response rate sent (%)

Author

Location of study

Alles et al. (2000) Pharmaceutical, light mfg, food and bev., rubber products Various, interviews including automotive Various Electronics, automotive, food, and HVAC

US

Amoako-Gyampah and Ghana Gargeya (2001) Ansari and Modarress (1990)US

Just-in-time implementation issues among automotive suppliers

Jack E. Matson and Jessica O. Matson

Bartezzaghi et al. (1992) Beard and Butler (2000)

Italy –

434

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40.4 and 20.5 Surveyed Italian industry to investigate the application of JIT 29.0 Identi?ed reasons why companies may not be able to implement JIT in its theoretical form – – US and UK Various Compared the use of JIT in the US and UK 550 (UK) 9.8 (UK) Billesbach et al. (1991) Brown and Mitchell (1991) US (West Coast) Electronics Evaluated employees’ perceptions of performance obstacles 230 (?rst) 60 68 (?rst) 100 (second) (second) Brox and Fader (2002) Southern Ontario, Automotive parts mfg Conducted statistical analysis of cost/productivity differences between JIT Canada and non-JIT companies 90 66.7 Canada Automotive and electronics Analyzed performance of JIT and non-JIT plants 103 97.0 Callen et al. (2000) Celley et al. (1986) US Automotive Established “a workable model of successful JIT development.” 359 36.2 Chen (1991) US (western Michigan) Various, including automotive Explored issues of JIT implementation in western Michigan – – Cheng (1988) Hong Kong Electronics Surveyed JIT in the Hong Kong electronics industry 100 20.0 US – Studied rel. among org. support, JIT implementation, and performance 2,640 44.1 Chong et al. (2001) Clarke and Mia (1993) Australia Various, including transport Investigated the use of JIT by large Australian manufacturers 445 20.0 US Logistics Examined JIT performance outcomes 1,002 22.2 Claycomb et al. (1999) Clode (1993) UK Various Surveyed UK manufacturing control over ten years – – – Machinery, electronics, and transport Analysis of buyer and supplier perspectives Dong et al. (2001) equipment – – Fawcett and Myers (2001) US Members of APICS Looked at relationships between product development, employee development, JIT, and automation 500 31.6 Freeland (1991) US Various, including automotive Studied JIT purchasing practices in the US 230 26.0 Fullerton (2003) US Chem., ind. mach., and electronics Studied effectiveness of JIT implementation 447 56.8 Fullerton and McWatters US Mfg (SIC 20-39); Sales $2M to $2B; incl. in Examined bene?ts of JIT verses level of commitment (2001) Compustat 447 56.8 Garg and Deshmukh (1999) India Indian Industries Identi?ed the important attributes required for JIT purchasing 70 44.3 Golhar and Deshpande US (Midwest) Various, including automotive Examined HRM practices in JIT ?rms (1993) 53 64.0 US (Midwest) Various, including automotive Evaluated the implementation of JIT as it applies to small ?rms 32 62.0 Golhar et al. (1990) Gonzalez-Benito et al. (2000)Spain Automotive Studied JIT purchasing practices 397 37.0 Hum and Ng (1995) Singapore Various Studied the use of JIT in Singapore 69 59.4 Jayaram and Ahire (1998) US (Michigan) Automotive Examined impact of operations management practices on quality and timebased performance 200 32.5

(continued)

Table I Industries included – Health care Manufacturing Various, including automotive Textile, clothing and footwear Automotive, electronics, and machinery – Various, including automotive Electronics Various, including automotive Members of APICS – Studied JIT purchasing, including the bene?ts and hazards – 129 – 450 600 114 95 – 64.0 – 34.2 30.5 68.0 89.5 18.5 20.0 44.1 44.1 – – 250 – – 6 – 3,000 Key focus Surveys Response rate sent (%) – 26.8 – – – – 32.0

Author

Location of study

Kadipasaoglu et al. (1999) Analyzed JIT implementation, cellular mfg., TQM, and factory automation impact on mfg costs Examined the feasibility of implementing a stockless system (JIT) in the health care industry Compared effects of TQM and JIT on manufacturing Identi?ed obstacles that Mexican ?rms encounter when implementing JIT Studied quick response in retail industry Examined relationship between JIT and manufacturing performance Examined human resource management strategies

Many

Kim and Rifai (1992)

US

Just-in-time implementation issues among automotive suppliers

Jack E. Matson and Jessica O. Matson

East Asian and Nordic Countries Lawrence and Lewis (1993) Mexico Australia McMichael et al. (2000) US Nakamura et al. (1998) Power and Sohal (2000) Australia and New Zealand US (San Francisco Bay Radovilsky et al. (1996) area) Sim (2001) US

Kristensen et al. (1999)

435
JIT in the public sector

Sohal et al. (1993) Spencer and Loomba (2001) Sriparavastu and Gupta (1997) Stamm and Golhar (1991) Upton (1998) Wafa and Yasin (1998)

Australia US (Midwestern) US

Studied mfg performance measures to show interactive relationship between TQM and JIT Evaluated the longevity of JIT among Australian companies Studied TQM practices for smaller manufacturers Examined JIT and TQM implementation in U.S. ?rms

Waples and Norris (1989) White (1993) White et al. (1999) Woods (1998) Yasin and Wafa (1996)

US (Midwest) New Zealand US (Mid-West and South) US (large metro. areas) US US Alabama US

Various, including automotive Studied effects of JIT at customer and supplier linkages for small ?rms – Studied JIT implementation and perf. measurement system changes Plastics, electronics, steel, automobile, glass,Identi?ed factors that hinder successful implementation of JIT mining mach. Public accounting ?rms Investigated the effect of JIT on audit testing and internal control Manufacturing Investigated JIT implementations in US ?rms Members of AIM Studied JIT differences between large and small manufacturers Automotive Studied JIT implementation issues Large manufacturers Investigated the effect of different mgmt. subsystems on JIT success

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Yasin et al. (2001)

US

Suggested an implementation strategy for JIT in the public sector

700 (mail) 378 2,642 2,640 50 15 visits and 700 surveys 500

18.6 17.2

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

Supply Chain Management: An International Journal Volume 12 · Number 6 · 2007 · 432 –443

Table II Characteristics of previous surveys
Characteristic Industry type Previous surveys Twenty of the 48 surveys included the automotive industry. Five surveys concentrated solely on the automotive industry: Brox and Fader (2002); Celley et al. (1986); Gonzalez-Benito et al. (2000); Jayaram and Ahire (1998); and Woods (1998) Methods included mail surveys, on-site visits, and interviews Previous surveys focused on twelve different countries: US, Mexico, UK, Italy, Singapore, Hong Kong, Australia, Canada, Spain, India, New Zealand, and Ghana Many of the previous surveys focused on ?rms that were larger in terms of number of employees. Surveys that included smaller companies were reported by: Callen et al. (2000); Beard and Butler (2000); Golhar et al. (1990); Spencer and Loomba (2001); Upton (1998); and White et al. (1999) Most of the previous surveys addressed aspects of what constitutes JIT and what bene?ts should be expected from JIT implementation. Surveys published on JIT-related problems included: Beard and Butler (2000); Chen (1991); Lawrence and Lewis (1993); Radovilsky et al. (1996); and Wafa and Yasin (1998) This survey Automotive manufacturing

Survey method Location Company size

On-site visit and interview Tennessee and Alabama in the Southern US Smaller companies, in terms of number of employees Company characteristics, JIT problems, and problem solutions

Survey focus

Table III Sample topics included on the survey
Section Plant background Sample topics Whether or not ?rm ever existed as non-JIT plant Whether or not ?rm moved to new building after starting JIT Number of years plant has been in business Number of years since the ?rm began JIT Whether or not staff includes an industrial engineer Whether or not a “team” concept is stressed Recruitment sources used Whether or not employees are offered incentives for improved performance Number of shifts daily Length of breaks Whether or not employees rotate jobs Whether or not ?rm has implemented Kanban Whether or not ?rm has implemented production-leveling methods Whether or not ?rm has implemented shortened setup times Reason for JIT implementation Plant’s primary source of JIT information Whether or not plant had a formal implementation team Number of customers Nationality of largest customer’s holding company Whether or not use EDI Number of suppliers Distance of plant from most distant supplier from plant Average length of plant’s contract with suppliers Number of trucking companies Most important criterion considered when selecting a new trucking company

interview then proceeded following the structure established in the survey instrument. In some instances, the visit included a plant tour.

Findings
Company characteristics Questions on company characteristics were aimed at determining factors that might in?uence the success of the JIT system. Characteristic-related results from the survey are discussed in the following sections. Plant background The responding companies were of six nationalities: US, Germany, Japan, Canada, France, and England. However, 72 percent were solely US-owned. The number of years plants had been open varied from 1 to 75 years with an average of 18.2 years and a median of 15 years. A total of 20, or 40 percent, of the plants had always operated in a JIT environment, while 30 (or 60 percent) had not. Of the 30 that had not, 19 produced the same products in their JIT plant as they produced in their non-JIT plant, and 29 reported being located in the same building. The number of years plants operated in a JIT environment was also highly variable with a minimum of less than one year and a maximum of 18 years. The average time was seven years and the median was 6.75 years. Manufacturing information As a whole, the responding companies supplied a variety of products to the automotive industry, including cockpits, seats, heat exchangers, manifolds, wiring harnesses, and hoses. Likewise, the plants used a variety of manufacturing processes, including assembly, casting, turning, stamping, milling, and injection molding. The majority of the plants were best described as a line-type organization with an average number of 19 production lines. The respondents represented several tiers of the supply chain, with the largest percentage from the ?rst tier. A total of 44 percent of respondent companies were ?rst tier suppliers, 16 percent were second tier suppliers, and 26 percent were both ?rst and second tier suppliers. The remaining 14 percent were other multi-tier suppliers. 436

General characteristics

Employees

Work environment

Understanding of JIT

Implementation of JIT

Customers

Suppliers

Trucking companies

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

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When asked what factor, in terms of the company’s overall performance, was viewed as most important, 31 of the respondents provided a quality-related answer. However, when asked about the plant’s largest advantage over competitors, only 11 respondents said quality. Even though respondents seemed to be interested in providing a highquality product, 32 percent of the respondents were neither QS- nor ISO-certi?ed. International Organization for Standardization (ISO)-9001 de?nes the current quality management system standard for the manufacture of products. QS-9000, based on ISO-9001, incorporates additional requirements for automotive suppliers. Among the certi?ed respondents, 16 percent were only QS-certi?ed and 10 percent were only ISO-certi?ed, while 42 percent were both QS- and ISO-certi?ed. The survey also found that the majority (72 percent) of respondents most often reworked rejected parts rather than scrap them. Employees Participating companies ranged in size from 17 to 3,500 employees. However, excluding the one plant with 3,500 employees, the plants ranged in size from 17 to 500 employees in Alabama and 50 to 1,200 employees in Tennessee. A total of 60 percent of this survey’s participants had fewer than 250 employees, compared to 23 percent of Celley et al.’s (1986) sample of automotive ?rms and 38 percent of White et al.’s (1999) sample of manufacturing ?rms. A total of 86 percent of this survey’s participants had fewer than 500 employees, compared to 75 percent of Upton’s (1998) survey, which included small manufacturers ranging in size from 100 to 500 employees. According to Beard and Butler (2000), the success of JIT implementation may be a function of the size of a company, with smaller ?rms ?nding it more dif?cult. White et al. (1999) noted that smaller manufacturers in the US experience different problems when implementing JIT than those encountered by large ?rms. Thus, this survey provides insight into the characteristics and problems of smaller JIT automotive ?rms. Work environment Slightly more than half (54 percent) of responding plants operated three daily shifts; 34 percent worked two daily shifts; and only 12 percent worked a single daily shift. Almost all (92 percent) stressed a team concept, and 86 percent of the plants were non-union. Considering the fact that union dif?culties were cited numerous times in the literature, e.g. (Callen et al., 2000) and (Wafa and Yasin, 1998), our ?ndings differ from prior research because the respondent plants are overwhelmingly non-union. Almost all of the responding ?rms (94 percent) required employees to inspect their own work, and 66 percent of the ?rms offered incentives for improved performance. Seventysix percent reported that their employees rotated jobs. Customers The number of automotive customers for any single plant ranged from 1 to 200, with an average of 19.2 and a median of 45. Likewise, respondents indicated that anywhere from 2.5 to 100 percent of their automotive customers required JIT, with the average being 75.4 percent. Respondents supplied an average of 52.7 percent of their total production to their primary customer. A larger majority of the respondents’ primary customers were owned by companies based in the US, Japan, or 437

Germany. A total of 52 percent of the primary customers were based in the US, 22 percent were based in Japan, and 14 percent were based in Germany. A total of 78 percent of the respondents indicated that their primary customer had shared technical expertise with their plant, and 72 percent were actively involved with designing their primary customer’s ?nished product. When asked whether their primary customer used electronic data interchange (EDI) with their company, 76 percent of the respondents said the customer did. Financial penalties were most frequently cited as the consequence for failure to deliver satisfactory products to the primary customer on time. Suppliers Survey participants had anywhere from 2 to 600 automotive suppliers, with an average number of 72 suppliers and a median of 45 suppliers. When selecting a new supplier, respondents most often considered quality, which matches Freeland’s (1991) ?ndings. Other factors were cost and ontime delivery. A total of 52 percent of respondents used either a sister or parent plant as a supplier of raw materials, which is considerably less than the 80 percent of the respondents to Cheng’s (1988) survey. However, Cheng’s survey results were based on a small sample of 20 ?rms and the study was limited to companies located in Hong Kong. A total of 52 percent of the plants included their suppliers in designing their product. Only 25 percent of the respondents did not have contracts with their suppliers. The others had contracts that lasted anywhere from six months to ten years. Many respondents did not have a speci?ed contract length. Trucking companies When selecting new trucking companies for their product, companies tended to place the highest value on on-time delivery and low cost. The majority of respondents did not have a contract with their trucking companies, and almost half of the respondents did not impose any penalty on a trucking company that did not meet the terms of its contract. The remaining respondents would impose ?nancial penalties or quit using the trucking company. Summary of company characteristics The sample results from the 50 plants in Tennessee and Alabama resemble the sample results of previous studies in many ways, such as the primary consideration of quality when selecting new suppliers. However, several differences were noted. First, 60 percent of the current survey’s participants had 250 employees or fewer, so this survey focused on smaller ?rms. Second, only ?ve previous surveys focused solely on automotive industry. Third, the ?rms in this survey were primarily non-union. Thus, this survey provides insight into a different segment of JIT ?rms: smaller, non-union automotive manufacturers. Implementation of JIT Included in the company characteristic section of the survey were questions related to the extent of JIT implementation. All companies included in the sample professed to have a JIT system. Even though each company supplied at least one customer that required JIT deliveries, most companies included in the sample did not work in a pure JIT plant. When asked about the percentage of the plant’s manufacturing system that was JIT, responses ranged from 4 to 100 percent, with an average of 75.4 percent. Monden associates eight subsystems and methods with a successful JIT system:

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

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1 2 3 4 5 6

7 8

The kanban system to maintain JIT production. A production-leveling method to allow adaptation to demand changes. Shortened set-up times that reduce production lead times. Standardizing operations to attain line balancing. Machine layouts that promote multi-skilled workers and the ?exible work force concept. Small-group improvement activities and a worker suggestion system to reduce the work force and increase morale, respectively. A visual control system to achieve autonomation. A “functional management” system that promotes company wide quality control, and so forth (Monden, 1992, p. 2117).

To provide insight into the extent of JIT implementation, each respondent was asked which of the elements had been implemented. The results are provided in Table IV, sequenced by percent implemented from high to low. A total of 48 of the 50 companies had implemented a “functional management” system. Likewise, 43 of the 50 respondents reported standardizing operations and/or implementing small-group improvement activities. Surprisingly, only 22 respondents used a kanban system, even though it is an important subsystem of JIT. A kanban system is a pull system of inventory control that typically uses cards or bins to signal when work-in-process should be moved forward. Companies reported a wide range of JIT-related bene?ts. When asked to name the single most signi?cant bene?t of JIT, more than half of the respondents cited an inventory-related bene?t. This supports the ?ndings of several studies: Claycomb et al. (1999), Fullerton and McWatters (2001), and Brox and Fader (2002). Scheduling, pricing, and improved quality feedback were other reported bene?ts. Both the number of years respondent plants had supplied JIT and the number of years that had passed since the plants began preparing to supply JIT varied greatly. Table V provides a summary of the minimum, maximum, average, and median Table IV Implementation rate of JIT-related subsystems and methods
JIT element Company wide quality control system Small-group improvement activities and worker suggestion system Standardized operations Production-leveling method Machine layouts promoting multi-skilled workers Visual control system Shortened setup times Kanban system Implemented (%) 96 90 86 84 82 82 72 44

values for these two characteristics. The data indicate that plants spent an average of less than one year preparing to become a JIT supplier. A total of 21 of the 50 respondents indicated that JIT implementation was ?rst suggested by a customer. Likewise, 28 respondents implemented JIT in their plant as a result of customer pressure, which supports the ?ndings of Stamm and Golhar (1991). Interestingly, 14 companies reported that either a customer or a potential customer served as their primary source of JIT information. Only one of the 41 respondents to Hum and Ng’s (1995) study indicated that JIT implementation was ?rst suggested by a customer, and none of the respondents to Cheng’s (1988) study reported learning about JIT from their customers. This difference may be due to the size of the companies included in the surveys. Earlier surveys focused on larger companies. Large ?rms in the supply chain possess more power or control over smaller ?rms (Claycomb et al., 1999). Smaller ?rms are more likely to yield to their customers’ pressures to become a JIT supplier. Only 16 percent of responding companies used an external consulting ?rm during JIT implementation, but 50 percent established a formal JIT implementation team. JIT implementation team members most often represented the engineering area of the plant and sometimes included members from production control, operations, logistics, systems, materials, purchasing, tooling, and/or quality. The plant manager most often supervised JIT implementation. Other supervisors included company owners, chief executive of?cers, presidents, engineers, material managers, and corporate consultants. Respondent plants took a wide variety of ?rst steps toward JIT implementation, ranging from reducing inventory to reducing setups to establishing a pull system to updating the computer system. This result differs from Chen’s (1991) ?ndings, which indicated that more than two-thirds of companies certi?ed suppliers as their ?rst step. It is unclear why the respondents of our survey did not focus on supplier certi?cation. Again, a wide variety of responses was provided regarding the party who currently evaluates the performance of the plant’s JIT system. The most frequently cited party was the plant manager; others included customers and quality departments. JIT implementation problems and solutions The second part of the survey focused on 20 JIT-related problems that had been identi?ed by previous surveys. The following sections address the respondents’ most frequently cited problems, as well as their periodically recurring, ongoing, and most troublesome problems. Most frequently cited problems Table VI shows the most frequently cited problems reported by more than half of the combined Tennessee and Alabama respondents. As shown, the top problem was poor production quality. To address this problem, most respondents used

Table V Length of JIT implementation and preparation time
Statistic Years supplying JIT Years since began preparing for JIT Minimum value 0.67 (8 months) 0.83 (10 months) Maximum value 18 19 Average value 7.0 7.8 Median value 6.75 7.25

438

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

Supply Chain Management: An International Journal Volume 12 · Number 6 · 2007 · 432 –443

Table VI Most frequently cited problems
Problem Poor production quality Poor quality of supplied parts Supplier inability to deliver materials on time Unstable customer schedules/scheduling Poor and/or inaccurate data Lack of supplier support Forecasting inaccuracies Alabama (%) 84 68 72 72 68 52 56 Tennessee (%) 88 88 80 76 64 76 44 Combined (%) 86 78 76 74 66 64 50

quality control techniques to identify quality defects and drivers. Then, based on the problem, they re-trained, retooled, or modi?ed processes to correct the problem. This ?nding supports Steele’s (2001) assertion that total quality management (TQM) is a key component of JIT and Fawcett and Myers’s (2001) conclusion that TQM is essential for JIT success. The next most frequently cited problem was poor quality of supplied parts. Respondent companies addressed the problem in numerous ways. Most tried to work with the supplier to identify problems and make corrective actions. Some used long term contracts to motivate suppliers, while others used a single source supplier to eliminate quality problems. Others implemented a certi?cation program for suppliers or placed employees at the supplier’s plant. When companies could not get suppliers to cooperate, they changed suppliers. The third most frequently cited problem was the supplier inability to deliver materials on time. According to Yasin et al. (2001), the cause of this problem is a lack of communication between the company and its suppliers, and the corrective actions taken by the respondents support this conclusion. These actions included communicating requirements and expectations, offering training, placing employees in the supplier’s plants, and instituting monthly performance ratings for suppliers. When companies could not get suppliers to cooperate, ?nancial penalties were assessed or the suppliers were dropped. Both Steele (2001) and Alternburg et al. (1999) cited a trend to encourage suppliers to locate close to their customers in an attempt to prevent this problem. Although locating nearby was not identi?ed as a requirement or corrective action by any of the respondent companies, it should be noted that many suppliers were located in close proximity to their customers. The fourth most frequently cited issue was unstable customer schedules/scheduling. Even though 76 percent of the respondents said their primary customer used electronic data interchange (EDI) with their company, unstable schedules continued to be a signi?cant problem. According to the survey responses, there is not a lot more a supplier can do other than communicate concerns frequently to the customer. One respondent stopped supplying a customer when the problems could not be resolved. Schedule stability and accurate timely data from the customer are essential to resolving this issue. Other JIT-related problems cited by more than 50 percent of the manufacturers were lack of supplier support, poor and/ or inaccurate data, and forecasting inaccuracies. Periodically recurring problems Figure 1 shows the most signi?cant problems identi?ed as periodically recurring, which are issues that have been 439

encountered and solved but continue to occur over time. Supplier inability to deliver materials on time was the most often cited periodically recurring problem (cited by 52 percent of respondents), closely followed by poor quality of supplied parts (cited by 48 percent of respondents). However, poor production quality was the top periodically recurring problem in Tennessee (cited by 60 percent of respondents). Ongoing problems Figure 2 shows the problems identi?ed as ongoing, which are issues that have been encountered but not solved. The top ongoing problem was unstable customer schedules (cited by 76 percent of respondents in both states). Poor production quality was cited as the second major ongoing problem by 52 percent of Alabama respondents, whereas 52 percent of Tennessee respondents cited lack of supplier support and supplier inability to deliver materials on-time. It should be noted that poor production quality was identi?ed as the top periodically recurring problem in Tennessee whereas it was an ongoing problem in Alabama. Thus, it appears that this problem has been solved to a greater degree in Tennessee. Although the two states are very similar, the longer history of automotive assembly and somewhat larger ?rms in Tennessee may be factors in the differences seen here. Most troublesome problem When asked to name their most troublesome issue, eighteen companies cited customer-related scheduling problems and eleven cited supplier-related problems. Figure 3 provides an illustration of the most troublesome problems, i.e. the issues identi?ed as causing the most problems. A total of 72 percent of Tennessee respondents and 60 percent of Alabama respondents cited unstable customer schedules and/or scheduling dif?culties as causing the most problems. Suppliers have to meet the requirements of their customers. Uneven and unpredictable demands may cause suppliers to hold higher levels of inventory. Responses indicated that, unless the customer cooperates, a supplier has little hope of solving this problem. EDI is helpful, but gaining further online access to customers’ changing production schedules might give more timely notice of ?uctuating schedules. Technology cannot be useful to the supplier if the input submitted by the customer changes without allowing time for suppliers to react. Supplier-related issues were the next category of issues that were most troublesome problems. The third category of issues included production-related problems, with many different problems reported but only two (inventory and production quality) cited by more than one respondent.

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

Supply Chain Management: An International Journal Volume 12 · Number 6 · 2007 · 432 –443

Figure 1 Periodically recurring problems

Figure 2 Ongoing problems

440

Just-in-time implementation issues among automotive suppliers Jack E. Matson and Jessica O. Matson

Supply Chain Management: An International Journal Volume 12 · Number 6 · 2007 · 432 –443

Figure 3 Summary of most troublesome problems

Implications and conclusions
Respondent companies reported using the eight JIT subsystems described by Monden (1992) at various levels of implementation. Over 80 percent of the respondents had implemented six of the eight subsystems, indicating a high level of implementation for these JIT practices. Fewer (72 percent) of the companies had reduced their setup times, and only 44 percent of the companies used a kanban system. With a kanban system, work-in-process (WIP) inventory is moved through production stages only when it is needed, minimizing WIP inventories. Together with shorter setup times, production is more ?exible, thus making it easier to respond to changes in demand. These two JIT subsystems are areas that the respondent companies could pursue to gain production ?exibility and reduce inventory costs. Suppliers play a crucial role in the success of a JIT system. Customers need to select and maintain a reliable and competitive supplier base to keep costs down and quality of the delivered product up. The respondent companies have an average of 72 suppliers and a median of 45 suppliers. That is probably too many for small JIT manufacturers. A total of 25 percent of respondent companies have no contract with their suppliers. For those with contracts, the length of the contract ranges from six months to ten years, and some contracts had no speci?ed length. Maintaining long-term contracts with fewer companies can result in better channels of communication, require less follow-up, and require less paperwork. Long-term commitments with fewer suppliers should result in higher quality parts and lower costs. The survey results also point to several problem areas of JIT suppliers for research focus. Previous research found a relationship between JIT implementation success and company size. This study also found differences related to company size. Respondents of companies with 250 or fewer employees cited unstable customer schedules as the most troublesome issue more than twice as often as respondents from larger ?rms. In addition, respondents from smaller ?rms had lower levels of implementation of Monden’s eight JIT subsystems. This ?nding supports the need for research to identify alternative methods that are more appropriate to small companies. A second need is for engineering research to help companies solve the most frequently cited problem, poor production quality. Third, companies who must implement a JIT system need research applied to determine methods of 441

dealing with or resolving the top ongoing problem of unstable customer schedules. In summary, this study has identi?ed problems faced by automotive suppliers that have implemented JIT systems. The ?ndings of this study have provided insight into the demographics and common problems related to JIT implementation in the automotive industry. If JIT experience is critical to a successful JIT implementation, then the ?ndings of this study can help others considering a conversion to a JIT system improve the likelihood of a successful implementation.

Note
1 To request a copy of the survey instrument, please e-mail the authors.

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About the authors
Jack E. Matson is an Associate Professor in Department of Decision Sciences and Management at Tennessee Technological University. He received his BS from Clemson University, MS from Mississippi State University, and PhD from the University of Alabama. He has over ten years of industrial experience as a manager with the Bell System in MIS and strategic planning and previously served on the faculty of the University of Alabama. Jack Matson is the corresponding author and can be contacted at: jematson@tntech.edu Jessica O. Matson is a Professor in the Industrial and Systems Engineering Department at Tennessee Technological University. She received her BS from Mississippi State University and her MS and PhD from the Georgia Institute of Technology, all in industrial engineering. She has previously served on the faculty of Mississippi State University and the University of Alabama and is a licensed Professional Engineer.

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