JUST IN TIME AND FIRM’S PRODUCTIVITY

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

 CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research question

1.5        Research hypotheses

1.6        Significance of the study

1.7        Scope and limitation of the study

1.8       Definition of terms

1.9        organization of the study

CHAPETR TWO

LITERATURE REVIEW

2.1 introduction

2.2 conceptual review

2.3 empirical review

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

 

 

 

 

Abstract

In today’s highly competitive work environment, companies have to find ways to be able to compete effectively with their competitors. They have to find ways to reduce cost, improve quality, and increase customer satisfaction. Just-In-Time production system is among the tools that companies can use to become competitive. The implementation of Just-In-Time manufacturing system will provide companies with competitive advantage; however the system requires companies to change radically. Cost accounting is among the areas that are affected by the implementation of Just-in-Time production system. The aim of this paper is to discuss the effects of Just-in-Time production system from cost and management accounting perspective.

 

 

 

 

 

 

 

CHAPTER ONE

                                                INTRODUCTION

1.1 Background of the study

In an intense competitive environment, companies try to find ways to be able become competitive. Just-in-Time (JIT) production system has been used as a response to increasing competition. Taicchi Ohno initiated the basic idea of JIT production system, and Toyota Company, which needed to produce different types of cars by using the same production process, first used JIT production system. After the use by Toyota Company, the system was employed by other Japanese companies (Yükçü, 2000). The JIT production system then became widespread in many companies in Japan in the late 1970s, and began to be known abroad (Yui, 1997). Today JIT system is well known throughout the world. The reason why the system is so popular today is a result of its advantages realized by the manufacturing companies. For instance, the use of JIT production system leads to better production quality, less inventory, and shorter product lead times (Swenson and Cassidy, 1993:39). The use of JIT production system, therefore, increases customer satisfaction by providing them with high-quality product on time. But these gains require some changes. When a company implements JIT production system, major physical, psychological, and organizational changes occur in the organization’s work environment. The company implementing JIT production system develops closer relationships with suppliers; significantly reduces its inventories; and implements simplified manufacturing procedures. The JIT concept also helps reduce the number and type of the accounts used in journal and ledger entries. The concept simplifies accounting records and reduces accounting costs. On the other hand, a reduction in the level of all kind of inventories will minimize inventory-related costs and significantly eliminate inventory-related procedures. The implementation of JIT production system is, therefore, of concern to management accountants. They must modify their cost accounting procedures when changes in manufacturing processes cause changes in the demand for accounting information (Lynn and Adrian, 1991). For example, as finished goods are sold immediately, there is no need to transfer the finished products to finished-goods inventory. Instead they can be transferred to the cost of goods sold account directly when sale takes place. JIT production system is a system that enables companies to produce products in required amounts and just when demanded (Tanış, 1992). By using the system, companies intend to offer products on time. If companies finish final products on time, they will be able to minimize the raw material, work-in-process and finished-goods inventories. How these reductions can be achieved may be described as follows: raw materials are purchased when needed for production, work-in-process inventories are not produced until they are needed by the coming production process, and finished products are offered to customers immediately after they are produced. In other words, in JIT setting demand triggers each step of the production process: starting with a customer demand for a finished product at the end of the process and working all the way back to the demand for direct material at the beginning of the process (Horngren et.al., 2000). When customers order a party of products, they will not wait very long to receive their orders, because these products can be produced in a very short period of time under a JIT setting. This means that, lead-time is very short. In addition, as products are produced without any stoppage, there will be no wasted time spent for inspecting and correcting the defective products. Thus, products can be ready to deliver on time. To meet up with the increasing requirements for efficiency and responsiveness, manufacturing and operations management philosophies have been developed during the past decades. Just-in-Time (JIT) is one of them. And as manufacture advances in technology there is need for Nigerian firms to collectively as well as individually move with the trend (Ihueze, C.C. & C.C.Okpala, 2011). Many Nigerian firms don’t apply JIT because they don’t have the idea of how it works, some have the idea but don’t know how to go about moving from the conventional manufacture to JIT manufacture. Still many Nigerian firms have imported and countless would like to import this technique and emulate Japanese success. But this Japanese success may be attributable not only to the Just-In-Time with kanban technique but also to the production environment in which the technique is employed.

1.2 STATEMENT OF THE PROBLEM

As manufacture advances in technology there is need for Nigerian firms to collectively as well as individually move with the trend. Many Nigerian firms don’t apply JIT because they don’t have the idea of how it works, some have the idea but don’t know how to go about moving from the conventional manufacture to JIT manufacture. Still many Nigerian firms have imported and countless would like to import this technique and emulate Japanese success. But this Japanese success may be attributable not only to the Just-In-Time with kanban technique but also to the production environment in which the technique is employed. Nigerian environment is not as ordered and JIT friendly like the Japanese, majority of raw materials are imported, so there is a need to draw a line on the application of JIT in Nigeria. Every motor assembly firm in Nigeria has their own peculiar problems, challenges and advantages; there comes the problem of how to go about the technique to be applied in modeling and evaluation by the respective firms. Most of the recent work on JIT analysis and modeling based their work on manual technique making it hard for firms to really compare and select the most suitable technique. Innoson Vehicle Manufacturing Company is located at Nnewi. The increase in demand of automobile in Nigeria today has given Innoson Vehicle Manufacturing Company a task of struggling for their market share especially with new motor assembly companies springing up.

 1.3 OBJECTIVE OF THE STUDY

The study has one main objective which is divided into general and specific objective; the general objective is to examine the effectiveness of just in time and firms productivity, the specific objective are;

1. i) To examine if JIT exercise tight control on the most valuable inventory in the course of procurement and accounting
2. ii) To examine if there is any relationship between just in time method of inventory and firms productivity

iii) To establish the levels of correlation between inventory management strategies and firms productivity

1. iv) To proffer suggested solutions to the identified problem

1.4 RESEARCH QUESTIONS

The following research questions were formulated by the researcher to aid the completion of the study

1. i) Does just in time method of inventory requisition exercise tight control on the most valuable inventory in the course of procurement and accounting?
2. ii) Does the levels of correlation between inventory management strategies enhanced firms productivity?

iii) Is there any significant relationship between just in time method of inventory and firms productivity?

1.5 RESEARCH HYPOTHESES

The following research hypotheses were formulated by the researcher to aid the completion of the study

H₀: there is no significant relationship between just in time method of inventory and firms productivity

H₁: there is a significant relationship between just in time method of inventory and firms productivity

H₀: The levels of correlation between inventory management strategies does not enhanced firms productivity

H₂: The levels of correlation between inventory management strategies does enhanced firms productivity

1.6 SIGNIFICANCE OF THE STUDY

This study was chosen because it will not only provide students with the basic knowledge of JIT, its analysis and modelling but will also give entrepreneurs- companies and SMEs- the basic and adequate knowledge they need to embrace it. Nigerian entrepreneurs would be able to embark on the following;

1. With the external and internal parameters on ground, they would be able to compare their method of manufacture and the JIT method and see for themselves.
2. For those that are already practising JIT and those that have a particular JIT system and performance level in mind, they would be able to evaluate the sensitivity of their performance to internal and external parameters.
3. Entrepreneurs already on JIT and the intending ones would be able to determine the number of kanbans that should be allocated to each of the work centres to maximize the throughput.
4. The last but far from the least, intending entrepreneurs would be able to know the challenges and determine the least expensive way to switch from a push (Conventional) to pull (JIT) control system.

This work adds to growing body of literatures on JIT by utilizing the present stand of Nigeria industry to forecast the bright future if suggested precautions and corrections are implemented.

This study will go a long way to address production cost and delays in Manufacturing Company.

1.7 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers just in time and firms productivity but in the course of the study, there were some factors that limited the scope of the study;

AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study

TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

FINANCE: The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

 1.8 OPERATIONAL DEFINITION OF TERMS

 Just in time

The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules.

 Inventory

Inventory or stock is the goods and materials that a business holds for the ultimate goal of resale. Inventory management is a discipline primarily about specifying the shape and placement of stocked goods

Productivity

Productivity describes various measures of the efficiency of production. Often, a productivity measure is expressed as the ratio of an aggregate output to a single input or an aggregate input used in a production process.

Firms

A firm is a for-profit business organization such as a corporation, limited liability company (LLC), or partnership that provides professional services. Most firms have just one location.

1.9 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

Reference

Altiok, T. (1989). Approximate Analysis of Queues in Series with Phase-Type Service Times and blocking. Operations Research, 37: 601-610.

Bard, J.F. & Golany, B. (1991). Determining the Number of Kanbans in a Multi-Production System. International Journal of Production Research, 29(5): 881-895.

Berkley, B. J., & Kiran, A.S. (1991). A Simulation Study of Sequencing Rules in a Kanban-Controlled Flow Shop. Decision Science, 22(3): 559-582.

Berkley, B.J. (1990). Analysis and Approximation of a JIT Production Line. Decision Sciences, 21(3): 660-669.

Chase- Jacobs- Aquilano. (2004). Operations Management for Competitive Advantage. New York: McGraw- Hill.

Conway, R., Maxwell, W., McClain, J. O., & Thomas, L. J. (1988). The Role of WIP Inventory in Serial Production Lines. Operations Research, 36(2): 229-241.

Costa, A., & Garetti, M. (1985). Design of a Control System for a Flexible Manufacturing Cell. Journal of Manufacturing Systems, 4(1): 65-84.

 

 

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