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Logistics and Distribution: JIT and other advantages in logistics

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Logistics and distribution 2008/09

Answer two of the following questions

Question: {1}

Just in time {JIT} is not just about reducing inventory. Discuss in full details

Question: {2}

{A} what is competitive advantage in Logistics?

{B} how can it be gained using Logistics Management?

Conclusion & References

Typed, 1200 words.

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Solution: 1

The Just-In-Time (JIT) concept is a "process for optimizing manufacturing processes by eliminating waste including wasted steps, wasted materials, and excess inventory" (Damiano, 2003). The JIT concept is also known as lean production or stockless production. This process should improve profits and return on investments. "This is done by reducing inventory levels, increasing the inventory turnover rate, improving product quality, reducing production and delivery lead times, and reducing other costs such as those associated with machine setup and equipment breakdowns" (Tubular Steel, Inc., 2004).

One of the key components of JIT is to reduce waste and add value. There are several activities that a company must monitor as targets for reducing waste. Among these are, excessive waste times, inflated inventories, unneeded people or material movement, unnecessary processing steps, numerous variability's throughout a firm's activities and any other non-value adding activity. A key example of this is a new plant that Caterpillar is bringing on-line in the near future. By reducing the number of times a bucket had to be repositioned while it was being welded, Caterpillar was able to reduce the time the bucket spent in the welding line, reduce labor costs by limiting idle time at the welding station and increase the efficiency of the entire manufacturing process.

JIT II is a way to improve the customer-supplier relationship. JIT II uses "systems integration" which allows, "sharing of information so that the relationship is more like a partnership" (Pragman,1996). Essentially this equals more and more visibility throughout the supply chain, which equals better responsiveness and lower costs, the two main goals of supply chain management.

Other systems that cater JIT principles are frequently used by large regional companies, or companies that expand nationally or even globally. Take for instance Sears Department store. Whenever a sale is made, that information is transferred to the computer and stored, to later be submitted to various computers that use the information to update inventory, calculate sales and create other statistical reports. Another example would be a restaurant such as Applebee's. When food is ordered, the waiter submits this into a computer. At the present time, the information is used for the cooks and for check calculation. Later, the stored information is used in reports for management to clearly see what items have been sold and need to be reordered. The uses span far, as management can also use this data to see sale progressions of certain items and to see what sells the most at various times of the day, week or month. Using the Internet, this information can be sent to several locations and management and accounting teams can access the data and analyze it, to project a much larger picture for the restaurant chain instead of just one store.

The JIT principle and uses span much farther than just inventory. It is a common practice that many companies have adopted and many more are realizing the need to pursue the concept. The process ...

Solution Summary

This solution contains a detailed explanation of competitive advantage in logistics as well as an explanation of logistics management.