JIT after a Catastrophe

Course: Productions & Operations Management.

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Thi Quc
Dng
Nguyn Ngc
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Thi Nht Minh
Nguyn Anh
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OUTLINE
I. JIT Definition.
II. Case summary.
III. Discussion questions:
1.
2.
3.
4.

If you are Mr. Folley, looking over the devastation at the Oxford plant,
what do you do to keep Caterpillars worldwide production running?
Given the inherent risk in JIT and the trauma that the companies have
experienced, why has JIT survived?
What do these experiences, and the continuing popularity of JIT, tell
you about just-in-time?
What actions or changes in policy do you suggest for Caterpillar?

JIT definition:
An inventory strategy companies employ
to increase efficiency and decrease waste
by receiving goods only as they are needed
in the production process, thereby reducing
inventory costs.

Case summary:
JIT systems are used and tested in real life by
many companies in the world:
Toyota got JIT tested by fire.
Chrysler got JIT tested by terrorist attack.

The case concerned about JIT system of

Caterpillar:
Feb 5th 2008, a storm destroyed Caterpillar facility in Oxford,
Mississippi.
10-ton heating and air-conditioning units, had fallen onto three
critical metal stamping machines.
Getting production back to normal would take 6 months.

If you are Mr.Folley, looking over the

devastation at the Oxford plant, what do
you do to keep Caterpillars worldwide
production running?

Reusing
Clear the final product => hiring engineers.
Couplings need to reuse.
Save the used source.

Affiliating
Contact with outside supports such as
supply chain in China, Japan

Fixing
Production chain needs to be
fixed.
Decrease the time of fixing those
machines by employ more
workers.
=> Should be carefully considered
to avoid the diminishing of returns.

Given the inherent risk in JIT and the

trauma that the companies have
experienced, why has JIT survived?

Reasons for survival

Reduce
inventory

Requirement
for higher
quality

Motivation
for
standardizati
on

Disadvantage
Risk of high loss due to
production halt
Ex: Toyota, in 1997, one
Saturday, a fire at Aisin Seiki
Companys plant stopped the
delivery of all break parts to
Toyota. By Tuesday, Toyota had
to close down all of its
Japanese assembly line. By the
time the supply of brake parts

Benefits of JIT

Reducing cost
Minimizing waste.
Less idle time.
Create a more simple practice of
quality control.
Force the company to focus on
production.

Link to the case

In Caterpillars case, the Oxford
plant is the only plant in the world
that makes this unique coupling.
The couplings link hydraulic hoses
on every piece of machinery
Caterpillar makes. Depending on
a single source and holding little
inventory is a risk, but it also
keeps firms lean and costs low.

Result
More efficient and better
quality.
Allowing a more fluid approach
to production.
Minimizes the costs of
redesign.

What do these experiences, and the

continuing popularity of JIT, tell you
about just-in-time?

Experiences
JIT is risky, but the cost
savings experienced make it
:
Minimize waste by
attacking waste.
Exposing problems.
Bottles necks .
Achieving streamlined
production.

The continuing popularity

Many companies have chosen to adopt the JIT practices.
Even through the catastrophic events we discussed
today have not stopped any of these companies from
continuing with a JIT plan for operational management.
The reason for the continuous support for the JIT
practice is the strength of relationships that are formed
with the suppliers, each company experiences.

The continuing popularity

The bottom line is once a JIT system is successfully

implemented the corporation will realize both time and
monetary savings.
JIT facilitates a more effective and efficient use of funds.

What actions or changes in policy

do you suggest ?

Adding some machines at factories that can duplicate

some of the couplings.
Reviewing operations world-wide.
Building another coupling plant outside the U.S :
- supply future growth.
- provide back-up if there is another crisis.
- maintain efficient JIT practices.

Reconstruct the design of its coupling plant:

Move the metal stamping machines away from the 10
ton heating and air conditioning unit above.

Have the right balance of efficiency and risk

Trim the number of its part variations:
- Cut cost.
- Easily shifting to another site if disaster strikes.