Assessing the impact of JIT using economic theory

Abstract

This paper combines ideas that are well founded in the production and inventory management literature, with analytical approaches that have been long established in the economic theory literature, to reveal and explore production‐function characteristic differences between JIT producers and non‐JIT producers among electronic firms in Ontario, Canada. The methodology employed is the estimation of the CES‐TL total cost system. Our primary conclusion is that JIT firms are more cost‐efficient and appear to be distinct from the non‐JIT group. This conclusion is supported by: (1) the fact that, in most cases, the elasticities calculated from the two groups of firms are significantly different; (2) the fact that the cost elasticity with respect to output is lower for the JIT firms than for the non‐JIT firms, indicating that the former are better able to capture economies of scale and density; (3) the difference between the elasticities of factor productivity, with respect to output changes, shows the JIT firms as being more labor‐ and materials‐saving than the non‐JIT firms.

Interrelationships among lean bundles and their effects on operational performance

“…Significant positive relationships are found between JIT and each individual dimension of performance. In a comparison study of JIT and non-JIT Canadian electronic firms, Brox and Fader (1997) find statistical support for the assertions that, within JIT companies, productivity is also enhanced through worker and production flexibility and quality improvements. Nakamura et al (1998), by analyzing a sample of three manufacturing industries including both U.S. owned plants and Japanese transplants located in the United States, estimate the impact of JIT practices on some key manufacturing performance measures.…”

A study of the effect of manufacturing proactivity on business performance

“…The most direct way to relate manufacturing proactivity to better business performance is through the literature that attributes some kind of competitive Practices Studies pointing out a positive effect on competitiveness and company performance Employee participation and involvement Brown (1993), Conte and Svejnar (1988), Ichniowski and Kochan (1996) and Shaw (1997, 1999) Employee training and development Brown (1993), Ichniowski and Kochan (1996) and Shaw (1997, 1999) Collaboration with suppliers Dyer (1997), Dyer and Ouchi (1993), Jap (2001) and Johnston and Lawrence (1988) Continuous improvement Flynn and Flynn (1996), Imai (1986) and Webb and Bryant (1993) TQM Douglas and Judge (2001), Flynn et al (1995), Kaynak (2003), Powell (1995) and Samson and Terziovski (1999) Pioneering product designs and features Brown and Eisenhardt (1995), Clark and Fujimoto (1991) and Kessler and Chakrabarti (1996) Advance manufacturing technologies Brandyberry (1999), Small and Yasin (1997) and Kotha and Swamidass (1999) Just-in-time production Brox and Fader (1997), Cua et al (2001), Fullerton and McWatters (2001) and Lawrence and Hottenstein (1995) Integrated information systems Feeny and Ives (1997), Gupta (2000), Mata and Fuerst (1995) and Palaniswamy and Tyler (2000) CAD/CAM technologies Boyer et al (1997), Gunasekaran and McGuaghey (2002) and Maholtra et al (2001) Effect of manufactu...…”

Lean Production System and Economic Development across the World Today

“…Fourth, Bils and Kahn [21] have shown that "...a persistent rise in real marginal cost, absent intertemporal substitution, creates a persistent reduction in inventory holdings relative to expected shipments". Finally, the study by Brox and Fader [22] is also worthwhile mentioning because it clearly shows the efficiency superiority of JIT firms (in relation to non-JIT firms) by relating output, costs and inventories amongst other variables.…”