Do Modern Japanese Inventory Methods Apply To Hong Kong?

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Steven P. Landry

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Abstract

The ability to achieve higher standards of productivity without sacrificing quality is an important goal of a manufacturing firm. A primary reason offered to explain Japanese firms successes has been the dominant role of the use of the Just-In-Time (JIT) operational philosophy (Mehra & Inman, 1992). If successfully implemented, JIT reduces inventory and ultimately results in reduction in manufacturing costs along with improvement in profitability (James, 1994). There are three main manufacturing objectives for JIT (Suzaki, 1987). One is increasing the organization's ability to compete with rival firms and remain competitive over the long run. JIT allows companies to develop optimal processes for manufacturing their products. A second is increasing the degree of efficiency within the production process. JIT allows greater level of productivity and minimizes the associated costs of production. The third is reducing the level of wasted materials, time, and effort involved in the production process. Elimination of unnecessary waste can significantly reduce costs of production. Much of the literature concerned with the implementation of JIT deals specifically with elements that are crucial to successful implementation (Karen & Anthony, 1993). This study looked at three of those elements; namely, management commitment, JIT production strategy, and JIT vendor strategy. If these "critical" elements are not present, the potential level of JIT implementation may be low. The Hong Kong electronics/electrical manufacturing industry was chosen as the context for this study. A survey questionnaire based on the three main prerequisites of JIT implementation was developed and sent out in order to investigate whether JIT implementation could be carried out in Hong Kong. Both inferential analysis and descriptive analysis were used to interpret the results. The study found (1) No significant relationship existed between management commitment and the potential level of JIT implementation, and (2) A significant relationship did exist between JIT production strategy and JIT vendor strategy and the potential level of JIT implementation.

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