Implementation of JIT in Steel Industries of BangladeshSukumar Mitra - 0620291

Research Paper

Abstract•This research reveals attributes of just-in-

time (‘JIT’) as practiced by Toyota and its affiliates.

• JIT in steel industry of Bangladesh is not explored yet.

• In this paper we have tried to study the significance of JIT for increasing company’s financial and non financial performance.

Introduction•Over the last decade, steel industries in

Bangladesh are facing increasing pressures to attain and sustain their competitive position and performance.

•Some of the benefits of JIT would allow ▫companies to reduce costs, ▫meet customer’s demands, ▫stay ahead of competitors and minimize

slack resources

Objective

•The purpose of the research is ▫to examine the level of JIT implementation

among steel industries in Bangladesh ▫to evaluate empirically the relationship

between the JIT implementation and performance.

Research Question• Hypothesis 1 There is a positive relationship between the level

of JIT implementation and business performance.

• Hypothesis 2 There is a positive relationship between the level

of JIT implementation and financial business performance.

• Hypothesis 3 There is a positive relationship between the level

of JIT implementation and non-financial business performance.

Research Method

•The research was undertaken using a survey design, where primary data were obtained from companies operating in the Steel industry of Bangladesh.

•Due to time and cost constraints, a total of 5 companies were conveniently selected.

•Questionnaires were distributed through postal mail and email to manufacturing companies

Findings and Analysis

•JIT implementation variable

Item Mean

Supplier access to production schedule

2.66

Manufacture after receive order 3.63

Use single cell production 3.36

Quality checks on raw material by suppliers

3.61

Deliver goods based on company’s production schedule

3.75

Cronbach alpha: 0.612

Criteria Mean Standard Deviation

Overall Performance

3.20 0.43

Financial: 3.24 0.67

Profit before Tax 3.14 0.88

Cost Savings 3.33 0.76

Non Financial: 3.18 0.47

On-time delivery 3.28 0.87

Manufacturing time 3.18 0.62

Product quality 3.28 0.76

Space saving 3.42 0.90

Reduce purchasing time

3.14 0.91

Innovation 2.79 0.85

Cronbach alpha: 0.628

CorrelationMEANJIT Overall

Performance Financial

performance Non-financial performance

MEANJIT 1

Overall Performance

0.488 (p=0.000)

1

Financial performance

0.438 (p=0.000)

0.929 (p=0.000)

1

Non-financial performance

0.332 (p=0.000)

0.615 (p=0.000)

0.281 (p=0.014)

1

The correlation between financial performance (profit and cost saving) and JIT implementation is also significant.

Regression Analyses

Independent Variable

Dependent Variable: Performance

Overall Performance

Financial performance

Non-financial performance

JIT Implementation

00.488*** 0.332*** 00.438***

R2 00.238 0.110 00.192

Adj. R2 00.227 0.098 00.181

F 23.079*** 9.159*** 17.585

The regression results indicate significant and positive relationship exists between JIT implementation and overall

performance

Limitations

•data collected at a single point of time•a majority of the respondents in the survey

were middle-level managers and were not the senior or top-level managers as initially planned

• that the respondents might have been unfamiliar with the questionnaire terms

• the sample size in this study is relatively small

•other variables could be added

Conclusion• JIT influences company’s performance in

making more profit by reducing the cost of unproductive activities and maintaining minimum inventory.

• Most of the steel industries are not aware of this process and have very little or no knowledge.

• Government should take steps to influence and make supportive environment

• Future research could investigate further into the nature and degree of JIT implementation through the use of bigger sample.