Question:
Japanese companies that have used just-in-time (JIT) for five or more years are reporting close to a 30% increase in labour productivity, a 60% reduction in inventories, a 90% reduction in quality rejection rates, and a 15% reduction in necessary plant space. However, implementing a just-in-time system does not occur overnight. It took Toyota over twenty years to develop its system and realize significant benefits from it.' Source: Sumer C. Aggrawal, Harvard Business Review (9/85)
Requirements:
(a) Explain how the benefits claimed for JIT in the above quotation are achieved and why it takes so long to achieve those benefits.
(b) Explain how management information systems in general (and management accounting systems in particular) should be developed in order to facilitate and make best use of JIT.