FEASIBILITY OF JUST-IN-TIME (JIT) IN GHANA

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ABSTRACT

Just-in-Time, a system of production that calls for the elimination of inventory has taken many parts of the world by storm. Many producers and even suppliers are engaging the statutes of this new production system and are seen to be clearly reaping the benefits associated with it. Ghanaian firms seem to be tarrying with respect to the use of this system thus this paper seeks to discover how beneficial this system of production will be to producers in Ghana and how feasibly its implementation will be. In attaining the objectives of this study, both qualitative and quantitative data were collected with the main data source being Magvlyn Ind Limited. Published journals and articles were some of the other data sources used. A regression analyses served as the tool for the determination of the strength of the relationship between sales and inventory. Also a qualitative analysis was used in the analysis of the questionnaires and other secondary data collected.

In conclusion, it was determined that there is a very strong relationship between inventory levels and sales and that inventory levels have a positive impact on sales. Also it was realized that Just-in-Time would not be the most feasible of production options for producers because of the current economic and infrastructural difficulties and also because of Ghanaians attitudes towards change.

Table of Contents

DECLARATION……………………………………………………………………………. I

Acknowledgements…………………………………………………………………… II

ABSTRACT……………………………………………………………………………….. III

List of Figures…………………………………………………………………………… VI

List of Tables……………………………………………………………………………. VII

Chapter One: Introduction…………………………………………………………. 1

Chapter Two: Literature Review……………………………………………….. 11

  1. Introduction………………………………………………………………………… 11
    1. Review of Literary Works……………………………………………………….. 11
      1. Definition of JIT………………………………………………………………. 11
      1. History of JIT………………………………………………………………….. 12
      1. Merits and Demerits of JIT………………………………………………… 13
      1. Elements of the JIT System………………………………………………. 15
      1. JIT and the Traditional Method………………………………………….. 17
      1. Environment and structures that support JIT……………………….. 18
      1. The Ghanaian Environment………………………………………………. 20
      1. Ghana and JIT Today……………………………………………………….. 22
      1. Ghana and JIT: Future Prospects……………………………………….. 23

Chapter Three………………………………………………………………………….. 25

  1. Introduction………………………………………………………………………… 25
    1. Research Methodology………………………………………………………….. 26
    1. Selection of Company……………………………………………………………. 26
    1. Sampling Method…………………………………………………………………. 26
    1. Population and Sample Size……………………………………………………. 27
    1. Data Collection…………………………………………………………………….. 27
      1. Questionnaire…………………………………………………………………. 27
    1. Data Analysis Tools………………………………………………………………. 27

Limitations of the Study……………………………………………………………… 28

Chapter Four: Summary Analysis and Broad Discussion of Results 29

Chapter Five: Conclusion………………………………………………………….. 46

  1. Introduction………………………………………………………………………… 46
    1. Findings……………………………………………………………………………… 47
    1. Conclusions…………………………………………………………………………. 49
    1. Recommendations………………………………………………………………… 50
    1. Further Research Topics………………………………………………………… 50

Works Cited……………………………………………………………………………… 51

Appendixes………………………………………………………………………………. 54

Appendix A – Regression Analysis………………………………………………. 54

Appendix B: Questionnaire……………………………………………………….. 55

Appendix C: Figure Showing Source of JIT Knowledge…………………… 58

List of Figures

Figure 1: Just-in-Time Knowledge………………………………………………….. 29

Figure 2: Strength of Supplier Relationship……………………………………… 31

Figure 3: Level of waste generated during production……………………….. 35

Figure 4: Platform for suggestions and Contribution………………………….. 39

Figure 5: Nature of Contribution Platform………………………………………… 39

Figure 6: Contribution Platforms Choice Patterns………………………………. 40

Figure 7: Effects of external infrastructure on company operations……… 42

Figure 8: Effects of the economy on company operations…………………… 44

Figure 9: Graph Showing inventory and sales figures………………………… 45

List of Tables

Table 1: Just-in-Time Knowledge*Employee Category Cross tabulation… 30

Table 2: Just-in-Time Knowledge*Inventory Management and Production Methods Cross tabulation………………………………………………………………………….. 30

Table 3: Just-in-Time Knowledge and Production System Change Cross Tabulation   33

Table 4: Reasons for Accepting or Refusing Production Change…………… 33

Table 5: Duration of production batches*Inventory Management and production methods Cross tabulation……………………………………………………………… 34

Table 6: Plant layout and efficient production*Handling more than one machinery Cross tabulation………………………………………………………………………………….. 36

Table 7: Plant layout and efficient production*Quickly meeting orders of customers Cross Tabulation…………………………………………………………………………. 36

Table 8: Training History and Culture*Frequency of Training Cross tabulation

………………………………………………………………………………………….. 38

Table 9: Summary of Regression Analysis of Sales and Inventory Costs… 45

Chapter One: Introduction

             Background to the Study

The world is always facing a shift in ideologies and thought dimensions. There has been an abandonment of old practices as new and better ones are embraced. The manufacturing world is no different in its quest to enhance its production methods and processes. For instance, the current world economic system of free trade that has broken down borders and geographic barriers is a change from the old Keynesian ideology of controlled markets. Free trade has led to the world becoming a large market place where there is an increased interaction between the forces of demand and supply. Communication and easy transportation have intensified competition and this has led to serious technological advancements with the attendant problem of products with short life spans (Mowen & Hansen 2006, pp. 518). Hence, business process in their design must be structured to cope with the rapidly changing business life cycle and environment.

Moreover, a major challenge for businesses in this changing business environment is the scarcity of resources needed to meet the demands of economies. This underlying rationale behind economics – the fact that man’s wants are greater than the available resources – implies that organisations look into avenues that will yield the best results despite the presence of the scarcity. Consequently, firms and countries face the task of arriving at set targets using the most optimum of processes and thus, institutions face a similar task of using practices that will yield the best results.

Several industries and disciplines have created systems designed to yield the most desired results. However, are these systems effective in the current

global business environment? The realization that old manufacturing processes, are not likely to lead to companies gaining the utmost benefit from the free market trade, has led to the creation of new management tools. In this regard, companies in developed economies have developed and adopted several modern costing methods, management tools and business processes such as the Just-in-Time (JIT) system of keeping inventory, throughput accounting, target accounting, back flush accounting etc. These modern methods of business processes seem to have improved the efficiency and effectiveness of operations in organisations in developed countries. Despite the performance of JIT in developed countries, will its use be viable in organisations stationed in developing countries considering the different environments of operations.