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Case Studies Production and Operations Management | Audi | Simulation

 

 JIT AND INDIA

Ind ian Ins tit ute of Mat eri als Man age men t (II MM) is a for um for pu rch ase andma ter ial s re lat ed emp loy ees an d th ey hav e fre que nt mee tin gs, sem ina rs andannual conventions to share knowledge.In on e of th ei r an nu al co nv en ti on s th e to pi c wa s im pl em en ta ti on of JI T fo rcompetitive advantages. Leading personaliti es of the Indian industries talked lots of  positive points and benefits due to the JIT purchase and JIT manufacturing methods.Many presented calculations and statistics of savings in costs and time and how ithelps in reduce the price of the end products and hence competitive advantage.Most of the audience were impressed about the theory and thought of practicalap pl ic at io n in th ei r re sp ec ti ve co mp an ie s. Ho we ve r, fe w of th e ex ec ut iv epar tic ipa nts wer e mo re wor rie d abo ut pr act ice and les s int er est ed in id eal ist ic theories.One Mr. JIt end ra Jos hi of LML ’s Ba nga lor e off ice was im pre ss ed. He has bee nar ra ng in g En gi ne Bl oc k ca st in gs , ty re tu be se ts , m ac hi ne d co mp on en ts , speedometers etc from southern region to LML, Kanpur Unit. He has 15 years’ of experience in facing lots of problems in arranging the long distance supplies. Hemustered courage to get up and ask few questions against the JIT and summary of question to Mr. Sudhakar (the speaker) were as follows:Mr. Joshi said JIT cannot be fully implement able in Indian conditions due to followinggenuine constraints.(a)The int er- sta te dis put es lik e ‘Ka ver i Dis put e’, “Bo rde r dis put es’ at tim es disturb the arrangements . (b)On and off terrorism, political agitatat ions, holidays due to local, regional and national leaders’ deaths also disturb work environment.(c)Spre ad of vendors all over India and vastn ess of coverag e do not enable to know correct position of WIP of vendors.(d)Tran spo rt bott lenec ks, heavy rains, floo ds (coa stal area s), work ers’ strikescause anxiety and worry.(e )Pa rt ne rs hi p pr ob le ms , fi na nc ia l an d qu al it y co ns tr ai nt s ar e no t ea si ly attended or solved. These questions were like a mini speech on anti JIT and the atmosphere in theauditorium got charged up Mr. Sudhakar, the speaker, gave half hearted replies toquestions for which Mr. Joshi and his friends were not satisfied. Finally Mr. Sudhakarsaid:“The system which operate successfully in Japan may not work equally well in othercountries.” Only when Mr. Joshi took his seat as he felt he has made his clear on

 

practical problems than merely going through the theory. Suddenly he seems tohave won the admiration of the gathering.Prof. Rao who was chairman of the technical session gave his concluding remarks.He appreciated the ideology of JIT but advised executives to take it up step by stepand ensu re pragm atic view s and do not overde pend on JIT to fail. Thi s he told as Indian Industrial Environ ment is yet to mature to take care of JIT systems in totality.

QUESTIONS

1.Expl ain why JIT p urch ase wor ks

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well in the de velop ing cou ntri es2.Do you agre e with Mr. Jos hi’s view s on const rain ts to JIT? Expla in the corr ect problems in northern and eastern India.3.Write howyou feel th e JIT syst ems can b e adopted inIndia withan example.

 

PLANT LOCA TION PROBLEMS

Location of a plant has direct relevance to raw materials, market, human resources, civic amenitiestransportation e tc. However, in some coun tries the problem beco mes complicated due to(i) Inter-Statecompetitions and tussles, (ii) Regional development and (iii) Political pressures and biased decision.Around 1970 Government of India mooted the idea of expanding steel production under public sector units to be established at suitable locations. A committee of eminent personalities was formed to gothrough claims of (i) Vijaynagar Steel plant near Bellary in Karnataka, (ii) Salem Steel in TN and (iii)Vishakapatam steel plant in A.P. Since it was under PSU the political pressure was going on and if it wasunder private sector, there would not have been any kind of political pressure.The most important raw materials for steel plant are iron core power and coal. Again in iron ore the iron percentage should be preferably more than 60% and ash content in coal should be less than 30%. Thesefactors enable production of iron and steel at competitive price. From experts’ reports the following brief was available:(a)Viz ag – The Iro n ore is ric h with 65% Iro n and coal can be arra nge d from MP and Bihar andVizag is well connected by broad gauge railway line to all important cities and the place has sea port and airport. Hence this place has more natural advantage than other cities.

(b)

Salem – Iron ore was having 60 to 65%. Iron content and hence be economically exploited. Thecoal is in lignite form which is low quality coal. Hence this needs to be converted as coke for use.The place has broad gauge line and Madras sea port and airport are nearby. This place wasconsidered second preference.(c)Vij ayn aga r – Bella ry belt has Iron ore of 60% iro n but coa l has to come from AP (Si nga ren i Colliery). The place had meter gauge railway line and hence not well connected to all India network. The seaport and airports were far away and hence this place was not found suitable.As per the expert committee report steel plant work started Vizag and Salem and these plants came up as per the plan and are doing well. However, to everyone’s surprise the them PM, Smt. Indira Gandhi, didfoundation stone laying in 1971 at Toranagallu in Bellary district for Vijaynagar steel plant also. Thisultimately proved to be an election gimmick to please the votes, though the PSU unit did not come upth er e at al l. Th is is a cl ea r ex am pl e ho w po li ti ci an s tr y to fo o l gu ll ia bl e vo te rs by wa y of  inaugurations/ foundation stone laying. Steel plants are quite huge with township having about 50,000 to 1,00,000 people. Hence requirements of housing, electricity, water, hospitals, education, institutions, entertainment facilities are very essential.The investment is huge and this helps to develop the surrounding area quite well and there is abundantscope for ancillary units, engineering services and employment inside and outside the steel plant. BothVizag and Salem got these advantages and production standard as per the plan and these industriescontinue to run profitably.The expert commit tee had made comment on Vijaynag ar proposal that , the unit can be viable if it uses latest foreign technology. In this method oxygen is injected to force oxidation of ores instead of natural


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