Another factor that can affect a location decision is the convenience to the customer. This can include the firm’s proximity to the market and their ability to match any fluctuations in demand. To decide upon a successful location, the firm must ensure that their location is accessible to the customer and close enough to quickly meet any rise in demand. Just-in-time production can have severe disadvantages in that there can be difficulties in coping with sharp increases in demand and there is the possibility of a loss of reputation if customers are let down by late deliveries. Deciding upon a location close to the market and the customers can greatly benefit the firm in combating these disadvantages as it can help to reduce lead times (the time between the order and the delivery of goods). A reduced lead time can not only ensure better service to the customer but also cheaper transportation costs.
On the other hand, it could be argued that location is of little importance to a firm operating on a just-in-time basis. There are various other factors that could be said to be more important to a just-in-time system than the firm’s location. The keys to successful JIT implementation are numerous. It is important to reduce or eliminate setup times, which can be done through better planning, process redesign and product redesign. The reduction of lot sizes is another factor; reducing setup times allows economical production of smaller lots. Another measure that can be taken to implement a successful JIT system is preventative maintenance. For example, machine and worker idle time can be used to maintain equipment and prevent breakdowns. Reducing all of these factors – setup times, lot sizes and breakdowns – allows the firm to run efficiently with little or no waste (where waste is the result of an activity that adds cost without adding value). As a management philosophy, this is exactly what just-in-time production strives to achieve. Notice that none of these factors are directly related to location.
The workforce can also be used to successfully implement a JIT production system. A flexible workforce can be most beneficial. Workers should be trained to operate several machines (where necessary), perform maintenance tasks as mentioned above and to perform quality inspections. In general, the attitude of respect for people leads to giving workers more responsibility for their own work, which in turn can lead to increased worker motivation and therefore continue smooth JIT production.
Total Quality Management is another catalyst of a successful JIT system. A firm should require total quality assurance from their suppliers and implement a zero defects quality program. Errors leading to defective items must be eliminated, since there are no buffers of excess parts. A quality at the source program can be implemented to give workers the personal responsibility for the quality of the work they do. With such a measure in place, JIT can be used effectively without any inputting factors from the location of the workplace.
So, in answer to the question ‘To what extent could it be said that location decisions are especially important for firms operating on a just-in-time basis?’ I would argue that it is only to a small extent. There are far more influential factors that can be met to ensure an efficient and effective just-in-time production system. There is much more focus on operations management and human resources than the firm’s location. It appears that it is what goes on inside as opposed to the outside that counts for the most.
