Just In Time (JIT)

Just In Time (JIT) systems were originally used in manufacturing to eliminate the lead times from delivery of raw materials to production and from production to delivery to customer. It requires good relationships with suppliers to ensure the best balance between cost, quality and delivery and the ability to react quickly to customer needs. Ultimately, production only takes place in response to customer demand, resulting in reduction in inventory of raw materials, work in progress and finished goods. This, in turn, produces increased cash flows and improved profitability.

Just in time systems are now being used in some financial institutions to try to eliminate the lead times from enquiry to product acceptance by the customer. In the financial services industry, production already takes place in response to customer demand and cost of work in progress (float cost) is minimised through the efficient use of funds.

Yet according to Hammer and Champy - "Reengineering does not seek to make businesses better through incremental improvements - 10 percent faster here or 20 percent less costly there. The aim of reengineering is a quantum leap in performance - the 100 percent or even tenfold improvements that can follow from entirely new work processes and structures. This more radical change requires the operational process to be reorganised in a way that allows companies to respond holistically.

The main purpose of the re-engineering is the achievement of substantial efficiency benefits from the whole organisation. Traditional change programmes no longer suffice.

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