Applicability of just in time (JIT) production approach in state forest enterprises

Abstract

Just in Time (JIT) Production System, also called as Non-Stock Production System or Toyota Production System, is based on minimization of stocks of raw materials, supplies, intermediate goods and final products. The basis of JIT system is to produce, receive/deliver supplies, intermediate and final products just in time when needed. Main benefit of this is decreasing stock level and lead time. Changing cost structures of enterprises due to high level of automation, it becomes impossible for them to produce and sell with “I would sell whatever I produce at whatever cost” approach. In recent years, many enterprises in developed countries use advanced cost management systems for an efficient cost management. JIT approach is one of these cost management approaches. High level of diversification in customer demands and various product desires after 1980s lead enterprises to change their production systems. Enterprises search for new methods for cost reduction in order to maintain and increase their market shares. These improvements in private sector are slower in public sector. In Turkey, State Forest Enterprises (SFEs), which supply most of the wood raw material, are basic example of this situation. For instance, in State Forest Enterprises not only modern cost approaches, even current cost defining activities are not realized appropriately. As SFEs have limited power to increase their sales revenue, in order to increase profitability and have competitive power, they have to produce quality products and decrease their costs. This is possible by cost management approaches. Besides, for SFEs current cost system is fall short of obtaining real success level and competitive power. In this study, JIT approach is discussed theoretically in the context of role of cost management in enterprises’ success. Also JIT approach is examined within the scope of production management in State Forest Enterprises in terms of planning where, when, how much and how will production operation be realized and applied and this process’s effect on costs.