Issues associated with Push up the Supply Chain when Implementing JIT
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What are the issues associated with pushing risks up the supply chain when implementing JIT?
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Issues associated with Pushup the Supply Chain when Implementing JIT
There are varied issues that can emanate from pushing risks up the supply chain when implementing JIT. One of the issues is that the illusion that organizations have managed the risks has often been overlooked, as well as the critical exposure along the supply chain. Therefore, supply chains that control hundreds or thousands of companies over several tiers present significant risks (Smith & Zsidisin 2002). Another issue that may arise is that pushing up risks the supply chain when implementing JIT limits ownership and increases the risks of obsolescence, inventories, and lack of responsiveness to peak and troughs in customer demands, thus, becoming even more complicated (Smith & Zsidisin 2002, p.119). Ownership problem can also be brought in by the process, which is triggered by outsourcing and concentration on core competencies, the accelerated use of manufacturing and distribution, and logistics partners leading to a complex network of business correlations with confused dimensions of responsibilities (Smith & Zsidisin 2002, p.119). These risks will emerge into inventory costs due to product obsolescence and markdowns or stock-outs, which are pushed up the supply chain.
When implementing JIT, getting the source of risks for the supply chains becomes hard. This is because the risks have been pushed up the supply chain in disorderly and concealing manner. Chaos effects can arise in supply chains (Smith & Zsidisin 2002). This is as result of second-guessing, unnecessary intervention, overreactions, and distorted information throughout a supply chain. Another issue that emerges is inertia. There will be general lack of responsiveness to dynamic and market signals of environment conditions. Inertia will also be brought by inflexibility of cost production. The practice of pushing risks up the supply chain also brings problems with cost containment, whereby, ability to adapt to changing costs becomes difficult. In addition, visibility is limited by the pushing-up of the risks as supply chain executives still struggles to analyze and act on the right information
Reference list
Smith, M. & Zsidisin, G. (2002). Early Supplier Involvement at MRD, Practix, Best Practices in Purchasing & Supply Chain Management journal. pp. 119-122.
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