Just-in-time: A Cross-sectional Plant Analysis

Abstract:     
This study uses a homogeneous database of cross-sectional qualitative and quantitative data to analyze the relative performance of Just-in-time and non-JIT plants operating in the auto-parts and electronic components manufacturing industries. The multivariate tests show that JIT plants use significantly less work-in-process and finished goods inventories than do non-JIT plants. JIT plants are significantly more profitable in terms of (operating) profit margins and contribution margin ratios than non-JIT plants. JIT plants have significantly smaller variable and total costs than do non-JIT plants, but not fixed costs. The success of JIT plants along these dimensions is related to the length of experience with JIT manufacturing, and process quality and leanness but unrelated to product quality, quality control or the extent of plant unionization. Although these benefits for JIT manufacturing have been conjectured by the literature, this study documents these associations empirically at the plant level.

Author footnote:
Opinions expressed in this article are the authors' only and do not necessarily correspond to the views of Bankers Trust or any of its subsidiaries.

Note: This is a description of the paper and not the actual abstract.

JEL Classification: L23, M40, M41, M46, L62, L63

Accepted Paper Series