Wanting to keep up with tight competition as the demand continues to grow, some firms resorted to seemingly economical approach including having less manpower and reducing inventory to meet their production requirements. These firms adopted “lean operations and just-in-time (JIT) production methods” hoping to cut on production cost and improve productivity (Galuzka and Anderson, 1999). Unknown to them, this move towards saving on cost would make it difficult for them to keep up with the demand. They become too much confident with lean operations that they failed to anticipate the rapid increase in the demand. Before they know it, they are faced with shortage in resources, both in human and technical resource.
Taking the experience of Internet Corp., Goodyear Tire & Rubber, Hershey Foods and AMR Research, all of which resorted to lean manufacturing when the demands went up, I don’t think it is possible to take manufacturing methods too far. These methods have resulted to lost profit for these companies and have caused them a lot.
In this day and age when competition is really stiff, companies cannot afford to be lenient and relaxed. Companies should learn to carefully anticipate and plan for the future for them to stay in the business.2. The fast surge in the demand was something that they have not anticipated.
They don’t have the luxury of time to analyze the situation and prepare winning plans anymore as they have no control over the surging demand. Instead, they are faced with something that required them to stretch their available resources in order to compete with other manufacturers.3. The 24-hour operation and constant overtime requirement is stressful and causes health problems to employees. Overworked employees have high tendency to quit the job, which causes a high turn-over rate for companies. This phenomenon, of having high turn-over rate is not good for a company, especially if it is struggling to deliver the orders in time.
High turn-over rate, coupled with technical backlogs can cause the company its business.