THE EFFECT OF JUST-IN-TIME SYSTEM ON COST EFFECTIVENESS OF AN ORGANIZATION: A CASE STUDY OF NATIONAL MEDICAL STORES

ABSTRACT

The study was carried out at National medical store with the purpose of establishing the effect of JIT system on cost effectiveness of an organization. The specific objectives of the study were; to examine the relationship between JIT system and cost effectiveness of an organization, to identify the necessary tools for JIT system implementation and to establish the challenges faced by National Medical Stores in implementing JIT system.

The study used a descriptive research design where both qualitative and quantitative approaches of data collection were adopted using questionnaires, interview guides and observation checklist. A sample size of 60 respondents was selected using purposive sampling technique.

The study found out that the use of this new production system reduces inventory related costs, increases quality, reduces lead-time, and reduces manufacturing costs by minimizing non-value-added activities and their costs. All these represent the benefits offered by the implementation of JIT production system. By reducing costs and reducing lead-time, company’s response to customer needs increases. One of the areas that are affected by JIT implementation is cost and management accounting. First of all, JIT has emerged as an effective cost management tool because it helps to achieve significant costs savings. In addition, the JIT system simplifies the cost accounting processes since it eliminates direct labor and inventory accounting. In a JIT environment there is little or no work-in-process and finished-goods inventories.

It was recommended that National medical store should diversify its outsourcing activities by having more sources of raw materials.

CHAPTER ONE

1.0 Introduction

This chapter presents the background to the study, statement of the problem, purpose of the study, research questions, the scope of the study, significance of the study and definition of key terms.

1.1 Background to the study

In an intense competitive environment, companies try to find ways to be able become competitive. Just-in-Time (JIT) production system has been used as a response to increasing competition. Taicchi Ohno initiated the basic idea of JIT production system, and Toyota Company, which needed to produce different types of cars by using the same production process, first used JIT production system. After the use by Toyota Company, the system was employed by other Japanese companies (Yukcu, 2000).The JIT production system then became widespread in many companies in Japan in the late 1970s, and began to be known abroad (Yui, 1997).

Today JIT system is well known throughout the world. The reason why the system is so popular today is a result of its advantages realized by the manufacturing companies. For instance, the use of JIT production system leads to better production quality, less inventory, and shorter product lead times (Swenson and Cassidy, 1993).

The use of JIT production system, therefore, increases customer satisfaction by providing them with high-quality product on time. But these gains require some changes. When a company implements JIT production system, major physical, psychological, and organizational changes occur in the organization’s work environment. The company implementing JIT production system develops closer relationships with suppliers; significantly reduces its inventories; and implements simplified manufacturing procedures. The JIT concept also helps reduce the number and type of the accounts used in journal and ledger entries. The concept simplifies accounting records and reduces accounting costs. On the other hand, a reduction in the level of all kind of inventories will minimize inventory-related costs and significantly eliminate inventory-related procedures (Yui, 1997).

The implementation of JIT production system is, therefore, of concern to management accountants. They must modify their cost accounting procedures when changes in manufacturing processes cause changes in the demand for accounting information (Lynn and Adrian, 1991). For example, as finished goods are sold immediately, there is no need to transfer the finished products to finished-goods inventory. Instead they can be transferred to the cost of goods sold account directly when sale takes place.

Application of JIT will lead to a decrease in inventories, waste reduction, employee involvement and customer satisfaction (Bailes and Kleinsorge, 1992).Therefore, employing the system will cause a company to save money and increase the number of the customers. In short, use of JIT production system will eliminate waste thus, improving the cost effectiveness of an organization (Horngren et.al, 2002).

National Medical Stores (NMS) located along Nsamizi Road, Entebbe, Uganda is an autonomous government Corporation established by the National Medical Stores Statute no. 12 of 1993, which came into effect on 3rd December, 1993. National Medical Stores is responsible is responsible ensuring continuous distribution of Pharmaceutical products in a financially viable and sustainable manner. Supply of Drugs, which involves identification of therapeutic needs, selection of drugs, quantification of requirements, procurement of drugs, distribution and use (The adoption of JIT system by National Medical Stores has enabled it to procure and distribute essential medicines and medical supplies to all public health facilities in the country in the most cost-effective manner possible while still ensuring the high quality of its products, service and support. Thus the study sought to establish the effect of JIT system on cost effectiveness of an organization.

1.2 Problem statement

JIT system enables companies to produce products in required amounts and just when demanded (Yukcu, 2000). By using the system, companies intend to offer products on time. If companies finish final products on time, they was able to minimize the raw material, work-in-process and finished-goods inventories. National Medical Stores is using JIT system to procure and distribute the essential medicines and medical supplies to all public health facilities in the country. Despite its implementation in the organization, NMS has not realized cost minimization, but instead it continues to receive increased customer complaints. It is against this background that the study sought to establish the effect of JIT system on cost effectiveness of an organization.

1.3 Purpose of the study

To establish the effect of JIT system on cost effectiveness of an organization. A case study of National Medical Stores.

1.4 Specific objectives

1. To examine the relationship between JIT system and cost effectiveness of an organization.
2. To identify the necessary tools for JIT system implementation at National Medical Stores.

• To establish the challenges faced by National Medical Stores in implementing JIT system.

1.5 Research questions

1. What is the relationship between JIT system and cost effectiveness of an organization?
2. What are the necessary tools for JIT system implementation at National Medical Stores?

• What challenges are faced by National Medical Stores in implementing JIT system?

1.6 Scope of the study

1.6.1 Content Scope

The study examined the effect of JIT system on cost effectiveness of an organization with specific emphasis put on identifying the relationship between JIT system and cost effectiveness of an organization, the necessary tools for JIT system implementation and challenges faced in JIT system implementation.

1.6.2 Geographical Scope

The research was carried out at National Medical Stores which is located on Plot 4-12, Nsamizi Road, Entebbe – Uganda.

1.6.3 Time scope

The study considered 2014-2016 as the period of data to be considered in the organization. The study was carried out for a period of four months from April to August, 2017 and considering 2000-2016 as the period of body of knowledge to review literature.

1.7 Significance of the statement

It is hoped that the findings would be helpful in the following ways;

The study would help the management of National Medical Stores to improve the process of integrating JIT system as a strategy for growth and performance.

The study would help to motivate the employees of the organization to appreciate their role towards business development, growth and strategic adoption module for the success of the organization.

The study would provide additional knowledge to the already existing literature on JIT system which may spur further research.

The findings of the study would also serve as a benchmark for other organizations which intend to adopt JIT system in their operations.

1.8 Definitions of key terms

1.8.1 JIT system

JIT system is a system that enables companies to produce products in required amounts and just when demanded (Yukcu, 2000). Byusing the system, companies intend to offer products on time.

1.8.2 Cost Effectiveness

According to Griffin (2016) cost effectiveness is the relationship between monetary inputs and the desired outcome.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter reviews the existing literature put forward by different scholars and personalities on the effects of JIT system on cost effectiveness as well as critically analyzing the deviations in the explanations to find out the research gap in the study variables; the necessary tools for JIT system implementation, challenges faced in JIT system implementation and the relationship between JIT system and cost effectiveness based on secondary sources like text books, internet, newspaper, report at the company, and journals.

2.1 Relationship between JIT system and cost effectiveness

Many changes brought by the JIT production system require alterations in the existing information systems and traditional accounting practices (Bailes and Kleinsorge, 1992:29). The application of a JIT production system will change the cost structure of a firm as well as cost allocation procedures and recording system. In addition, performance measurements and reporting systems must be changed in a JIT environment. The following paragraphs describe how JIT concept may affectively be used in cost management.

Implementation of JIT in a company will lead to cost reductions in the production system. In fact, a JIT production system is very effective in eliminating mainly nonvalue- added activities and thus, non-value added costs. The non-value-added activities are the activities such as moving materials and parts from one place to another; setting up a machine; storing materials, parts and finished goods; inspection, rework and purchasing. These activities, although consume resources, do not add value to a product produced. Therefore, the JIT production system is quite helpful in this attempt because it minimizes the non-value-added activities as explained in the following sections:

Reducing Inspection and Ordering Costs: As discussed above, the use of a JIT system requires dealing with few dependable suppliers by establishing long-lasting, reliable relationships. Because high quality in production requires close relationships with vendors to ensure that the firm receives defect-free raw materials (Martin et.al., 1992:10). Working with dependable and reliable suppliers ensures the acquisition of high-quality raw materials and eliminates the need for inspection, because company can make sure that raw materials that particular supplier is providing are defect-free raw materials. In addition, as company deals with the same supplier, there is no need for a search for the best supplier, detailed paperwork, and the ordering process every time.

That is why, cost of purchasing and ordering is minimized. According to a study conducted in Oregon Cutting Systems (a company producing chain saws, timber harvesting equipment, and sporting equipment), number of suppliers was reduced from seven to one after implementing JIT system (Bailes and Kleinsorge, 1992:31). Therefore, application of a JIT production system reduces the number of suppliers that company deals and the costs related to establishing relationships with these suppliers.

Minimizing Moving Activity: Machines producing similar products are grouped into production cells under a JIT setting. In these cells, machines are close to each other so that work-in-process does not need to move long distances (Hilton et.al., 2000:463). This decreases both the moving activity and its cost to a minimum level.

Minimizing Setup Activity: As technologically advanced machinery, —which can produce various products without requiring frequent, or no setups— is used in a JIT setting, cost of a setup will also be minimized. There is a positive relationship between the percent of operations converted to JIT and the reduction in set up time (Swenson and Cassidy, 1993:46). This means that, application of JIT leads to a decrease in set up time and set up related costs such as cleaning and readjusting the machinery, etc.

Minimizing Storing Activity: Work-in-process inventory does not pile up in front of the operators since pull method is used in a JIT production system. Also, as quality improves, work-in-process inventory buffers can be reduced (Swenson and Cassidy, 1993:45). Emerging reductions in work-in-process inventory will bring the reductions in storage costs such as employee salaries and wages; rent, electricity and depreciation costs for warehouses; and in-factory transportation activity costs. In addition to reductions in work-in-process inventories, there was reductions in finished goods inventories and similar storage costs attributed to them. Last but not the least, company that employs a JIT system will also save some resources tied up holding excessive inventories (Tanış, 1992:102).

Minimizing Rework Activity: As explained above, in a JIT environment there is no need to have large inventories to buffer the plant from disruptions caused by poor quality because of effective quality control programs in use. This means when an operator discovers a defective product, he pauses the process and only few parts are at risk of being scrapped. However, in case of having a large amount of work-in-process inventory, and parts from the previous operations that are determined as being defective, many more parts must be scrapped. As a result, a great amount of loss is likely to occur. On the other hand, when an operator reduces the number of defective units, he is able to reduce product costs since this reduction decreases the number of inspectors and employees doing rework. Also an increase in productivity is gained. It has been claimed (Hayes, 1981:63) “a 2% reduction in defects is usually accompanied by a 10% increase in productivity.” Therefore, it can be said that rework costs and cost of lack of productivity are minimized in a JIT setting.

2.2 Necessary Tools for JIT System Implementation

A JIT production system, as explained above, aims at minimizing work-in-process and finished-goods inventories, reducing lead-time, and increasing product quality. In order to achieve these by implementing a JIT system manufacturing system, the following aspects and steps should be put into consideration and then operation (Hilton, 2000).

2.2.1 Getting the Commitment of Top and Middle Managers

Although top managers themselves will not initiate a JIT production system (Griffin and Harrell, 1991), their support must be obtained. As JIT will affect all parts of the organization there must be a high level of cooperation among functional areas. That is why, middle managers’ commitment should also be obtained. The decision to introduce JIT procedures into the production environment is usually made by a firm’s top management. Once this decision is made, the next step toward implementation is to gain an active support from the firm’s middle managers and supervisors. Getting this support may not be very easy because these managers could be reluctant to support the implementation of JIT production system. Possible changes in production process, control procedures and performance measurement that would be required by the implementation of JIT may discourage middle managers from actively participating in the implementation of the system.

In a JIT environment, everything must be perfect; there is no allowance for defective products and production errors because there must be no delay caused by those kinds of activities. These strict requirements brought by the JIT production system may discourage managers from voluntarily participating in the implementation of the system. Because the existing organizational slowdown that the JIT concept wants to eliminate provides middle managers and supervisors with a cushion against the difficulties caused by defective raw materials, production errors, and irregular supply and demand schedules. As a result, they may be reluctant to support the implementation of JIT concept (Lynn and Adrian, 1991). However, it is difficult to implement JIT production system without the support of middle managers and supervisors. Therefore, the motivation of middle managers and supervisors to support the implementation of JIT procedures is exceedingly important concept if this production system is to be implemented. In other words, managers must be motivated to participate in the implementation of the system.

For this reason, some researchers have conducted research about the motivation of managers in implementing JIT production system. For example, according to a research conducted by Lynn and Adrian (1991) about the examination of managers’ motivation to implement JIT procedures; rewards associated with increased productivity in the new work environment, employment security which would be brought by the new manufacturing system, more challenging production standards and output goals associated with the JIT environment are the most attractive outcomes of implementing JIT production system. In this case, management accountants who advise senior executives regarding appropriate incentives for motivating the implementation of JIT procedures might advise publicizing those productivity rewards and employment security results for the implementation (Lynn and Adrian, 1991:5). In this case, managers can be motivated to participate in the implementation of JIT production system because they expect to get positive results from the implementation of the system.

2.2.2 Pull Method

As final products are produced only when they are demanded, operators will not put materials and components into production unless they are required. Therefore, parts and components that are produced by any operator should not be produced until the next operator demands them. When customer demands the product, production centers begin to produce the parts required by the following divisions in sequence. Under the pull method, goods are produced in each manufacturing stage only as they are needed (Hilton, 2000).

Pull system differs from a push system in that machine operators do not produce according to schedule or material availability. Instead, production does not begin until parts are needed by the downstream operator (Swenson and Cassidy, 1993). When additional materials and parts are needed for final assembly, a message is sent to the preceding work center immediately to send the amount of materials that was needed over the next few hours.

Often this message is in the form of withdrawal kanban, a card that describes a part number, a quantity of parts, where parts are from, where the parts are to be delivered. That system can be compared to a system that takes place in the supermarket. If a customer wants to buy something, he pulls the good from the shelves. When the stock clerk realized the resulting empty shelves he receives the signal to replenish what has been sold. Therefore, kanban system restocks what has been purchased rather than using a system of estimated replenishments (DeLuzio, 1993). In this case, there is no allowance for the pile-up of work-in-process inventory through the production process because materials are not produced unless needed by a downstream operator.

2.2.3 Establishing Long-Lasting, Reliable Relationships With Few Suppliers

If the company wants to establish JIT production system, supplier must be able to provide high-quality raw materials, because in JIT setting there is no allowance for the stoppage resulting from poor-quality work-in-process inventory (Atkinson et.al, 2001:242). If raw materials offered by the supplier are defective, there was problems in the production process due to poor-quality raw materials. In case of any stoppage, company will not be able to offer the product to customers on time. In other words, lead-time was longer. Therefore, successful JIT production depends largely on assembling a few cooperative and reliable suppliers. Just-in-Time purchasing is the purchase of goods and materials such that delivery immediately precedes demand for use (Horngren et.al, 1999:737) Manufacturers implementing this system tend to make vigorous assessments of potential suppliers (Lee, 1997:3).

Therefore, companies implementing JIT production system should make careful evaluation of suppliers while selecting the best one. In evaluating the suppliers, following characteristics must be considered in order to decide on:  the supplier’s ability to provide high levels of quality; the supplier’s ability make frequent deliveries of small lots; the supplier’s capability for continuous improvement; the supplier financial strength; price.

To ensure that supplier provides high-quality raw materials, long-term and reliable relationships must be established with few suppliers. In addition, the JIT production system focuses on producing products in small lots frequently. Therefore, the supplier must be able to make frequent deliveries of raw materials in small lots otherwise production will not be done in a way that will enable the company to offer the product on time.

2.2.4 Standard Work Concepts

Standard work is one of the most comprehensive and powerful tools found in JIT (DeLuzio, 1993). Standardization is achieved when all the tasks necessary to perform the production process are made uniform. In other words, if the same tasks are performed every time a process is carried out, it means that the production process is standardized. Once the procedure is standardized, there was no variation in the process. Therefore, a work procedure must define every detail as clearly as possible.

Otherwise, each operator will perform the task in a way he likes. Also, if the work procedure is made clear, the worker will make high-quality parts with less variation (DeLuzio, 1993). Then the workers are able to finish products in shorter time because work is done in a standard sequential way. Also, if the procedure is standardized, the worker does not face any confusion because there is a known and fixed way of performing the job. Thus, any worker can carry out the task. This helps managers substitute the absent operator with the existing one to perform the task in case of employee absence. Therefore, possibility of delay caused by the absence of the operators is eliminated and products can be produced in the planned way. On the other hand, unless the working procedure is standardized different sequence of activities was followed every time when the product is produced. This will cause products not being offered on time because of the confusion caused by random production procedures.

2.2.5 Creating a Clean, Orderly Work Environment

In a JIT work environment production flow must be smooth. In other words, production should be done in a standardized way without variation. Also, work-in-process inventory should be moved smoothly in the production area because it is desired the production process be completed on time. In this sense, tools used in production shouldbe put in order, machinery and the work place should be clean (Hayes, 1981:59). In a JIT environment, materials move through the factory very quickly in response to signals from the pull control system. Therefore, the work environment should be organized in a way that allows the movement of materials without any difficulty. Also, the workers should be able to reach the tools and other materials easily in the shortest time available. If work place is clean and tidy, and everything is in order, then there was no chance for the occurrence of delay because tasks can be performed without any waste of time.

2.2.6 Quick and Inexpensive Machine Setups

As company applies JIT aiming at producing in small lots when demanded, operators should be able to setup the machinery in a very short time so that there is no wasted time while switching from one lot to another. In other words, manufacturing facilities must be able to produce different kinds of products without wasting time. Otherwise, if too much time is spent on setting up the machinery there was delay in offering the product on time. Therefore, JIT production system must be based on advanced computer-controlled machines that are able to produce several product types without requiring a set-up.

2.2.7 High-quality finished products

In a JIT production system, finished-goods inventory is kept at minimum level. To achieve this, products that are produced in the system must be of uniform quality. Thus, a total quality control program should be applied in the JIT setting. In this case, everybody should be responsible for the quality of the final product. So, everybody in the organization should seek ways to continuously improve the production system. In traditional systems, inventories are pushed through the system undergoing quality inspections conducted by quality control personnel, whereas in a JIT setting teams are responsible for production and quality (Banker and Potter, 1993).

An important characteristic of this production system is that once defective parts are discovered, production stops until the root cause of the problem is identified and solved. Otherwise, production in the upstream operation also stops because there is no pull from the producer of the defective part. In a JIT environment, everybody focuses on continuous improvement in order to prevent problems from taking place, and shutting down the production line that may then cause delay in offering the product on time. In other words, everybody should be responsible for the quality of the tasks for which he or she is responsible. One division should provide the coming division with defect-free working process so that there was no rework and wasted time through the production process.

According to a study conducted in some UK and Japanese companies, firms that adapted Total Quality Management and JIT simultaneously gained noticeable synergy (Yui, 1997: 2). Effective quality-control programs also help minimize work-in process inventories because there is no need to establish huge buffer inventories to prevent the plant from disruptions that would be caused by poor quality. In other words, if company guarantees that all raw materials and work-in-process are of high quality, then it is ensured that there was no problem caused by poor quality.

2.21.8 Flexible Facilities and Multi- Skilled Workers

Facilities in a JIT setting must be flexible so that they can produce various kinds of products without requiring frequent setups. As the system (JIT) aims at producing small lots of different kinds, facilities must be able to produce different kinds in small lots. Multi-skilled workers are also required in this environment to respond quickly to changes in demand and product mix. In addition to these, in a JIT setting workers must have multiple skills because in case of absence of an employee, one of the others must replace him so that there was no stoppage and delay in offering the final product to customers on time. In other words, operators may be required to move among different machines, functions and areas. If they are not able to be flexible to work in different areas, company cannot be responsive to different demands on time. The JIT production system, therefore, requires highly skilled and highly dedicated workers and well maintained equipment (Martin et.al., 1992; Hilton et.al., 2000).

Furthermore, one of the first steps that a company must take while implementing a JIT production system is to establish work cells. In a JIT environment, products are grouped into cells, and workers are assigned to these cells with each employee performing several functions (Banker and Potter, 1993). In the work cells, similar machines are grouped together to produce similar products. In these cells operations are moved together so that unnecessary and time-wasting transportation of parts between functional departments is eliminated. Parts are produced from a raw material stage to finished stage within the same cell (Deluzio, 1993). As products can be produced in manufacturing cells in a short period of time without any stoppage, there is no allowance for the pile-up of work-in-process inventory.

All of the things explained above are necessary for the implementation of a JIT production system. When a JIT production system is implemented successfully, high productivity, high quality, shorter lead-time, and low levels of raw material and working process inventories was achieved. As there are only few reliable suppliers, raw material requirements are minimized through small and more frequent deliveries. JIT production system also emphasizes reduction in setup time that enables the company to produce the products in small lot sizes and to minimize the work-in-process inventory.

In turn, shorter setup and less work-in-process inventories make the manufacturing cycle time shorter. Thus a manufacturer that is applying JIT production system becomes more competitive by shortening product lead times (Swenson and Cassidy, 1993: 39).

For example, according to a research (Lee, 1997) conducted on small manufacturing firms in Korea, reduced inventory was the most significant benefit. Lee (1997:5) reports that 46 % of the responding firms stated that reduction in work-in-process inventory could be obtained in the early stages of the JIT implementation. The next most significant benefit the researcher discovers was quality improvement (28.6 percent); and the third shorter lead-time and greater flexibility. Therefore, although reduction in inventories is the most significant benefit, quality improvement, shorter lead-time, and greater flexibility can also be realized outcomes of the JIT implementation.

2.3 Challenges faced in implementing just in time system

Just-in-time manufacturing provides zero tolerance for mistakes, as it makes re-working very difficult in practice, as inventory is kept to a bare minimum (SimKins, 2010). While Rhem (2005) in this study argued that, there is a high reliance on suppliers, whose performance is generally outside the purview of the manufacturer. Organizations are facing the overall problems in the suppliers. The suppliers sending wrong materials at the wrong times. On the other hand, the overall parts of companies must have to be more systematic in finding the overall attributable parts of the company which are uncontrollable in the just – in – time (JIT) inventory system (Patterson, 2005).

Due to there being no buffers for delays, production downtime and line idling can occur which would bear a detrimental effect on finances and on the equilibrium of the production process (Patterson, 2005).The organization would not be able to meet an unexpected increase in orders due to the fact that there are no excess finish goods (Marrs, 2003).According to Simkins (2010), just-in-time manufacturing may have certain detrimental effects on the environment due to the frequent deliveries that would result in increased use of transportation, which in turn would consume more fossil fuels. Transaction costs would be relatively high as frequent transactions would be made (Rhem, 2005).

Patterson (2005) poor quality and far location of the suppliers. In the just in time (JIT) inventory system, quality and location of the suppliers plays a vital role in the overall system. On the other hand, the total procedure of the suppliers must have to be more connected with the companies in the system of the just in time (JIT) inventory system. It is because; the overall number, quality and location must have to be perfectly attributable. The quality of the supplied parts must have to be in time and must have to be quality. Without the proper quality, it is totally impossible for the company to set up the overall companies’ parts. In the part of the location, the suppliers must have to be in such a location from which the overall supplied products can be easily supplied to the companies.

Hansen (2003), the system of the length of the just – in – time (JIT) inventory system must have to be implemented in such point in which it perfectly fills up its objectives. It is because; if the overall parts don’t match up, the system will go down. So the length of the just – in – time (JIT) inventory system must have to be implemented to that point in which it fills ups the overall objectives of the using of the just – in – time (JIT) inventory system. Sometimes, it doesn’t work as there are some of the parts which the overall JIT system can’t be able to control. On the other hand, there are some of the parts which can’t be filling up though the company uses the just in time (JIT) inventory system. Those are called as uncontrollable parts which are shown before. If those uncontrollable parts create problems then the company can’t not be able to filled up or using the just in time (JIT) inventory system. So the length of the just in time (JIT) inventory system implementation varies from situation to situation.

2.4 Conclusion

Just-in-time manufacturing is a philosophy that has been successfully implemented in many manufacturing organizations. It is an optimal system that reduces inventory whilst being increasingly responsive to customer needs; this is not to say that it is not without its pitfalls. However, these problems that the organizations are facing can be overcome with a little forethought and a lot of commitment at all levels of the organization

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the research methodology which include; Research design, study area, study population, sampling technique, sampling procedure and sample size and composition, sources of data, data collection methods/instruments, validity and reliability of research instruments, data collection procedures, data  analysis, data presentation and limitations of the study.

3.1 Research design

The research employed a descriptive research design. Descriptive studies attempts to describe a subject by creating a profile of a group of problems, people, or event (Cooper & Schindler, 2000). Descriptive research design was used because it is effective to analyse non-quantified topics and issues, the possibility to observe the phenomenon in a completely natural and unchanged natural environment and the opportunity to integrate the qualitative and quantitative methods of data collection which other designs do not provide. The study also will use a descriptive design because it enables the researcher to collect in-depth information about the population being studied. The design exploited both qualitative and quantitative approaches of data collection.

3.1.1 Quantitative approach

While quantitative research is the systematic empirical investigation of observable phenomena via statistical, mathematical or computational techniques (Mugenda & Mugenda, 2003). According to Silverrman (2001), quantification gives greater confidence in the accuracy of conclusions derived from qualitative data; and it gives the reader a chance to think through the data on their own to cap on the researcher’s findings. The research used this method because it produces information only on the particular cases studied.

3.1.2 Qualitative approach

According to Baron (2011), qualitative research design helps to capture qualitative data, based on qualitative aspects that may not be quantified. It aids in discovering the motives and desires or what people think and how they feel about a given subject or situation. This method involves an unstructured approach to inquiry and allows flexibility in all aspects of the research process. It is more appropriate to explore the nature of a problem, issue or phenomenon without quantifying it.

3.2 Study Area

The research was carried out at National Medical Stores which is located on Plot 4-12, Nsamizi Road, Entebbe – Uganda.

3.3 Study population

Study population is a complete set of individuals, cases or objects with some common observable characteristics. The study population consists of 100 staff.The population included the sales representative, procurement department, and transportation department, and other employees holding familiar and unfamiliar titles but were deemed to be suitable stakeholders for generating relevant data to the problem which was under investigation

3.4 Sampling Technique, Sampling Procedure and Sample size and Composition

3.4.1 Sampling technique

The study used purposive sampling design to collect data from the field. Opuko (2000), purposive Sampling involves deliberate selection of particular units of the population for constituting a representative sample. The researcher chose the sample based on who she thinks would be appropriate for the study.

3.4.1 Sampling Procedure

Using the probability of proportions, the researcher chose a proportion of respondents from each department. In the top management, out of 8 managers 5 was selected purposively, in the sales department out of 26 the researcher chose 16, procurement department out the 18 officers 12 was selected for this study, while in the transportation department, from the 19 officers 12 was selected, human resource department with 18, 10 respondents was selected and the IT department, out of the 11 officers, 10 was selected purposively.

3.4.3 Sample size and Composition

Denscombe (1998) poised that, the sample must be carefully selected to be representative of the population and the researcher also needs to ensure that the subdivisions entailed in the analysis are accurately catered for. The sample size consisted of 60 respondents from the study area and these were selected as follows. The sample was calculated from the entire population using probability of proportions.

Table 3.1: Showing Sample size

Source: Primary Data

The study used a sample size selected 60 respondents because it was enough for the study to obtain reliable information. In addition, it helped the researcher to finish her study in time.

3.5 Source of Data

Data have been defined as factual information (as measurements or statistics) used as a basis for reasoning, discussion, or calculation (Gleason, 1955). The study willprincipally depend on both primary and secondary data.

3.5.1 Primary Data

Basically, the study collated qualitative data in the form of primary data from respondents. Primary data was collected from the field survey through the administration of structured questionnaire

3.5.1 Secondary data

Secondary data comprised works that have already been done in the field of Just in Time and Cost Effectiveness. Therefore, journals, internet sources, published and unpublished dissertations as well as empirical literature formed the secondary data used for the study.

3.6 Data collection methods / instruments

3.6.1 Questioning method

The researcher used the questioning method whereby the researcher drafted to respondents structured questions. This method was used because some respondents may have no time to sit down and answer during interviews.

A questionnaire guide was used and this was inform of close ended in nature and this allowed the study respondents to fill the questionnaire in the study field. The questionnaire method of data collection was used because of being cheap and that the method collects responses with minimum errors and high level of confidentiality.

3.6.2 Interviewing method

An interview is a conversation where questions are asked and answers are given. Interview refers to a one-on-one conversation with one person acting in the role of the interviewer and the other in the role of the interviewee.

An interview guide was drafted with a set of questions that the researcher asked during an interview and this was structured (close ended) in nature. Interview guide was used by the study since the methods helps in the collection of more data as it allows the interaction of both the researcher and the respondents.

3.6.3 Observation

It is also called unstructured or exploratory observation. This is usually done when the research group has little knowledge of a population and its behaviour. The main purpose of informal observation was to create hypotheses to be tested later, in a survey or using for a survey. This method involved watching and listening to people.

Additional data was obtained using an observation checklist. The observation checklist enabled the researcher to assess how JIT has had an effect on cost effectiveness of National Medical Store.

3.7 Validity and reliability of research instruments

3.7.1 Validity

To test the construct validity, citations of all sources where materials and evidence of material collected from was provided. The supervisor reviewed the questionnaires and approved them.

3.7.2 Reliability

When conducting research, the researcher tried to act as neutral as possible in order to avoid being bias. The researcher was also conscious about the type of questions to ask.

3.8 Data collection procedure

The researcher ensured the approval of the research proposal and instruments to test their effectiveness in carrying out the study; got a letter of introduction from the Research Coordinator, School of management and Entrepreneurship for introducing her to the area of study fully explaining the purpose of research. After getting their consent, she set a program with the respondents on when the questionnaires was administered and date for the interview sessions was set. The researcher also built the confidence of the respondents by assuring them that their views were confidential and was used only for academic purposes.

3.9 Data analysis

3.9.1 Quantitative Data

Manual editing of questionnaires was done to eliminate errors. After coding, tabulation was done to clearly present various responses and the interpretation. Frequencies and percentages were used to portray statistics used to analyze and interpret the findings of the study. Frequency tables, graphs and charts aided in presenting the data using statistical packages like Microsoft excel.

3.9.2 Qualitative Data

Data processing involved editing raw data to detect errors and omissions, classifying data according to common features, and tabulation to summarize and organize it. Data analysis involved the qualitative approach of identifying the major themes arising respondents’ answers; assigning of codes to the themes: classification of the themes under the main theme; and integrating the responses into the report in a more descriptive and analytical manner.

3.10 Data Presentation

Presentation of data involved use of tables, pie-charts and graphs that was generated from the questions relevant to the study variables. Interpretation and discussion of the results was done as the researcher explained the strength of the study variables basing on the frequencies and percentages, charts and graphs.

3.11 Limitations of the Study

The researcher faced a problem of not finding all respondents in the study area especially the employees who go to field as a group. The researcher however arranged with them to fix for her an appropriate time in order to collect reliable and valid information from them for the study.

The study also was expensive in terms of stationary. However the researcher mobilized funds from her friends and family members for the study to be completed successfully in time with the help of her supervisor.

The researcher further faced a problem of some respondents not providing information for the study as information relating to the study variables. However, the researcher explained to them that the information was only for the academic purpose while making them to understand the study variables.

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.0 Introduction

The study looked at the effect of just-in-time system on cost effectiveness of an organization. A case study of National Medical Stores. The findings from the study were presented and analyzed orderly using computer packages MS word and Excel whereby tables were generated.

The chapter begins by presenting the biographic characteristics of respondents in terms of gender; age, education levels, department and period of work. The study there after discusses the findings as per the formulated objectives of the study.

4.1 Background information of the respondents

4.1.1 Gender of Respondents

The gender distribution of the respondents were shown in below;

Table 4.1: Showing Gender of Respondents

Source: Primary

Figure 4.1: Showing Gender of Respondents

Source: Primary Data

According to figure 4.1 above, 31 (51.67%) majorityof respondents were male while 29 (48.33%) were women. This implies that the organization is gender sensitive since both categories of people are employed by the organization.

4.1.2 Age range of Respondents

The age range of the respondents were shown in below;

Table 4.2: Showing Age range of Respondents

Figure 4.2:ShowingAge range of Respondents

Source: Primary Data

Results in table 4.2 &Figure4.2 indicates that majority of respondents 23(38.3%)were in the 26-35 age group, 18(30%) of them were between 18-25years while 12(20%) of the respondents were 46years and above and only 7(11.7%) of the study respondents were in the age bracket of 36-45years. This justifies that the organization follows the constitution of the Republic of Uganda that allows employers to recruit staff above 18 years. The staff had the experience since respondents were of average age and energetic enough to carry out their duties and responsibilities assigned to them hence they would hence they would relied on to give appropriate information on the study under investigation.

4.1.3 Level of education of the respondents

The level of education of respondents is shown below;

Table 4.3: Showing Education of Respondents

Source: Primary Data

Figure 4.3: Showing Level of educationof Respondents

Source: Primary Data

From table 4.3 & figure 4.3 above, majority of respondents constituting 46.67%(23) were diploma holders, 28.33% (17) of them acquired 1^st degree and 25% (15) of the respondents had acquired secondary level. This justifies that the organization recruits, maintains and retains high qualified human resource to fill the positions of the organization who are capable of sustaining electronic procurement components which implies that the selected sample had the capacity to avail the researcher with reliable and appropriate information on the topic under study.

4.1.4 Period of Work of the respondents

The period of work of the respondents is shown below;

Table 4.4: Showing period of work of the respondents

Source: Primary Data

Figure 4.4: Showing period of workof the respondents

Source: Primary Data

According to the table 4.4 & figure4.4 above, majority of the respondents 24 (40%) had been in the organization between 2-5yearsm followed by 17(28.3%) of them who had been in the organization from less than 2years, 11(18.4%) had been in the organization for over 10years and only 8(13.3%)% of the respondents have stayed in the organization for 6-10years. This shows that the working experience for the categories of workers was enough to get conclusive results, sinceits assumed that by virtue of their positions, they know about just in time and its impact on cost effectiveness.

4.1.5 Department of the Respondents

The department of the respondents were shown below;

Table 4.5: Department of the Respondents

Source: Primary Data

Figure 4.5: Department of the Respondents

Source: Primary Data

Table 4.5 and figure 4.5 shows that majority of the respondents 16(26.7%) are from sales department, 12(20%) were from procurement department, also 12(20%) were from transportation department, 10(16.7%) of the respondents were from Human Resource Department while those from top management and IT department each had 5(8.3%) of the study respondents. This implies that the study got information from the sales, procurement and transportation departments was sufficient in regards to the topic under study since these departments deal directly in procurement activities.

4.2 Relationship between JIT system and cost effectiveness of an organization

The study sought to know therelationship between JIT system and cost effectiveness of an organization. The results were obtained and are presented below;

Table 4.6: Showing relationship between JIT system and cost effectiveness of an organization

Source: Primary Data

The study sought to examine the relationship between JIT system and cost effectiveness of an organization and result shows that, majority of respondents 27(45%) strongly agree with NMS uses JIT philosophy to distribute medical supplies to the government centres, 24(40%) of them agree, 5(8.3%) of the respondents, only 6.7% of the respondents disagree and no respondents strongly disagreed. Since the majority of the respondents 51(85%) were positive implies that NMS uses JIT philosophy to distribute medical supplies to the government centres.

Results also show that most 25(41.7%) of the respondents agree with JIT system eliminates waste, 22(36.7%) of them were not sure, 8(13.3%) of the respondents strongly agree and only 8.3% disagree while no respondents strongly disagreed. From findings majority 33(55%) were positive on JIT system eliminates waste.

Table also indicates that a majority of the respondents 40 (66.7%) strongly agree with JIT system reduces chances of producing defecting products, 20(33.3%) of them agree. No respondent was not sure, disagree, or strongly disagree.  This implies that JIT system has reduced the chances of producing defecting products since 60(100%) of the respondents agreed.

Also findings indicate that, 45(75%) of the respondents strongly agree with JIT system helps the organization to deliver medical supplies in lot sizes while 15(25%) of them agree. No respondent was not sure, disagree, or strongly disagree. All respondents 60(100%) were positive with the statement implying that JIT system helped NMS to deliver medical supplies in lot sizes. This has also proved to be cost effective to the organization.

Results also indicate that majority of the respondents 35(58.3%) strongly agree with JIT system exposes problems and bottlenecks, 41.7% of them agree. No respondent was not sure, disagree, or strongly disagree. Since majority 60(100%) implies that JIT system has exposed problems and bottlenecks in NMS.

Most of the study respondents 30(50%) strongly agree with JIT system encourages streamlined Production, 29(48.3%) of them agree while only 1(1.7%) of the study respondents disagree. No respondent was not sure or disagree. This implies that JIT system in National Medical Store has encouraged streamlined Production.

On JIT implementation reduces inspection costs, majority of respondents (30)50% agree, followed by 23(38.3%) of the respondents who strongly disagreed, 5(8.3%) of the respondents strongly agree, 2(3.3%) of the study respondents disagreed, No respondent was not sure. This implies that the application of JIT system in NMS has reduced inspection costs.

Results in table above also indicates that, most respondents 59(98.3%) strongly agree with JIT implementation reduces ordering costs and only 1(1.7%) of the respondents agreed. However, no respondent was not sure, disagree, or strongly disagree. Majority of the respondents 60(100%) were positive implies that the application of JIT system has reduced general operational costs in NMS.

Majority of respondents 40(66.7%) strongly agree with JIT implementation reduces the number of suppliers and only 20(33.3%) of the study respondents agree. No respondent was not sure, disagree, or strongly disagree. Since all the study respondents 60(100%) agreed implies that JIT system has been effective in NMS as it has improved on its general performance.

Study findings also showed that the highest number of respondents 45(87.5%) strongly agree with JIT implementation minimizes moving activity while 15(12.5%) of the respondents agree. No respondent was not sure, disagree, or strongly disagree. Since majority 60(100%) were positive implies that JIT implementation in NMS has minimized moving activity in the organization.

The table above also indicates most respondents 35(58.3%) strongly agree with JIT implementation minimizes set up activity and only 25(41.7%) of them agree. Since the response 60(100%) was positive implies that JIT implementation has minimized set up activities in NMS.

Finally, study findings in the table shows that most respondents 30(50%) strongly agree with JIT implementation changes the cost allocation procedure, 23(38.3%) agree, 5(8.3%) disagreed, 2(3.3%) of the respondents strongly disagreed and only no respondents were not sure. However, since the majority of respondents 53(88.3%) were positive implies that JIT implementation has changed the cost allocation procedure in NMS. This has improved the general performance of the organization in terms of cost effectiveness.

4.3 Necessary tools for JIT system implementation

The study sought to identify the necessary tools for JIT system implementation. Results were obtained and are presented below;

Table 4.7: Showing necessary tools for JIT system implementation

Source: Primary Data

According to table above, majority of the study respondents 40(66.7%) strongly agreed that JIT system requires small lot size while 20(33.3%) agree, no respondent was not sure, disagree, or strongly disagree. Since majority 60(100%) of the respondents agreed implies that JIT system in NMS requires small lot size.

Majority of respondents 25(41.6%) agreed that JIT system requires employee participation, while 22(36.7%) were not sure, 8(13.3%), only 8.3% of them opposed while no respondents strongly disagreed implying that JIT system in NMS requires employee participation.

Most respondents 40(66.7%) strongly agreed that JIT system requires total quality control while 20(33.3%) agree, no respondent was not sure, disagree, or strongly disagree. Since majority 60(100%) of the respondents agreed implies that the application of JIT system in NMS requires total quality control.

Also majority of respondents 45(75%) strongly agreed that JIT system assures stable environment and 15(25%) of them agreed as compared to none of the respondents who opposed or were not sure. This means that JIT system assures stable environment in the organization since majority 60(100%) agreed.

Furthermore, findings in table above indicate that most respondents 30(50%) strongly agreed that JIT system assures commitment to quality and reduction of waste and 29(48.3%) of the respondents agreed while no respondents were not sure and only a few (1.7%) opposed. This implies that at NMS, JIT system assures commitment to quality and reduction of waste since most respondents 59(98.3%).

Most respondents 40(66.7%) strongly agreed that JIT system requires long term planning while 20(33.3%) agree, no respondent was not sure, disagree, or strongly disagree. Since majority 60(100%) of the respondents agreed implies that the application of JIT system in NMS requires long term planning.

Also majority of respondents 45(75%) strongly agreed that JIT system requires stockholders (owners) and 15(25%) of them agreed as compared to none of the respondents who opposed or were not sure. This means that JIT system requires stockholders (owners) in the organization since majority 60(100%) agreed.

Furthermore, findings in table above indicate that most respondents 50(83.3%) strongly agreed that JIT system requires support of labor Organizations (Unions) and 10(16.7%) of the respondents agreed while no respondents were not sure or opposed. This implies that at NMS, JIT system requires support of labor Organizations (Unions) since most respondents 60(100%).

Most respondents 40(66.7%) strongly agreed that JIT system requires training while 13(21.7%) agreed, 5(8.3%) of the respondents disagreed, only 2(3.3%) strongly disagreed and no respondents were not sure. Since majority 53(88.3%) of the respondents agreed implies that the organization has trained employees on JIT system.

4.4 Challenges faced by national medical stores in implementing JIT system

The study sought to determine the challenges faced by National Medical Stores in implementing JIT system.

Table 4.8: Showing challenges faced by national medical stores in implementing JIT system

Source: Primary Data

Most respondents 24(40%) agreed with the statement that JIT system has zero tolerance for mistakes and 9(15%) strongly agreed compared to those who concurred 20(33.3%) who disagreed and 4(6.7%) of the respondents strongly disagreed while only 5% were not sure. This implies that, JIT system has zero tolerance for mistakes as indicated by 33(55%). Since mistakes are un-avoidance, NMS has faced this challenge in their operations.

From Table above, findings show that fewer respondents 7(11.7%) disagreed and 5(8.3%) strongly disagreed with JIT system involves production downtime and line idling compared to those who concurred (24(40%) agreed and 21(35%) strongly agreed) while only 5% were not sure. Since majority 45(75%) agreed implies that, JIT system involves production downtime and line idling in National medical stores.

Fewer respondents 5(8.3%) strongly disagreed with JIT system relies more on suppliers who may bring poor quality products and 19(31.7%) disagreed compared to those who concurred 27(45%) who agreed and 3(5%) strongly agreed while 6(10%) were not sure. However majority 30(50%) agreed implies that in most cases, JIT system relies more on suppliers who may bring poor quality products. This has also affected the operation of NMS.

Furthermore, findings in table above indicate that most respondents 25(41.7%) agreed that JIT system has detrimental effects on the environment and 2(3.3%) of the respondents strongly agreed while 23(38.3%) of respondents disagreed with 1(1.7%) of them strongly disagreeing and only 9(15%) of the respondents were not sure or opposed. Majority 27(45%) were positive implies that sometimes at NMS, JIT system has detrimental effects on the environment. However, this challenge is not so much in NMS since a significant number of respondents opposed.

Most respondents 27(45%) agreed with the statement that there are high transaction costs in JIT system and 4(6.7%) strongly agreed compared to those who concurred 24(40%) who disagreed and 2(3.3%) of the respondents strongly disagreed while only 3(5%) were not sure. This implies that, there are high transaction costs in JIT system as indicated by 31(51.7%).

Finally, fewer respondents 5(8.3%) strongly disagreed with JIT system may be unable to meet an unexpected increase in orders, 19(31.7%) of the respondents disagreed, compared to those who concurred 27(45%) of the respondents agreed, 3(5%) strongly agreed while 6(10%) of the respondents were not sure. This implies that sometimes at NMS, JIT system may be unable to meet an unexpected increase in orders.

CHAPTER FIVE

DISCUSSION, SUMMARY, CONCLUSION AND RECOMMENDATION AND AREAS FOR FURTHER STUDIES

5.0 Introduction

This chapter presents the discussion, summary of the findings, conclusion, recommendation and areas for further studies presented in the previous chapter. The discussion focuses on the finding in relation to the objective of the study to achieve.

5.1 Discussion of major findings

5.1.1 Relationship between JIT system and cost effectiveness of an organization

Study findings in Table 4.6 revealed that, National Medical Store (NMS) uses JIT philosophy to distribute medical supplies to the government centres as agreed upon by 85% of the respondents, 55% agreed that JIT system has eliminated waste, 100% cited that reduced chances of producing defecting products, it has helped the organization to deliver medical supplies in lot sizes with 100%. Findings also show that JIT system has exposed problems and bottlenecks in NMS with 100%, 98.3% of the respondents revealed that it encourages streamlined Production, 100% of the respondents urged that JIT reduced inspection costs. Other findings indicated that JIT implementation reduced ordering costs with 100%, also it reduced the number of suppliers and minimized moving activity with 100%. JIT implementation minimized set up activity with 100% and changed the cost allocation procedure with 88.3%.

Some of the findings agree with (Bailes and Kleinsorge, 1992) who argued that many changes brought by the JIT production system require alterations in the existing information systems and traditional accounting practices. The application of a JIT production system will change the cost structure of a firm as well as cost allocation procedures and recording system. In addition, performance measurements and reporting systems must be changed in a JIT environment. The following paragraphs describe how JIT concept may affectively be used in cost management.

Implementation of JIT in a company will lead to cost reductions in the production system. In fact, a JIT production system is very effective in eliminating mainly nonvalue- added activities and thus, non-value added costs. The non-value-added activities are the activities such as moving materials and parts from one place to another; setting up a machine; storing materials, parts and finished goods; inspection, rework and purchasing. These activities, although consume resources, do not add value to a product produced. Therefore, the JIT production system is quite helpful in this attempt because it minimizes the non-value-added activities as explained in the following sections:

5.1.2 Necessary tools for JIT system implementation

Study results in table 4.7 in chapter four showed that, JIT system requires small lot size as agreed upon by 100% of the respondents, employee participation with 54.9%, total quality control with 100%, stable environment with 100%, commitment to quality and reduction of waste with 98.3% of the respondents. JIT system also requires long term planning with 100%, stockholders (owners) with 100%, support of labor Organizations (Unions) with 100% of the respondents and training with 88.3% of the respondents. This implies that for JIT system to be employed in an organization, all those tools are required.

Study findings are in line with Atkinson et.al, (2001) who argued that if the company wants to establish JIT production system, supplier must be able to provide high-quality raw materials, because in JIT setting there is no allowance for the stoppage resulting from poor-quality work-in-process inventory. If raw materials offered by the supplier are defective, there was problems in the production process due to poor-quality raw materials. In case of any stoppage, company will not be able to offer the product to customers on time. In other words, lead-time was longer. Therefore, successful JIT production depends largely on assembling a few cooperative and reliable suppliers. Just-in-Time purchasing is the purchase of goods and materials such that delivery immediately precedes demand for use (Horngren et.al, 1999:737) Manufacturers implementing this system tend to make vigorous assessments of potential suppliers (Lee, 1997:3).

Also in a JIT work environment production flow must be smooth. In other words, production should be done in a standardized way without variation. Also, work-in-process inventory should be moved smoothly in the production area because it is desired the production process be completed on time. In this sense, tools used in production should be put in order, machinery and the work place should be clean (Hayes, 1981:59). In a JIT environment, materials move through the factory very quickly in response to signals from the pull control system. Therefore, the work environment should be organized in a way that allows the movement of materials without any difficulty. Also, the workers should be able to reach the tools and other materials easily in the shortest time available. If work place is clean and tidy, and everything is in order, then there was no chance for the occurrence of delay because tasks can be performed without any waste of time.

5.1.3 Challenges faced by national medical stores in implementing JIT system

Results in Table 4.8 in chapter four indicated that 55% of the respondents agreed with JIT system has zero tolerance for mistakes, 75% of the respondents agreed with it involves production downtime and line idling. Also JIT system relies more on suppliers who may bring poor quality products agreed upon by 50% of the respondents. There are high transaction costs in JIT system with 45% and may be unable to meet an unexpected increase in orders with 50%. This implies that NMS has faced various challenges in the implementing of JIT system.

Findings are in line with (SimKins, 2010) who stated that Just-in-time manufacturing provides zero tolerance for mistakes, as it makes re-working very difficult in practice, as inventory is kept to a bare minimum. While Rhem (2005) in this study argued that, there is a high reliance on suppliers, whose performance is generally outside the purview of the manufacturer. Organizations are facing the overall problems in the suppliers. The suppliers sending wrong materials at the wrong times. On the other hand, the overall parts of companies must have to be more systematic in finding the overall attributable parts of the company which are uncontrollable in the just – in – time (JIT) inventory system (Patterson, 2005).

Due to there being no buffers for delays, production downtime and line idling can occur which would bear a detrimental effect on finances and on the equilibrium of the production process (Patterson, 2005).The organization would not be able to meet an unexpected increase in orders due to the fact that there are no excess finish goods (Marrs, 2003).According to Simkins (2010), just-in-time manufacturing may have certain detrimental effects on the environment due to the frequent deliveries that would result in increased use of transportation, which in turn would consume more fossil fuels. Transaction costs would be relatively high as frequent transactions would be made (Rhem, 2005).

5.2 Summary

National Medical Store (NMS) uses JIT philosophy to distribute medical supplies to the government centres, eliminated waste, reduced chances of producing defecting products, it has helped the organization to deliver medical supplies in lot sizes. Findings also show that JIT system has exposed problems and bottlenecks in NMS, encouraged streamlined Production, reduced inspection and ordering costs, reduced the number of suppliers and minimized moving activity, minimized set up activity and changed the cost allocation procedure.

The necessary tools required for JIT system implementation included small lot size, employee participation, total quality control, stable environment, commitment to quality and reduction of waste, long term planning, stockholders (owners), support of labor Organizations (Unions) and training.

The major challenges faced by NMS in implementing JIT system included zero tolerance for mistakes, production downtime and line idling, relies more on suppliers who may bring poor quality products, high transaction costs and may be unable to meet an unexpected increase in orders.

5.3 Conclusion

The use of this new production system reduces inventory related costs, increases quality, reduces lead-time, and reduces manufacturing costs by minimizing non-value-added activities and their costs. All these represent the benefits offered by the implementation of JIT production system. By reducing costs and reducing lead-time, company’s response to customer needs increases.

One of the areas that are affected by JIT implementation is cost and management accounting. First of all, JIT has emerged as an effective cost management tool because it helps to achieve significant costs savings. In addition, the JIT system simplifies the cost accounting processes since it eliminates direct labor and inventory accounting. In a JIT environment there is little or no work-in-process and finished-goods inventories.

5.4 Recommendations

National medical store should diversify its outsourcing activities by having more sources of raw materials.

NMS should apply other production techniques to fill in when JIT is not effective.

National medical store should forecast demand and ensure that there are buffer stocks.

5.5 Areas for further studies

The study recommends that further studies should be carried out on the Implementation of JIT Inventory System Application in manufacturing company and It’s Output.

REFERENCES

Atkinson, A.A.; Banker, R.D.; Kaplan, R.S.; Young, S.M. (2001).Management Accounting, 3rd edition, Prentice Hall.

Bailes, J.C. and Kleinsorge, K.I. (1992) “Cutting Waste With JIT”. Management Accounting. May.

Banker, R.D; Potter, G.(1993).“Reporting Manufacturing Performance Measures to Workers: An Empirical Study”. Journal of Management Accounting Research.Vol.3, Fall.

DeLuzio, M.C. (1993). “The Tools of JIT”. Journal of Cost Management. Summer.

Griffin, L. and Harrell, A., (1991). “An Empirical Examination of Managers’ Motivation to Implement JIT Procedures”. Journal of Management Accounting Research. Vol. 3,Fall.

Hansen, M. (2003). “Inventory Management: economic order quality, JIT and the theory of constraints,” Cost Management: Accounting and Control, 4th Edition.

Hayes, R.H. (1981). “Why Japanese Factories Work”. Harward Business Review. July–August.

Hilton, R.W.; Maher, M.W.; Selto, F.H. (2000).Cost Management, International edition, McGrawHill.

Hilton, Ronald W.(2000).Managerial Accounting, 4th edition, McGraw Hill.

Horngren, C.T.; Bhimani, A.; Foster, G.; Datar, S.M. (1999).Management and CostAccounting, Prentice Hall.

Horngren, C.T.; Foster, G; and Datar, S.M. (2000).Cost Accounting, 10th edition, Prentice Hall.

Horngren, C.T.; Sundem, G.L.; and Stratton, W.O. (2002).Introduction to Management Accounting, 12th edition, Prentice Hall.

Lee, Choong Y. (1997). “JIT Adoption By Small Manufacturers In Korea”. Journal of Small Business Management. Vol. 35, July.

Lynn, A. and Adrian, H.(1991).“An Empirical Examination of Managers’ Motivation to Implement Just-Time Procedures”. Journal of Management Accounting Research.Vol.3.

Marrs, K. (2003). Web-Based Warm Up Exercises in Just-In-Time Teaching: Determining Students’ Prior Knowledge and Misconceptions in Biology, Chemistry and Physics, Journal of College Science Teaching.

Martin, J.R., Schelb, W.K., Snyder R.C., and Sparling, J.S. (1992).“Comparing Japanese Companies: Implications for Management Accounting”. Journal of Cost Management. Spring.

Patterson, E. (2005). “Just-in-Time Teaching: Technology Transforming Learning – A Status Report,” Invention and Impact: Building Excellence in Undergraduate STEM (Science, Technology, Engineering, and Mathematics) Education, American Association for the Advancement of Science.

Rhem, J. (2005). Just-in-Time Teaching Tomorrow’s Professor listserv posting, originally published in the National Teaching and Learning Forum Newsletter, Volume 14

Simkins, S. (2010). Just in Time Teaching: Across the Disciplines, Across the Academy. Stylus Publishing.

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APPENDICES

Appendix I: Questionnaire

Dear respondents,

I am Keji Beatrice, Reg No. 14/X/10377/PLE/PE, a student of Kyambogo University pursuing a Bachelor’s Degree in Procurement and Logistics Management.  I am carrying out research on the effect of electronic -procurement on operational efficiency, A case study of National medical Stores. I humbly request you to spare some few minutes of your time and answer these questions below. The study is strictly for academic purposes and was treated with utmost confidentiality. Your cooperation is highly appreciated.

Section A: Background information

Instructions: For each of the questions, tick against your response in the box provided.

1. a.Gender

1. a) Female b) Male

1. Age range

1. a) 18-25yrs             b) 26-35yrs                  c) 36-45yrs                  d) 46 and above

1. Level of education

1. a) Secondary b) Diploma c) 1^st Degree                d) Masters       e) PHD

1. Period you have served in this organization
2. a) Less than 2 years b) 2-5 years c) 6-10 years

1. d) Over 10 years

e)Inwhich department do you work?

a)Production                                       b) Finance                               c) Sales

1. d) Stores d) Procurement

SECTION B: RELATIONSHIP BETWEEN JIT SYSTEM (JIT) AND COST EFFECTIVENESS OF AN ORGANIZATION

2. In this section, the researcher seeks to establish the relationship between JIT system and Cost effectiveness. Please tick (√) the appropriate alternative. Key; Where SA-strongly agree, A- agree, NS- Not Sure, SD-strongly disagree D-disagree

SECTION C: NECESSARY TOOLS FOR JIT SYSTEM IMPLEMENTATION

3. In this section, the researcher seeks to identify the necessary tools for jit system implementation. Please tick (√) the appropriate alternative. Key; Where SA-strongly agree, A- agree, NS- Not Sure, SD-strongly disagree D-disagree

SECTION D: CHALLENGES FACED BY NATIONAL MEDICAL STORES IN IMPLEMENTING JIT SYSTEM

4. In this section, the researcher seeks to determine the challenges faced by National Medical Stores in implementing JIT system. Please tick (√) the appropriate alternative. Key; Where SA-strongly agree, A- agree, NS- Not Sure, SD-strongly disagree D-disagree

THANK YOU FOR YOUR TIME

Appendix II: Interview Guide

1. What do you understand by Just in time?
2. What are the main features of JIT?
3. What Does JIT do in this organization?
4. What is the relationship between JIT system and cost effectiveness?
5. What is required in JIT?
6. What is assured in JIT?
7. What controllable requirements for the JIT system?
8. What uncontrollable Requirements for the JIT system?
9. What challenges are faced by the organization in implementing JIT system?

THANK YOU FOR YOUR TIME