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The development of a conceptual framework for Just-In-Time implementation in SMEsShad Dowlatshahi a & Farzam Taham ba Division of Business Administration, HW Bloch School of Business and PublicAdministration , University of Missouri-Kansas City , 5110 Cherry, Kansas City, MO64110-2499, USAb Department of Industrial Engineering, Iran University of Science & Technology , Tehran,IranPublished online: 15 Sep 2009.

To cite this article: Shad Dowlatshahi & Farzam Taham (2009) The development of a conceptual framework for Just-In-Time implementation in SMEs, Production Planning & Control: The Management of Operations, 20:7, 611-621, DOI:10.1080/09537280903034305

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Production Planning & ControlVol. 20, No. 7, October 2009, 611–621

The development of a conceptual framework for Just-In-Time implementation in SMEs

Shad Dowlatshahia* and Farzam Tahamb

aDivision of Business Administration, HW Bloch School of Business and Public Administration,University of Missouri-Kansas City, 5110 Cherry, Kansas City, MO 64110-2499, USA

bDepartment of Industrial Engineering, Iran University of Science & Technology, Tehran, Iran

(Final version received 17 April 2009)

Just-In-Time (JIT) has shown much promise in many industries but particularly in large organisations. Thisarticle analyses which aspects of the JIT philosophy are also applicable to small and medium sized enterprises(SMEs). Based on a literature review and with a particular focus on four data sources, challenges to JITimplementation in SMEs are analysed. A conceptual framework and a set of hypotheses are developed whichdescribe the barriers to, and enablers of, JIT implementation in SMEs. Barriers include: a lack of suppliercooperation and partnerships; an inability to develop the necessary technologies and methodologies to reduce oreliminate waste; difficulties in managing demand fluctuations; a lack of capital to acquire advanced technologies;quality control problems; and, inadequate employee training and development. Enablers include the ability to:empower employees; reduce JIT implementation time; overcome employee resistance to change; and, receivevarious forms of governmental support. The hypotheses could form the basis of a set of measures that allowSMEs to decide whether JIT is right for them.

Keywords: Just-In-Time; small and medium sized enterprises; barriers to JIT implementation; enablers ofJIT implementation

1. Introduction

Just-In-Time (JIT) is part of the lean philosophy which

aims to eliminate waste and increase quality and

profitability. JIT is based on producing what is

needed, when it is needed, and in the right quantity

and quality. The adoption of philosophies such as JIT

usually lead to operational and strategic gains for both

manufacturing and service organisations (Yasin et al.

2004). JIT was first implemented in Japan by Toyota;

the philosophy arrived in the US in the 1980s and

rapidly spread. According to a St Louis logistics

consulting firm, 18% and 23% of all US products

were produced on a JIT basis in 1990 and 1992,

respectively; at that time, a 39% JIT delivery rate was

projected for the year 2000 (Johnson 1994). JIT is also

a manufacturing approach that assists companies to

efficiently manage and implement cost and time saving

methods and techniques. Some of these methods and

techniques include: waste elimination, reduction of

total processing times, reduction of setup times, lot size

reduction, inventory cost minimisation, employee

flexibility, total preventive maintenance (TPM), total

quality control (TQC), a pull/Kanban production

system, uniform plant loading, and long-term cooper-

ative relationships with vendors.

The implementation of a JIT system has mostcommonly taken place in large organisations. Largecompanies typically have more resources and access tothe technologies needed for effective JIT implementa-tion than smaller firms. Large downstream companiesthat employ a JIT philosophy are also able to force their(often smaller) upstream suppliers, who have lesspower, to hold inventory. As a result, although JITworks well for large companies, it may be more difficultfor smaller firms in the same supply chain to alsobenefit.

Small and medium sized enterprises (SMEs) play animportant role in the economy of many countries yet

very few researchers have studied how well the JIT

philosophy works in SMEs (Ramaswamy et al. 2002).

It could be argued that, like large organisations, SMEs

should seek to access the benefits of JIT but that certain

SME characteristics may serve as barriers to imple-

mentation. For example, SMEs typically have limited

capital, possess limited resources for training and

personnel development, and lack intimate knowledge

about the products or markets of their larger customers

(Gargeya and Thompson 1994). Nonetheless, it is

argued here that both small and large firms can improve

performance as a result of implementing JIT systems.

*Corresponding author. Email: shad@umkc.edu

ISSN 0953–7287 print/ISSN 1366–5871 online

� 2009 Taylor & Francis

DOI: 10.1080/09537280903034305

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1.1. Objectives, research methodology andorganisation of the article

Given the focus on large organisations in the literature,this research asks: what are the barriers to JITimplementation in SMEs? And, how can the imple-mentation of JIT in SMEs be enabled? The purpose ofthis article is to identify these barriers and enablers andto develop a conceptual framework for the effectiveimplementation of JIT in SMEs.

The research methodology is based on an extensiveliterature review, with a particular focus on analysingfour existing data sources in the literature. This articledevelops a conceptual framework which serves as thebasis for developing research hypotheses. Thesehypotheses pertain to the enablers of, and barriers to,effective JIT implementation in SMEs. The four ‘cases’studied are from different settings and from fourdifferent countries in Asia. The analysis sheds light onhow SMEs deal with JIT issues in practice in differentcountries.

The remainder of this article is organised asfollows. To consider JIT implementation in SMEs,an understanding of the characteristics of SMEs isessential. Section 2 therefore presents the relevantcharacteristics of SMEs before comparing JIT imple-mentation in SMEs with that in large organisations.Section 3 presents the analysis of the cases. Section 4presents the conceptual framework and hypothesesbefore, finally, this article concludes in Section 5.

2. The characteristics of SMEs

Small firms are often owned by a single person orfamily with most of their major managerial decisionsmade by one or two individuals. SMEs may becharacterised by entrepreneurship; entrepreneurs inSMEs are generally ‘all-founders’ with basic knowl-edge of many areas – they are good at multi-tasking.The entrepreneurs perform many tasks but perhaps notin the most efficient manner (Sohal and Naylor 1992).A small business in the US employs fewer than 100people and is usually privately owned. Small manu-facturing enterprises are usually highly dependent onthe revenue generated from their major customersbecause they often have a small customer base. SMEs,therefore, could suffer from fluctuating demand andprice reductions from their major customers.

Large companies have implemented JIT in theirproduction systems to improve their global marketcompetitiveness (Gunasekaran and Lyu 1997), redu-cing inventories and improving quality and productiv-ity. Many cases of successful JIT implementationsin terms of operational, financial, and strategic

improvements have been reported (Claycomb et al.1999, White et al. 1999, Chong et al. 2001, Kennedyand Hyland 2003, Meybodi 2003, Ahmad et al. 2004,Mistry 2005, Salaheldin 2005, Liao 2008). This createsa driving force for SMEs that supply parts andcomponents to JIT manufacturers to change theirbusiness practices. For example, SMEs must coordi-nate their planning and manufacturing processes withtransportation companies and with their own suppliersin order to conform to the requirements of the JITsystem (Sadhwani and Sarhan 1987).

Ramaswamy et al. (2002) stated that JIT is rarelyadopted by SMEs and suggested that there areproblems in promoting and deploying the concept inSMEs. Unlike large companies, SMEs lack the humanresources and materials necessary for organisationalchange and project implementation; and, they lackbargaining power with customers, suppliers, andfinancial institutions (Prajogo and Johnston 1997).For example, SMEs do not order materials in largevolumes and this can result in delivery refusals by somesuppliers or an increase in transportation costs fromsuppliers or transporters. Additionally, SMEs havelimited resources to invest in new equipment andtechnologies. Similarly, Manoochehri (1988) arguedthat small firms usually lack resources, sufficientcapital, have no market power, and have little or noin-house JIT experience and training. From the aboveit is understandable why some small firms may beincapable of adopting and implementing JIT in theiroperations (Stamm and Golhar 1991).

Implementing JIT is not a decision to be takenlightly. It must be thought through and planned verycarefully. It requires certain fundamental changes inapproach with the involvement of an entire organisa-tion from the top management to the lowest level of thehierarchy; commitments must be made at all levelswithin the organisation to successfully implement thephilosophy. This process may also require a wholesalemodification in the overall organisational culture inwhich top management must decentralise power, sothat managers as well as workers can gain ‘grass-rootslevel’ decision making powers (Hay 1988). SMEsusually have only a limited number of managers incharge of their operations. This could pose a difficultyfor SMEs since they have to understand that the JITphilosophy requires different managerial thinking anda new attitude towards operations (Kupferberg 1988).Without a sufficient understanding of the JIT philo-sophy, implementation is unlikely to be successful.

The education and training of employees andworkers is also important. SMEs may, however, havea limited ability to allocate the proper budget foreducation and training support of their employees

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and workers. Since SMEs do not usually have a largeamount of available capital, it is difficult for them tofund training programmes. SMEs do not often have atraining department while limited funds also makethe hiring of an outside consultant impractical(Kupferberg 1988). Another barrier faced by someSMEs is the geographical dispersion of their suppliers.This results in huge increases in transportation costsfor receiving frequent deliveries (Manoochehri 1988).Moreover, according to Norris (1994), JIT assumesthat additional inventory is always available for quickdelivery at the same price as old inventories andtherefore it often creates inflationary behavioursbetween SMEs and their suppliers. For instance,shortages in certain commodities and consumerproducts in the market may cause suppliers to requirehigh prices for these products (including shipping andhandling costs) from SMEs.

SMEs may also face constraints on their ability toimplement JIT because they may be unable to reduceprocessing and setup times as they have fewer ordersand lower volumes of output than large organisations.According to Gargeya and Thompson (1994), theemphasis on smaller order quantities and more fre-quent deliveries by the customer places a burden on asupplier with smaller lot sizes and increased setupcosts. The authors further stated that SMEs couldundertake some setup time reduction techniques todeal with these possible problems. These techniquesinclude documenting jobs, dedicated tooling, setupteams, videotaping complex setups and job schedulecoordination.

3. Data analysis

To shed further light on the implementation of JIT inSMEs, four sources of data from the literature (fromfour different Asian countries) are considered in moredetail.

3.1. Case 1: Ikeda, Tokyo, Japan

According to Ibata-Arens (2005), Ikeda is a smallmanufacturing firm founded in the Ota Ward of south-eastern Tokyo. The firm, which applies protective thinfilm to machinery components, became an exclusivesubcontractor to the NEC group. Being a subcon-tractor, however, subjected Ikeda to two downsides ofthe Japanese production system: cash flow problemsand the ‘cost-down forces’ of large JIT companies. Ina cost-down scenario, large Japanese firms use theirleverage over suppliers by unilaterally reducing sup-plier prices, usually once a year. Initially, large firms

make orders for a few thousand pieces upon SMEs.Several months later, the large firm asks for more andmore pieces, paying on time at first, until the largefirm’s orders take up most of the SME’s productiontime. Then, the large firm may stop paying on time,knowing that the SME has no choice but to accept latepayment.

Ikeda experienced cash flow problems due to thecost-down forces imposed by their major customers.According to Ibata-Arens (2005), JIT was all abouttransferring the inventory holding costs from largefirms to small firms, such as Ikeda. Ikeda alsoanticipated fierce price competition from Chinesesmall manufacturers that had even lower costs andused more advanced technology. Ikeda was strugglingwith cutting costs while adopting the JIT philosophy tobe competitive with other companies. The main findingof this case study was that cost down and latepayments were often used in tandem with JIT bylarge firms to ‘squeeze’ their SME suppliers. JIT meantthe placement of orders by large firms to their SMEsuppliers, with a 1 or 2 day lead-time before expecteddelivery at a lower price and with delayed payments.

3.2. Case 2: SMEs in India

Mahadevan (1997) studied JIT adoption in India.From the analysis it appears that Indian firms whichhave already adopted JIT need more assistance andsupport compared to Japanese firms. In India, manycompanies are under government control, operate intune with government policies and with a short-termperspective. As a result, Indian firms adopt andimplement new manufacturing innovations betterwhen adoption is under the direction and control ofthe Indian government.

A survey was administered to 400 manufacturingorganisations with different types of ownership; thesurvey included SMEs. The survey resulted in theidentification of 14 critical success factors for JITimplementation. Employee involvement, setup timereduction, and TPM were rated the highest by therespondents. Quality circles and cellular manufactur-ing were rated the lowest. In the case of quality circles,the concept was a recent phenomenon and it wasintroduced in India only during the early 1980s.Additionally, in order to evolve to a pull inventorysystem, manufacturing operations need to be reorga-nised into cells. The substantial rearrangement of theirproduction system required greater managerial effortand employee flexibility. This was a reason why IndianSMEs were reluctant to initiate operational systemlevel changes on the shop floor. Additionally, Indian

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companies showed no significant progress in buildingcloser relationships with their supplier network.

Several key issues were identified and/or reinforcedby the survey. Firstly, SMEs which plan for major JITimplementation need to accept that some shop floorand operational changes are inevitable. Secondly, thatmanufacturing complexity, the sector, and the type ofownership affect JIT adoption. Thirdly, JIT imple-mentation requires the involvement and commitmentof top management and the employees on the shopfloor. Finally, although the focus of JIT is consistentlyon continuous waste elimination and non-stopimprovement, results vary across different industries.

The overall findings of this case suggest thatTQM and supplier development efforts must precedethe launch of a major JIT programme. The studyalso indicated that the immediate priorities for success-ful JIT implementation were TQM, TPM, and JITpurchasing.

3.3. Case 3: small and medium sized industriesin Malaysia

TPM is a prerequisite for the ‘proper’ implementationof JIT (Dowlatshahi 2008). Ahmed et al. (2004)presented the state of TPM and JIT implementationin Malaysian small and medium sized industries(SMIs) and conducted a survey which found thatTPM has not yet been widely used within the corefunctions of many organisations in SMIs. Other studiessupport the claim that few TPM implementationshave been achieved in Malaysian SMIs (Anderson andSohal 1999, Yusof and Aspinwall 2000).

Malaysia is one of the fastest developing countriesin East Asia; the manufacturing sector and SMIs inparticular are very significant contributors to thegrowth of both Malaysia’s Gross Domestic Product(GDP) and employment (Ahmed et al. 2004).According to the directory of the Federation ofMalaysian Manufacturers (FMM Directory 1999),SMIs employ 59.5% of 668,174 employees (smallfirms 27.4% and medium firms 32.1%) and areresponsible for 64% of annual sales (small firms44.4% and medium firms 19.6%).

The survey conducted by Ahmed et al. (2004) foundthat SMIs lacked the necessary educated manpower forJIT and faced a shortage of funds for training. Themajor limitations were:

. A lack of managerial knowledge and vision ofwhat training was really required.

. A lack of resources or facilities for carryingout an effective training programme or

maintaining a training department in theorganisation.

. Difficulty in affording the absence of employ-ees from the workplace for trainingpurposes and difficulty in finding appropriatesubstitutes.

. A lack of space within the organisation and ashortage of funds for adequate training.

In the survey, about 60% of respondents wereconcerned about quality defects, and 43% maintaineda record of breakdown losses. Only 27% were engagedin setup adjustments, idling, and the avoidance ofminor losses. Among the respondents, a relatively largenumber of respondents (39%) believed that qualitydefects could be eliminated if breakdown maintenanceschedules were maintained. This showed that manycompanies preferred to stop the production line formaintenance, which required longer productiondowntime.

The results indicated that the implementation ofTPM (and JIT) is far from widespread in SMIs inMalaysia. The survey also showed that SMIs had manylimitations that inhibited their ability to implementTPM or JIT as a large number of SMI owners were inmanagement positions by birth and not by qualifica-tion. Additionally, SMIs faced problems, for example,in low-level overall equipment effectiveness, shortageof capital, lack of in-house training programmes, andlow participation and cooperation from non-manufac-turing units such as administration, marketing, andaccounting departments. Therefore, more motivationand participation should be instilled in the SMIs andmore effective communication should be undertaken inorder to emphasise the importance of quality controland productive maintenance to everyone in the SMIs(Ahmed et al. 2004). The case inferred that a lack ofunderstanding about the importance of equipmentmaintenance was one of the main obstacles toimproving equipment performance. The proper appli-cation of basic statistical tools and techniques werealso lacking in the industries surveyed.

3.4. Case 4: garment industry in Bali and Indonesia

In Indonesia, SMEs play a pivotal role in the economicdevelopment of the country and create employment.Rao (2004) focuses on the case of the Bali garmentexport industry and on the extent to which governmentintervention has helped SMEs; similarly, governmentintervention may be a relevant enabler of, or barrier to,JIT implementation in SMEs.

The Bali garment industry, which is almostexclusively based on small firms, is practically an

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accidental case of industrialisation. Foreign tourists –particularly surfers – saw commercial opportunities inBalinese garments. They acted as the intermediarybetween local producers and retail outlets abroad,spreading information about design and productiontechniques. The garment industry developed quicklyand mushroomed from its seasonal, cottage origins tolarger production units (Schiller 1997). This did notresult from any deliberate government promotionalmeasures but the government did play an importantrole in providing a supportive macroeconomic envir-onment, and a rapidly improving infrastructure. Thegovernment provided marketing support by acting as acatalyst in assisting smaller firms to achieve commer-cial success (Berry and Levy 1999). SMEs were givensupport to participate in international trade fairs thatenabled these enterprises to better explore marketingchannels. Local government adopted a fairly openpolicy towards the presence of foreign entrepreneurswithout strict regulations on small foreign investors,thereby playing a positive role through its absencerather than its actions.

A key obstacle to the development of SMEs is oftenfinance; however, Indonesia operated a number ofsubsidised SME credit programmes from the early1970s, in the context of a heavily regulated and state-dominated financial sector. However, by the early1980s, there was a rethinking of these policies becausethe collapse in oil prices meant that government was nolonger able to sustain the subsidies. Therefore, itdecided to permit banks to offer non-subsidisedlending and to introduce mobile and flexible servicesto SMEs. This programme grew positively andinvolved very little subsidy (Harianto 1993).

The case highlights factors that contributed to thesuccess of the garment industry in Indonesia, includinga beneficial commercial environment, good physicalinfrastructure, mechanisms to facilitate access to for-eign technologies and markets. The case suggests thatthe ‘right type’ of government intervention and regu-lation can help SMEs to prosper. These factors providethe essential framework for the overall operations ofSMEs, which could include the application of JIT.

4. Conceptual framework and hypotheses for JIT

implementation in SMEs

This section covers the barriers to, and enablers of, JITimplementation in SMEs. Figure 1 represents the fiveconstructs that serve as barriers to effective implemen-tation (technical, financial, human resources, suppliers,and government regulations) while the legends corre-sponding to the barriers are outlined in Table 1.Figure 1 also identifies twelve hypotheses for the fiveconstructs; where relevant, Table 2 lists the literaturethat supports the hypotheses, including the casesdescribed in the previous section.

Hypothesis HB1 (corresponding to item B1) statesthat there is a significant and negative relationshipbetween the JIT performance of SMEs and a lack ofappropriate technology and technology acquisition.This indicates that advanced and relevant manufactur-ing technologies and methodologies are necessary forenhancing JIT implementation in SMEs. HypothesisHB1 is, therefore, formulated as follows:

HB1: A lack of appropriate technology and technologyacquisition significantly and negatively affectsJIT performance in SMEs

HB12 (−)

HB11 (−)

HB10 (−)

HB9 (−)

HB8 (−)

HB7 (−)

HB6 (−)HB5

(−)

HB4 (-)

HB2 (−)

HB1 (−)

TechnicalHuman

resources

JIT performance

in SMEs

SuppliersFinancial

HB3

(−)

Government regulations

Figure 1. The barrier constructs for effective JIT implementation in SMEs.

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Hypothesis HB2 states that deficient lack of

knowledge and a poor understanding of the JIT

philosophy negatively and significantly affects JIT

performance in SMEs. This implies that adequate

managerial knowledge is required to improve overall

JIT performance in SMEs. Hypothesis HB2 is, there-

fore, formulated as follows:

HB2: A lack of JIT knowledge and managerial know-how negatively and significantly affects JITperformance in SMEs

Hypothesis HB3 states that there is a significant

and negative impact on the JIT performance of SMEs

due to instability and fluctuations in demand. This

implies that proper demand management is essential

for effective JIT implementation, which requires a

stable environment. Hypothesis HB3 is, therefore,

formulated as follows:

HB3: Improper demand management negativelyand significantly affects JIT performance inSMEs

Hypothesis HB4 states that there is a significant

and negative impact on the JIT performance of SMEs

that have poor product quality control systems in

place. This indicates that a proactive and effective

quality control system is a prerequisite for enhancing

JIT implementation. Hypothesis HB4, is, therefore,

formulated as follows:

HB4: The lack of a ‘good’ quality control systemnegatively and significantly affects JIT perfor-mance in SMEs

Table 2. Summary of the hypotheses and literature support.

Hypothesis Literature to support the hypothesis

Barriers to JITimplementation

HB1 Prajogo and Johnston (1997), Nwankwo (2000)HB2 Nwankwo (2000), Gargeya and Thompson (1994)HB3 NoneHB4 Brannen and Hranac (1983), Ahmed et al. (2004)HB5 Gargeya and Thompson (1994), Prajogo and Johnston (1997),

Nwankwo (2000) Ahmed et al. (2004)HB6 Ibata-Arens (2005)HB7 Harianto (1993)HB8 Prajogo and Johnston (1997), Nwankwo (2000)HB9 Kupferberg (1988), Gargeya and Thompson (1994),

Nwankwo (2000), Ahmed et al. (2004)HB10 Kupferberg (1988), Gargeya and Thompson (1994),

Nwankwo (2000), Ahmed et al. (2004), Ibata-Arens (2005)HB11 Sadhwani and Sarhan (1987), Ahmed et al. (2004)HB12 Mahadevan (1997)

Enablers of JITimplementation

HE1 Nakajima (1988)HE2 Finch (1986)HE3 NoneHE4 NoneHE5 NoneHE6 Schiller (1997), Berry and Levy (1999)

Table 1. The barriers in the conceptual framework for SMEs.

Construct 1: Technical Construct 2: FinancialItem [B1] Lack of technology Item [B5] Lack of capitalItem [B2] Lack of JIT knowledge Item [B6] Cash flow problemsItem [B3] Improper demand management Item [B7] Banking and credit problemsItem [B4] Lack of quality control systems

Construct 3: Human resources Construct 4: SuppliersItem [B8] Lack of qualified workforce Item [B10] Higher transaction costsItem [B9] Lack of training programmes Item [B11] Inability to secure sources of supply

Construct 5: Government regulationsItem [B12] Restrictive government policies

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Hypothesis HB5 states that there is a significantand negative relationship between JIT implementationin SMEs and capital shortages and financial limita-tions. This indicates that sufficient capital investment isa fundamental requirement for effective JIT imple-mentation in SMEs. Hypothesis HB5 is, therefore,formulated as follows:

HB5: A lack of capital and financial support negativelyand significantly affects the ability of SMEs tofully utilise the JIT philosophy

Hypothesis HB6 focuses on the inability of manySME firms to have readily available capital to imple-ment various facets of the JIT philosophy. HypothesisHB6 is, therefore, formulated as follows:

HB6: Cash flow problems negatively affect the abilityof SMEs to fully utilise the JIT philosophy

Hypothesis HB7 focuses on the lending practices,operations, and credit requirements of banks. Banks,at times, do not lend to SMEs in order to avoid the riskof lending to firms that have an inability to repay. Thisimplies that gaining the trust and support of thebanking industry is necessary to enhance JIT perfor-mance in SMEs. Hypothesis HB7 is, therefore,formulated as follows:

HB7: Banking operational and lending practices, aswell as credit requirements, negatively affect theability of SMEs to practise full JIT operations

Hypothesis HB8 states that there is a significantand negative relationship between JIT implementationin SMEs and the lack of a qualified, educated, andtrained workforce. A JIT system usually requires newmodes of operations with a different skill-set on thepart of employees. Hypothesis HB8 is, therefore,formulated as follows:

HB8: The lack of a qualified, educated, and trainedworkforce negatively and significantly affectsJIT implementation in SMEs

Hypothesis HB9 states that there is a significantand negative relationship between JIT performance inSMEs and effective and practical training programmes.This implies that appropriate educational supportand sophisticated training programmes would enhanceJIT performance in SMEs. Hypothesis HB9 is, there-fore, formulated as follows:

HB9: A lack of effective training programmes nega-tively and significantly affects JIT performancein SMEs

Hypothesis HB10 states that there is a significantand negative impact on JIT implementation in SMEsdue to the pressures imposed by major customers andsuppliers to increase credit transaction costs and delay

payments alternatively. This suggests that strong andtight relationships between customers and suppliersshould be maintained at all times. Hypothesis HB10 is,therefore, formulated as follows:

HB10: Higher transaction costs and delayed paymentsimposed by suppliers and customers of SMEscan negatively and significantly affect JITperformance in SMEs

Hypothesis HB11 states that the inability of SMEsto obtain sources of supply when competing withlarger firms is an inhibitor to JIT operations.Many suppliers are more inclined to supply largerand more prosperous firms that can order largerbatches and have the ability at least to make timelypayments. Hypothesis HB11 is, therefore, formulatedas follows:

HB11: The inability of SMEs to secure sources ofsupply in competition with larger companies cannegatively and significantly affect the ability ofSMEs to effectively implement JIT operations

Hypothesis HB12 states that ineffective and restric-tive government policies can negatively affect JITimplementation in SMEs. This could mean thatproactive government policies and regulations arerequired to enhance JIT performance in SMEs.Hypothesis HB12 is, therefore, formulated as follows:

HB12: Ineffective and restrictive government interven-tion and policies can negatively affect JITimplementation in SMEs

Figure 2 represents the constructs that serve asenablers to effective JIT implementation in SMEs. Thelegends corresponding to enablers are outlined inTable 3.

In Figure 2, six hypotheses are identified for threeconstructs (human resources, implementation issues,and government regulations); see also Table 2 forliterature that supports some of the hypotheses.Hypothesis HE1 states that there is a significant andpositive relationship between JIT implementation inSMEs and a motivated and dedicated workforce. Thismeans that having a small motivated, dedicated, andempowered workforce is an essential element for thesuccessful implementation of JIT. Hypothesis HE1 is,therefore, formulated as follows:

HE1: The presence of a motivated and empoweredworkforce positively and significantly affects JITperformance in SMEs

Hypothesis HE2 states that there is a significantand positive relationship between JIT implementationin SMEs and a workforce that is flexible and cohesive.This implies that the involvement of the entireorganisation from the top management to the lowest

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hierarchical level should be encouraged. HypothesisHE2 is, therefore, formulated as follows:

HE2: The flexibility and cohesiveness of the workforcepositively and significantly affects the ability ofSMEs to implement the JIT philosophy

Hypothesis HE3 states that there is lower employeeresistance to change in implementing the JIT philoso-phy in SMEs than large firms. This is an importantconsideration for the effective implementation of JITas it relies on the grass-roots level involvement ofemployees and workers to effectively implement it.Hypothesis HE3 is, therefore, formulated as follows:

HE3: Lower employee resistance to change in theworkforce of SMEs positively and significantlyaffects their ability to implement the JITphilosophy

Hypothesis HE4 states that there is a shorterimplementation time to initiate and embed a JITphilosophy in SMEs than in larger organisations. Aworkforce that is motivated, flexible, and is lessresistant to change can facilitate the prompt andeffective implementation of JIT in SMEs. HypothesisHE4 is, therefore, formulated as follows:

HE4: The shorter JIT implementation time in SMEscan positively and significantly affect the abilityof SMEs to promptly implement the JITphilosophy

Hypothesis HE5 states that supportive macroeco-nomic and proper infrastructure development couldassist in the implementation of JIT in SMEs.These external environmental factors could have asignificant impact upon effective JIT operations inSMEs. Hypothesis HE5 is, therefore, formulated asfollows:

HE5: Supportive macroeconomic and infrastructuredevelopment can positively and significantlyaffect the ability of SMEs to effectively imple-ment the JIT philosophy

Hypothesis HE6 states that lower investmentbarriers and an increase in commercial support couldassist in the implementation of JIT in SMEs.These external environmental factors could have asignificant impact upon effective JIT operations inSMEs. Hypothesis HE6 is, therefore, formulated asfollows:

HE6: Lower investment barriers for nations and anincrease in commercial support can positivelyand significantly affect the ability of SMEs toeffectively implement JIT

5. Conclusions and future research

To be competitive in the domestic and global market-place, SMEs should attempt to adopt and implementJIT in their organisations. But SMEs should be awarethat their business practices and relations withcustomers and suppliers differ from those of largerorganisations. This article presents a framework and aset of hypotheses which provide guidance for SMEs asto which factors are important and relevant and howthese factors could serve as barriers to, and enablers of,the effective implementation of JIT. The followingcould pose as barriers:

(1) Supplier cooperation and partnerships. SomeSMEs might find it difficult to develop long-term, close, and fruitful partnerships withsome suppliers due to the small volumes of

HE6 (+)

HE5 (+)

HE4 (+)

HE3 (+)

HE2

(+)HE1

(+)

JIT performance

in SMEs

JITimplementation

issues

Human resources

Government regulations

Figure 2. The enabler constructs for effective JIT implementation in SMEs.

Table 3. The enablers in the conceptual framework forSMEs.

Construct 1: Human resourcesItem [E1] Motivated workforceItem [E2] Workforce flexibility and cohesiveness

Construct 2: JIT implementation issuesItem [E3] Lower employee resistance to changeItem [E4] Shorter JIT implementation time

Construct 3: Government regulationsItem [E5] Macroeconomic and infrastructure supportItem [E6] Lower investment barriers for nations

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their business. These low volumes could be adeterrent for many suppliers to contemplatelong and close relationships with SMEs. Toremain competitive and survive, some SMEsare changing their purchasing practices inorder to have fewer suppliers and to establishlong-term contracts on the basis of close buyer–supplier relationships.

(2) Waste reduction. Some SMEs might find itdifficult to develop waste reduction methods,particularly in less developed countries.Waste reduction activities include: use of cellu-lar manufacturing or group technology, set uptime reductions, use of modular designs, anduniform plant loadings.

(3) Managing demand fluctuations. Managing thedemand fluctuations that are typical of manySMEs could pose a problem for JIT imple-mentation, which requires demand stability.

(4) Technology acquisition. Due to limited finan-cial resources, SMEs are often unable toacquire the advanced technologies needed forthe effective implementation of JIT.

(5) Quality control. JIT focuses on qualityimprovement processes, which require theinvolvement of the entire organisation.However, small manufacturers may be unableto afford sophisticated quality control systems.

(6) Lack of investment capability. The capital ofmany SMEs is tied up in staff costs andinventory. Therefore, SMEs often face cashproblems in investing in necessary resources.

(7) Employee training and development. The lim-ited resources of SMEs inhibit their ability tohire, retain, and train qualified employees andworkers. This lack of competitiveness in thehuman resource market could negatively affecttheir ability to develop and implement JITpractices.

The unique environment of SMEs also providessome advantages for the use of JIT. The followingcould pose as enablers:

(1) Human relations. One of the main focuses ofJIT is on human relations and employeeempowerment. By their very nature, SMEshave a smaller number of employees than largeorganisations. There is typically more groupcohesiveness among the ranks of SMEs thanlarge corporations; involving employees in thegrass-roots level of a JIT implementation istherefore arguably more possible.

(2) Implementation time and employee resistanceto change. It is argued that less time is required

to implement JIT in SMEs than in largeorganisations. Employee resistance could alsobe overcome with less difficulty as less coordi-nation efforts and cultural changes are likely tobe necessary.

(3) Government support. SMEs are the enginesthat drive the employment machines of manycountries, especially developing countries.Many governments and their ancillary agenciesprovide support mechanisms in terms of infra-structure, macroeconomics, employment, taxes,expertise, transit, custom, and export areas.These resources and support systems aid effec-tive JIT implementation in SMEs.

5.1. Future research directions

The conceptual framework presented in this article isinferred from the literature. It should be ’tested’ andrefined through field research. These refinements mayinclude adding new constructs such as customer-related issues. The hypotheses developed in this articlecould also be tested empirically to verify them usingquantitative survey data or qualitative case studies.Additionally, the hypotheses could be transformed intoa set of measures that allow SMEs to decide whetherJIT is right for them, based on their size, supplierrelationships, governmental regulations, and otherrelevant factors.

Notes on contributors

Dr Shad Dowlatshahi is a Professor ofOperations Management at theUniversity of Missouri, Kansas City.He holds a PhD in IndustrialEngineering from The University ofIowa. He holds a MBA degree as wellas an MS degree in IndustrialEngineering from Emporia StateUniversity and the University of

Missouri, Columbia, respectively. He has an undergraduatedegree in Industrial Management. Dr Dowlatshahi’s researchactivities focus on operations management, supply chainmanagement, service operations, manufacturing systems andstrategy, technology management, concurrent engineering,purchasing and materials management, quality management,information system design, business logistics andtransportation, statistics, and management sciences. He haspublished over 100 journal articles, books, book chapters,and proceedings in refereed academic and professionaloutlets. He has presented and published extensively innational conferences. He has also served as a member ofthe editorial board and/or referee for a number of academicand professional journals and is an active member of DSIand APICS.

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Farzam Taham is an industrial engi-neering student at the Iran Universityof Science & Technology. His researchinterests include the modelling andanalysis of supply chain systems, newproduct development as well as leanand JITmanufacturing. He is currentlyworking on platform based supplychains and product design for logistics.

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