JIT Purchasing: Analyzing Survey Results

Article excerpt

Applications of Just-in-Time (JIT) purchasing systems are growing in the United States. Today, they are being used not only as a part of standard JIT systems but also as independent purchasing systems. Such systems include delivery of required items at the right time in the right quantities, elimination of waste in the production process, and inventory control of materials and parts.

Implementation of JIT purchasing is a multi-phased process that embraces both JIT purchasing characteristics and JIT inventory management principles. The implementation strategy should involve top management commitment to establish JIT purchasing as a top priority. Also, the system should be changed to subordinate everything toward the goals of this system. Once the new role of the JIT purchaser is established, suppliers that can support a JIT operation must be selected. When a supplier or group of suppliers is selected, JIT purchasing requires a continuous effort for improving the relationship between the purchaser and supplier.

According to Hahn, Pinto, and Bragg, the utilization of JIT purchasing usually leads to reduced lot sizes, frequent and reliable supplies, higher quality of incoming materials, and reduced lead times. Ansari and Modarress report that the potential tangible benefits of JIT purchasing are generally divided into several groups. The most important benefits that the companies achieve are higher material turnover, reduced lead times, and satisfaction of the delivery promises. Raia specifies improved quality, reduced paperwork, and improved supplier-purchaser relationships as benefits of this progressive system in purchasing. A survey of plant managers of automotive, electronic, and machinery firms, performed by Norris, Swanson, and Chu, reveals that 98 percent of the managers interviewed reported a reduction of work-in-process(WIP) inventory, 96 percent indicated an improvement in inventory turnover, and 88 percent realized an improvement in their inventory records. These improvements led to lower manufacturing costs, higher production quality, and significantly higher customer satisfaction. Although JIT purchasing produces a number of impressive results, problems associated with the implementation and usage of this system still exist. A survey conducted by Ansari found the following seven problems to be most significant: poor support from suppliers; lack of top management commitment; poor product quality; lack of employee readiness and support; poor engineering support; lack of communication; and inadequate support from carrier companies.

Some experts believe that the greatest problem with JIT purchasing is the lack of flexibility available to meet unexpected demand. Since planning, purchasing, and scheduling are performed right before production and safety stocks are minimized, last minute situations are difficult to react to. Another problem is the dependency that companies develop on suppliers. If an unanticipated incident occurs-such as a supplier's crew going on strike or a factory burning down-goods may arrive late or not at all. According to Raia, increased transportation costs-associated with frequent deliveries-are another disadvantage.

Besides the differences in evaluating problems in JIT purchasing, we found few industry surveys that related to JIT purchasing. The available surveys proved an unevenness of results and problems associated with JIT purchasing. We decided to conduct a new survey concerning benefits and pitfalls of JIT purchasing. This article describes the results of the survey we conducted among various manufacturing, distribution, and service companies. Using a regression analysis based on the survey data, we identified the leading predictors that most strongly influence the utilization of JIT purchasing.

Survey data

The survey was performed over a period of nine months and was fairly extensive. It was based on interviews conducted by undergraduate students from California State University, Hayward and supervised by the authors of this article. …