Academic journal article International Journal of Purchasing and Materials Management

Supplier Performance Measures and Practices in JIT Companies in the U.S. and the U.K

Academic journal article International Journal of Purchasing and Materials Management

Supplier Performance Measures and Practices in JIT Companies in the U.S. and the U.K

Article excerpt

Purchasing can do a great deal to support and enhance the effectiveness of a JIT manufacturing system. This article explores these specific possibilities and compares the performance of American and British firms in this regard. Although companies in the United States and the United Kingdom have been utilizing JIT principles for a number of years, there appear to be several significant differences between U.S. and U.K. purchasing practices. Approximately 100 American and British manufacturing firms were studied in an attempt to identify and analyze these differences. This article reports the results of that study.

INTRODUCTION

Purchasing practices in a just-in-time (JIT) company differ from those in a traditional manufacturing operation. Because JIT has been in existence in the United States and the United Kingdom for a number of years, one would expect that purchasing activities in the two countries would follow a similar pattern. A survey of United Kingdom manufacturing companies in 1986 indicated that 57 percent of the respondents either were or planned to be JIT users.[1] The corresponding figure in the United States, as determined by a 1989 study, was in excess of 75 percent.[2]

This study compares and contrasts the purchasing practices of the U.K. and U.S. companies that have implemented or are implementing a JIT system. The data produced by the study provide a base measurement that may be of value to purchasing managers that are using or are contemplating using the just-in-time approach.

IMPORTANCE OF PURCHASING IN A JIT

COMPANY

The effectiveness of JIT in an organization's supply chain can be measured by a number of significant tangible benefits - particularly in the areas of inventory reduction, quality conformance to specification, and delivery reliability. A major U.S. study found that 67 percent of the firms studied classified JIT purchasing as a major component of their JIT system.[3] A comparable study of JIT implementation in the United Kingdom found that 51 percent of the firms that were engaged in JIT viewed JIT purchasing as a significant factor in the success of their programs.[4] A separate research study conducted in Japan likewise underscored the importance of supplier and subcontractor performance to the success of Japanese JIT producers.[5]

Are there significant differences in purchasing practices among JIT producers? Lee and Ansari examined and contrasted 9 major purchasing activities in a mid 1980s analysis of JIT purchasing.[6] These activities included:

  * Supplier selection        * Product specifications
  * Supplier evaluation       * Negotiation and bidding
  * Lot sizes                 * Paperwork
  * Delivery                  * Paperwork

* Receiving inspection

The researchers concluded that a number of clear-cut differences existed between effective JIT purchasing practices and the more traditional purchasing practices.

When a manufacturing firm adopts a JIT philosophy, this action produces a number of implications for purchasing. Such a move requires high and consistent material quality, frequent and reliable deliveries, small delivery quantities, and reduced lead times. With these imperatives assuming top priority, the need for cooperation with suppliers is clear - and urgent. In developing closer, more cooperative relationships with suppliers, a greater volume of business with preferred suppliers typically leads toward a single or a single/dual sourcing policy. As a result, this action, in turn, should lead to a significant reduction in the supplier base.

RESEARCH METHODOLOGY

In attempting to obtain information regarding purchasing practices, a pretest questionnaire was developed and mailed to selected individuals in four different companies. These four companies were members of the Warwick Manufacturing Roundtable, all in the United Kingdom. …

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