Academic journal article Journal of Purchasing & Materials Management

Motivating and Monitoring JIT Supplier Performance

Academic journal article Journal of Purchasing & Materials Management

Motivating and Monitoring JIT Supplier Performance

Article excerpt

Motivating and Monitoring JIT Supplier Performance

Measuring purchasing performance in an organization that utilizes a JIT system requires a broader view of quality than is the case in a non-JIT operation. This article reports the results of a study which showed that experienced JIT managers track quality costs and their impact on scrap and rework, plant efficiency, and customer return costs, as well as on traditional incoming inspection costs. Forty-six percent of the firms studied use some type of formal supplier evaluation system, and purchasing departments typically are evaluated on supply base management techniques involving lead-time, delivery, quality, and inventory improvements.

INTRODUCTION

Much discussion in the professional journals has focused on the development and utilization of JIT type systems in U.S. industry. A number of noted researchers have discussed the purchasing requirements of a JIT system, developed a framework for JIT purchasing, and investigated the buyer-supplier linkages in such a system. Ironically, however, few research efforts have investigated the performance measurement systems that are utilized in JIT operating systems.[1] The research reported in this article focuses on the types of performance measurement systems used, and it analyzes the changes required in these systems when used in a JIT operating environment.

Over the years, research and experience have established the fact that feedback to both organizations and individuals is one of the key motivators that affects future performance.[2] Additionally, information that is collected in a feedback system is viewed as important, and that which is not collected tends to be viewed as somewhat less important.[3] Thus, without some form of feedback information,a supplier frequently is uncertain about its position relative to other suppliers. Further, purchasing personnel tend to shape their views about the relative importance of various supplier characteristics based on the criteria that management uses to measure the performance of individual buyers.

The specific purpose of this article, then, is to investigate and evaluate (1) supplier performance evaluation techniques, (2) purchasing performance measures, and (3) quality cost factors that are used by buyers operating in a JIT environment. Figure 1 depicts an overview of the various JIT evaluation measures--and it provides the framework for this presentation.

Supplier evaluation and motivation plans typically involve the utilization of one or more of the following approaches:

* Formal quantitative rating systems

* In-depth performance reviews

* Ongoing communications and development of business

partnerships Measuring total costs associated with quality requires the monitoring of scrap and rework costs, line stoppages, and customer returns, as well as receiving inspection data. At the same time, the effectiveness of the purchasing function is measured on the basis of its ability to manage suppliers' quality, delivery, and lead times, and to control the total cost of acquisition.

THE RESEARCH SAMPLE

The research study was based on questionnaire responses from 100 practitioners who were active in implementing JIT in their respective firms. Members of the Association For Manufacturing Excellence, Inc., served as the target research population. No attempt was made to develop a random sample; rather, the firms selected for study were those actively involved in operating JIT programs. The sample studied represented a questionnaire response rate of approximately 30 percent. Questionnaires were sent to general management personnel, with the request that they be answered by key individuals having responsibility for the JIT efforts of the plant, business unit, or firm. Eighty-six percent of the respondents held the title of either materials manager (38 percent), purchasing manager (34 percent), or manufacturing manager (14 percent). …

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