Just-in-time Purchasing.pptVIP

Just-in-time Purchasing Katherine Hogan OISM 470W February 19, 2000 Presentation Overview Definition of Just-in-time Purchasing Different uses How it will help your company Examples of Just-in-time Purchasing Just-in-time Purchasing An approach to purchasing that requires long-term agreements with few suppliers Brainstorming How can just-in-time purchasing be used in your organization? Advantages to JIT Reduces the need for central warehousing and storage More personal relationship with suppliers Long-term relationships that help to certify suppliers Receiving inspection is reduced and in some cases eliminated Lowered variety in suppliers Reliable delivery schedules High quality materials used Reduced waste Demands on Purchasing of JIT Reduced number of suppliers Stable and good communication throughout a firm Locating suppliers nearby Long-term relationships Helping suppliers to increase quality Not to get hung up by single sourcing Buying from small firms Limitations of JIT Difficulty to change old ways More pressure on workers Success is varied Employee commitment Production levels Employee skills Differences between JIT and Traditional Purchasing JIT Purchasing Smaller lot sizes More frequent deliveries No rejection from the supplier Long-term contracts Buyer decides delivery schedule Innovation encouraged Minimal paper work Less formal communication Traditional Relatively large lot sizes Less deliveries at higher quantities 2% rejection from supplier Lowest price is main objective Time consuming, formal paperwork Formal communication Why organizations use JIT Purchasing Reduce waste Increased cycle times Higher quality in products Fewer suppliers Reduction in warehouses Dependable delivery Example – Faxban What is Faxban? It combines production floor fax machines and kanban re-supply signals to lower transaction processing and save money Example - Faxban Who uses it? Honeywell started using this with their suppliers How does it work? Re-supply orde