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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.

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just in time purchasing

Just-in-time Purchasing

Katherine Hogan


February 19, 2000

presentation overview
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 purchasing3
Just-in-time Purchasing
  • An approach to purchasing that requires long-term agreements with few suppliers

How can just-in-time purchasing be used in your organization?

advantages to jit
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
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
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


Relatively large lot sizes

Less deliveries at higher quantities

2% rejection from supplier

Lowest price is main objective

Time consuming, formal paperwork

Formal communication

Differences between JIT and Traditional Purchasing
why organizations use jit purchasing
Why organizations use JIT Purchasing
  • Reduce waste
  • Increased cycle times
  • Higher quality in products
  • Fewer suppliers
  • Reduction in warehouses
  • Dependable delivery
example faxban
Example – Faxban

What is Faxban?

  • It combines production floor fax machines and kanban re-supply signals to lower transaction processing and save money
example faxban12
Example - Faxban

Who uses it?

  • Honeywell started using this with their suppliers

How does it work?

  • Re-supply orders are faxed from the production floor by the workers to suppliers
example faxban13
Example - Faxban

What techniques are used in faxban?

  • EDI
  • Kanban
  • Blanket Order
  • Purchasing Card
example faxban14
Example - Faxban

What were the outcomes?

  • Transaction processing reduced
  • Reduction in accounts payable function
  • Money saved
  • Reduced waste
  • Direct communication resulted in less ambiguity between supplier and Honeywell
  • Time reduced

We are opening a shop that makes different types of chairs.

Discuss in groups the advantages of being a shop with traditonal purchasing values and JIT values.

exercise cont
Exercise, cont.

Remember that we make many different types of chairs

What are the advantages to both types of purchasing?

summary of jit purchasing
Summary of JIT Purchasing
  • Many advantages that lead to reduction in waste, storage, and other aspects that lead to saving money and time
  • Long-term relationships with suppliers
  • Many different techniques are used depending on the demand of the company
summary cont
Summary, cont.
  • Higher quality material used

"Faxban: Just-In-Time purchasing made simple." . 1997. <www.innovativepurchasing.com/articles/Faxban.html > (14 February 2001).

Foster, S. Thomas. Managing Quality: An Integrative Approach. Upper Saddle River, New Jersey: Prentice Hall, 2001.

bibliography cont
Bibliography, cont.

"Just-in-Time." <www.clubpom.com/Student_Wing/Public/JITtutorial.html#web > (12 February 2001).

"Just-in-Time Purchasing."

<www.cl.uh.edu/bpa/hadm/HADM_5731/ppt_presentations/20inven/tsld029.html > (14 February 2001).