Case Study: Just In Time
October 24, 2014
Rising operational costs, along with a charge from above “to do more with less,” place pressure on organizations to identify effective strategies to reduce spending. It is why it is important for companies and employees to understand the importance of developing strong relationships between companies and suppliers, otherwise there are questions that might arise, such as, how is it that one is to get the best price, when a bid cannot be asked from anyone else.? Or, why is it that someone from another companies is giving orders as to how many supplies to get on a monthly basis.?
Today manufacturing companies are becoming increasingly aware that excellence in manufacturing can provide a competitive weapon to compete in sophisticated worldwide markets. In order to compete effectively, companies must be capable of manufacturing product of high quality at a low cost, and also provide a first class customer service. Many companies have found it necessary to reduce the number of suppliers as they expand their involvement with source firms. When buyer and seller share forecasts and plans, they usually find they can reduce inventories (Dwyer and Tanner, page 38). Allowing the buyer to participate in the vendor’s production set up and quality control process eliminates the costly process of coping with defective inputs, like, rework, reorders, and scrap. Reducing the number of suppliers, reduces the number of competitive bidders and dampens the power of the marketplace to affect prices (Dwyer and Tanner, page 38), but can possibly establish some standardized cost method to cope with this problem. BY establishing a just-in-time (JIT) relationship requires the supplier to produce and deliver precise and necessary quantities of product at the necessary time, with the objective that products conform to performance specification. Establishing a long term win-win relationship based on mutual trust and...
References: Dwyer, F. R., & Tanner, J. F. (2009). Business Marketing: Connecting Strategy, Relationships, and Learning. New York: McGraw-Hill/Irwin.
Hakansson, H., & Snehota, I. (1995). Developing Relationships in Business Networks. New York: Routledge. Retrieved 24, Oct. 2014 from:
Please join StudyMode to read the full document