It is very important to reduce wastes in the factory floor. But it is useless if your raw material stocks are high. In this case you will only be transferring the stocks from factory floor to the RM warehouse.
In a traditional organization purchasing is done in larger volumes. These stocks are stored and then used when required. There will be few deliveries in larger time intervals. But in just in time purchasing, the requirement for purchasing comes from manufacturing process. When they require raw materials, purchasing must be triggered and then purchasing will be taken place in smaller quantities and will have frequent deliveries.
To facilitate just in time purchasing, the supplier bases must be sorted. There should be a narrow, manageable and reliable supplier base. There should be convenient ways of communication between suppliers and purchasers. Paperwork must be minimized. In short suppliers must be treated as strategic partners of your business.
This purchasing behavior will make sure the correct quantities of high quality supplies every time when there is a requirement. In fact the JIT purchasing gives the real value to JIT manufacturing process.
Just-in-time purchasing (JITP), as a process technology, is an important component of supply chain management in managing inventory flows throughout the chain. Thus far, a detailed examination of JITP relating to firm performance has not been conducted.Structural equation modeling is used to test the hypotheses. JITP techniques positively and directly related to firm performance are:
(1) supplier value-added, a concept that melds supplier-buyer cooperation and increased supply of quality materials and
(2) quantities delivered, which refers to frequent and timely delivery of supplied materials in the right quantities. The finding that top management commitment to JITP is directly or indirectly related to other techniques of JITP underscores the importance of leadership in implementing change in organizations.