IJOPM 15,9


Just-in-time purchasing and supply: a review of the literature
Niall Waters-Fuller
Department of Management Studies, Napier Business School, Napier University, Edinburgh, UK
Introduction Most authors agree that the objectives of just-in-time ( JIT) are to eliminate waste and to improve the flow of materials, so value is added throughout the transformation process. Once this is achieved, costs can be reduced, quality improved and the firm becomes more flexible: in short, JIT implementation, according to its supporters, results in competitive advantage. Since the pioneering article by Sugimori et al.[l] there has been a plethora of literature on the subject, describing the principles, objectives and techniques of JIT. The interest generated in the subject may be explained by the radically different approach taken by JIT compared to traditional production management trade-off analysis[2]. Nevertheless, much of the literature relating to JIT, according to St John and Heriot[3] focuses on the manufacturer and the implications for the manufacturer. There are consequently many case studies of known adopters such as Toyota, Kawasaki USA, Hewlett-Packard, and General Electric[4-9]. To date there have been a number of literature reviews which have tended to concentrate on the background and principles of JIT as well as the operational changes required[10-13]. However, one of the operational changes that has received scant attention to date is that of JIT purchasing and supply. This article seeks to provide such a review. There is some literature on the subject of “Co-makership”, “Partnership” and “World class suppliers” which overlaps the JIT purchasing/supply literature[14-16]. The basis for co-makership is much the same as for JIT sourcing, but may or may not involve the small lot delivery concept[14]. However, this review will concentrate on JIT sourcing only. Authors[l 7-19] estimate that purchased materials and services account for between 50 per cent and 80 per cent of the total cost of a manufactured product, and it is further estimated that suppliers account for 30 per cent of the quality problems and 80 per cent of the product lead time[19-20]. Not only does this provide considerable scope for cost reduction, but, according to Manoochehri[21] successful application of JIT depends to a great extent on suppliers, since with little or no safety stock in the system, the timing, quality and quantity of deliveries are vital. Also, Ansari and Modarress[22] suggest that JIT efficiency is primarily achieved through the complete support and

International Journal of Operations & Production Management, Vol. 15 No. 9 1995, pp. 220-236. © MCB University Press, 0144-3577

ideally one per component or family of parts rather than multi-sourcing. while De Treville[23] places much of the blame of the JIT implementation failure at General Electric’s Wilmington plant (one of the few published accounts of a JIT implementation “failure”) on vendor problems.co-operation of suppliers. q few suppliers. they have been labelled the pragmatist school. 42]. reduce manufacturer and supplier costs. The literature pertaining to JIT sourcing contains the two schools of thought suggested by Zipkin. delivered in exact quantities compared to traditional large batch delivery within 5 per cent volume either way. Romantic JIT uses more rhetoric. This group have been labelled the advocate school. These articles outline the basis for JIT sourcing. provides many benefits to the buyer. which he calls romantic JIT and pragmatic JIT. p. There is little disagreement within this literature over how these objectives are met and what exactly JIT purchasing activities are. Pragmatic JIT concentrates on the production processes and provides “tools” to overcome problems. the major JIT sourcing practices are reviewed in light of the different schools of thought. which creates a number of problems for the supplier. This article initially categorizes the literature and outlines the main schools of thought. The second group take a more pragmatic view and suggest that JIT sourcing. as well as a third: those totally opposed to the strategy. in theory. although many buyers are not implementing the practices generally considered to be essential. Finally. These authors have been labelled as the sceptical school. Next. JIT: purchasing and supply 221 . Ansari and Modarress[26] list the following activities as major JIT purchasing practices: q small purchase lot sizes. The final category take the opposite view and suggest that JIT sourcing practices leave the firm open to supply disruption and non-competitive prices. which in turn affect the buyer. and this literature contains many accounts of either success in implementation (in the form of survey evidence or case evidence) or conceptual models. Consequently. The literature Zipkin[25] describes two schools of thought within the JIT literature. The first group of authors advocate the use of JIT sourcing and suggest that it is a better strategy for making sourcing decisions than the traditional forms of purchasing. The next section outlines the potential benefits achieved through JIT sourcing implementation. increase quality and service and to create long-term relationships with chosen suppliers[17]. and “promises a factory where workers and suppliers will be in harmony and ‘goods will flow like water”’[25. JIT delivery has also been described as a crucial route to survival for companies in the 1990s[24]. the suggested movements in power and responsibilities and the problems associated with it. The advocates are by far the most popular school. future avenues for research are explored. namely to streamline material flows.

these authors present a number of more specific arguments. q packaging is changed to encompass standard containers.27. These include: q deliveries synchronized with buyer’s production schedule[21. q improved data exchange[21. This issue will be dealt with in more detail later in the article. rather than solely a price decision. which will be addressed later in this article The next section deals with the main aspects of JIT sourcing. and is therefore less efficient than traditional marketbased sourcing strategies[30]. The scepticism is based first on the means of measurement of the benefits. and can lead to the supplier charging prices which are not competitive. q design specifications are looser and more freedom is given to the supplier in meeting the specifications. By utilizing short-term contracts and multiple sources of supply. which is seen as an inefficient form of sourcing. The sourcing decision is not based on the free market. The more prevalent purchasing practices are discussed in more detail below. q no annual rebidding compared to traditional frequent retendering. q paperwork reduces and becomes more informal. The sceptical school is relatively small. there are other practices which are labelled as being JIT purchasing techniques. and bases its arguments on the basis that JIT sourcing encourages closer. q quality inspection is performed at the supplier’s facility unlike traditional incoming inspection practices.27]. concluding that they are in fact more efficient than the more adversarial approaches of traditional strategies.9 222 supplier selection and evaluation based on quality and delivery performance as well as price.28]. Ansari and Modarress[22] cite empirical evidence indicating both tangible and intangible benefits derived from JIT sourcing. The main points of debate are not over which practices constitute JIT sourcing. more long-term relationships with suppliers. primarily concerned with the issues of sole sourcing and long-term contracts. in addition to the above. Other authors have suggested that. is countered by a number of authors. However. but which practices are effective in contributing to the firm’s competitive position. q .27-29].IJOPM 15. this responsibility shift is countered by authors suggesting that this is due to either poor implementation by buyers or suppliers failing to adapt their strategies to the new relationship. the buying firm can ensure that they are paying the lowest price for their materials and components. However. The benefits of JIT sourcing are acknowledged. although the authors are more sceptical of the scale and scope of benefits. The second issue is that of shifted responsibilities (and hence costs) from the buyer to the supplier. both in terms of causality and a uniform means of comparison. q geographically close suppliers[21. while Sako[31] provides a detailed defence of co-operative relationships. The pragmatists sit between the other two schools. This view however.

The sceptical school comment that sole sourcing increases the risks of supply disruption and further leaves the buyer open to paying non-competitive prices[33]. (2) The other approach to reduce the supply disruption risk is to cross source. thereby ensuring that the buying company becomes an important customer to the supplier. Single sourcing concentrates on reducing the supply base by using fewer but more capable suppliers[17]. Arnold and Bernard[32] state that single sourcing allows the supplier to achieve internal scale effects. A further debate exists over the extent to which a supplier should dedicate capacity to a single customer. Therefore. and that more suppliers result in increased cost and time spent in development and training as well as being less practical for small lot delivery. according to the advocate school the use of sole sources eliminates waste and improves quality. each supplying 50 per cent of the volume. There are two approaches commonly used: (1) The second source may be an existing supplier who receives some split in the volume requirements or it may involve setting up a completely new source[36]. Further.Single sourcing Single sourcing is an area of debate within the literature. Harrison and Voss[37] describe just such a case. This reduces the risk of single sourcing while maintaining all the advantages of a small supply base[36]. Ansari and Modarress[26] suggest that the ideal number of suppliers for each material. However. In practice. reinforcing good buyer/supplier relationships. or class of materials is one. Manoochehri[21] argues that utilizing multiple sources of supply increases the difficulty of managing the co-ordination of production schedules and relationships. the policy of dual sourcing can cause some supply problems if there are fluctuations in the delivery schedule. enter into long-term contracts and also achieve synergy effects through organizational co-ordination. whereby the customer utilizes duplicate or potential capacity on the part of the suppliers. loss of supplier identity and excess control. even though it may be a rational model for the Japanese (due to differences in business culture and the state of labour relations). Westbrook[38] comments that a Japanese firm studied has a policy of having two suppliers for each part. This is backed up by a survey of suppliers to JIT: purchasing and supply 223 . where dual sourcing led to an increase in demand variability for the supplier and hence increased costs. Research findings by Rainnie[39] indicate that customers generally limited themselves to taking no more than 30-50 per cent of a sub-contractor’s business for fear that the dependency would limit the efficiency of the relationship. Newman[36] suggests that the single sourcing policy may be creating long-term problems through loss of technological thrust. some firms compromize by utilizing a second source. Ramsey[34] and Quayle[35] both conclude that the combination of single sourcing and inventory reduction throughout the supply chain is highly risky for the UK because firms become more vulnerable to supply disruption.

rather an order-qualifying criteria[3. Most supplier evaluation schemes possess two features: a quantitative measure of quality. selected suppliers will be quality certified by the customer. Total quality suppliers There is little debate over the need for total quality suppliers: all three schools of thought agree on the need for quality parts. Long-term contracts The debate over long-term contracts includes all three schools of thought.46]. although this can cause suppliers problems.IJOPM 15. The sceptics suggest that the award of long-term contracts can lead to the buyer becoming out of touch with market prices. losing creativity and enterprise and increasing switching costs associated with changing an unsatisfactory supplier[30. The pragmatists argue that there are few long-term contracts being awarded[42]. The advocate school suggests that JIT purchasing seeks to cement the relationship with its chosen suppliers by awarding long-term contracts in return for the demands the buyer makes on the supplier. as long as they attain and maintain set quality standards. helps build the relationship and ensures that costs are reduced in the long-term through repetition. Suppliers help customers to grow and succeed in the marketplace in order that all members of the supply chain (including themselves) benefit[21]. the vendor will continue to supply the customer for future products[40]. especially if there is 224 . The long-term contract eliminates the re-tendering costs. as poor quality parts can halt the manufacturer’s line as there are no buffer stocks held by the customer. Raia[45] points out that some companies count missed delivery windows. incorrect labels etc. missing paperwork. Frequently. although there is some survey evidence suggesting that OEMs are beginning to increase the number of multiyear contracts awarded[43.33 ]. Suppliers who fail the quality requirements will not supply JIT manufacturers: quality is no longer an orderwinning criteria.9 Japanese car assemblers in the UK. usually based on the number of accepted lots. The long-term relationship with the supplier encourages loyalty and reduces the risk of an interruption to supply[41]. This runs contradictory to the view proposed by Schonberger[6] that the supplier should ideally be dedicated to one customer. and a qualitative evaluation conducted at the supplier’s plant[41].44]. In order to ensure quality many firms certify their suppliers. barring a complete relationship breakdown. Instead. and. promotes reclaiming capital over an extended period. which found that none had more than 25 per cent of output going to Japanese firms[40]. as defects or quality faults. The vendor must deliver total quality products and responsibility is placed on the supplier to achieve and sustain total quality through quality at source for all parts delivered JIT. The contract will usually be extended unless the supplier fails to keep the exacting standards set by the buyer. the debate centres on the means for assuring that suppliers deliver quality products to the manufacturer.

thus providing buffer stock. how machines are running and workforce professionalism. although a survey of US JIT purchasers[22] indicated that suppliers are willing and able to hit delivery windows set by the buyer. delivery performance. The customer is able to reduce buffer stocks when there is sufficient confidence in the supply relationship with vendors[29]. General criteria used to select and evaluate suppliers emphasize quality. Das and Goyal[50] comment that reducing the delivery lot size results in an increase in the frequency of delivery and therefore having a dependable source of transport is essential for the JIT supplier. The warehouse may be owned and financed by either party or by a contract carrier and may be located on the buyer’s site[52]. level of activity. directly or via a warehouse[51]: (1) Directly. It will also look at the number. This is the second best option and involves interposing a warehouse between the supplier and the customer. geographical location and price structure. This is the ideal solution. buffer inventories. although Hay[49] points to the use of “strategic inventory” until both supplier and customer approach perfection regarding defects. There is wide agreement that dependable deliveries are vital in a system where buffer stocks have been removed because the failure of a supplier to keep to a delivery schedule could close a line. Fieten[51] recommends that the inventory is jointly financed although it is normally maintained at the supplier’s cost. More specifically. The precondition for this is that suppliers must receive comprehensive planning and scheduling data before production commences. appearance. as well as management attitudes.more than one certification programme being carried out[47]. the certification process at the supplier’s facility will look at planning. JIT: purchasing and supply 225 . deliveries can be subject to unforeseen delays such as traffic congestion. (2) An interposed warehouse. variation. technical capabilities and delivery reliability. poor weather conditions or vehicle breakdown which can cause delivery problems for suppliers through slowing down the delivery or causing the delivery to be late. thereby reducing cost. lead time and flexibility. where the supplier delivers directly to the customer’s plant. There are two forms of integrating suppliers into JIT supply. Rather. However. This may include increasing the size of the supplier-owned fleet (the need for excess capacity is a common occurrence within all JIT systems) or engaging the services of a dependable carrier. longterm relationships and co-operation. according to Carr and Truesdale[40]. Certification programmes of vendors eliminates the need for incoming inspection[48]. the debate focuses on the logistics of the buyer-supplier interface and the need for. influence and calibre of engineers. Dependable deliveries Again there is no debate over the need for dependable deliveries. tidiness. and size of.

as Schonberger and Ansari[41] state. it is possible to trade-off between the expected costs of small lot delivery (increased transportation costs) and the savings (reduced inventory carrying costs). because. small lot sizes. is a hallmark of JIT. invoices etc.IJOPM 15. quality or delivery problems or costings. Finally. The exchange of data can include schedule changes. and go on to state that under certain circumstances rail transportation would be preferable to road. A fourth scheme is that the supplier company supplies a number of components to the customer. as described above. whether manufactured or purchased. frequency will increase and therefore transportation costs will increase. Second. The literature concentrates instead on the logistics of getting small frequent batches to the manufacturer at least cost. The end result is a full load from a number of suppliers[15]. and Rainnie[39] concludes 226 . He also notes a shift from utilizing common carriers to using contract carriers. which is reflected in Ramashesh’s[54] lot sizing model. that an interposed warehouse be constructed. The first concept is that JIT suppliers be located close to the customer. The advocate school suggest that to make JIT purchasing more effective there needs to be a full exchange of data between the supplier and the customer and vice versa. Carter and Frendenhall[57] define EDI as direct electronic transmission.) between two organizations. Higginson and Bookbinder[55] comment that JIT systems require precision in terms of timing and quantity. A study by Millen[58] has suggested there is no direct link between EDI implementation and JIT. A number of solutions have been suggested to get round the problem of increased transportation costs. advanced shipping notes. Small lot sizes There is no debate over small lot delivery. computer to computer of standard business forms (such as purchase orders. As a consequence of small lot delivery. The supplier can therefore still send a truckload (and therefore reduce the transportation costs) of small quantities (of different part numbers). thereby increasing supplier responsiveness to change[37]. O’Neal[43] agrees with Higginson and Bookbinder regarding the need for precision and control over the mode of transport used although the results of his survey indicate rail freight is being phased down in favour of motor freight. design modifications. Another scheme is the milk round collection where a contract carrier visits a number of supplier sites and collects small quantities from each. engineering changes. Exchange of data The debate over data exchange concentrates on the issue of implementation.9 Kant and Grenoble[53] provide a model which determines the required buffer stock to be held in case of delayed delivery. The pragmatic camp suggest that the promised improvement in communication has not occurred. Waller[56] describes Electronic Data Interchange (EDI) as a key to successful JIT in that it aids in pushing inventory back up the supply chain.

Further. the pragmatic school note that the customer is supposed to aid the supplier in implementing cost reduction schemes. contradicts Lovell’s simulation model[64] which concluded that an economy running on a JIT basis may be more stable than a conventional inventory economy. hence the disturbance is amplified further up the supply chain.[63] propose five methods of damping the supply chain. However. survey evidence[27] indicates that less than one fifth (17 per cent) of OEMs had frozen the schedule while over a quarter (26 per cent) had no frozen period at all. the most effective of which is information flow requiring the supply chain to be operating as an integrated flow. in practice. JIT: purchasing and supply 227 . This. Turnbull[61] suggests that suppliers bear the brunt of demand instability through labour changes or stocking policies. There is therefore a need to reduce demand amplification for the total chain and to this end. which will result in lower prices being passed onto the customer. mixed model assembly[6]. the factory production rate fluctuates more widely than actual sales rate. The customer expects to benefit from this increase in volume through reduced prices over time and the absorption of inflationary increases by the supplier. According to Forrester[62]. The advocate camp point out that JIT purchasing relies on one or a small number of suppliers for any part hence the volume of business to each supplier will increase. Both the advocate and pragmatic camps note that the JIT manufacturer should be progressing towards level. Stable schedules The issue of stable schedules is critical to waste elimination. and once this is achieved a level schedule can be provided for suppliers. The authors conclude that with effective design only one level of the supply chain need provide buffer stock which will fluctuate with the market. Manufacturers cannot expect suppliers to meet delivery date requirements without a stable schedule[60]. communication between the remaining ones and the customer have not improved. and is another area of debate over implementation. On the basis of this model therefore. however. otherwise the increased burden of holding costs is incurred. Harrison and Voss[37] studied a JIT supply relationship within the UK automotive industry and found that the supplier was carrying excess stock due to the customer operating within a volatile market which resulted in schedule instability. Wikner et al. while the manufacturer suffers little disruption. Nevertheless. it would not be possible to have an entire supply chain operating JIT. The pragmatic school report instances of non-level schedules and the implications for upstream suppliers. many suppliers feel that they “…do not receive much assistance in reducing costs or adopting new techniques”[59]. Reduce supplier costs The debate over reducing supplier costs centres on the issue of implementation rather than the principle.that even though the number of suppliers has fallen as manufacturers rationalize the supply base.

improved quality. Zipkin[25] and Inman and Mehra[69].45. the advocate school suggest that both parties benefit from the JIT exchange.26. Studies[22. The pragmatic school note that most of the benefits cited within the literature have been achieved by the purchaser and all quantified benefits have been at the purchasers’ side of the supply relationship. According to Turnbull[61]. reduced material costs and improved flexibility[19].41. product quality and productivity have substantially improved through JIT purchasing. increased buyer support through more assistance from buyers and a closer relationship resulting in better information flows and more influence. There is no literature quantifying benefits achieved by JIT suppliers.9 228 JIT purchasing benefits JIT purchasing is an important part of the overall JIT programme and can produce benefits of reduced lead times. q reduced supplier costs 11 per cent. Romero[68] comments that the benefits of JIT purchasing are instantly obtained and maintained over a long term with relatively little investment. increased capacity utilization. reduced inventories. Martell[65] claims the benefits to suppliers are increased profits through improvements in product and process design. Further benefits include drastic improvements in delivery promises met. q increased inventory turnover by 97 per cent. allowing a better focus on the R&D effort. greater visibility and access to the customers’ expertise.67] have shown that JIT purchasing has achieved the following benefits for the buyer: q reduced raw material stocks by 50 per cent. the supplier .IJOPM 15. however. reductions in delivery lead time and reductions in the administrative burden. although some authors note normative advantages. time frames and the state of the firm prior to implementation. The shifting of responsibilities and power The pragmatic school suggest that JIT sourcing pushes responsibilities and costs from the manufacturer to the supplier[39]. design and productivity improvements. although these vary with the period of implementation. mergers. warn of taking these improvement figures without accounting for factors such as business cycles. improved lead time reliability. q increased supplier quality 26 per cent. Other supply side benefits alluded to include reductions in finished goods and WIP carrying costs and increased control of finished goods inventory through steady and predictable shipments[29]. favourable payment terms. the move towards JIT sourcing offers all the advantages of vertical integration but with the added advantage of flexibility and without the cost disadvantages. q reduced scrap by 40 per cent. long-term contracts. Specifically. According to Ansari and Modarress[26]. Nevertheless. Others[66] cite benefits for suppliers as increased R&D effectiveness through closer ties with the OEM.

lack of employee readiness and support.e. resource abundance and homogeneity of goals and interests. design. It is the final area which seems to cause most distress to suppliers. transportation and inventory costs for the supplier. lack of top management support. Frazier et al. design and inventory. how far through the organization any disruption will be felt. This may well endanger the spread of JIT applications because the supplier has to bear increased set up. lack of communication. sole sourcing reduces the ease of substituting suppliers: the buyer becomes less powerful while the power of the supplier is enhanced. To overcome this Wilkinson and Oliver suggest creating mutual dependency.becomes responsible for quality. As well as there being a shift in responsibilities. Within JIT environments there is little in process buffers. in general. therefore. immediacy and substitutability. Further. according to Ansari and Modarress[67] is lack of support from suppliers. there is also a shift in power through the implementation of JIT. how quickly it will be felt and the ease of substituting resources. packaging. Wilkinson and Oliver[72] adapted Marchington’s[73] model of strategic positions within organizations. holding and distribution costs[70]. which he claims are dependent on pervasiveness. Not only are there increased quality. according to Vail[2] the system is at the mercy of the goodwill of resource suppliers. should there be a disruption in supply. There will also be costs associated with personnel training and development as well as the purchase of specialist equipment (by the supplier). Therefore. especially in the early stages as the participants adapt to the new relationship[71].[71] comment that the supplier may well have to invest in new plant. it would result in a complete and fast disruption of the line. but there is also an increase in the transaction costs. new warehousing facilities or new delivery vehicles thereby increasing the switching costs and ensuring dependence on the buyer. lack of engineering support. A number of authors suggest that the lack of supplier support is due to poor implementation of JIT purchasing. it seems that most of the costs are the suppliers’ and most of the benefits are the customers’[50]. JIT purchasing problems The greatest problem encountered by the customer. lack of support from carrier companies. reducing the motivation rather than the ability of suppliers to exercise their power. i. The authors go on to list the major problems of JIT sourcing: q q q q q q q JIT: purchasing and supply 229 lack of support from suppliers. low product quality. A survey of US automotive suppliers . but. delivery.

68. The survey also showed that most suppliers were manufacturing in lot sizes greater than the JIT delivery batch and were stockpiling thereby increasing inventory levels. Twenty-two per cent of OEMs considered that suppliers held a higher level of finished goods. and promoted by Schonberger is “The most apparent benefit of JIT buying is. less than a third of suppliers thought JIT does anything other than “transfer responsibility for inventory from customers to the suppliers”. there are many reports of JIT suppliers being forced to hold inventory for their customers[21. However. higher productivity and improved quality. First.60. However. He found a marginally significant difference in answer to a survey question on the subject of suppliers’ inventory levels. as one Kawasaki buyer put it ‘working off someone else’s inventory”’[29].75. indicated that most suppliers had implemented JIT delivery “mainly because our customers demand it”.50. JIT purchasing provides benefits to both the customer and supplier in terms of lower material costs. A supplier to the UK automotive industry[77] claims “JIT has been used as a myth on which to hang the transfer of the responsibility for stockholding to another point in the supply chain – anywhere so long as it doesn’t cost the assemblers money”. This inventory shift occurs if there are fluctuating schedules or if the lot size required is less than the suppliers’ EOQ in which case the supplier will have increased costs either in the form of increased production costs or increased inventories. Under traditional practices the supplier produces over time and stores the product.9 230 conducted by Helper[59]. O’Neal[43] provides some evidence of shifting costs. O’Neal agrees with Hall and explains it by suggesting that it is simply an intermediate event needed while the suppliers come to terms with their new responsibilities. they cut off suppliers who fail to provide the new terms for free or second. Large lots are then shipped to the customer who stores them until use. Schonberger and Gilbert[29] state that the supplying plant does not need to carry much buffer stock unless they sell capacity to other plants.64. According to Schonberger and Gilbert[29]. it must be noted that the survey . inventories may temporarily be shifted to suppliers but the long-term goal is inventory reduction throughout the supply chain. However. 30 per cent held the same level of finished goods and 48 per cent held a reduced level of finished goods. By implementing small lot production both buyer and supplier can reduce inventory costs.70.27. a popular view held by OEMs.76]. 61. Helper also states that US auto makers have reacted in one of two ways to the demands of JIT delivery. in which case buffer stocks would be necessary to maintain JIT deliveries and therefore JIT purchasing works best if the vendor supplies to one customer.37. Not surprisingly therefore. The OEMs surveyed suggested that supplier levels of finished goods would be lower within five years (82 per cent). These actions are a far cry from the win-win relationship promised by the advocate school. Hall[7] argues that this is a misconception. they seek to establish a long-term relationship and hence cost reduction. and customers rarely provided level schedules.IJOPM 15.

and competitive bidding is still common. the response time to changes in demand would be expected to increase the further upstream the inventory is held. leading to an overall increase in the inventory cost within the supply chain. or simply re-distributed to other. Future research could investigate whether inventory has indeed been removed from the chain. the greater the fluctuations will be following market changes. particularly on system wide benefits and supplier-perspective benefits. Further. In order to gain the full benefits of JIT supply. and those which have been done cite a number of problems. some authors suggest that the further upstream in the supply chain. However. This research would benefit from utilizing a number of research methodologies from modelling to quantitative and qualitative approaches. upstream members of the chain. These problems could be either due to JIT: purchasing and supply 231 . the supplier should extend JIT up the supply chain. The result of this is that either the members of the supply chain absorb the increased costs through reduced margins. so that the costs can be passed on. inventory is removed from the supply chain. hence the system-wide inventory cost may be reduced. In theory. with the long-term implications of reduced investment. There have been few studies conducted on the supplier perspective of the exchange. There are areas of potential research in taking a system-wide perspective of the JIT exchange. although some suppliers suggest that their inventory levels have increased. The pragmatists therefore suggest that the customer should bear some of the increased expense and reduce the planning uncertainty by increasing data flow[70] or the manufacturer should try to assess the extra costs incurred by the vendor[50]. Further problems arise as a result of OEMs not implementing all aspects of the philosophy. It is not always possible for small firms to ensure their vendors supply JIT and they often find themselves caught between giant customers and giant suppliers[77]and therefore squeezed by both. Rainnie suggests that purchase decisions are still based mainly on price. in some cases the OEM is persuading second tier suppliers to implement JIT[78]. or they find that the extra cost of small lot delivery is prohibitive[79]. or pass the costs on to customers through higher prices. Arnold and Bernard[32] note that suppliers who remain in business may not share in the overall benefit subsumed by the dominant member of the chain owing to lack of influence. Further research There is considerable scope for further research within the broad area of JIT sourcing. These suppliers will be able to hold inventory more cheaply than the manufacturer. there are too few long-term contracts. Suppliers may therefore be holding a greater quantity of inventory.was conducted with OEMs and not the suppliers themselves. There are further avenues of research which could concentrate on supplier benefits of entering into the JIT exchange. so the data can be considered secondary and the OEMs have an interest in suggesting that inventory levels will diminish.

This approach could be broadened to the entire supply chain in order to first assess the extent to which JIT has been diffused within the supply chain and second to assess the benefits attained by each echelon. Firms which engage in long term. There is also a body of literature which highlights the problems caused by JIT sourcing. Conclusion There is little. Rainnie[39]. The second source of disagreement stems from implementation problems. supplier responsiveness and quality. This confirms an earlier study by Voss and Robinson[81] who concluded that firms tended to implement the easier aspects of JIT. Helper[59].[42]. data exchange and levelling schedules. The former four studies suggest more negative outcomes. local suppliers. sole sourcing. These arguments are countered by other authors. although the latter study outlines the benefits achieved by a supplier delivering JIT. Turnbull[61] and Karlsson and Norr[80] suggest that it is more a matter of poor implementation than theory flaw. Principally. increase the risk of supply disruption. inability of the supplier to change to small lot production or the inability to implement JIT purchasing themselves. There is some disagreement within the literature on a number of issues. Further problems are caused by a lack of communication and a resistance by buyers to abandon competitive bidding and price first selection criteria. which may be due in part to the shifting of responsibilities (and costs) from the buyer to the supplier. may fall behind the competition in terms of technological innovation and will incur expense should a switch of suppliers become necessary. especially in terms of inventories. or a more fundamental flaw within the theory. such as long-term contracts. rather than those which would produce the greater return. sole source relationships.IJOPM 15. Predominately these are caused by lack of supplier cooperation.9 232 poor implementation by buyer and supplier. who suggest that the closer form of relationship which is formed through JIT sourcing is more rather than less efficient. if any. JIT purchasing is an important aspect of any firm’s overall JIT programme and it is therefore vital to address the problems preventing successful . but fail to implement the more difficult aspects. Inventory is shifted due to widely fluctuating schedules. with whom there is a close relationship rounded on mutual dependency and frequent communication. there is a body of literature which suggests that traditional purchasing practices of short-term contracts and multiple sources of supply is a more effective form of purchasing for the manufacturer. Research by Baxter et al. Some authors note that a number of OEMs claim to embrace the JIT philosophy. while others point to the strategic implications of JIT sourcing achieved through the long-term mutual dependency relationship forged between customers and reliable suppliers[29]. disagreement over exactly what JIT purchasing practices are. JIT purchasing requires small but frequent deliveries of total quality parts from single sourced. There are operational criteria cited indicating improvements in inventory turns. First. open themselves to purchasing at above market prices.

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