The main purpose of this paper was to determine
how both buyers and suppliers might benefit
from the use of JIT purchasing. Due to our analysis
of a limited and select group of industries
and given the new scale construction required for
the analysis, the results must be interpreted as exploratory.
Near-mirror-image models were developed
and tested for buyers and suppliers, each resulting
in a highly significant fit to the data. Five specific
paths were tested in both the buyer and supplier
models.
An important finding was that the extent of JIT purchasing
has a direct effect on reducing costs in buyer
organizations but not in supplier organizations. Previous
research has found that JIT purchasing can result
in inventory costs being transferred from buyers to
sellers (Romero, 1991; Fandel and Reese, 1991; Zipkin,
1991). Although our results do not directly support
this conclusion, they do lend credence to this view.
On the other hand, significant paths were found, using
supplier data, between JIT purchasing and supplier JIT
manufacturing and between supplier JIT manufacturing
and supplier logistics costs. This result indicates
that JIT purchasing can indirectly lead to lower logistics
costs for suppliers; that is if suppliers implement
JIT manufacturing in conjunction with a JIT purchasing
program.
We also found, as might be expected, that integrating
operations between buyers and suppliers was positively
associated with JIT purchasing for both buyers
and suppliers. More surprising, however, we did not
find significant direct paths between supply chain integration
and cost reduction in either of the models.
It may be that supply chain integration is best implemented
as part of a wider program, such as JIT purchasing,
in order to produce significant logistics cost
reductions.
In summary, our exploratory research suggests that
buyers can directly benefit from JIT purchasing while
suppliers may need to adjust their manufacturing practices
to benefit as well.