BENEFITS OF JIT PURCHASING
Having a new management philosophy is not the "be all" and "end all". If
benefits are not forthcoming then a new management philosophy provides no value
added. JIT purchasing generates many measurable benefits. The following section lists
the benefits derived from an effective JIT purchasing operation:
1. Cost of Parts
Low inventory-carrying costs
Decreasing cost ofparts because oflong-term learning curve
benefits from long-term relationships
Low scrap cost, since defects are detected early
Quality
Fast detection of defects, since deliveries are frequent
Fast correction of defects, since supplier setups are frequent
and lots are smaller
Less need for inspection, since process control is encouraged
Higher quality of parts purchased - and of products in which they
are used.
Design
Fast response to engineering changes
Design innovativeness, since supplier expertise is not
hamstrung by restrictive specs
Administrative Efficiency
Few requests for bids
Few suppliers with which to contract
Contracts negotiated infrequently
Minimal release paperwork
Little expediting
35
5. Productivity
• Reduced paperwork
• Reduced inspections
• Reduced delay because of off-spec parts, late deliveries, or
delivery underages
• Reduced purchasing, production control, inventory control, and
supervision, with more reliable parts provisioning and smaller
inventories. [Ref. 35:p. 160]
Abdolhossein Ansari, a noted JIT advocate, surveyed 31 companies concerning
the benefits ofJIT purchasing. The results are presented in Table 3-1.
As can be seen from the table, JIT purchasing can provide real benefits for those
companies in which it is implemented. The following section shows the elements DLA
has derived from commercial JIT purchasing and modified to fit Government purchasing.