4. Negotiating With Suppliers
Another area of acute difference in traditional and JIT purchasing is negotiating
with suppliers. Under a conventional purchasing system, the buyer tends to deal with
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multiple suppliers and grants the contract or purchase order to the lowest bidder. The
purpose of dealing with multiple suppliers is to obtain the lowest price. Most buyers
provide exacting and rigid standards so that the price becomes the basis for decision.
In JIT purchasing, the buyer is less concerned about lowest price and is more
concerned about the parties' long-term relationship. The supplier most likely to be
awarded the contract is the one who can provide consistently high product quality with
no incoming inspection, deliver on time, work with the buyer to solve problems, and
agree upon a fair price for both parties. [Ref. 3:p. 34]