Just-in-time purchasing: an empirical investigation

The just-in-time (JIT) literature suggests that, for JIT to be successful, a manufacturing firm has to make changes in its purchasing operations. However, empirical examination of the JIT purchasing related issues is limited. For example, a literature search identified 49 JIT purchasing articles. Of these, only 14 are empirical studies; two dealing with statistical testing of a few JIT purchasing issues. This comprehensive empirical study is undertaken to investigate (a) changes in the purchasing attributes since JIT implementation, (b) supplier evaluation cri-teria, and (c) problems with JIT purchasing implementation. Statistically significant changes are observed in 28 out of 32 attributes identified in the literature, suggesting that the manufacturing firms are successfully implementing JIT purchasing programmes. Of the 14 supplier evaluation criteria, the empirical investigation shows nine of them being important. Erratic demand for the product and customized product are found to be problematic (but not very problematic as suggested in the JIT literature( in JIT purchasing implementation.     

JIT purchasing: attribute classification and literature review

To find critical JIT purchasing attributes for manufacturing industry, 56 refereed articles are reviewed. These articles are categorized as conceptual, case and empirical studies. Thirty-four attributes are thus identified. An input-output model is developed to classify these attributes. The inputs to JIT purchasing environment consists of buyer, supplier and joint buyer-supplier actions with 13, six and six attributes, respectively. The interaction between these attributes leads to the JIT purchasing environment. Output of this environment consists of nine attributes. By using the frequency of citation of an attribute as a measure of its importance, consensus is found among conceptual and case studies regarding those attributes of JIT purchasing considered critical. However, many of these attributes have not been investigated empirically, while others have not been rigorously examined. Common supplier evaluation criteria are identified. Benefits and problems with JIT purchasing implementation are discussed. Analysis suggests the need for comprehensive and statistically rigorous empirical studies.     

Planning and Control in Multi-Cell Manufacturing

This research compares Material Requirements Planning (MRP), Kanban, and Period Batch Control (PBC) as alternative approaches to the planning and control of multi-cell manufacturing involving flow cells and assembly. Since previous research on performance of these systems in cellular manufacturing has been primarily conceptual, the experiments reported here provide new insights into their comparative performance. The results show that the production environment is a major factor in system choice. Three operating factors—Master Production Schedule (MPS) volume variation, MPS mix variation, and setup time/lot size—clearly affect system choice. All systems performed well under Justin-Time (JIT) conditions; there was no advantage to Kanban. Under the mixed conditions of high MPS variation, but small setup time/lot sizes, PBC produced superior performance compared to Kanban and MRP. Under non-JIT conditions, MRP was seen as clearly more effective. Finally, the results indicate that when conditions permit very small lot sizes relative to requirements, Kanban may perform best, even when MPS variation is high.     

Determining the Critical Elements of Just-In-Time Implementation

There are a limited number of papers dealing primarily with the implementation aspect of JIT. While the literature shows almost general agreement on the critical elements of JIT implementation, few empirical studies exist to support the proposed elements. The purpose of this study is to identify the elements of JIT implementation that are required to ensure successful implementation. A number of implementation elements were identified and subsequently grouped into a hierarchical structure consisting of four broader elements. Criteria were selected as measures of the level of implementation success. Analysis revealed that only a few of the identified elements were indeed required for successful JIT implementation.     

A joint economic lot size model for raw material ordering,manufacturing setup,and finished goods delivering

In this research we consider a single-manufacturer single-buyer supply chain problem where the manufacturer orders raw materials from its supplier, then using its manufacturing processes converts the raw materials to finished goods, and finally delivers the finished goods to its customer. The manufacturer produces the product in batches at a finite rate and periodically delivers the finished goods at a fixed lot size to its customer, who has a constant demand rate. An integrated inventory control model, making joint economic lot sizes of manufacturer's raw material ordering, production batch, and buyer's ordering, is developed to minimize the mean total cost per unit time of the raw materials ordering and holding, manufacturer's setup and finished goods holding, the buyer's ordering, and inventory holding. Numerical examples are also setup to illustrate that jointly considering the inventory costs above results in less mean total cost than that of considering them separately.     

A FRAMEWORK AND MEASUREMENT INSTRUMENT FOR JUST-IN-TIME MANUFACTURING

While Just-in-Time (JIT) manufacturing has emerged as one of the major tools to enhance manufacturing competitiveness, no attempt has been made to develop a reliable and valid measurement instrument for empirical research in JIT. Without such an instrument, generalization beyond the immediate sample is difficult or misleading. We have proposed a JIT framework and developed a valid and reliable instrument with 16 summated scales for dimensions that capture essential aspects of JIT useful in assessing its impact in manufacturing environments. In addition, we discuss in detail the interactive nature of JIT practice. And, we propose a step-by-step approach to reliability and validity testing. Four JIT practices (equipment layout, pull system support, supplier quality level, and Kanban) are identified as major contributing factors to JIT performance.     

An adaptation of the EOQ formula for JIT quasi-pull system production

This research demonstrates for the first time that in a just-in-time (JIT) quasi-pull production environment, a model adapted from the Economic Order Quantity and made up of two specific formulas can be employed for calculating an optimised lot size. The assumptions of our model are: a low level of defects, and insignificant shortage backordering and failure of the equipment. JIT quasi-pull production is the state typically reached by many manufacturing companies because it is almost impossible to achieve zero set-ups and zero work-in-process (WIPs) even in the best Lean Production implementations. In this model, finished products are shipped at once in a JIT way. The two developed formulas are specialised: one for balanced stations/processes and the other for unbalanced stations; the formulas allow calculation of an optimised lot size. Several applications of the formulas have been tested and discussed through a case study. Findings demonstrated that the optimised quantity of a lot size has to be smaller than the customer’s daily demand for the product. Moreover, in case of unbalanced stations with long cycle times, the formula forces the company to reduce its set-up times and the cycle times. The new model will be of interest to practitioners who are seeking a way to balance the costs of set-ups and the cost of holding some WIPs and offers interesting avenues for new research.     

Adoption of just-in-time based quality assurance and purchasing practices

Feasibility of transforming purchasing and quality control operations from conventional to just-in-time (JIT) practices is discussed. The study is confined to the dock-to-stores area of an engine manufacturing plant. Components used in the study are selected from a representative sample of inventory classes, commodity groups and agreement types with vendors. A time/cost analysis is carried out for the components selected so as to evaluate the cost effectiveness of the conventional purchasing and quality control. Findings on savings in terms of inventory-related costs and inventory turnover through the implementation of JIT practices are reported. A transformation framework is then developed to determine the suitability of individual components for JIT based practices. Cases are presented to demonstrate the functioning of the framework.     

The Value of Production Schedule Integration in Supply Chains

This study explores the value of integrated production schedules for reducing the negative effects of schedule revisions in supply chains involving buyer and supplier firms. A stochastic cost model is developed to evaluate the total supply chain cost with integrated purchasing and scheduling policies. The model minimizes the costs associated with assembly rate adjustment, safety stock, and schedule changes for all supply chain members. Through experimentation, the paper examines the impact of several environmental factors on the value of schedule integration. This study finds that schedule integration can lead to overall cost savings in a supply chain, but some firms may have to absorb costs in excess of those they would incur with independent scheduling. Environments with high inventory holding costs and long supplier lead times may not find it beneficial to adopt an integrated schedule. Forecast effectiveness plays a critical role in realizing the benefits of schedule integration. The paper concludes with suggestions for future research.     

Optimizing lot size and setup time in a JIT environment: a multiple objective application

The just-in-time (JIT) system has been studied extensively and implemented by a number of US firms as an ell'ective production system. The core of JIT involves determination of lot size and setup time reduction so as to increase manufacturing flexibility while minimizing the inventory level. This decision problem usually involves multiple conflicting objectives and mixed-model production. In this paper, goal programming (GP) is applied to a real-world JIT problem involving fabrication of different automotive and industrial rubber composite belts. The model results provide new insights concerning the conflicting nature of several goals, especially between meeting demand and reducing setup or idle time. Also, the GP solution is superior to the current JIT practice of the company.     

Just-in-time in ATO vehicle manufacturing: The Minivan-Piaggio V.E. case study

The system adopted by Piaggio V.E. to run the production of 'Minivan' aims at conciliating the manufacturing philosophy 'just-in-time' JIT with the creation of a wide range of end-product codes. Some general assumptions for a JIT production, with small lot sizes, are described together with their implementation in the operationorganizing system adopted by Piaggio V.E. for the 'Minivan' assembly line. The strategy pursued by Piaggio V.E. for the Minivan focuses on the quality of the product and the level of service in the form of fast order cycle and a high number of options offered on catalogue. According to the logic of an ATO production system, the customer orders a customized product and the manufacturer does not keep any finished inventory, but aims at effective management of the information flows.     

Transportation Approach to Locating Plants in Relation to Potential Markets and Raw Material Sources

Proximity to the market place has been considered the most important locational factor in the literature so far. However, the growing need for frequent deliveries of materials in smaller lot sizes for just-in-time (JIT) manufacturing prefers plants closer to the raw materials sources. Locating plants for JIT manufacturing is, therefore, a problem of finding the right balance between the requirements of procurement and distribution. A comprehensive model is proposed in this paper to solve this problem. The model is solved by using the transportation algorithm and produces simultaneous decisions on procurement, production, and distribution. The model does not require plant sizes to be known a priori, but it allows upper limits to be placed on the size of each plant and raw material source. As such, optimal plant capacities along with the corresponding procurement and distribution quantities are all determined by the model solution.     

An Evaluation of the NERJIT Priority Rule in a Kanban‐Controlled Flowshop

Significant progress in production and information technologies and innovations in management of operations during the last couple of decades have made the production of small lots and deployment of Just‐In‐Time (JIT) concepts in flowshops possible. As a result, some researchers and practitioners have been seeking to improve the performance of non‐repetitive systems using JIT concepts. In this process, the JIT concepts that were originally designed for mass production have been modified to adapt JIT to non‐repetitive systems. This article uses a priority rule that is based on real‐time demand and production information for sequencing jobs in a kanban‐controlled flowshop. The analysis of the effect of this priority rule; the number of kanbans; the length of the withdrawal cycle; First‐Come, First‐Served (FCFS); and Shortest Processing Time (SPT) on four performance measures—customer wait time, total inventory, input stock‐point inventory, and output stock‐point inventory, shows that the use of this priority rule results in a significant reduction of customer wait time and a slight decrease in inventory.     

Determining Optimal Selling Price and Lot Size When the Supplier Offers All-Unit Quantity Discounts*

This paper is concerned with finding the optimal price and lot size for a retailer purchasing a product for which the supplier offers all-unit quantity discounts. Demand for the product is assumed to be a decreasing function of price, and a procedure is developed for finding the optimal price and lot size for a class of demand functions. The procedure then is applied to two common demand functions: (1) the constant price-elasticity function, and (2) the linear demand function.     

Production control for just-in-time tool-and-die manufacturing

The strategy to implement production control varies in different types of manufacturing systems. We address the issue of production control in unit-based manufacturing systems where the production batch size of the final product is one or two, the product is custom designed and is made up of numerous individual components with similar process routeings lor special machine tools, turbines, boilers, tool-and-die, injection moulding equipment, custom fabrication, etc. We have developed algorithms to generate master production schedules in this particular domain of manufacturing systems using the concept of workgroups. We show how a Kanban-based JIT shopfloor control and purchasing system can be implemented in such systems in tandem with an inventory management system by utilizing the concept of demand lists. We also propose a model for practical implementation of production control in this domain. The methodology is illustrated at a tool-and-die plant where a CIM software is used to apply the JIT-based production control. Preliminary results show a significant reduction in lead times. We try to show the relationship between research and industrial applications of productions of production control and how to bridge the gap between them.     

Distinguishing Features of Just-in-Time Systems in the Make-to-Order/Assemble-to-Order Environment*

Few studies of just-in-time (JIT) implementation examine their significance in make-to-order manufacturing environments. This study examines the relative importance of several operating variables that are characteristic features of JIT systems within such environments in North America. The results suggest that the most salient features of JIT for make-to-order and assemble-to-order firms are the elimination of waste (in the form of time and defects), reduced setup time, reduced lotsize, and a smaller pool of suppliers. In addition, the results suggest that the use of non-domestic suppliers can possibly hinder efforts at JIT implementation of materials procurement.     

A Heuristic Algorithm for the Capacitated Multiple Supplier Inventory Grouping Problem

This paper presents and solves a model for the multiple supplier inventory grouping problem, which involves the minimization of logistics costs for a firm that has multiple suppliers with capacity limitations. The costs included in the model are purchasing, transportation, ordering, and inventory holding, while the firm's objective is to determine the optimal flows and groups of commodities from each supplier. We present an algorithm, which combines subgradient optimization and a primal heuristic, to quickly solve the multiple supplier inventory grouping problem. Our algorithm is tested extensively on problems of various sizes and structures, and its performance is compared to that of OSL, a state-of-the-art integer programming code. The computational results indicate that our approach is extremely efficient for solving the multiple supplier inventory grouping problem.     

WIP inventories in the simultaneous determination of optimal production and purchase lot sizes

This paper studies an integrated production and purchasing lot sizing model with work-in-process WIP inventory. In this model, the single product is made in a multiprocess manufacturing system. The raw materials are procured from outside sources and are converted gradually into the product. A solution procedure is developed to simultaneously find the optimal lot sizes for the product and its raw materials and the corresponding total relevant cost. It is shown that if the cost of WIP inventory is considered in the production lot size computation, the optimal lot sizes of the product as well as those of the raw materials could be altered significantly.     

Multiproduct,Multicriteria Model for Supplier Selection with Product Life‐Cycle Considerations

In industrial purchasing contexts firms often procure a set of products from the same suppliers to benefit from economies of scale and scope. These products are often at different stages of their respective product life cycles (PLCs). Firms consider multiple criteria in purchasing such products, and the relative importance of these criteria varies depending on the PLC stage of a given product. Therefore, a firm should select suppliers and choose sourcing arrangements such that product requirements across multiple criteria are satisfied over time. The extant models in sourcing literature for evaluating and selecting suppliers for a portfolio of products have not considered this important and practical issue faced by firms. This article proposes a mathematical model that effectively addresses this issue and contributes to the sourcing literature by demonstrating an approach for optimally selecting suppliers and supplier bids given the relative importance of multiple criteria across multiple products over their PLC. The application of the model on a hypothetical data set illustrates the strategic and tactical significance of such considerations.     

Real‐Time Revision of Order Quantities with Capacity Constraint: A Single Period Model

Manufacturing firms would like to maximize customer satisfaction by providing them with what they need when they need it. This, however, would mean continual variations in production quantities, and component orders from suppliers. A flexible manufacturing system can help alleviate costs related to modification of production quantities. The capacity of such a system, however, has to be limited because of high investment cost. Further, unless there is a long‐term relationship, suppliers may levy a high surcharge for last minute changes in order size. We model a hybrid control policy comprising an advance (pre‐production) order size agreed upon with suppliers, and a provision for real‐time order revision at a given rate of surcharge. We show that a rank‐order of products can be used for real‐time revisions, and that a strong buyer‐supplier relationship that keeps these surcharges low can actually help increase profits for both parties. We study issues such as compatibility between JIT and flexibility, and the impact of market conditions on overall profitability.