PURCHASING OF JIT SYSTEM

 PURCHASING OF JIT SYSTEM

 JIT system is growth up to eliminate the waste whether time, energy or inventories. Its principles focus on the people, postponement and efficiency.It have significant effect on the profitability of a firm. This system is not easy to be implemented because it involves other members such as the suppliers. The purchasing function is to provide a firm with materials or component parts which are the high-quality material provided on time at a reasonable price.

By executing the Just-In-Time system, it is reducing the order quantities. One of the most crucial elements f JIT system is small lot sizes. A firm does not need to store the inventories because the cost of handling and setup the inventories are too high.

 They do want to have high level of inventory because the inventories are too expensive. The inventories are probably damaged, theft or catch on fire. By ordering in small sizes, the firm be ableto cut the cost of handling and avoid any problem during storage. 

JIT system reduces the lead times. To be able to maintain low level of inventory level,it is critical that replenishment lead times be as short as possible. This system reduces the lead time for order completion.

 Usually, suppliers have long relationship with the firm. It is able to them to reduce paperwork significantly. The suppliers also be able to reduce the manufacturing time because of the guaranteed volumes.

This system also provides frequently and on-time-delivery schedules. The deliveries must be doing frequently to ensure the level of the inventory in low level. 

The on-time delivery need because to ensure the production run as normal and without wasting any single second of the work hour. It is critical part in JIT system because any delay or late will stop the production immediately.

The JIT system ensures the high quality of incoming material. The firm wants to minimize the cost of inspection as much as can. The suppliers must ensure the materials are in good quality to furnish the long-terms agreement. This system allows the firm to receive high quality of incoming material only. The suppliers need to make inspection before delivering the materials. High quality incoming materials result in savings associated with reduce rework and scrap.

To implement this, the suppliers must be reliable to follow all of terms such frequent delivery, small lot sizes and in position to receive quick feedback. The reliability of suppliers is critical consideration because it is too hard to the suppliers follow all of term. Most of the suppliers don`t want follow JIT system. There seems to be a lack of commitment from the buyer, who treats the suppliers as independent parties and foster intense competition among them.