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Just-in-timePurchasingKatherineHoganOISM470WFebruary19,2000PresentationOverview•DefinitionofJust-in-timePurchasing•Differentuses•Howitwillhelpyourcompany•ExamplesofJust-in-timePurchasingJust-in-timePurchasing•Anapproachtopurchasingthatrequireslong-termagreementswithfewsuppliersBrainstormingHowcanjust-in-timepurchasingbeusedinyourorganization?AdvantagestoJIT•Reducestheneedforcentralwarehousingandstorage•Morepersonalrelationshipwithsuppliers•Long-termrelationshipsthathelptocertifysuppliers•Receivinginspectionisreducedandinsomecaseseliminated•Loweredvarietyinsuppliers•Reliabledeliveryschedules•Highqualitymaterialsused•ReducedwasteDemandsonPurchasingofJIT•Reducednumberofsuppliers•Stableandgoodcommunicationthroughoutafirm•Locatingsuppliersnearby•Long-termrelationships•Helpingsupplierstoincreasequality•Nottogethungupbysinglesourcing•BuyingfromsmallfirmsLimitationsofJIT•Difficultytochangeoldways•Morepressureonworkers•Successisvaried•Employeecommitment•Productionlevels•EmployeeskillsDifferencesbetweenJITandTraditionalPurchasingJITPurchasing•Smallerlotsizes•Morefrequentdeliveries•Norejectionfromthesupplier•Long-termcontracts•Buyerdecidesdeliveryschedule•Innovationencouraged•Minimalpaperwork•LessformalcommunicationTraditional•Relativelylargelotsizes•Lessdeliveriesathigherquantities•2%rejectionfromsupplier•Lowestpriceismainobjective•Timeconsuming,formalpaperwork•FormalcommunicationWhyorganizationsuseJITPurchasing•Reducewaste•Increasedcycletimes•Higherqualityinproducts•Fewersuppliers•Reductioninwarehouses•DependabledeliveryExample–FaxbanWhatisFaxban?•Itcombinesproductionfloorfaxmachinesandkanbanre-supplysignalstolowertransactionprocessingandsavemoneyExample-FaxbanWhousesit?•HoneywellstartedusingthiswiththeirsuppliersHowdoesitwork?•Re-supplyordersarefaxedfromtheproductionfloorbytheworkerstosuppliersExample-FaxbanWhattechniquesareusedinfaxban?•EDI•Kanban•BlanketOrder•PurchasingCardExample-FaxbanWhatweretheoutcomes?•Transactionprocessingreduced•Reductioninaccountspayablefunction•Moneysaved•Reducedwaste•DirectcommunicationresultedinlessambiguitybetweensupplierandHoneywell•TimereducedExerciseWeareopeningashopthatmakesdifferenttypesofchairs.DiscussingroupstheadvantagesofbeingashopwithtraditonalpurchasingvaluesandJITvalues.Exercise,cont.RememberthatwemakemanydifferenttypesofchairsWhataretheadvantagestobothtypesofpurchasing?SummaryofJITPurchasing•Manyadvantagesthatleadtoreductioninwaste,storage,andotheraspectsthatleadtosavingmoneyandtime•Long-termrelationshipswithsuppliers•ManydifferenttechniquesareuseddependingonthedemandofthecompanySummary,cont.•HigherqualitymaterialusedBibliographyFaxban:Just-In-Timepurchasingmadesimple..1997.(14February2001).Foster,S.Thomas.ManagingQuality:AnIntegrativeApproach.UpperSaddleRiver,NewJersey:PrenticeHall,2001.Bibliography,cont.Just-in-Time.(12February2001).Just-in-TimePurchasing.(14February2001).