Challenges of Just-In-Time (JIT) Procurement

Posted by Alicia Carlson on Sep 21, 2018 11:12:39 AM
Alicia Carlson
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Manufacturers utilizing JIT production are continuously trying to mitigate the volatility of product availability and price within their current supply base. Unfortunately, most JIT facility layouts are designed for limited spatial flexibility to secure those line-side critical parts. The manufacturer, then, is oftentimes left with optimizing capability at the supplier side to maintain on time delivery and production. As an alternative to working through the existing relationship, the manufacturer also looks for additional sourcing opportunities to compete with the highly demanding production schedule and product prices.

 

Supplier Relationship Management (SRM) Case

CGN understands the value of complete supply chain visibility. By understanding the constraints of the supply base, the manufacturer can better manipulate its operations, buying strategies, and resources to optimize its production needs. CGN recently partnered with a JIT manufacturer in the access equipment industry to manage its current SRM strategies with Supplier A and Supplier B. Supplier A’s on time delivery performance had been under-performing for several months, due to operational and technical incompetencies. Supplier B’s past due slippages were fundamentally a result of production inefficiencies as well but were layered with an added complexity of relational indifference.

 

CGN Approach

CGN identified several opportunities and solutions that were consistently evident across the JIT manufacturer’s under-performing supply base.

Supply Chain Visibility1

Sustainable Outcomes

CGN’s unique sustainable footprint has been proven successful by designing these solutions with the manufacturer and supplier’s preexisting SRM framework as the basis. When asking Supplier A for root causes on missed delivery, CGN integrated the enhancement into the current communication structure to alleviate any growth pains and focus on delivering immediate productivity results. The newly added reporting metrics alone drove past dues at Supplier A down by 77% in 12 weeks (see below). Conversely, the modified buying strategy by the manufacturer has allowed Supplier B to increase capacity hours by 10% and pallet utilization by 7%. In both cases, CGN focused on driving the relational component of SRM to set up the manufacturer and suppliers with long-term profitable development and visibility to operational and technical improvements.

jit slippages1-1