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In the name of ALLAH, The Most Gracious and The Most Merciful,
Assalamualaikum. For our sixth post, we would like to discuss about the advantages of Just-In-Time (JIT) purchasing.
Do you know what is exactly JIT?
JIT is the production and inventory control system in which materials are purchased and units are produced only as needed to meet the actual customer demand and fulfill the customer requirements. The example of company that implement Just-In-Time (JIT) are Toyota and Dell Computer Corporation.
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| Toyota |
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| Dell Computer Corporation |
Advantages of JIT purchasing
The first advantages of JIT purchasing is high quality of incoming materials.
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| High quality |
Receiving inspection that being done after the product been delivered to the buying firm is costly to be paid by the buying firm. Thus, in order to eliminate the associated receiving inspection costs, the buying firm always emphasize on the quality of the materials. High-quality of incoming materials will reduce the rework and scrap which eventually reduce the cost of
The second advantages is reliable suppliers.
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| Reliable suppliers |
The reliablity of the suppliers of the raw material and assembly parts to the buying firm is a critical consideration in the selection process of Just-In-Time (JIT) suppliers. A supplier is needed to be reliable in term of quality of the incoming material, quantity, and delivery time as it may affect the production. In case there are problems on the delivery of the material, the production line will be affected.
The buying firm also can contribute to the construction of the suppliers company in term of quality and strategies because the Just-In-Time (JIT) purchasing program involves close technical cooperation with the suppliers.
The third advantages is improved quality and customer satisfaction.
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| Customer satisfaction |
JIT purchasing results in improved quality and customer satisfaction. In order to enable the company to improve their quality of performances, they implement Just-In-Time (JIT) purchasing to reduce the defect rate.
The fourth advantages of JIT purchasing is schedulling flexibility.
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| Flexible Scheduling |
Reduce in the purchasing lead times and setup times lead to the schedulling flexibility. This helps to prevent the confusion in the manufacturing plant and offers unique competitive advantages to the company.
In a nutshell, if the JIT purchasing is manage wisely, the company production can obtain more profitable gains and reduce the cost investment.
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