Just-in-Time Purchasing: A Challenge for U.S. Industry

Abstract

Traditional U.S. purchasing is under assault. Japanese purchasing practices, featuring frequent “just-in-time” deliveries in small quantities, have made inroads among Japanese subsidiaries in the United States and more recently in the U.S. auto industry. Just-in-time (JIT) buying tends to be accompanied by a host of structural changes: Long-term, stable buyer-supplier relationships; avoidance of annual rebidding; sole-source contracts; improved containerization; and localized buying, to name just a few. The benefits of JIT purchasing, to both buyer and supplier, include lower material costs, higher productivity, and improved qualify. The strategic advantages—growth of market share and stable relationships—can be significant. Geographical vastness is one of several obstacles in the way of widespread use of JIT buying practices in the United States. The companies that have pioneered in the development of JIT purchasing in this country have demonstrated that most of the obstacles are not insurmountable.