What is JIT II? Just-In-Time has revamped its processes and produced JIT II.

JIT II places more responsibility with the suppliers for functions such as: forecasting usage; ordering replenishments; and billing the organization. JIT II systems are frequently implemented in client/server environments, where multiple servers have access to a database utilizing Structured Query Language (SQL). The authors assert that JIT II provides the potential to reduce inventories, eliminate redundant purchasing agents and get cost-saving tips from having suppliers familiar with their business. The retailing industry denotes this as ECR, efficient consumer response. Risks The JIT II system is inherently risky because it relies heavily on the supplier: Cost savings may not be realized if suppliers do not synchronize their deliveries with demand. Suppliers may attempt to serve more customers than they can accommodate. Suppliers may fail to make needed improvements. It can be difficult to sever a relationship that no longer works. Frequently controls disappear in JIT II such as: approval of purchase requisitions; no longer receive purchase requisitions; Receiving no longer inspects incoming merchandise; traditional paper trail ceases to exist; and reduced separation of duties. Many of the risks have the ability to be corrected if queried and monitored correctly by management and operational personnel. The risks mentioned in the article can be found in the table below. Risk Monitor/Control

Stockout

Risk with the greatest potential impact on production

Controlling for this risk requires determining which items from which suppliers have been out of stock, or nearly so.

Overstock

Suppliers can abuse their ordering privileges by over ordering inventory items

Quantity on hand is greater than two times average daily usage

Defective Items

Inspection and testing costs are increased

Query number of defective products per supplier

Overpriced Items

When Suppliers secure contracts they may take advantage of these

Compare the current suppliers prices with competitors prices weighted

relationships by becoming less price competitive Implementation

by quantities of the items received

If a company recognizes the risks involved and still has an interest in JIT II there are four steps to a successful implementation. Step 1 - Design: Management must recognize at the initial stage that primary responsibility for ensuring that suppliers adhere to their agreements lie with them. Operating personnel should participate with management in the design phase because they will be working with the queries that the system produces. Step 2 - Data Access: The next step involves working with the companys information systems provider to detail the collection and access of the data. Step 3 - Query Development and Maintenance: If operating personnel are to participate in the construction of the queries they will need training. The operating personnel will envision new queries as they become more familiar with JIT II. The authors expressed that simple alterations could be made to the queries later to create more helpful data. SQL commands that the operating personnel will be manipulating can be found in the table below. Command/Keyword Use

COUNT

Sums the number of rows satisfying the WHERE condition

CREATE VIEW

Composes a table SELECTed from rows and columns of another table

FROM

Specifies the location of the selected table

GROUP BY

Summary information

NOT IN

Excludes certain rows from consideration

ORDER BY

Sorts the data by ASCending or DESCending order

SELECT

Specifies the columns to be displayed

SUM

Computes the total of a specified column/row

UNION

Combines similar data

WHERE

Restricts the data displayed

Step 4 - Results Monitoring: The responsibility for daily and weekly monitoring of the queries will likely be vested with the operating personnel. The query results will be sent electronically to the personnel and if not resolved within a specified time frame the next level of supervision will receive the queries. Final Statement The authors state that converting to a JIT II system from a traditional purchasing system can open a company to new risks, however, it can reduce acquisition costs, shorten acquisition times and decrease inventory holding costs if implemented and monitored effectively.

JIT and Purchasing The most challenging area for most manufacturers in achieving JIT is the purchasing of raw materials and parts. This is important because an internal JIT system can only be operated successfully when the material being fed into it are of sufficient quality and delivered on time. Therefore, unless the quality and delivery of purchased material are not production issues, the purchasing function should begin to establish a JIT supplier base. In JIT purchasing several tactics are being used to achieve certain goals and objectives. Goals Secure a steady flow of quality parts. Reduce the lead time required for ordering product. Reduce the amount of inventory in the supply and production pipe lines. Reduce the cost of purchased material. Objectives Improve purchasing efficiency. Improve quality and delivery performance of suppliers. Isolate factors that influence the cost of material. Remove unnecessary cost factors in the materials supply system. Tactics Regard suppliers as an extension of the internal manufacturing process and cultivate them as long term business partners. Establish long term purchasing and supply commitments. Improve communication with suppliers. Involve suppliers in early stages of new product planning. Use supplier expertise to improve design manufacturability and reduce product cost. Purchasing Requirements Material purchased in a JIT system should meet three requirements: An acceptable level of quality, On time delivery schedule, and A reasonable cost.