Just-In-Time Delivery

Introduction

Supply chain management is becoming a major buzzword in the B2B arena. In the quest for better quality outputs, organisations have adopted TQM (Total Quality Management) as a means to gain a strategic advantage. One of the means of improving quality is JIT (Just-in-Time) manufacturing.

Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs. Just in Time (JIT) reduces carrying and inventory costs between Business to Business (B2B) entities. A main principle of JIT is to keep inventories low and reduce overheads and carrying costs. However, raw materials must be available on the turn when new stocks are ordered by customers. For example, if VW needs headlights for the Citi Golf range, they would only order lights from the headlight manufacturer when an order for Golfs is placed. The supplier would have to ensure that sufficient headlights are delivered to the Citi Golf plant by the time the cars reach that place on the production line where lights are installed.

Making JIT work requires an electronic link between customers, the manufacturer and the suppliers of raw materials. This electronic link is called the supply chain. The last two decades have seen the rapid development of software and hardware to facilitate the electronic supply chain. A number of software manufacturers have developed ERP (Enterprise Resource Planning) software to integrate all aspects of the business from administration and procurement to manufacturing and delivery in one package. ERP eliminates wastage and inefficiency, reduces costs, increases quality and ensures timeouts service delivery.

Business customers who run their factories according to the JIT manufacturing principle critically need JIT delivery. In such a case, delivering materials and parts on time is a must. Using electronic commerce, it is highly possible to assure JIT deliveries. Just-in-time delivery can be realized by the coordinated effort of delivery service company and supplier's inventory policy. For example, National Semiconductor was able to deliver to customers JIT by outsourcing the delivery service to FedEx Company.

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