Practitioners in supply chain jobs are changing the pace of procurement through highly efficient new approaches to “just-in-time” (JIT) manufacturing, an article in Supply Chain Dive has revealed.
JIT manufacturing was pioneered by Toyota in the 1970s, since when thousands of companies have followed suit.
The method takes a rigorous approach to waste elimination, with companies managing a pared-down, lean supply of materials to produce their products exceptionally swiftly on demand.
The method requires a comprehensive, end-to-end approach to the supply chain.
According to the Supply Chain Dive article, professionals in supply chain jobs are managing to deliver significant competitive advantage for their firms via JIT by ensuring that they have the right key performance indicators (KPIs) in place and by selecting the most reliable suppliers.
The number one KPI, the article explains, is lead time: supply chain professionals practising JIT have to have an accurate measure of the time interval, whether hours or days, between receiving an order and delivering the finished product to the customer.
To reduce missed deliveries, the latter need to be monitored so that supply chain practitioners presiding over the JIT process (including supply chain interims) know the details: if there’s a 2% failure rate, for example, there’s a major cost differential between a delivery that’s 15 minutes late and one that’s several days late.
However, tracking missed deliveries also needs to be set alongside the data on successful deliveries so that supply chain professionals understand how and why those deliveries worked.
Speaking to Supply Chain Dive, Dr Robert Lee Gordon, program director of Reverse Logistics Management at the American Public University System, recommends that supply chain practitioners set up electronic data interchange (EDI) relationships with key partners to allow computer-to-computer exchange of business documents between them and permit the tracking of all data.
This allows baseline requirements for in-full and on-time deliveries to be set and agreed.
Dr Gordon added: “That sets the benchmarks and then one can compare to those contracted levels.”