Just-in-time purchasing and supply: A supply chain analysis

The success of Just-in-time (JIT) strategy in manufacturing has led to attempts to extend such success to the logistics fields, among which purchasing/selling has received much attention recently. However, there appears to be no research of JIT impact from the supply chain perspective that incorporates the market, buyers, and suppliers. The objective of this research is to contribute in this perspective. The focus of this research is on the overall impact of JIT on the entire supply chain, including buyers and suppliers.; First, a hierarchical optimization model is discussed and analyzed. An Economic Order Quantity (EOQ) inventory policy is embedded in a monopolistic buyer and oligopolistic supplier framework, which allows examination of supply chain relationships under a "quasi-competitive" equilibrium. JIT strategy can then be examined in a comparative analysis, which demonstrates the impact of JIT on both parties' costs, inventory systems, and profitability. Furthermore, the impact of JIT is analyzed within an integrated supply chain and a numerical example illustrates how JIT would change a buyer or supplier's performance. The major results from the model are as follows: (1) without supplier cooperation, JIT may bring short-term benefits to a buyer, but will reduce the buyer's profits in the long run; (2) without supplier cooperation, JIT will increase the suppliers inventory costs and reduce its profits even if the buyer is willing to offer higher prices; (3) with supplier cooperation, JIT will improve both parties' performance in costs and profits; (4) an integrated supply chain will allow the parties to best realize the possible benefits from JIT.; The model results, along with other issues raised in previous research, are subject to empirical testing. A two-stage empirical method is adopted---the first stage being the refinement of a measurement model using Confirmatory Factor Analysis; the second stage being the estimation of a Three Stage Least Square regression model which demonstrates the relationships between the variables. Data is collected using a survey questionnaire and a total of 124 buyers and 131 suppliers are included in the measurement model and regression analysis. The major findings are: (1) supply chain integration improves the impact of JIT on buyer performance; (2) supplier cooperation improves the impact of JIT on supplier performance; (3) JIT has a positive impact on buyer performance; (4) the extent of JIT adoption is positively influenced by supplier cooperation and supply chain integration; (5) the extent of JIT is negatively influenced by demand and operational uncertainty of buyers; (6) the extent of JIT is positively influenced by demand uncertainty of suppliers; and finally, (7) the larger the size of a buyer firm, the greater the extent of JIT adoption.