What are the advantages and disadvantages of JIT procurement?

First, JIT procurement, also known as JIT procurement method, the advantages of JIT procurement:

1, excluding no appreciation

Improvement of production efficiency In enterprise procurement, there are a lot of activities that do not increase product value, such as ordering, modifying orders, receiving goods, loading and unloading, invoicing, quality inspection, inventory, warehousing and operation. It is a waste to spend a lot of time, energy and money on these activities. JIT procurement greatly simplifies the procurement process, thus eliminating these wastes and greatly improving work efficiency.

2. Further reduce and eventually eliminate the inventory of raw materials and purchased parts.

Reducing the inventory of raw materials in enterprises depends not only on the inside of enterprises, but also on the management level of suppliers. JIT procurement mode not only puts forward strict requirements for scientific management within enterprises, but also puts forward higher and stricter requirements for the management level of suppliers. JIT procurement is not only a procurement method, but also a scientific management mode. The operation of JIT procurement mode will objectively cast a new scientific management mode in user enterprises and supplier enterprises, which will greatly improve the scientific management level of user enterprises and supplier enterprises. According to the calculation of some foreign enterprises that implement JIT procurement strategy, JIT procurement can reduce the inventory of raw materials and purchased parts by 40% ~ 85%. It is beneficial for enterprises to reduce the occupation of working capital, speed up the turnover of working capital, and save the inventory space of raw materials and purchased parts, thus reducing the inventory cost.

3. Realize flexible production.

Just-in-time procurement enables enterprises to supply any materials they need at any time. So as to minimize the inventory of raw materials and purchased parts. In this sense, JIT procurement can best adapt to the changes in market demand and make enterprises have real flexibility.

Step 4 improve quality

Generally speaking, the implementation of JIT procurement can improve the quality of purchased raw materials and purchased parts by 2~3 times. Moreover, the improvement of the quality of raw materials and purchased parts will lead to the reduction of quality cost. It is estimated that the implementation of JIT procurement can reduce the quality cost by 26% and 3%.

5, is conducive to reducing the purchase price of raw materials and purchased parts.

Due to the close cooperation between suppliers and manufacturers, internal economies of scale and long-term orders, as well as the elimination of some waste in the procurement process, the prices of purchased raw materials and purchased parts have been reduced. Taking American Xerox Company as an example, by implementing JIT purchasing strategy, the cost of purchasing materials has been reduced by 40%~50%, and remarkable economic benefits have been achieved.

Second, JIT procurement, also known as JIT procurement method, the shortcomings of JIT procurement:

1, using fewer suppliers.

Even single-source supply single-source supply refers to purchasing a certain raw material or purchased parts from only one supplier; In other words, the demand for a certain raw material or purchased parts is only supplied by one supplier. Jrr Procurement believes that the ideal number of suppliers is: only one supplier for each raw material or purchased part. Therefore, single source supply is one of the basic characteristics of JIT procurement. The traditional procurement mode is generally multi-head procurement, and the number of suppliers is relatively large.

2. Take the strategy of buying in small quantities.

Small batch purchasing is a basic feature of JIT purchasing. An important difference between JIT procurement and traditional procurement mode is that JIT production needs to reduce batch size and even realize "single-flow production". Therefore, the procurement of materials should also adopt the method of small batch. From another point of view, because the demand for raw materials and purchased parts in enterprise production is uncertain, and the purpose of JIT procurement is to eliminate the inventory of raw materials and purchased parts, in order to ensure the timely supply of raw materials and purchased parts, procurement must be in small batches. However, small batch purchase will inevitably increase the transportation times and transportation costs, which is very difficult for suppliers, especially when some suppliers are far away, it is very difficult to implement JIT procurement.

3. The criteria for selecting suppliers have changed.

Because JIT procurement adopts single source supply, it is particularly important to choose suppliers reasonably. It can be said that whether qualified suppliers can be selected is the key to the successful implementation of JIT procurement. Qualified suppliers should have good technology, equipment conditions and high management level, and can guarantee the quality of purchased raw materials and purchased parts, and ensure timely and quantity supply.

4. The requirement for on-time delivery is more stringent.

An important feature of JIT procurement is the requirement of on-time delivery, which is a prerequisite for the implementation of JIT production. Timely delivery depends on the supplier's production and transportation conditions. As a supplier, in order to deliver the goods on time, we can start from the following aspects: First, continuously improve the production conditions of enterprises, improve the continuity and stability of production, and reduce the phenomenon of delayed delivery or delayed delivery caused by unstable production process. As a part of JIT supply chain management, suppliers should also adopt JIT production management mode to improve the punctuality of production process. On the other hand, in order to improve the punctuality of delivery, the transportation problem can not be ignored. In logistics management, transportation is a very important issue, which determines the possibility of on-time delivery. Therefore, both user enterprises and supply enterprises need to pay attention to this aspect, carry out effective planning and management, and make the transportation process accurate.