V. JIT and Safety Inventory
The JIT procurement model is the application of JUST IN TIME in procurement management. "JP production" is one of the most important production methods after World War II. Because it originated from Toyota Motor Corporation of Japan, it was once called "Toyota Production Mode." Later, as the uniqueness and effectiveness of this production method were more widely recognized, studied, and applied, people called it JIT. JIT condenses various management essences. It is an advanced management idea, management method, and management model developed in a repetitive manufacturing environment. It can be applied to any repetitive part of any type of business.
Printing companies belong to order-oriented processing companies. There is no production without orders, and production means selling! Therefore, JIT purchasing model is also easy for order-oriented processing enterprises. JIT attaches great importance to the individual needs of customers, increases the flexibility and agility of the supply chain, reflects the coordination and integration of supply chain management, and can ensure the synchronized operation of the entire supply chain. These are all suitable for today's paper packaging and printing. The operating characteristics of the company. There are many differences between the JIT procurement approach and the traditional procurement approach in the supply chain management environment. Mainly reflected as follows:
1. Selection Criteria for Suppliers The relationship between suppliers and users in traditional procurement models is a short-term partnership. When suppliers are found to be unsuitable, they can choose suppliers again. However, in the JIT procurement model, suppliers and users are long-term cooperative relationships. When selecting suppliers, comprehensive assessments of suppliers are required, and when assessing suppliers, prices are not the main factor. Quality is the most important standard. This quality not only refers to the quality of the product, but also includes aspects such as work quality, delivery quality, and technical quality.
2. Different requirements for information sharing The JIT procurement model requires highly shared supply and demand information, while ensuring the accuracy and real-time nature of supply and demand information. Due to the strategic cooperation between the two parties, the company's information on production planning, inventory, quality and other aspects can be communicated in a timely manner so that problems can be dealt with promptly.
3. Formulating strategies for purchasing batches Different small-batch purchases are a basic feature of JIT purchasing. An important difference between on-time procurement and traditional procurement models is that on-time production requires the reduction of production batches, and the procurement of materials uses small batch methods. However, it should be noted that this also increases the number of shipments and costs accordingly. The solution can be achieved through mixed transportation, third-party logistics, or bringing suppliers closer to users.
4. On-time delivery requirements are different. One of the important features of the JIT procurement approach is that on-time delivery is required. This is a prerequisite for the implementation of fine production, and it is also a necessary condition for the entire supply chain to quickly meet user needs. For suppliers, to make delivery on time, the first is to continuously improve the company's production conditions and improve the reliability and stability of production; the second is to strengthen the control of transportation.
The JIT procurement model does not exclude safety stocks. The reason for maintaining safe stocks is obvious. Inventory is insurance and it is a measure against uncertainty. The market is changeable and there are many uncertainties. This brings many risks to the operators. In order to maintain the continuity of production, in order to achieve the goal of serving customers, we must have enough inventory maintenance (called safety stock), so that even if the upstream process has a problem, it will not affect the service.
At present, almost all printing companies have a certain amount of inventory to fight this possible situation. The difficulty is how to determine the safety stock volume? The reason why it is difficult is because the propagation of uncertainty is mathematically complex. Existing knowledge fails to provide people with an analytical method that can accurately calculate the amount of inventory that should be in the production process. It can also be said that the predecessors did not have an accurate insight into other processes in the supply chain. At present, enterprises can only rely on experience and intuition to determine safety stocks according to traditional methods. This is the only feasible way we can deal with the unpredictable uncertainties in the supply chain.
Procurement management is an important part of the company's value chain. Regardless of the cost, quality, or delivery time and agile manufacturing considerations, it is of great significance to enhance the competitiveness of the company. Therefore, printing entrepreneurs should establish modern procurement concepts, reform procurement models, formulate procurement strategies, optimize procurement processes, reduce procurement transaction costs, and enable companies to improve.
Source: Print Magazine
