Implementation, Effects and Advantages of JITQC Initiative to the Company - Case Study Example

STRATEGIC PROCUREMENT Name University Professor (Tutor) Course City/State Date STRATEGIC PROCUREMENT Introduction Company XYZ adopted a policy illustrated as total quality control /just-in-time initiative. The mandate of the initiative was to improve the competitiveness of the company and also improve across all the other business measures. To implement the policy, company XYZ came up with some policies to follow in line with the initiatives objectives. The principles included the focus to quality first and not the short-term profit, fully involving employees in problem-solving and using more flexible and broader management perspective. Company XYZ also uses groups, sites and corporate officials to help suppliers adopt the JITQC initiative. Good supplier input makes the company be more productive in its operations. The sourcing of company XYZ comes from Information systems and local sources of supply. The local supply helps company XYZ to know the needs of the people, so they know the specific requirements that the local population requires. Information systems also help in shipments through the forecast. This paper discusses the implementation, effects and advantages of JITQC initiative to company XYZ. Question 1. The significance of this renaming purchasing to ‘supplier management’ and how Company XYZ’s sourcing strategy link directly to the corporate goals and objectives of JITQC The objective of company XYZ of renaming purchasing to” suppliers management” was to improve the Just-in-Time Quality Initiative (JITQC) that the company adopted in the 1990s. The renaming was significance as it brought out time as the prime competitive weapon of the company. The initiative merges the concept of total quality management with the concepts just-in-time of total quality management giving the company a top competitive ground in the market and improve across all business measures (Blome, C et al 2014, p.34).The renaming also assists to crumble time from product, time-to-market as well as swift response to all customer demands. The major part of Company XYZ’s sourcing strategy is the Information Systems. Through the electronic data interchange (EDI), company XYZ is able to provide to external suppliers and MRP-driven one-year prediction, every time the MRP system is updated. Distant suppliers are also able to schedule their shipment to company XYZ through the use the official transfer authorization windows and forecast. The Information system enables company XYZ to stay competitive in the market and also to maintain workflows with suppliers, trading partners such as the consumers. Using long-term contracts where necessary, Company XYZ uses the local sources of supply. This source is mostly used when only a particular supplier is available to provide an individual item. In this case, company XYZ refers to the experience curves from the previous sourcing experience and use the data got to help in developing long-term pricing processes and contracts with the local supplier. The company is able to amalgamate suppliers straight into its JIT, and improve total quality control. The sourcing strategy is linked directly to the company XYZ’S initiatives by measurements such as the Price of non-conformance (PONC) or the Cost of quality and sensitive measurements should show continuous improvement during the initial baseline review. Small group growth and customer satisfaction activities should exhibit constant enhancement during both subsequent and baseline reviews (Turner, J. 2014).The supplier must continuously improve the employee contribution criteria, which Company XYZ establishes during the baseline study. The measurement shows the effectiveness of a supplier in a company. Question 2 How suppliers’ performance can impact each of the principles of JITQC Company XYZ emphasizes on some principles that act as a guide for each operation that happens in the business. The principles include the significance on the quality first and not the short-term profit. The alignment toward the consumer and customer, not the producer. Have a perspective on the next process as the client and also a correlate with reduction of organizational barriers. The use of decision-making based on facts and statistical methods, data, and problem-solving methods. Having more flexible and broader management perspective and involving employee fully in problem-solving. The suppliers can impact each of the above principles through their performance through; having an active input to new product design of the company through Early supplier involvement (ESI) programs. The supplier data helps in maintain the quality of the products first and to have the company’s orientation focused towards the customer and the consumer. The supplier selection depends on issues like supplier employee involvement programs, ppm quality history, historical cost improvement contributions, supplier employee engagement programs, and supplier JIT manufacturing processes among others (Igarashi, M.et. al 2013, p.251). Considering such issues help company XYZ to involve the employees in problem-solving in the company. Using ppm quality history and historical cost improvement ensures that Company XYZ uses statistical data that is based on facts and also uses facts in problem- solving. When selecting new items, suppliers use cross-functional teams with subscribers from design, quality, and distribution. This amplifies the quality of the product. Question 3a, Advantages of using local sources of supply It is a demonstration of investment in the community where the company is situated. It can also result into a good PR for a firm particularly if it is a large employer in the region. They are less expensive to access as they are in close proximity to the company. Travel costs are minimal for contract management purposes and supplier development and also for site inspections. Local suppliers possess local knowledge and therefore they are correctly placed to treasure and satisfy local predilection. This is important where the company prefers specialized services and products. The company can know the preferences of the people through the local suppliers. The local suppliers are dedicated to serving the local community and enjoying the benefits associated with it. This gives a company an advantage of working with people who are willing to produce the best for their community. Prepared workforce increases the productivity of the company. The delivery time is shorter due to shorter supply chains. This is an attractive element to companies working on a JIT basis. In addition, the delivery costs are lower. Question 3b, Why the company relies on longer-term contract agreements The longer-term contract agreements provide the company and the local suppliers with a long- term certainty and especially if it’s a beneficial contract to both parties. The company is assured of the supply of the commodity. Having a long term contract helps to maintain a fixed price of commodities for a longer time. This is a benefit to the company as it such agreement stabilizes the cost of a certain product for a long time. Company XYZ may not be severely affected by infatuation that may occur within the contract period. Ensures less frequent procurement for the company throughout the term of the Contract thus saving costs for the company. Advantages of having JIT system versus using forecast to schedule shipments Advantages of having shipments prompt by use (JIT system) over using predictions to schedule shipments is that JIT focuses a company manufacturing lines on the products needed by the customers. This contributes to a long-term viability of the company to the consumers and customers. Also, inventory shrinkage and redundant functions are reduced. This is because the products are made available as needed (Qrunfleh, S. 2014, p.348).The reliability of the company’s product is increased. On the other hand shipment by using forecast can contribute to increasing in inventory shrinkage and redundant functions as products are still produced even when they are not needed. The reliability of the products shipped through forecast is low as the forecast may not always be right. Question 4 Advantages of using cross-functional specialists to develop supplier capabilities. Company XYZ uses groups, site or corporate assistant teams to assist suppliers embrace JITQC principles. Using cross-functional experts help develop supplier capacity. By enabling them supply quality resources needed and also to provide them in time. Using cross-functional specialists helps to maintain strong supplier input to new product design (Fitzsimmons, J. et, al 2013). Cross-functional specialists help the suppliers get a broader perspective of JITQC and what it entails. Moreover, this improves the performance of the suppliers in their different roles. How Company XYZ uses information technology when executing its sourcing strategy. Company XYZ uses the Information technology to dispense the external suppliers with an MRP-driven twelve-month prediction through electronic data interchange (EDI) every time there is an update in the MRP system. Faraway suppliers use the projection and agreed-upon shipment clearance windows to program their shipments to Company XYZ. This is enabled by Information technology. Question 5 The value of regularly scheduled performance reviews between suppliers and Company XYZ. Company XYZ regularly reviews the supplier performance so as to measures each supplier’s progress toward implementing the JITQC principles. Also, the potential of a supplier to respond fast with a minimum of inventory cost subjection has a direct influence on raw and WIP cycle time and work-in-process (WIP) inventory to the company. Company XYZ encourage continuous supplier enhancement through its performance measurement system. For instance, the use of stocks quantification that includes the days of supply. (Volume of sales per working day). There is also the cycle-time performance ratio (CTPR), which emphasizes on the removal of all unrequired factory floor cycle time (Davenport, T.H, 2013). Actual cycle time begins in the point of entry of the key element to the production and is finalized with the delivery of finished products to the consumer or customer. Theoretical cycle time can be defined as time cycle where all unnecessary activities eliminated such as rework, queue and wait among others (Stead, J.G.et al, 2013). Necessary activities includes the machine operation time, hands-on-delivery and functional tests. Company XYZ targets to improve the inventory by 30% and cycle-time portions from review to review. Performance quantification carries the supplier selection process at company XYZ because the quantification system can track the whole product of the supplier. Through the performance measurement the company is able to identify the necessary and the unnecessary activities and hence reduce wastage and improve performance of the suppliers. Conclusion To support JITQC initiative in company XYZ, requires a type of purchasing firm which focuses externally and is capable supporting the supplier’s need which are linked directly to JITQC goals and objectives. It should also be able to evaluate performance using the right measure and information systems. Sourcing is the key to success of the JITQC initiative and firms that demonstrate a commitment to their sourcing place themselves in better positions of achieving most. The company management should regularly review the performance of the suppliers to ensure they stay in line with the JITQC principle. Reference list. Blome, C, Hollos, D and Paulraj, A, 2014, ‘Green procurement and green supplier development: antecedents and effects on supplier performance’, International Journal of Production Research, vol.52, no.1, pp.32-49. Davenport, T,H, 2013, ‘Process innovation: reengineering work through information technology’, Harvard Business Press. Fitzsimmons, J and Fitzsimmons, M, 2013, ‘Service management: Operations, strategy, information technology’, McGraw-Hill Higher Education. Igarashi, M, de Boer, L and Fet, A M, 2013, ‘What is required for greener supplier selection? A literature review and conceptual model development’, Journal of Purchasing and Supply Management, vol. 19, no.4, pp.247-263. Stead, J,G, and Stead, W.E., 2013, ‘Sustainable strategic management’, ME Sharpe. Turner, J,R, 2014, ‘The handbook of project-based management’,vol. 92, McGraw-hill. Qrunfleh, S, and Tarafdar, M, 2014, ‘Supply chain information systems strategy: Impacts on supply chain performance and firm performance’, International Journal of Production Economics, 147, pp.340-350. Read More