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Hi there,
I understand that for just in time time production to be successful, a number of factors need to exist e.g constant demand from customers, not much fluctuation of material prices etc. in regards to the price of materials not changing drastically, in order for just in time to work, can/do companies make deals with suppliers that prices will stay fixed for a number of months/years?. Or would this be unrealistic If I suggested this in the exam?Moreover, what ways (if its possible) are there to guarantee customers? (excellent marketing, very good brand?).
In general, do most big companies have just in time and just in case production? For example, I believe that regardless of size, you will have to have a warehouse and be prepared to store goods that may not be sold for months.
Any help is greatly appreciated.
Many thanks
I think the pricing depends on the goods. For example, fresh food prices can be very volatile as they can depend on harvests. For other items, such as computer RAM, long term deals would be sought. I don’t think JiT depends on agreed prices, though these would help with financial planning.
I’m not sure what you mean about guaranteeing customers. Good marketing will increase the customer base, but unless the customer enters into an agreement to buy minimum amounts, buying goods is a voluntary event.
True just in time is relatively rare and requires great cooperation, proximity and quality guarantees from suppliers. Most firms work towards minimising stocks whilst usually having some spare to cope with surges in demand or problems with supplies.
thanks Gromit. so why is just in time supplying mentioned on the syllabus, if it doesn’t really work in the real world?. in what type of questions, would we have to talk about just in time supplying? Surely, we couldn’t suggest a strategy of changing all their supplying to just in time?
Many thanks
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