A just‐in‐time evaluation strategy for international procurement

Abstract

Many manufacturers are considering the just‐in‐time (JIT) philosophy in order to become more competitive in global markets. An important element of the JIT strategy is the purchasing function. The procurement of parts and materials plays a key role in the successful implementation of a JIT strategy because it has a direct impact on increased productivity, reduced costs and improved quality. Experts agree that supplier selection is one of the most important activities of purchasing. Three popular methods for supplier performance evaluation appear in the literature: categorical, weighted point and cost ratio. However, these techniques have disadvantages associated with them and an alternative approach is suggested which applies dimensional analysis to selecting prospective suppliers. An international purchasing office (IPO), located in Hong Kong, has been applying the dimensional analysis approach to assessing suppliers. Using the IPO as a case study, the benefits of this approach over the traditional assessment methods are discussed, both as a means of measuring not only supplier performance, but also the contribution to the purchasing relationship from the buyer organisation.