The Effect of Communication On the Linkage Between Manufacturers and Suppliers in a Just‐in‐Time Environment

Abstract

INTRODUCTION The importance of communication is confirmed by scholars and practitioners when describing an organization's just-in-time (JIT)/total quality management (TQM) performance. One researcher has recently suggested that communication is actually the key to JIT success.[1] She argues that efforts made to simplify communication and open information channels must parallel structural and organizational changes associated with JIT implementation. JIT partnering, an important link in the value chain, facilitates better management of supply risk and reduces demands on organizational resources by cutting non-value added activities.[2] In the past, supply risk was managed by holding buffer inventories to avoid problems caused by part shortages, defective inputs, and lengthy setup times. Traditional competitively oriented purchasing-supplier relationships usually are conditioned by the lowest bid price criterion. JIT partnering relations, on the other hand, are ideally described as cooperative partnerships in which one of the main goals is to obtain mutually beneficial results. In a win-win cooperative relationship, communication is an essential ingredient for developing successful supplier relations. Partnering arrangements the basis for supplier delivery of quality materials on a JIT basis as required by the manufacturer. Realization of the resulting benefits[3] depends on the opening of channels of communication between manufacturers and their supplier partners. New or enhanced communication patterns include: 1. More freely exchanged cost, schedule, and quality control information 2. The elimination of purchase orders for each shipment 3. Involving suppliers in the development of design specifications 4. The formation of joint task forces to resolve concerns 5. The use of supplier and manufacturer plant visits 6. The use of electronic data interchange (EDI) Opening channels of communication fosters the development of trust between a manufacturer and its supplier, thereby facilitating openness in the exchange of information. This exchange helps reduce opportunistic behavior and improves the free flow of important operating information.[4] The communication link in supplier partnerships thus contributes beyond immediate information transfer needs, reinforcing longer term mutual benefits affecting both manufacturer and supplier partners. One group of researchers discusses the need for organizations to provide a structured foundation for relationships, supported by processes which mutual benefits.[5] This article examines one of the foundations of the interorganizational JIT relationship: that of the communication experience of JIT manufacturers with JIT suppliers. RESEARCH DESIGN The data used in this study were drawn from a broader study examining the JIT purchasing relationship. The purpose of the study was to determine empirically the factors contributing to a cooperative, as opposed to a traditional, relationship between a manufacturer and a supplier. Questionnaires were distributed to a sample of 1,315 purchasing personnel. Participants were purchasing managers, procurement officers, buyers, purchasing supervisors, and materials managers. Respondents were employed by original equipment manufacturing firms in such industries as fabricated metal products, machinery, electric and electronic equipment, transportation equipment, instruments and related products, and miscellaneous manufacturing. A second mailing was made to encourage participation in the study. The sample was partitioned into early and late responding groups to test for nonresponse bias - none was found. Of the 535 respondents, 218 were involved with JIT purchasing. These 218 responses were used to test the relationship between supplier communication and JIT outcomes. JIT outcomes were operationalized using perceptions of performance adapted from Ansari's earlier work. …