The relationship between just-in-time purchasing techniques and firm performance

Just-in-time purchasing (JITP), as a process technology, is an important component of supply chain management in managing inventory flows throughout the chain. Thus far, a detailed examination of JITP relating to firm performance has not been conducted. This study fills this void in the current literature by investigating the relationships among JITP techniques and their relation to firm performance. The hypotheses based on the research model presented are tested by using data from a broader cross-sectional mail study than is reported here. The sample in this study consists of 214 organizations operating in the US and encompasses various sizes of firms and a large variety of industries. Structural equation modeling is used to test the hypotheses. JITP techniques positively and directly related to firm performance are: (1) supplier value-added, a concept that melds supplier-buyer cooperation and increased supply of quality materials and (2) quantities delivered, which refers to frequent and timely delivery of supplied materials in the right quantities. The finding that top management commitment to JITP is directly or indirectly related to other techniques of JITP underscores the importance of leadership in implementing change in organizations.