Customer and Supplier Linkages for Small JIT Manufacturing Firms

Customers around the world are increasingly selective about the quality and cost of purchased goods. To be competitive in a global market, a manufacturing firm, regardless of its size, must devise ways to produce quality goods at a lower cost. The Just-In-Time (JIT) philosophy has been proposed and implemented as a way of meeting this challenge. Three major tenets of the JIT philosophy include waste reduction, continuous quality improvement, and increased participation in decision making (Hannah 1987, Schonberger 1986, and Warne 1986). Successful implementation of the JIT philosophy strengthens both customer and supplier linkages. Large manufacturing firms are reporting success with JIT implementation (Schonberger 1986, and O'Neal 1987). As a result, more mnaufacturing firms are expected to embrace the JIT philosophy in the future (Stokes 1989). This will increase the number of small firms implementing JIT; however, little attention has been devoted to the experiences of small JIT firms. Existing literature provides only a generic description of the expected benefits and disadvantages of implementing JIT in small businesses (Newman 1988, and Sonfield 1984). Researchers Manoochehri 1988, and Sonfield 1984). Researchers argue that small firms are different from large firms because they lack sufficient capital to implement JIT, have no market power, and have little or no in-house JIT expertise (Newman 1988, Finch 1986). Therefore, some small firms may be incapable of implementing the JIT philosophy. Practitioners believe that large JIT firms are forcing this suppliers (typically small manufacturing firms) to adopt the JIT philosophy (Hutchins 1989, Stokes 1989). As a result these small firms may simply pretend to be JIT suppliers by carrying excess inventory and inspecting 100 percent of their product (Newman 1988). However, it must be noted that small firms have a unique advantage over large firms because of their flexibility in multifunctional labor, small lot size production, and participatory decision making (Manoochehri 1988, Sonfield 1984). For these reasons, JIT implementation experiences of small manufacturing firms, as related to their customers and suppliers, may differ from those of large firms. However, empirical studies have not yet been reported that document actual JIT implementation experiences of small firms. This study of small manufacturing firms examined effects of their JIT implementation at customer and supplier linkages. Small manufacturing firms must interact both with their customers and suppliers. Hence, success of their JIT implementation depends largely on the relationship between the firms and their customers and suppliers. For the purposes of this study, customer linkage evaluates respondents' relationships with their JIT customers, and supplier linkage examines the respondents' relationships to their suppliers. METHODOLOGY Tenets of the JIT philosophy--reduction in waste, improved quality, and participation in decision making--were used to develop an instrument to explore both customer and supplier linkages. The questionnaire consisted of 14 customer linkage items and 15 supplier linkage items. These items, classified according to the three tenets of JIT, are given in tablets 1 and 2. A five-point Likert scale was used to measure the change for each item since the JIT implementation. Possible responses were: decreased considerably, decreased somewhat, same, increased somewhat, and increased considerably. The responses were coded on a numerical scale from 1 to 5, respectively. A mean of 3 for any item reflects no change, while a mean less than 3 shows a decrease and a mean greater than 3 shows an increase. The JIT firms that have a supplier evaluation program and/or participate in their customers' evaluation program also were asked to rank-order evaluation criteria. Additional responses were sought regarding the benefits and difficulties associated with JIT implementation. …