Why are supplier relationships intensified under JIT production methods?

Supplier relationships are intensified under JIT production methods because they rely heavily on timely and accurate deliveries from suppliers.

Just-In-Time (JIT) production methods are a type of inventory strategy that aims to improve a business's return on investment by reducing in-process inventory and associated carrying costs. In order to achieve this, businesses need to ensure that materials or components arrive exactly when they are needed in the production process. This means that businesses using JIT methods are heavily reliant on their suppliers to deliver goods on time and in the correct quantities.

This reliance on suppliers intensifies the relationship between the business and its suppliers. If a supplier fails to deliver on time, or delivers the wrong quantity, it can have a significant impact on the business's production process. This could lead to delays in delivering products to customers, which could damage the business's reputation and result in lost sales. Therefore, businesses using JIT methods need to have a high level of trust in their suppliers and work closely with them to ensure that deliveries are accurate and on time.

Furthermore, because JIT methods involve holding minimal stock, businesses are less able to switch to alternative suppliers at short notice if there are problems with their existing suppliers. This means that businesses using JIT methods need to invest time and resources in building strong, long-term relationships with their suppliers.

In addition, the need for accurate and timely deliveries means that businesses using JIT methods may need to work with their suppliers to improve their own processes and systems. This could involve sharing information and collaborating on problem-solving, which can further intensify the relationship between the business and its suppliers.

Overall, the use of JIT production methods can lead to a more intense and collaborative relationship between businesses and their suppliers. This can bring benefits in terms of improved efficiency and cost savings, but it also requires a high level of trust and commitment from both parties.