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Just-in-time: the flow principle in procurement planning

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Just-in-time: the flow principle in procurement planning TUP GmbH & Co. KG - Warehouse Management Solutions

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Logistik knowhow - The original

“Just in time” refers to a type of delivery in which the required goods are delivered in the right quantity at the right time in order to keep storage at the processing location to a minimum. The key difference to just in sequence is that the supplier does not have to ensure the correct sequence when packaging the goods.

In just-in-time production, the “flow principle” is applied to procurement planning. The flow principle means that all materials should be in a constant flow. The form of procurement logistics used here is made possible by good transport planning. The task of transport planning is to keep transport and inventory costs as low as possible. These costs can be reduced by determining the optimal delivery size and calculating the correct cycle lengths. In order to realize a smooth just-in-time procurement, an electronic data exchange between customer and supplier is indispensable. Only when there is a demand is the required quantity of materials delivered to the assembly line. As a result, stock quantities only arise directly at the assembly line.

Advantages and disadvantages of just-in-time The main advantage of just-in-time procurement is the reduction of inventory costs, since the need for storage space is minimized.

The disadvantage of just-in-time procurement is, on the one hand, the increased communication effort. In the communication between customer and supplier, protocols on the current production status must be constantly exchanged, otherwise the delivery of the wrong parts can lead to cumbersome rework or delivery delays. On the other hand, environmental influences such as snow, storm damage, etc., or traffic obstructions endanger smooth production. Complications on the route, such as accidents or detours, can mean that the replenishmentsdo not arrive at the production site on time, which in turn can result in a production stoppage. The decisive disadvantage compared to just-in-sequence is that the need for a storage location does not completely disappear.

More information about the just-in-sequence procurement type can be found under procurement logistics – just-in-sequence.

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