Over the last two decades, an in- Ahhough s{)me empirical research
creasing number (il companies have onJITP exists {e.g., .'\nsari, 1984: Faw-
implemented just-in-time purchasing cett and Biroii. 1993; Cermain and
([ITP) teclniiques in an effort to Drc")ge, 1997), scant attenliou has
shaipen iheir competitive edge (def- been paid to the implementation of
initions of abbrfviatioiis are hsled in JITP in different prodnction systems.
Appendix A). JITP involves the pro- Unfortunately, the research method-
curement of quahty materials meet- ologies utilized in the studies that do
ing exiict specifications via fn'C|uent. exist ditiiinished and tlnis limited lhe
timely deliveries in small qiianlilies. vahie ol' theii' findings becau,se (1)
Companies within a supply chain it- the extent of JITP implementation
self tend to adopl JITP ledmiques to was not exaTnined m rompaiiies tliat
coordinate aiid integiale tlieir own employed a mix oi pro{luction proc-
inventory management activities. esses (White, 1993: White and Pr>'-
Thus, JITP imptoves supply chain butok, 2001), an important oversight
management (SC^M) hy synchroniz- because Celley et al. (1986) have re-
ing the flow of inventfiiy throughout porlect that most of the companies
the snpjjly chain and l>y Joint reduc- they studied that implemented Just-
tions in channel inventories (Cooper in-time (JIT) management systems
el ai, 1997; de Tieville W aL 2004: employed a mix of production proc-
Dong et al, 2001; Marklaiui fl al., esses and often also implement JIT
1998; Tan, 2001; Zimmer. 2002). manufacturing (Dotig et al.., 2001;
* Funding m cnllrc! ilif datii used in ill is study \\ii,s pjinidcd hy ilic Anicricui Sniictv Ihi'Qii;ilit\ and
the Instllutf loi ,Siip])!y Mnii;igciiicni—National LUICI the Dallas chapicr. The inuh<ir wuukl lik<' Io
thank (lliiulcs (.'.. Fiscliei. IJimaldJ, Ni'wniaii anti the |jiiprr's Iwo anonymous rt-vicwi'is i(jr their
helpful (itninieiits and ,siij>;g('siions. She is also very grau-fiil ui the r^spondetiLs wlm filk-d oui the
questionnaire lor iheir cooperation.
of JITP, technical complexity atid its .services ((Jermain aitd Droge, 1997;
relation to different process etiviron- Gonzales-Benito, 2002; Hattdfield,
ments are discussed. Ftirther. the ittt- 199.Sb; Sancbez and Perez, 2003;
plemeniation of JITP pi-actices at dif- Tretttand Monczka, 1999). Stippliers
ferent levels of technical complexity can assist purchasers in chocsing ma-
i.s exatnined, and this stttdy's reseatch terials attci parts "that can be most ef-
hy|jotheses are presented. ficiently and eiTectively prodticed
given their production capability"
Just-In-Time Purchasing (JITP) (Trent and Monczka, 1999: 93t)).
JITP etnphasizes stipplier evalua-
The main t haracteristics of [ITP tiott based on product and/or ser\ice
are reflected in stipplier cooperation, qttality, delivery performance, and
qttantities delivered, qttality of sui> price (An.sari and Modaness, 1990;
plied materials and transportatioit Billesbach ft ai, 1991; Vonderembse
(Gelinas et at, 1996; Sch{)nbergerand W nl, 1995), rather thati on price
Gilbert, I98S; W'aters-Fttller, 1995). alone. Shin el al. luul that improved
Kaytiak (1997) etttpirically validated supplier relatioit.s enhances "both
these characteristics and fotind thtee suppliers' and buyers' performance
distinct ditnensions: suftpHer quality especially when the bttyer emphasizes
mannjrement, fjuatilitics diiivned, and quality and delivety as its coitipetitive
transpnrlation. These JITP technicjues prioriues" (2000: 330). When mate-
are disc ttssed bt iefly in the remainder rials and parts are delivered in small
of this section. ItJts and only in required quantities,
Supplier Quality Management. Stt[>- qtiality issties become critical because
plier (|ualit\ inanagentt-nt is cotti- (lelective materials atid parts, and/or
prised of sttpplier—hityi-r coopera- shortages, might disrttpt prodticiion
tioit and improved qtiality of supplied (De Toni and Nassimbeni, 2000;
materials. Companies utilizing jITP Dion etaL, 1992; O'Neal, 1989).
techniqttes tealize significant reduc- Quantities Delivered. JITP letjuires
tions in the intmher of stippliets (llil- frecitieni and timely delivery of sup-
lesbach H al, 1991; Freelatid, 1991; plied materials in small lots and exact
Gonzales-Benito, 2002; Handfield. quantities (Chapman and Carter.
1993a; Harlait<l, 1996), which eases 1990: Dion et ni. 1992; Gottzales-
the maitagement task. Dealing with Benito. 2002; Haitdfield, 1993a;
ottly one supplier for a pattictilar O'Neal, 1987). More important, how-
item or items helps establish long- ever, is the delivery of exact qtiantities
term stipplier-btiyer relationships. (Ansari and Modarress, 1990; Free-
Moreover, when the pittchiisitig de- lattd. 1991: Schoitbergcr and (iilbert,
partment deals with a small nuitther 1983: Willis and Httston, 1990). If
of suppliets, quality aitd deliver)' smaller quatttities are delivered, the
problems are easier to solve because shortage stops the buyer's produc-
attentioit can be focused on individ- tion. Delivery of larger cinantities
nal stij)pliers (Atisati and Modattt-ss, eliininalesonc of the- benefits of ]fTP,
1990; Cooper and Ellram, 199.S). the reduction of inventory carrying
A significant contribtitor to sttc- costs.
cessftil stipplier relationships is the Tramportation. L'nderJITP, ttans-
early itivohrment of sttjjpliers in the portatiftn agreements base deliven
design of die bttyitig firtn s products/ dales or times on the buyer's sched-
E o .^
O O
tlic literalnre review suggests the fol- can help managers who are imple-
lowing hyptJthesis: menting JITP decide how to organize
Hypothesis 2: The pcr!bnn:in<-f of firms im- their production systems and recog-
plfmt'iiting jITP praciires does not dider nize at what levels of technical com-
with the production process' level of tech- plexity their suppliers implementing
nical rijniplcxily. JITP operate. Due to the lack of re-
Characteristics of Different Levels of search on the sizes ol firms imple-
Technical Complexity. Two characier- menting JITP at different levels of
istics of technically complex proc- technical complexity, a hypothesis re-
esses get further attention in this garding firm size at different levels of
study: level of MTO/MTS production technical complexity cannot he yet
and firm size. While fnnis with proc- formulated. Thus, ihe analysis of this
esses of low technical complexity are aspect of technical eomplexity is ex-
tr\ing to reduce their demand uncer- ploratory.
tainty', companies that mantifacture
MTS in an environineiit of higli tech-
nicai complexity are iiu reasing their RESEARCH METHODOLOGY
demand uncertainty by switching to
Researeh Design and Sample
an MTO strategy (Safi/adeh and Ritz-
man, 1997). With the implementa- The data for this research were
tion of JITP. the level of MTO/MTS drawn from a cross-sectional mail sur-
should not change signifieantly along vey that investigated the relation of
the continuum of processes that are total quality management (TQM)
technically complex. Thu.s, the fol- and JITP to fnm perfonnance. The
lowing hypothesis is pioposed: target population was U.S. firms in
Hypothesis 3: [n firms impieineiuiiig |ITP. the contiguous 48 states that have im-
the level of MTO/MTS does not differ wiih plemented TQM and JITP tech-
the level of the production process' lech- niques. Based on the results of a pilot
nical complexitv- sttidy and power analysis, a sample
The liteiature (Kim and Lee, 1993; size of 1,884 husiness units was tar-
Kotha and Orne. 1989) argues that geted. The industries most likely to
processes of low technical eomplexity employ TQM and [ITP were identi-
are usually found in small-scale op- fied through a literature review. The
erations whereas companies with SIC codes of the industries that com-
processes of high technical complex- prised the set from which target re-
ity are large-scale operations. Empir- spondents would be selected were
ical investigations determining provided hy the American Society for
whether this argument holds true for Qtiaiity and the Institute for Supply
companies implementing JITP have Management. In addition to industry
not appeared in the literature. Nev- specifications, respondetits had to
ertheless, an examination of firm size meet several other conditions: they
at diflerent levels of technical com- had to he the sole respondent in a
plexity in companies implementing company, they had to be high-rank-
JITP is important. It is well-known ing, and it had to he likely they would
that a supply chain may he comprised he knowledgeable ahout their com-
of firms of various sizes. An under- pany's implementation of TQM and
standing of firm size operating at dif- JITP and iheir firms' peribrmance.
ferent levels of technical complexity Organizations using such job titles as
base indicated that the degtee of JITP performed to examine the relation-
implementation wa.s directly and sig- ship between number of employees
nificantly related to each perform- and annual sales, another measure of
ance factor: financial and market, firm size widely used in the literature
quality, and inventoiy management (e.g., Ettlie, 1983; Keats and Hitt,
(/Malues = 0.019, O.OOOl, 0.0210, re- 1988). The two measures showed a
spectively), and they established cri- high correlation, a value of 0,82,
terion-related validity. C Writer ion-re- which indicated a high convergence
lated validity is based on the extent to between the two measures.
which predictions from a theoretical
framework are supported (Venkaira-
DATA ANALYSES AND RESULTS
nian atid Gram, 19H(i).
Technical Complexity. The instru- The data analyses employed to lest
ment asked subjects to report, in per- the pnjposed hypotheses in this study
centages, the types of production were consonant with those in config-
processes used in their organizations: uration research (e.g., Avella ct aL,
job shop, batch, assembly line, and 1998: Kaufman et al., 2000; Kla.ssen
continuous flow (Hayes and Wlieel- and Wliybark, 1999). Technical com-
wrighl, 1979). A categoiy ot" "other" plexity scores were assigned to the
was provided to reduce the response three categories by using SPSS
bias. The technical complexity of (2001): processes of low technical
firms was measured using the com- complexity (3.0-4.9), processes of av-
plexity levels ofproductioti processes erage technical complexity (5.0 - (j.ti)
developed by KJiurana (1999), who and prt>ccsses ol high technical com-
quatitified complexity levels by as- plexity (6.7 - 10.0). This procedure
signing " 3 " to job shop processes, categorizes the data based on percen-
" 5 " to batch, " 6 " to assembly, and lile groups, each group including ap-
"10" to continuous processes. The proximately the same number of
higher the number, the greater the cases. One of the indicators that
complexity. Most of the companies groups were effectively distinguished
employed a mix of production proc- was the existence of gtoups of similar
esses. A technical complexity' score sizes (Hair d al.. 1995). Fifty-tour
was obtained by inultiphing each of companies were classified as having
the percentage ol production proc- processes of low technical complexity
esses employed by the complexity (POLTC), 63 companies as liaving
level and adding the scores together. processes of average technical com-
plexity (POATC-) and 59 companies
MTO/MTS Production. The targei
as having processes of high technical
respondents were asked to teport the
complexity (POHTC). To validate
percentages of MTO and MI'S pro-
discrimination among the three
duction in their firms. In this study,
groups, one-way analysis of variaiKe
only the |)ercentage oi production
(ANOVA) was periormed to test the
MTO is used t^ecause using the per-
mean differences of the technical
centage of MTS production also
complexity scores in the three
would be redundant as these two
groups. The results indicated that die
measures add up to 100 percent.
complexity scores for the three
Size, l h e size of the manuiacturing gioups were significantly different (F
firm was measured by the number of statistic = 526.32, /rvalue < 0.000).
employees. A correlation analysis was
TABLE i
Descriptive Statistics Tor Variables for the Sample and Means of Variables al DitTerent
Levels of Technical Complexity
The summaled scores for each of ihe equal variances across three technical
three dimensions of |ITP techniques ccunplexity groups were sigtiificant
and perlbniiance were tiiktilated. iur the variables fiini si/e and level of
Descriptive statistics tot" the variables MTO proditttion. Thus, transfortna-
tised in ihi,s researth are piesetited in tiotis were pcHbtmed for both firm
Table 1. size and the level of MTO production
.^NOVA was used to te.sl the nieati variables. Firm si/e for tbe two groups
(iilleiences of the variables itivesti- was positively skewed so the values for
gated in this sLiidy—the intensity of it were transformed into the natural
JITP techniques, perfortnance, the logarithm (Hair et al.. 1995). Because
level of MTO piotltu tioti. and ftrni the level ol MTO production is meiis-
size—by technical cotnplexity. The ured in percentages, a logit transfor-
two assuniption.s of ANOVA are (1) tiiation was perfbtnied for its values
the normal distrihtition of dependent (Coheti and Cohen, 198S). After the
variables and (^) equal variances for transfoniiaiions, the analyses for botb
all treamient groups (Hair et aL, variables weie rerun, and the Levene
1995). Levene statistics for the tests of statistics showed equal variances
across ihc ihree groups, statistically els of MTO production nor firm size
meeting lhe assumptions of ANOVA. were significantly different in the
The lesulLs were con.sistent with firms with processes of average and
Hypothesis 1, indicating that the in- bigh technical complexity. The
tensity of jITP lechniques docs not means of variables investigated at
differ according to the level of tech- three levels of technical complexity
nical complexity (sec Table 2). Finns are presented in Table 1.
can implement JITP iechniqi:es with
the same intensity regardless of the
level of technical complexiiy. No sta- DISCUSSION AND
tistically significant differences ex- IMPLICATIONS FOR MANAGERS
isted among the performance of
firms at three levels of technical (om- The primaiy purposes of this study
plexily, supporting Hypothe.sis 2. In were to investigate if and to what ex-
light of the results concerning Hy- tent JITP techniques implemented
pothesis 1, it appears that companies differs at different levels of technical
at variotis levels of lectinical complex- complexity, and to see whether firms
ity realize simitar benefits as long as implementing JITP exhibit the typi-
they implenientjlfl* tcchrii(]nes wiili cal characteristics and performance
the same intensity. The .statistical re- criteria associated with processes op-
snlts for the level of MTO production erating at differeTit levels of technical
and firm size by the level of technical complexity. By testing the suggested
complexity are highly signifuanl (/>- hypotheses derived from tbe lilera-
values = 0.003, 0.000, respectively). Uue review, these purposes were ac-
Thus, Hypotheses 3 is rejected (re- complished. Whatever internal/ex-
call, no hypothesis is offered regard- ternal pressures for implementing
ing tinn si/e) because the level of JITP a firm experiences, no statisti-
MTO prodtiction does differ with the cally significant (iifferences in the in-
level of technical complexity in the tensity of implementing JI fP tech-
firms lhat implemented JITP. niques across levels of technical
P(Kst hoc paii^ise nmltiple compari- complexity' appear. This lack of sig-
son tests were peiformed lo deter- nificani differences is encouraging
mine which means differed in the for managers of companies in which
third step of the data analyses. The a mix of production sysLcms are em-
Bonferioni metbod was chosen as ployed because they show that the im-
suitable for these tests because il ad- plementation of JITP is not valuable
justs the obsened significance level exclusively to companies with lepeti-
for tnnltiple comparisons. The results tive production processes. Based on
show thai lhe firms wiih POI.TC man- lhe results of data analyses and values
ufacture MTO signiiicantk higher presented in Tahle 1, a profile of
than those with processes of average technically complex protesses in the
and high technical complexity (/>va!- firms implementing JITP is summa-
ues = 0.004, 0.025, respectively), rized in Table 3. Table 3 indicates
('ompanies lhat have POLTC are sig- ibat lhe iradilional characteristics
nilicanUy smaller than linns ibai liave and performaiu e ai diffei eni levels of
POATC and tho.se that have POHTC: technical complexity are changing in
(/>values = 0.002, 0.000. respec- firms impleTiientingJITP as discussed
tivelv)- Neither the means of lhe lev- in the rest of this section.
TABLE 2
Variables p-value
Sitppher quality rnanagement 0.237 0.789
Quantities delivered 0.296 0.744
Transportation 1 -.356 0,260
Firm si/,e (natural log) 13.153 0,()(K)
Make to order (MTO) production (logit) 5.939 0,003
Quality performanee 1.005 0.368
Inventory management performance 0.493 0.750
Financial and market performance 1.023 0,362
N for processes of low technical complexity - 54. /V for processes of average technical
complexity = 63 (62 for the MTO variable due to missing value), atid N for pnxiesses of high
technical complexity = 59 (58 inr the MTO variable due to missing value).
One significant Iniding of this can maintain about the same quality
study was thiit JITP, regardless of the and inventor)' levels as those with
level of technical cotnplexity, can ini- POLTC. Thus, lirms that imple-
piove a fnin's performance in all di- mented JITP impioved the dimen-
mensions. Low profitability and long sions of peribrmance traciitionally
deliveiy lead times, traditiotially as- considered incompatible with their
sociated wilh P()I.T('. can be im- production environment. That these
proved by impleinenilng j r i P . Com- (ompanies fiave achieved better per-
panies with processes of average and lbrmance than competitors in the
high levels of technical complexity same industry regardless of the level
TABLE 3
Characteristics and Performance at Different Levels of Technical Complexity in
Firms Implementing Just-in-Time Purchasing
Choi and Eboch (1998) and Stanley = 0.87) indicates a high level of re-
and Wisner (2001) to obtain a large sponse consistency. Although the
sample hy using perceptual daia. This steps taken do not completely elimi-
study attempted to find secondar^• ob- nate the possibility of same source,
jective data on the numher of em- self-report biases, the results indi-
ployees and annual sales. The high cated non-significant common
convergence between self-reported method variance. Overall, validit)'
and archival data on number of em- and reliahility in this sliidy seem ad-
ployees (/•= 0.91) and annual sales (r equate.
APPENDIX A
UST OF ABBREVIATIONS
Abbreviation Definition
ANOVA Analysis Of Variance
CMV Common Method Variance
Cronbach's a Cronbach's .\lpha
JIT Just-In-Time
JITP Just-In-Time Purchasing
"MTO Make-To-Order
MIS Make-To-Stock
POATC Processes Of Average Technical (lomplexity
POHTC Processes Of High Technical Complexity
POLTC Processes Of Lciw Technital Complexity
SCM Supply Chain Management
SIC Standard Industrial Classiftcatioti
TQM Total Qnalily Managetnent
APPENDIX B
MEASURES AND CRONBACH S ALPHA OF THE SCALES
' hi ihis siLidy. a continuous scale wilh the length ui' 100 millimeters was used for the stales of JITP
and rt'liitive perceived performance. The polar poinl.s of scales pertaining to JITP techniques were
noiif = 0 and ver\' high = 1(H». and lo perioriiKince mcitsurcs de.sigiiaied worse dian coinpetilioTi =
0, better than competition - 100.
'• Cronhach's alpha (a) Wius calculated for facli scale. Values o l a equal lo 0.70 or higher arc act c-pl;il)k-
(Nunnally and Bernstein, 1994).
APPENDIX B (Continued)
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