A resource dependence perspective of Just‐in‐Time purchasing

Abstract A substantial body of literature in operations management has emphasized the importance of establishing “Just‐in‐Time” (JIT) purchasing with suppliers in order to reduce inventory levels, reduce inspection and produce better products. This issue is paralleled in resource dependence theory, which predicts how organizations respond to uncertainty within their external environment. The current research proposes a model which uses resource dependence to explain how and why purchasing is moving towards JIT, thereby bridging the fields of operations management and organization theory. The model proposes that supply base reduction is a response to increased uncertainty in demand and that JIT is preceded by greater information sharing with fewer suppliers. Further, the success of JIT purchasing systems is sustained through reduced transaction uncertainty with critical suppliers. These hypotheses are embodied in a path analysis model, which is tested for the existence of causal linkages between the constructs. The path model was tested using data collected from interviews with production, purchasing and engineering personnel at forty Make‐to‐Order manufacturing facilities. The results of the study support the idea that purchasing departments in Make‐to‐Order firms are likely to reduce the number of critical suppliers in response to uncertainty in demand. Further, evidence of the relationship between information sharing and supply base reduction was established and information sharing was shown to be an antecedent to JIT purchasing. The hypothesis that supply base reduction is an antecedent to JIT was not supported. However, the results suggest that the two policies are complementary, in that a coordinated program of both JIT purchasing and supply base consolidation can lead to significant reductions in transaction uncertainty