Just-in-time Buying on the Upswing

Buyers seen gaining confidence as economy recovers, Thomas Register survey finds

New York  April 22, 2002  In a sign that the economic aftershocks of last September's terrorist attacks are beginning to wane, industrial buyers have begun increasing their just-in-time buying, according to the most recent Industrial Purchasing Barometer (IPB) Survey from Thomas Register.

The March IPB Survey, conducted randomly among Thomas Register's pool of 760,000 opt-in online users, found that 57 percent of respondents report they were increasing their just-in-time (JIT) buying. Respondents to the survey included buyers from the manufacturing and engineering industries, wholesale trade, distribution and government buyers.

"There is still a great deal of uncertainty in the industrial market, but the results suggest that buyers are regaining confidence in the stability of the service chain and are re-focusing their attention on reducing costs," said Ruth Hurd, publisher of Thomas Register.

In the survey, Thomas Register asked about buyers' just-in-time buying compared to forecast buying for this year versus last year. A total of 21 percent of respondents said they expect just-in-time buying in 2002 to be much greater than last year. A further 36 percent said that JIT buying would be somewhat greater this year than in 2001.

A further 30 percent said that JIT buying would be about the same this year as last year, while 11 percent said they would do somewhat less just-in-time buying. Just 2 percent reported they would do much less JIT buying.

The September attacks and the resultant supply chain disruptions prompted many buyers to increase their forecast buying, Hurd explained. "Right after September 11, people started worrying about the problems associated with just-in-time. It's terrific for saving money and not having a lot of money tied up in inventory, but suppose you have a disruption? Now what do you do? You could be out of commission for a period of time if you're running a factory."

As a result, Hurd continued, "People started balancing stockpiling with just in time, trying to evaluate how much is enough to have on hand in case there is a disruption and how fast an alternate source of supply could gear up."

But with the economy returning to normal, demand on the increase and supply chains adjusting to the new, post-9/11 realities, companies are returning to JIT as a way to attack the cost side of their business.

"While forecast buying eliminates concerns about business interruption, particularly important in times of economic uncertainty, just-in-time offers an efficient way to control costs and handle the sudden shifts in demand," Hurd said.

Thomas Register, which has long tracked the psyche of industrial buyers, initiated its monthly IPB Barometer to measure the changing attitudes and behavior of the industrial purchasing community.