Original Date: 08/07/1995
Revision Date: 01/18/2007
Best Practice : On Call and Just-In-Time
The On-Call and Just-In-Time programs will help reduce procurement dollars committed by Lockheed Martin Tactical Aircraft Systems (LMTAS) to maintaining inventories and to affect the goal of reducing inventories to zero levels. The On-Call program was started five years ago and applies to more than 240 contracts covering 6000 line items. The Just-in-Time program was started three years ago and applies to two large contracts covering 1000 line items. Both programs are initiatives under the LMTAS Supplier Relations Program.
Maintaining inventories at some designated level to insure that materials are available when and where they are needed is a costly tradeoff compared with the value added to the product. Costs associated with maintaining inventories are often overlooked in assessing the total acquisition costs of a product. However, they are manifested in floor space, utility costs, recordkeeping chores, storage and retrieval needs, security, capital equipment, facilities, and personnel resources. Most importantly, the money invested in the materials is frozen. The On-Call and Just-In- Time programs provide proven procurement techniques refined by LMTAS for eliminating, or at least minimizing, inventory.
The On-Call program is a multiyear procurement of a specific material or like materials such as office supplies or safety equipment, to be delivered only on “call” from designated personnel. This type of contract specifies delivery time and frequency for materials as required by the user. The Just-In-Time program is similar to On-Call except in the multiple users with different requirements and large “group” of like materials, such as perishable tools and industrial supplies. A key element of both programs is the performance of the supplier, a result of LMTAS successfully developing its outstanding supplier relationships under the Supplier Relations Program.
Although non-production items have been the target for both programs until now, production items are currently established in the programs. As the result of applying On-Call and Just-in-Time, excess inventory has been consolidated and nearly eliminated, and the total acquisition costs have been significantly impacted. At the same time, delivery schedules and quality have also continued to improve through this and other LMTAS initiatives. Close to $1M in material investment savings have been documented since the programs have been initiated. Over 100 personnel resources required to store, retrieve, secure, and keep records have been eliminated.
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