 Customers use a JIT program to minimize the cost of stocking and managing inventory, which allows them to reduce cost or reallocate resources to more productive uses.
Each contractor provides just one commodity and uses his own computer system and procedures. If a contractor defaults or is unsatisfactory, the customer must renegotiate with a new contractor to maintain his supply chain. Reports and other metrics used to evaluate each contractor are usually not standardized, so it may be difficult to compare the performance of different contractors.
The contractor stocks the LDC from his Central Distribution Facility (CDF). He has the power to determine the suppliers that will be used. Many times he may choose a supplier that is not necessarily the best for the customer. These suppliers are chosen to meet the needs of his business, including the customer’s LDC, other customers' LDCs,
the general sales base and other
business considerations. |
