The Effect of Defense Contracting Requirements on Just-In-Time Implementation
Abstract
This study examined the impact of defense contracting practices on defense contractors' efforts to improve production and purchasing operations by adopting the just-in-time (JIT) philosophy, a systematic approach of continual improvement. A conceptual model, based on transaction cost economics, was used to describe the buyer/seller relationship. This was defined in terms of cost uncertainty, contract uncertainty, asset specialization, and resource commitment. The research sought to identify the significant contracting elements that determine the level of government administrative control and their impact on JIT implementation. Data were collected by structured interviews with representatives from five defense electronics firms implementing JIT. Concerning the impact of the contractual relationship, specialized asset requirements (quality requirements), as hypothesized, were the most significant determinants of the impact of government controls on JIT efforts, and the extent of JIT production implementation. Resource commitment (use of government financing) was also a significant factor in JIT implementation. Companies who used such financing had their JIT production and purchasing efforts negatively impacted. The role of contract uncertainty was weakest and had mixed effects. Difficult negotiations prior to contract award positively impacted JIT production but negatively impacted JIT purchasing. Difficult negotiations to make contract changes negatively impacted production and purchasing.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1988
- Accession Number
- ADA208489
Entities
People
- Carl R. Templin
Organizations
- Air Force Institute of Technology