Answers to Textbook Case – Dixon Audio Systems

1. Identify the pros and cons of a JIT relationship from a supplier’s point of view.

A supplier such as D&S can obtain several benefits from establishing a JIT relationship with a buyer such as Dixon. Usually, such relationships are longer term, more cooperative, and with a small set of vendors. D&S will then have a more certain, steady demand for their product. They should also have more accurate forecasts further into the future. Besides these demand benefits, D&S could improve its production and distribution efficiency. Better knowledge of the size and timing of orders would allow them to plan operations more efficiently. As they are responsible for much of the ordering, they can better coordinate their operations with the order cycles. However, D&S does have some reasons to be concerned also.. The relationship shifts supply responsibility to D&S. The guaranteed business would be at risk if D&S were to forecast or perform poorly. Further, the responsibility for placing orders in now a D&S paid employee.

2. Identify the pros and cons of a JIT relationship from a buyer’s point of view.

A buyer, such as Dixon, can obtain many relationships from a JIT relationship with a supplier. Order timing becomes the responsibility of the vendor. Quality should improve and deliveries should become more reliable. Through better coordination, the supplier’s costs should improve, which may eventually be reflected in their price. Buyers often have several concerns of such an arrangement. For one, seldom does a supplier have only one customer in a market. Buyers worry that sensitive information, such as upcoming product promotions, may become known to their competitors through the information they share with the supplier. Buyers are also often reluctant to give up the ability to play one vendor against