Question

Go through the case given and answer the questions that follow:

Toyota's history goes back to 1897, when Sakichi Toyoda (Sakichi) diversified into the handloom machinery business from his family traditional business of carpentry. He founded Toyoda Automatic Loom Works (TALW) in 1926 for manufacturing automatic looms. Sakichi invented a loom that stopped automatically when any of the threads snapped. This concept of designing equipment to stop so that defects could be fixed immediately formed the basis of the Toyota Production System (TPS) that went on to become a major factor in the company’s success.

In 1933, Sakichi established an automobile department within TALW and the first passenger car prototype was developed in 1935.

Sakichi's son Kiichiro Toyoda (Kiichiro) convinced him to enter the automobile business. After this the production of Model AA began and Toyota Motor Corporation was established in 1937. Kiichiro visited the Ford Motor Company in Detroit to study the US automotive industry. He saw that an average US worker's production was nine times that of a Japanese worker. He realized that the productivity of the Japanese automobile industry had to be increased if it were to compete globally.

Back in Japan, he customized the Ford production system to suit Japanese market. He also devised a system wherein each process in the assembly line of production would produce only the number of parts needed at the next step on the production line, which made logistics management easier as material was procured according to consumption. This system was referred to as Just-in-Time (JIT), within the Toyota Group.

The JIT production was defined as 'producing only necessary units in a necessary quantity at a necessary time resulting in decreased excess inventories and excess workforce, thereby increasing productivity.'

Kiichiro realized that by relying solely on the central planning approach, it would be very difficult to implement JIT in all the processes for an automobile. Hence, TPS followed the production flow conversely. People working in one process went to the preceding one to withdraw the necessary units in the necessary quantities at the necessary time...

Just-In-Time Production System:

Developed by the Japanese, the JIT production system was one of the most significant production management approaches of the post-World War II era. The system comprised a set of activities aimed at increasing production volume through the optimum use of inventories of raw materials, work-in-process, and finished goods. In a JIT production system, a workstation gets a part just in time, completes its work and the part is moved through the system quickly.

JIT was based on the principle of producing only what is needed and nothing more than needed. The Japanese believed that anything produced over the quantity required was a waste...

JIT In TOYOTA

In the early 1930s, the technology used by American automobile companies was superior to that used by Japanese companies. Kiichiro therefore decided to learn new automobile production techniques from American manufacturers. He soon realized that to catch up with the Americans, he had to master basic production techniques. He then reorganized the production system in Toyota in a unique way. This reorganization eventually led to the development of JIT concept...

FUTURE OF JIT:

Although many automobile companies around the world adopted JIT, the system was far from perfect and difficult to implement. It was based on the key assumption that sources and channels of supply were reliable and dependable at all times. Analysts felt that it did not take into account the possibility of labor strikes at automotive plants. Moreover, JIT involved high set up costs and Special training and reorganization of policies and procedures in the company were necessary to implement JIT. The supplier relations of the company also needed to be improved to ensure timely delivery. In the absence of good supplier relations, JIT increased the risk of inventory shortage...

Questions:

5.In your opinion JIT concept is a success or failure? Indicate based on your understanding of a chosen organization’s operations of your choice?  

Answer 1

From the given passage, it is very obvious that JIT concept has revolutionalized the production of automobile parts in the automotive industry by fully optimizing labor efficiency and removing any redundant work called as waste.

Let us take an example of JIT production in the case of a consumer durable industry. If the manufacturer adopts such a system, then there has to be a perfect, close association between the supplier and manufacturer to allow the continuous flow of goods and information between them. If communication ceases to exist, then implementing JIT will be a difficult task. Also, at the distributor side, the lean inventory system has to be adopted as shipments arrive on a day to day basis. Hence, the scope for maintaining any buffer or safety stock will be lesser. In case of a large customer order any given day, it may lead to large variance in the quantity ordered by the distributor. This bullwhip effect may be very high and demand may not be fulfilled at crucial times. This shall hamper the image of the brand in case of Fast moving or consumer durable industry. Thus, in my opinion, JIT will be well suited to complex, large assembly lines that require huge manpower and input for production. For other fast moving goods industries, implementing JIT will be a disaster.