Toyota and JIT Manufacturing. Origins of Just In Time Management Strategy

Although the history of JIT traces back to Henry Ford who applied Just in Time principles to manage inventory in the Ford Automobile Company during the early part of the 20th Century, the origins of the JIT as a management strategy traces to Taiichi Ohno of the Toyota Manufacturing Company. He developed Just in Time strategy as a means of competitive advantage during the post World War II period in Japan.

The post-World War II Japanese automobile industry faced a crisis of existence, and companies such as Toyota looked to benchmark their thriving American counterparts. The productivity of an American car worker was nine times that of a Japanese car worker at that time, and Taiichi Onho sought ways to reach such levels.

Two pressing challenges however prevented Toyota from adopting the American way:

- American car manufacturers made “lots” or a “batch” of a model or a component before switching over to a new model or component. This system was not suited to the Japanese conditions where a small market required manufacturing in small quantities.

- The car pricing policy of US manufacturers was to charge a mark-up on the cost price. The low demand in Japan led to price resistance. The need of the hour was thus to reduce manufacturing costs to increase profits.

To overcome these two challenges, Taiichi Onho identified waste as the primary evil.

How Toyota Implemented Just in Time: Kanban

Toyota JIT manufacturing strategy centered on changing factory layout to eliminate transporting items back and forth to different machines and instead arranging machines to ensure the items flow smoothly from one machine to another.

To control the flow of items in the new environment, Toyota introduced kanban, or information on what to do that controlled all movements throughout the factory.

The two types of kanban in Toyota are:

- withdrawal kanban that details the items marked for withdrawal from the preceding step in the process

-production ordering kanban that details the items to be produced

A part disappearing from an assembly station was the sign to produce or order a new part.

Toyota started work on the Just in Time system in 1952, and established kanbans throughout the organization by 1962.

2. Answer the questions:

1.What company do the origins of JIT trace to?

2.Why did Toyota decide to change its standards of production?

3. What consideration did Toyota have while refusing the American way?

4.What did Toyota JIT manufacturing strategy center on?

5.What does Kanban mean? Name the two types of Kanban.

UNIT 7