Just-In-Time manufacturing: Toyota's revolutionary management philosophy

Just in Time Manufacturing

In our newly competitive global economy, manufactures of all kinds have been forced to search for new opportunities that strategically reduce costs yet still increase potential manufacturing revenues. The manufacturing of automobiles is just one such example of an industry adopting a new manufacturing process or philosophy in order to adjust to the global business environment which has been fueled by the likes of foreign cheap labor as well as all new emerging markets. In the 1990's, reducing the labor force was the main corporate option as layoffs, downsizing and corporate re-structuring symbolized the approaches of companies attempting to produce quality outputs and cutting costs. Today, the manufacturing processes are working at barebones efficiency so an all new approach was required to meet the even higher quality demands of the consumers. Consider the likes of automobile manufacturers like the Ford Motor Company and General Motors. The automobile manufacturing industry now all follows the philosophies that were introduced by Toyota. Just-In-Time manufacturing was that solution. The philosophy of Just-In-Time inventory control was supposed to deliver new and far superior quality control methodologies while at the same time creating much more efficient manufacturing processes. However, the Just-In-Time system or process approach has recently been referred to by many top executives as a management philosophy of doing business as opposed to being a technique for improving efficiency. This report therefore tries to present some insights into Just-In-Time manufacturing and also providing insights into some of the inherent difficulties associated with the Just-In-Time manufacturing process.

Management Philosophy

The management philosophy of Just-In-Time inventory control is originally a Japanese idea. "Just-In-Time is a Japanese manufacturing management method developed in the 70's. It was first adopted by Toyota manufacturing plants by Taiichi Ohno. The main concern at that time was to meet consumer demands. Because of the success of Just-In-Time management, Taiichi Ohno was named the father of Just-In-Time. After the first introduction of Just-In-Time by Toyota, many companies followed up and around the mid-70's, and Just-In-Time gained extensive support, which was widely used by many companies." (Academic Emporia, 1999)

The Japanese created Just-In-Time philosophies and other production techniques after their industry was decimated as a result of World War II. The island nation needed to reinvigorate and completely rebuild many aspects of their economy. "Before the introduction of Just-In-Time, there were a lot of manufacturing defects for the existing system at that time. This included inventory problems, product defects, risen cost, large lot production and delivery delays. The inventory problems included the unused accumulated inventory that was not only unproductive, but also required a lot of effort in storing and managing them." (Academic Emporia, 1999)

The main objectives of Just-In-Time vary from company to company. However, in the long run, the ability to increase the organization's need to compete in this highly competitive global economy can be seen as very important. "The competitiveness of the firms is increased by the use of Just-In-Time manufacturing process as they can develop a more optimal process for their firms."(Academic Emporia, 1999) The process allows for the manufacturing process to respond to the consumers ever changing needs and demands. "This objective will help the firm on what is demanded from customers, and what is required of production. Moreover, the optimal quality and cost relationship is also important. The organization should focus on zero-defect production process." (Academic Emporia, 1999)

Efficiency

Like Ford, General Motors has also gone global in search of cutting costs. "Unlike the past, when car companies would build one car and try to sell it worldwide, this new GM strategy takes common components or architecture but allows each market to have its own unique vehicle. It's a global strategy, not of world cars but globally shared architecture." (GM goes back to the future with Assue-built GTO)

GM has created many new strategic partnerships throughout Asia and Australia. The company follows the Just-In-Time approach that now has eliminated the need to ship new components back to the United States and like Ford, General Motors continues to expand its automobile manufacturing facilities in lower labor cost and high Just-In-Time rent districts like China and partnering with many suppliers in Korea, Thailand and the Philippians.

It is cheaper to ship completed cars to customers than it is to ship all of the parts and components to a manufacturing facility in the United Sates and then send the finished car back to the customers in Asia. In other words, global economics takes precedence and partnerships that take advantage of the 'Just-In-Time' delivery system are a key factor.

As the automotive giants like Toyota, Ford and GM all adopting the cost cutting approaches associated with Just-In-Time manufacturing, the approach has become an industry standard. The process is supposed to reduce costs, improve quality while improving efficiency.

Just In Time

The driving force of the Just-In-Time philosophy is the reduction of product defects. Manufacturers are well aware that with the internet and global television news, a single defect that is highly publicized could in affect destroy a producer's reputation. Thus, products today have the inherent need of being a completely defect-free which therefore entails that the manufacturing process of all components and parts must also be defect free.

There are basic elements of Just-In-Time manufacturing that could either be the solution to a defect free product or the problem of any defects. The elements are the employees, the manufacturing facilities and the process or system itself. "People involvement deal with maintaining a good support and agreement with the people involved in the production. This is not only to reduce the time and effort of implementation of Just-In-Time, but also to minimize the chance of creating implementation problems." (Academic Emporia, 1999)

But even if the employees and the entire organization is supportive of the Just-In-Time process, the facilities must be conducive to producing defect free products. "The plant itself also have certain requirements that are needed to implement the JIT, and those are plant layout, demand pull production, Kanban, self-inspection, and continuous improvement. The plant layout mainly focuses on maximizing working flexibility." (Academic Emporia, 1999)

When the people and the facilities are ready for quality, the process of producing defect free products can be achieved. The process is a series of steps that are the foundation of the Just-In-Time philosophy which allows for better management of quantity and time more appropriately. For example, the step of Kanban is a uniquely Japanese approach. "Kanban is a Japanese term for card or tag. This is where special inventory and process information are written on the card. This helps in tying and linking the process more efficiently. Self-inspection is where the workers on the line inspect products as they move along, this helps in catching mistakes immediately." (Academic Emporia, 1999)

The Just-In-Time approach requires a need to continuously improve the process. Some companies such as General Electric, Motorola and Dell have tied the Just-In-Time philosophy into other philosophies such as Six Sigma where near perfection is sought after in the manufacturing approach. Just-In-Time has been highly praised as the savior of the manufacturing process.

But, there are limitations in the philosophy such as cultural differences. "The organizations cultures vary from firm to firm. There are some cultures that tie to Just-In-Time's success, but it is difficult for an organization to change its cultures within a short time." (Academic Emporia, 1999)

Another limitation is that in the past, manufacturers used a more traditional approach that relied on storing large inventories for down cycles. Just-In-Time has an adverse affect during these times because there is the potential that new inventory will not be delivered and thus shut down the entire process. "Also Just-In-Time is quite different for workers, in the sense that due to the shorter cycle time, lots of pressure and stress is added on the workers. Also the Just-In-Time system throws workers off in the sense that if a problem occurs, they cannot use their own method of fixing the problem, but use methods that have been previously defined." (Academic Emporia, 1999)

Conclusion

Our world has become a highly competitive global economy where manufactures of all kinds have been forced to search for new opportunities to strategically reduce costs and increase revenues. One good example of this trend can be demonstrated by observing the manufacturing of automobiles. The auto industry has gradually adopted new manufacturing processes or philosophies in order to adjust to the global business environment fueled by foreign cheap labor and new emerging markets. Today, the manufacturing processes need to be efficient in order to meet the quality demands of consumers. The automobile manufacturing industry follows a philosophy introduced by Toyota called Just-In-Time manufacturing. The philosophy of Just-In-Time inventory control delivers quality control methodologies while at the same time creating much more efficient manufacturing processes. But the Just-In-Time system or process approach has recently been referred to by many top executives as a management philosophy of doing business as opposed to being a technique for improving efficiency. This report therefore tried to present some insights into Just-In-Time manufacturing and also providing insights into some of the inherent difficulties associated with the Just-In-Time manufacturing process.