Strategic Warehousing Just in Time

Strategic Warehousing at Toyota Motor Company

This essay examines just in time strategic warehousing as implemented at Toyota Motor Company. The Toyota website describes its philosophy regarding just in time production as a strategy for the complete elimination of waste. The webpage defines just in time as making "only what is needed, when it is needed, and in the amount needed." The webpage discusses how the need to efficiently produce a large number of automobiles, which can consist of approximately 30,000 parts, it is necessary to create a detailed production plan that includes parts procurement and warehousing. By supplying parts in minimum needed amounts, the just in time system eliminates waste, inconsistencies and unreasonable warehousing requirements, all resulting in improved productivity for Toyota (Toyota website, 2011).

A former Toyota vice-president and chief engineer, Taichi Ohno, promoted the idea of just in time, having borrowed the concept from the supermarket industry. Ohno noted that a supermarket stocks the items needed by its customers when they are needed in the quantity needed, and has all these items available for sale at any given time. By applying the just in time concept, Ohno helped Toyota improve upon its inefficient system (Toyota website, 2011).

The just in time system was adopted and publicized by Toyota as part of its Toyota Production System. Japanese corporations cannot afford large amounts of land to warehouse finished products and parts, which constraint forced the production lot size below the economic lot size. Over a period of several years, Toyota engineers redesigned car models for commonality of tooling for such production processes as paint-spraying and welding. Toyota was one of the first to apply flexible robotic systems for these tasks. The number and types of fasteners were reduced in order to standardize steps and tools, also identical subassemblies could be used in several models. The result of these and other factory improvements meant that Toyota became the envy of the industrialized world, and has since been widely emulated (Lean Deployment, 2011).

According to AcademicMind, Toyota is known as the "master and pioneer" of just in time. They used the strategy to provide customized vehicles to customers with a minimal wait. Toyota spent several year revamping its ordering, manufacturing, and distribution to make it easier for dealers and customers to make changes right before production. Their goal at the time they upgraded their system was to reduce the average time between dealer order and delivery from Toyota's North American factories from 70 days to 14 days. This change resulted in making customers happy, as well as cutting dealer inventory costs and the need for Toyota to spend on rebates for slower-moving vehicles (Broyles, Beims, Franko & Bergman, 2005).

In order to benefit from providing customized orders and reducing average delivery time, Toyota developed its own software that connects dealers to factories and factories to suppliers. By integrating their value chain, Toyota created visibility for all members if its supply chain. When a request from a dealer is received, their software determines the availability of parts nearby, the time to re-sequence the assembly line and whether the change would unbalance the line by scheduling, for example, too many models loaded with time-consuming options one right after the other (Broyles et al., 2005).