The Practice of `Just-in-Time' Production Model in Toyota Automobile Company in Japan.

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BUS 521: Operations Management
An Assignment on
The Practice of Just-in-Time Production Model in
Toyota Automobile Company in Japan
Submitted by:
Md. Nazrul Islam
Student ID: 18203004, Spring 2020, EMBA
Department of Business Administration
Submitted to:
Mr. Sk. Kamrul Hassan
Assistant Professor and Course Coordinator
Department of Business Administration
FAREAST INTERNATIONAL UNIVERSITY (FIU)
21 May 2020
R.S.R Tower, House # 50, Road # 11, Block – C, Banani, Dhaka-1213, Bangladesh
R.S.R Tower, House # 50, Road # 11, Block – C, Banani, Dhaka-1213, Bangladesh

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Contents
`Just-In-Time’(JIT) Concept.....................................................................................................................3
History of JIT...........................................................................................................................................4
Cultural Aspects Associated with the Emergence of JIT in Japan.........................................................4
Basic Features of JIT Production System ...............................................................................................4
Principles of JIT.......................................................................................................................................5
Elements of `Just-In-Time’ .....................................................................................................................5
Advantages of Just-In-Time Manufacturing Systems............................................................................5
Some Problems with Just-In-Time Manufacturing Systems .................................................................6
Requirements of JIT................................................................................................................................6
JIT Manufacturing Building Blocks.........................................................................................................7
JIT in Practice in Toyota Automobile.....................................................................................................7
The Key Factors of Toyota's Success......................................................................................................7
Conclusion ..............................................................................................................................................8
References..............................................................................................................................................8

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`Just-In-Time’(JIT) Concept
Just-In-Time manufacturing referred to as JIT production system. It is also known
as lean manufacturing and sometimes referred to as the Toyota production
system (TPS). Just-In-Time (JIT) Manufacturing is a philosophy rather than a
technique. JIT is a philosophy of continuous
improvement that puts emphasis on prevention
rather than correction and demands a company-
wide focus on quality. By eliminating all waste
associated with time, labour, and storage space
and seeking continuous improvement, it aims at
creating manufacturing system that is response
to the market needs. JIT is a long-term approach
to process improvement. It uses timeliness as a
lever to lower costs, improve quality and improve
responsiveness. However, JIT requires enormous
commitment. It took Toyota more than 25 years
to get right! It works on a demand-pull basis
rather than working on a production-push basis.
In this concept actual orders dictate what should
be manufactured, so that the exact quantity is
produced at the exact time that is required. Basics of the concept are that the company
produces only what is needed, when it is needed and in the quantity that is needed. The
company produces only what the customer requests to actual orders, not to forecast.
This methodology focuses on freeing up capital by holding the minimum amount of
inventory on hand, while still allowing the business to perform well. The idea is to have
inventory only when you need it and not a moment sooner. With a well-tuned JIT system, it
is possible to build products after they are ordered by customers, which allows the supplier
to avoid holding massive amounts of inventory on hand. This is called make-to-order
manufacturing.
Figure Showing a Diagram of JIT Concept
If correctly adapted, JIT manufacturing has the ability to strengthen a manufacturer’s
competitiveness in the marketplace by reducing waste, improving product quality, and
increase the efficiency of production. JIT systems view inventory as waste and work to lower
inventory levels to expose and correct the problems (rocks) that cause disruption. The focus
of JIT is to improve the system of production by eliminating all forms of waste.

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JIT manufacturing supplements continuous improvement by attacking fundamental
problems, such as anything that does not add value to the product. It helps to devise
systems to identify snags. JIT makes for a simpler system, which is easier to understand and
manage; and less time is used to move material, parts and finished product.
JIT manufacturing eliminates waste from overproduction, wasted employee time,
unnecessary or excess motion, unnecessary inventory, and product defect waste.
The JIT manufacturing system is popular with both small and large manufacturers because it
provides a more efficient use of working capital and improves the cash flow. The JIT system
can be especially helpful to small businesses that are just starting out, since it can reduce
the amount of capital required to get the business up and running and avoids the business
tying up money in unneeded inventory.
History of JIT
The philosophy of JIT can be traced back to Henry Ford, but formalized JIT
originated in Japan as the Toyota Production System after World War II as a result
of their diminishing market share in the automobile industry. Taiichi Ohno, a vice
president of Toyota helped in establishing the Toyota Production System and
built the foundation for the Toyota spirit of "making things" by creating the basic
framework for the Just-in-Time method. Thus, Taiichi Ohno is frequently referred
to as the father of JIT. Basically, implemented in Toyota plant 1950, made famous by Toyota
in the 1960’s and well established after 1970.
Cultural Aspects Associated with the Emergence of JIT in Japan
There are strong cultural aspects associated with the emergence of JIT in Japan. The
Japanese work ethic involves the following concepts.
 Workers are highly motivated to seek constant improvement upon that which
already exists. Although high standards are currently being met, there exist even
higher standards to achieve.
 Companies focus on group effort which involves the combining of talents and
sharing knowledge, problem-solving skills, ideas and the achievement of a common
goal.
 Work itself takes precedence over leisure. It is not unusual for a Japanese employee
to work 14-hour days.
 Employees tend to remain with one company throughout the course of their career
span. This allows the opportunity for them to hone their skills and abilities at a
constant rate while offering numerous benefits to the company. These benefits
manifest themselves in employee loyalty, low turnover costs and fulfilment of
company goals.
Basic Features of JIT Production System
Indicators Just In time systems
Production systems
Customers order pull the products through the factory. The system
works on a demand-pull basis
Production lot size Small batches are made with reduced set up time

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Indicators Just In time systems
Process design Concurrent engineering design is applied
Inventory turnover High turnover with minimum inventory level
Suppliers
Fewer suppliers and they are helped, informed and kept close.
Manufacturer must rely on its suppliers to timely make deliveries
Employees Multi-skilled, flexible and work well in teams
Decision making Empowerment of workers enable quick response
Quality Everyone’s responsibility
System improvement Emphasis is on small but continuous improvement
The focus of JIT
Improved production system by reduced amount of wastes, energy
and emissions.
Principles of JIT
 Zero/reduced inventory
 Zero/reduced lead time
 Reduces setup time
 Emphasizes product-oriented Layout
 Emphasizes demand-pull manufacturing
 Emphasizes zero defects
 Emphasizes team-oriented employee involvement
 Emphasizes supplier partnering
Elements of `Just-In-Time’
 Pull production(Production based on market demand) system
 Small-lot production
 Uniforms production Flexible resources
 Cellular layouts
 Quick setups
 Quality at source
 Total productive maintenance
 Kanban production control (allocating resources only on demand and when capacity
is available)
 Suppliers networks
Advantages of Just-In-Time Manufacturing Systems
Following are the advantages of Adopting Just-In-Time Manufacturing Systems
 High quality products and greater efficiency
 Flexibility
 Reduced setup times
 Reduced need for indirect labor

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 Less waste
 Low warehouse cost
 Synchronization between production scheduling and work hour
 Return on investment (ROI) would generally be high.
 Constant communication with the customer results in high customer satisfaction.
 Overproduction is eliminated
Some Problems with Just-In-Time Manufacturing Systems
Just-in-time manufacturing provides zero tolerance for mistakes, as it makes re-working
very difficult in practice, as inventory is kept to a bare minimum.
JIT has high reliance on suppliers. Since little inventory is kept on hand, JIT may be a risky
choice for some companies, leaving them susceptible to stock outs, labor strikes, and spikes
in input price
JIT requires management to rethink their supply chain to make sure they can find trusted
suppliers who can work with them as demand fluctuates.
Supplier warehouses/factories should ideally be located near the manufacturing facility. If
they are not, then a delayed shipment could lead to a halt in production.
Due to there being no buffers for delays, production downtime and line-idling can occur
which would bear a negative effect on finances and on the equilibrium of the production
process
The manufacturer would not be able to meet an unexpected increase in orders since there
are no excess finish goods.
Transaction costs would be relatively high as frequent transactions would be made.
Detrimental effects on the environment due to the frequent deliveries resulting in increased
use of transportation, which in turn would consume more fossil fuels.
Requirements of JIT
 Respond to Customer Requirements
 Integrate all Processes
 Employee Participation
 Company-wide commitment to education
 Eliminate redundancy
 Reduce all Inventory
 Establish Continuous Improvement Goals
 Use a pull Production System
 Design products for Manufacturing
 Develop Controllable Production Processes
 Have Defect Prevention Program
 Reduce Setup Times
 Build Products to Specification

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JIT Manufacturing Building Blocks
JIT in Practice in Toyota Automobile
Toyota started using JIT production system in the 1970s and took more than 15 years to
perfect its process. Toyota sends off orders to purchase production parts only when it
receives new orders from customers. It needs reliable suppliers that can always deliver parts
quickly, and the ability to efficiently assemble machines that put together its vehicles.
In Toyota Production System(TPS) production is initiated in response to
customer order. Raw materials are not brought to the production floor
until an order is received and this product is ready to be built. No parts are
allowed at a node unless they are required for the next node, or they are
part of an assembly for the next node. This philosophy has allowed Toyota
to keep a minimum amount of inventory which means lower costs. This
allows Toyota a room to adapt quick changes in demand without having to worry about
disposing of expensive inventory. It gives Toyota huge success in terms of cost reduction and
increased efficiency at the manufacturing floor. Toyota is able to meet the increasing
challenges for survival through an approach that focused on people, plants and systems.
Toyota realized that JIT would only be successful if every individual within the company was
involved and committed to it, if the plant and processes were arranged for maximum output
and efficiency, and if quality and production programs were scheduled to meet demands
exactly.
The Key Factors of Toyota's Success
 First & foremost, Toyota follows the JIT production and JIT distribution method
 Toyota uses pull based system throughout the production process.
 Each task in the process seems to take identical length and work content, so
everyone is working at the same pace to reduce bottlenecks.
 The Value of `go to the spot’. It is the practice of thoroughly understanding a
problem through personal observation. For example, a manager goes to the factory

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floor to observe a process and interact with workers to understand a situation rather
than relying on second-hand information
 People are respectful and organized into small work teams to facilitate management,
enhance motivation, and improve problem-solving.
 Continuous improvement
 Elimination of waste
 Adaption of new technologies
Conclusion
Via the philosophies of "Daily Improvements" and "Good Thinking, Good Products, TPS
(Toyota Production System) has evolved into a world-renowned production system. Even
today, all Toyota production divisions are making improvements to TPS day-and-night to
ensure its continued development. It has been adopted not only by companies in Japan and
within the automotive industry, but in production activities worldwide, and continues to
evolve globally. JIT can lead to great savings and free up capital for other projects in the
company. However, it requires a great deal of planning and collaboration with suppliers to
make it work. JIT isn't a fire and forget solution, it is a commitment that the company must
maintain to continually reap the benefits.
The JIT system can be especially helpful to small businesses that are just starting out, since it
can reduce the amount of capital required to get the business up and running and avoids
the business tying up money in unneeded inventory. Psychological adjustment, training/
capacity building, quality ensuring, efficient supply chain are important issues in
implementing JIT.
References
https://www.thebalancesmb.com/just-in-time-jit-inventory-management-393301
https://www.investopedia.com/terms/j/jit.asp
https://en.wikipedia.org/wiki/Just-in-time_manufacturing
https://babington.co.uk/blog/accounting/just-in-time-advantages-and-disadvantages/
https://www.archerpoint.com/blog/Posts/jit-less-inventory-more-capital
https://www.slideshare.net/StaicyJones/done-essaycom-jit-inventory-management
https://www.thebalancesmb.com/just-in-time-jit-inventory-management-393301
Hernandez, A. JIT Quality: A Practical Approach. Englewood Cliffs, NJ: Prentice-Hall, 1993.
Hutchins, D. Just-In-Time: Inventory Control. Brookfield, VT: Gower Publishing, 1988.
https://www.manufacturingtomorrow.com/article/2017/07/is-just-in-time-manufacturing-
for-you /10068/
O’Grady, P.J. Putting the JIT Philosophy Into Practice. New York, NY: Nichols Publishing,1988.
Kiyoshi Suzaki, 1987, The New Manufacturing Challenge: techniques for continuous
improvement, the Free Press, London.
Yasuhiro Monden, 1993, Toyota Production System: an integrated approach to Just-In Time.
Second edition, Industrial Engineering and Management Press, Institute of Industrial
Engineers, Norcross, Georgia.