This case study is perhaps well known to Mech-guys. I learnt about JIT at the training period in BHEL. Although I m a HR-freak but there, I also developed interest in JIT and TQM. For the people interested in opting for Ops as specialization, this case is one of the obvious cases that they will have to encounter in future.
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.
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. This resulted in the preceding process producing only quantities of units to replace those that had been withdrawn.
According to analysts, Toyota's success in both the local and global markets was mainly because of its state-of-the-art and well-planned operational strategies. The company had continuously focused on gaining a competitive advantage through implementation of innovative and path-breaking ideas on its production floors. TPS worked on the basic idea of maintaining a continuous flow of products in factories in order to flexibly adapt to demand changes. The most important feature of TPS was the way it linked all production activities to real dealer demand through implementation of Kanban, JIT and other quality measures that enabled Toyota to manufacture in low quantities.
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. Cho defined waste as, "Anything other than the minimum amount of equipment, materials, parts and workers (working time) which are absolutely essential to production." JIT did not allow any surplus as it believed that "effort and material expended for something not needed now cannot be utilized now."
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. Cho defined waste as, "Anything other than the minimum amount of equipment, materials, parts and workers (working time) which are absolutely essential to production." JIT did not allow any surplus as it believed that "effort and material expended for something not needed now cannot be utilized now."
Just-In-Time Production System
What it is • Management philosophy • 'Pull' System through the plant | What it does • Attacks waste (time, inventory, scrap) • Exposes problems and bottlenecks • Achieves streamlined production |
What it requires • Employee participation • Industrial engineering/basics • Continuing improvement • Total quality control • Small lot sizes | What it assumes • Stable environment |
Kanban was an essential component of Toyota's JIT concept. The Japanese referred to Kanban as a simple parts-movement system that depended on cards and boxes/containers to take parts from one workstation to another on a production line. Ohno had developed the idea in 1956 from the super markets in the US, which had devised an effective system for replenishment of store shelves based on the quantities picked by the customers. Initially, Ohno used pieces of paper contained in rectangular vinyl envelopes to convey information (called Kanban). In a period spanning three decades, Kanban developed into a sophisticated information system that ensured production in required quantities at the right time in all manufacturing processes within the factory.
The essence of the Kanban concept was that a supplier delivered components to the production line only when required, thus eliminating storage in the production area. Suppliers delivered desired components when they received a card and an empty container, indicating that more parts were needed for production. In case of line interruption, each supplier produced only enough components to fill the container and then stopped. Since Kanban was a chain process in which orders flowed from one process to another, the production or delivery of components was 'pulled' to the production line.
The essence of the Kanban concept was that a supplier delivered components to the production line only when required, thus eliminating storage in the production area. Suppliers delivered desired components when they received a card and an empty container, indicating that more parts were needed for production. In case of line interruption, each supplier produced only enough components to fill the container and then stopped. Since Kanban was a chain process in which orders flowed from one process to another, the production or delivery of components was 'pulled' to the production line.
At Toyota, two types of Kanban cards were used: one, to move parts from one place to another, known as the Conveyance Kanban card, and the other, to authorize the production of parts, known as the Production Kanban card. A standard size container was used to store parts and each card was treated like a coupon.
To make the Kanban system effective and reap maximum benefits from it TPS framed six rules:
• Later process went to the earlier process to pick up products.
• The earlier process produced only the amount withdrawn by the later process.
• Should not pick or produce goods without a Kanban.
• A Kanban should be attached to the goods.
• 100% defect free parts were required.
• Reduce the number of Kanbans.
• Later process went to the earlier process to pick up products.
• The earlier process produced only the amount withdrawn by the later process.
• Should not pick or produce goods without a Kanban.
• A Kanban should be attached to the goods.
• 100% defect free parts were required.
• Reduce the number of Kanbans.
The Kanban cards were re-circulated and the number of cards controlled work-in-progress (WIP) in the system. In this way, the activities of final assembly were linked to previous operations by a chain system of card ordering that 'pulled' production through the factory.
Another important component of JIT was Heijunka (production smoothing). JIT's principle of building only the required number of items helped keep the production costs low. Heijunka helped in the accomplishment of this principle by creating a consistent production volume. Heijunka averaged the highest and lowest variations of the orders. The variations were then removed from the production schedule. This ensured that the right quantity of parts was produced with minimum workforce. Heijunka took care not only of the total volume of items but also the type of items produced and the other options.
Another important component of JIT was Heijunka (production smoothing). JIT's principle of building only the required number of items helped keep the production costs low. Heijunka helped in the accomplishment of this principle by creating a consistent production volume. Heijunka averaged the highest and lowest variations of the orders. The variations were then removed from the production schedule. This ensured that the right quantity of parts was produced with minimum workforce. Heijunka took care not only of the total volume of items but also the type of items produced and the other options.
Although Toyota's JIT had some drawbacks, it offered several advantages over other manufacturing processes. Because of the early adoption of JIT, Toyota benefited more from the system than other automobile companies.Although many automobile companies around the world later 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. Organizational culture also seemed to play a crucial role in the implementation of JIT. Many companies outside Japan reported difficulties in the implementation of the concept.
