Toyota's JIT Revolution

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Future of JIT

Although many automobile companies around the world 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. Another problem seemed to be the difficulty of removing the 'human element' from the systems that generate requirements.

An analyst commented, "Computer algorithms, they say, go only so far. Good people, with lengthy experience at reading the ups and downs of the industry are still a must." Most companies felt that people should be actively involved in the system.

Moreover, there could be many barriers to the successful implementation of JIT. For JIT to be successful, companies had to ensure that they did not make frequent changes in production planning and that their forecasting procedures were reliable and did not result in under or over forecasting of demand. Other barriers could be equipment failure and employee absenteeism.

Analysts felt that Toyota's JIT was a complicated process and that its success inside a plant depended mainly on highly experienced, highly motivated managers. Outside the plant, JIT's success depended on a network of capable suppliers that operated in sync with Toyota's production processes. In fact, according to some analysts, Toyota was not able to replicate the JIT production system in an efficient way in any of its operations outside Japan. John Paul MacDuffie⁵ said, "Toyota hasn't developed a single facility that is as efficient as the ones it has in Japan."

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 (Refer Exhibits IV & V).

By 2000, JIT was adopted by many Japanese companies, as well as some US car companies. Analysts felt that JIT was not only a process that could be applied to manufacturing, but also a philosophy that governed the attitude of a successful business. According to one analyst,⁶ "Using JIT, Taiichi Ohno had revolutionized production. The market clearly reflects the success of JIT. The concept has made Japanese products affordable and reliable in quality. Quality is no longer a privilege - it is a standard accompanied by low cost."

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5] Professor at Wharton School, doing research in the international automobile industry for 10 years (Fortune, December 8, 1997).
6] Andres Aviles' Final Draft, www.list.gatech.edu.

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