Just in Time-Toyota vs Nissan

Abstract

Toyota Motor Corporation and Nissan Motor Corporation were established in 1937 and 1933

respectively. They have been facing the same global challenges as well as the same politico-

economic changes domestically and globally. They have similar business resources such as work

force, capital, products, technology, and information. How, then, can there be such major

differences in their overall business performance? This case highlights the activities,

performance level, operation mode of Toyota and Nissan, their JIT implementation status. This

research also shows the similarities and differences in performance level of these two firms with

a view to show effectiveness as well as competitive advantage. It also addresses recent successes

and challenges Toyota and Nissan may face in the future.

KEYWORDS

Toyota, Nissan, Leadership, Governance, Strategy, Just-In-Time method, Toyota Production

System, Rules-in-Use, process improvement

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TABLE OF CONTENT

1.0 INTRODUCTION…………………………………………………………………………………………………3

1.1 PURPOSES OF THE RESEARCH:.........................................................................................................................4

2.0 WHAT IS JIT?........................................................................................................................................5

3.0 BRIEF HISTORY OF TOYOTA PRODUCTION SYSTEM…………………………………………7

3.1 LEAN DEVELOPMENT IN TOYOTA:....................................................................................................8

3.2 ACTIVITIES OF TOYOTA:.....................................................................................................................10

3.3 METHODS USED IN CONTROLLING WASTE:..................................................................................12

3.4 PROCESS IMPROVEMENT....................................................................................................................12

4.0 BRIEF HISTORY OF NISSAN…………............................................................................................14

4.1 JIT IMPLEMENTATION IN NISSAN…………………………………………………………….14.

4.2 PRODUCTION METHODS AND ACTITVITES OF NISSAN……………………………………….14

4.3 WORKFORCE AND PRODUCTIVITY OF NISSAN:………………………………………………..15

5.0 COMPARISON BETWEEN TOYOTA AND NISSAN:……………………………………………………16

5.1 PERFORMANCE LEVEL OF TOYOTA AND NISSAN:......................................................................16

5.2 MANUFACTURING TECHNOLOGY AND OPERATIONAL EFFICIENCY.....................................17

5.3 PRODUCTIVITY OF TOYOTA AND NISSAN:....................................................................................19

6.0 BENEFITS FOR IMPLEMENTING JIT METHOD:………………………………………………………..21

7.0 COMPETITIVE ADVANTAGE OF TOYOTA AND NISSAN:……………………………………………24

8.0 OBSTACLES IN JIT IMPLEMENTATION:………………………………………………………………..25

9.0 CONCLUSION…………………………………………………………………………………………………...26

10.0 REFERENCES:……….……………………………………………………………………………………..27

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1.0 Introduction:

The automobile industry was born in France and emerged as a modern industry through the

assembly line mass production of Model-T (1913) by Henry Ford who established the Ford

Motor Company in 1903. William Durant established the General Motors in 1908, and Chrysler

was founded in 1925. Nissan and Toyota were established in 1933 and 1937 respectively. The

two major Japanese automakers have been in the same industry, facing the same global forces as

well the same as the same politico-economic challenges domestically and globally. Although

they have had similar business resources such as work force, capital, products, technology, and

information, major differences in their financial performance began to emerge in the 1980s.

The purpose of this paper is to discuss factors that contributed to the gap in the performance of

the two automakers Toyota and Nissan during following JIT method in their production process.

It is argued the performance of the two firms can be related to lean production to increase

productivity, improve product quality and manufacturing cycle time, reduce inventory, reduce

lead time and eliminate manufacturing waste. To achieve these, the lean production philosophy

uses several concepts such as one-piece flow, kaizen, cellular manufacturing, synchronous

manufacturing, inventory management, pokayoke, standardized work, work place organization,

and scrap reduction to reduce manufacturing waste (Russell and Taylor, 1999). In JIT

production systems, attempts are made to eliminate waste through continuous improvement of

processes of the entire value chain in the organization. Having nurtured a lean manufacturing

mindset among the employees, it facilitates achievement of continuous product flow through

physical rearrangement and control mechanisms. A study indicates that “most western

manufacturers have been aware of the need to improve their performance and competitiveness

for nearly two decades”.

They were using lean production system for taking advantage of most of the above benefits.

Another study (EPA, 2003) summarized the main reasons for adopting a lean system under three

broad categories: reducing production resource requirements and costs, increasing customer

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responsiveness, and improving product quality. It concluded that all of these combine to boost

company profits and competitiveness.

1.1 Purposes of the research:

Finding the activities and performance level of the selected firms practicing JIT method.

Identifying the Operation mode or scenario of the selected firms.

Examining the JIT Implementation status of the selected firms.

Examining the manufacturing performance improvement experienced by the selected

firms to implement JIT method.

Identifying the business challenges faced by the selected firms.

Identifying the areas where changes have been made to implement lean in the selected

firms.

Highlighting the differences and similarities of performance between the companies.

1.2 Research Context:

To study first hand and thereby gain an understanding of the micro-dynamics of process

improvement of Toyota and Nissan and their affiliates were chosen as research sites. Existing

links among Toyota’s quality, cost, and variety advantages and its workforce management and

problem-solving processes -- collectively referred to as the Toyota Production System (‘TPS’) --

supported this decision. Since the 1960s, Toyota has been more productive than its competitors

[Cusumano (1988, 1989)].

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2.0 What is Just-In-Time (JIT)?

Just -in -Time (JIT) production is a manufacturing philosophy which eliminates waste associated

with time, labor, and storage space. 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. JIT can also be defined as producing

the necessary units, with the required quality, in the necessary quantities, at the last safe moment.

It means that company can manage with their own resources and allocate them very easily.

Figure 2 shows a drawing of the JIT concept.

Just-in-time (JIT) production or so-called lean manufacturing. The pioneers of these methods

were Taiichi Ohno, a former Toyota executive, and Shigeo Shingo, an eminent engineer and

consultant. In his 1989 book The Study of the Toyota Production System from an Industrial

Engineering Perspective, Shingo identified these basic features of TPS:

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1. It achieves cost reductions by eliminating waste, be it staff time, materials, or other

resources.

2. It reduces the likelihood of overproduction by maintaining low inventories ("nonstock")

and keeps labor costs low by using minimal manpower.

3. It reduces production cycle time drastically with innovations like the Single-Minute

Exchange of Die (SMED) system, which cuts downtime and enables small-lot

production.

4. It emphasizes that product orders should guide production decisions and processes, a

practice known as order-based production.

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3.0 Brief History of Toyota Production

System (TPS)

First, of course, it taught the modern car industry how to make cars properly. Few had heard of

the Toyota Production System (TPS) until three academics in the car industry study programme

run by Massachusetts Institute of Technology (MIT) wrote a book in 1991 called “The Machine

that Changed the World”. It described the principles and practices behind the “just-in-time”

manufacturing system developed at Toyota by Taiichi Ohno. He in turn had drawn inspiration

from W. Edwards Deming, an influential statistician and quality-control expert who had played a

big part in developing the rapid-manufacturing processes used by America during the Second

World War. At the core of TPS is elimination of waste and absolute concentration on consistent

high quality by a process of continuous improvement (kaizen). The catchy just-in time aspect of

bringing parts together just as they are needed on the line is only the clearest manifestation of the

relentless drive to eliminate mud waste) from the manufacturing process. The world's motor

industry, and many other branches of manufacturing, rushed to embrace and adopt the principles

of TPS. Toyota's success starts with its brilliant production engineering, which puts quality

control in the hands of the line workers who have the power to stop the line or summon help the

moment something goes wrong. Walk into a Toyota factory in Japan or America, Derby in

Britain or Valentines in France and you will see the same visual displays telling you everything

that is going on. You will also hear the same jingles at the various work stations telling you a

model is being changed, an operation have been completed or a brief halt called. Everything is

minutely synchronized; the work goes at the same steady cadence of one car a minute rolling off

the final assembly line. Each operation along the way takes that time. No one ushers and there

are cute slings and swiveling loaders to take the heavy lifting out of the work. But there is much

more to the soul of the Toyota machine than a dour, relentless pursuit of perfection in its car

factories. Another triumph is the slick product-development process that can roll out new models

in barely two years. As rival Carlos Ghosn, chief executive of Nissan, notes in his book “Shift”

(about how he turned around the weakest of Japan's big three), as soon as Toyota bosses spot a

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gap in the market or a smart new product from a rival, they swiftly move in with their own

version.

The result is a bewildering array of over 60 models in Japan and loads of different versions in big

overseas markets such as Europe and America. Of course, under the skin, these share many

common parts. Toyota has long been the champion of putting old wine in new bottles: over two-

thirds of a new vehicle will contain the unseen parts of a previous model. But TPS alone would

not justify the extraordinary success of the company in the world market.

3.1 Lean development in Toyota:

Lean principles adopted by Toyota to achieve their goals are:

Precisely define value by specific product.

Identify the value stream for each product.

Make the value flow without interruptions.

Let the customer pull value from the producer.

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Pursue perfection

Toyota’s approach to product development can be labeled lean development:

Its starting point is Toyota’s ability to make sure that its engineers actually care about

what customers think of their product. This means both creating a strong vision for the

future product and communicating this vision to everyone involved in the development

process. Once expressed clearly, this early vision serves as a reference to arbitrate

conflicting constraints within the design process. In some cases, this vision can

fundamentally challenge the existing product.

The second key to the Toyota development process is that it limits late engineering

changes. While car makers are painfully aware of the disruptive power of late

engineering changes, few have learned to limit them. Toyota has perfected a process

which mostly avoids such late changes. Indeed, the Camry project manager at the Toyota

Technical Center in Plymouth, Michigan, claims that the car’s chief engineer, Mr.

Yamada, pushed for what he called “perfect drawings”, or “Zero EC” in Toyota-speak:

no engineering changes were allowed after production drawings were released.

The third recurrent issue is mastering the flow of drawings and tool elaboration. The aim

of any design process is to “industrialize” drawing production to increase overall design

effectiveness. This is rarely possible because of the on-going changes which cross-impact

throughout the development process. Having largely solved key issues upfront in its

design process, Toyota focuses on precise, tightly scheduled production of the actual

drawings. In the Camry’s case, the number of vehicle prototypes was cut by 65 per cent,

and the number of crash tests halved by the use of digital assembly software.

This links to the final key to an efficient development process: focusing on quality and

cost in production itself. Drawing on its expertise in lean manufacturing, Toyota

examines all aspects of the car’s production to make sure that it will be built within the

targeted cost brackets once the design is released. Toyota’s emphasis on lean production

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and waste reduction starts at source. These four key factors are the aim of every

development process.

3.2 Activities of Toyota:

In the TPS-managed organizations in which I gathered data, a consistent approach was evident in

the design of assembly line work. At its Kentucky plant, mentioned earlier, installing a seat

required a total of 51 seconds and was demarcated into 7 distinct steps, each with an expected

sequence, location, completion time and expected outcome. Deviations from the design

triggered signals that the line worker was in need of assistance. Exactly this same approach was

taken with other assembly line jobs at Toyota’s Kentucky plant, and seat installation and other

work at other Toyota plants (NUMMI, Takaoka, Tsutsumi, Kyushu) also was specified with

built-in, self-diagnostic tests. In contrast, I installed seats and did other assembly line work at a

Toyota competitor, and the work was not precisely defined. Furthermore, there was less ability

to signal immediately that a problem had occurred. At Toyota, a line-worker’s problem

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immediately triggered a specific team leader to do his or her assistance work, and the team

leader’s problem in providing assistance immediately triggered a specific group leader to provide

assistance. In contrast, at the non-Toyota plant in which I labored, problems were entered into

computer consoles for later attention with no mechanism in place to call the first and second

level supervisors for immediate help.

This emphasis on specifying activity designs with built-in tests was peculiar to and pervasive at

the TPS-managed organizations in which I gathered data. Toyota team is teaching TPS to a first-

tier supplier, one of our objectives was to reduce the changeover time on the stamping presses in

the plant. Our first step in this was to document how a die change was done. We then repeated

that sequence of work-elements with the workers. As problems impeded the set-up specialists

from replacing the tool used to stamp one part with the tool used to stamp the next, we

immediately developed a ‘counter-measure’, a change in the work design, so that the activity

could be done with greater efficiency and effectiveness. For instance, one of the workers

recognized that the forklift operation had trouble centering the die on the bed of the press

because the tool obstructed the driver’s view. The worker’s counter-measure was to develop a

simple target for which the driver could aim. From one try to the next, this modification shaved

50 seconds from the changeover. On a subsequent trial, a worker realized that his associate was

matching scrap chutes to each tool in a trial and error fashion. As a counter-measure, they color

coded scrap-chutes of different widths with the location to which they were to be attached to the

die. Having defined the die-change work with high-resolution, another person realized that

considerable time was spent getting confirmation that the new die was making acceptable parts.

The counter-measure for this problem was to place a jig by the side of the press so that

confirmation of part-quality could be nearly immediate, at the work-site, rather than delayed, and

away from where the work was being done. As a result of these many changes, each

implemented in response to individual problems, part production on this press went from 15,080

in first week of April to 23,140 in the final week of the month. Changeover time dropped from

several hours to 18 minutes, on average. Cumulative overtime for the press, which had been 30

hours in the first week of April, was eliminated, and lot sizes were driven down from 3 weeks of

demand to 4.7 days.

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In short, the Toyota approach was to specify the work associated with this machine. The purpose

of the specification was not to entrench ‘best practice’, per se. Rather, it was to use the current

best practice as the basis for discovering large and small problems. These, when remediated, are

contributed to substantial improvements on multiple performance measures. Solving these

individual problems, one-by-one, was the means by which I was learning TPS and we were

teaching it to the supplier’s workforce.

3.3 Methods Used In Controlling Waste:

The purpose of TPS is to minimize time spent on non-value adding activities by positioning the

materials and tools as close as possible to the point of assembly. The major types of non-value

adding waste in business or production process are overproduction, waiting or time on hand,

unnecessary transport or conveyance, over processing or incorrect processing, excess inventory,

unnecessary movement, defects and unused employee creativity. The driving force behind the

Japanese system of production is eliminating waste, thereby maximizing process efficiency and

the returns on resources. A wide number of principles and practices can be employed to achieve

this goal. As Shingo once noted, people instinctively know to eliminate waste once

it is identified as such, so the task of reducing waste often centers first around

identifying unnecessary uses of human, capital, or physical resources. After waste is targeted,

new processes or practices can be devised to deal with it.

3.4 Process Improvement

An important aspect of eliminating waste is designing efficiency into production processes and

methods. For example, in the Toyota system heavy emphasis was placed on lowering the time

and complexity required to change a die in a manufacturing process. A time-consuming die-

changing process is wasteful in two ways. First, while it is happening production is often at a

standstill, increasing cycle times and all the costs associated with longer cycle times. (However,

it is important to note that idle time for individual machines in a system is not always viewed as

wasteful under the TPS philosophy.) Second, workers' time and effort are spent on activities that

aren't directly related to production (i.e., no value is being added by changing a die). As a result

of such concerns, the push at Toyota was to reduce significantly the time it took to change dies.

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4.0 Brief History of Nissan

In 1933, Aikawa Yoshisuke (1880-1967) initiated the development of the Japanese car industry

by merging the automobile components department of Tabata Casting with a small automobile

producer and repair shop factory owned by DAT Motors. The name DATSON (son of DAT)

came about when the firm introduced a new car. The name was changed from DATSON to

DATSUN because of unfavorable connotation of SON which means “damage” or “loss” in

Japanese. The name “Nissan” originated in the 1930s as an abbreviation for Nippon Sangyo

(Japan Industries) used in the Tokyo stock market. Nippon Sangyo grew to more than seventy-

four companies by the end of World War II. Among the largest of companies in the new

“Zaibatsu” were Hitachi, Nissan Motor Company, Nissan Chemical, and Nippon Mining.

Aikawa’s strategy was to produce small cars and trucks that did not compete directly with larger

American imports. Aikawa had worked in the United States and established relationship with

several American engineers and businessmen. His familiarity and fondness of the American

system of mass production of automobiles greatly influenced his decisions throughout his reign

at Nissan. In the mid 1930’s he hired American engineers and imported designs and entire truck

factories from the United States. Nissan did extremely well in its early years and became the

second largest automaker in Japan by the eve of World War II. After the war it declined initially,

but grew rapidly again and by end of 1960s was exporting over 300,000 vehicles, or 26% of its

total production. Nissan’s domestic market share grew to a high of 33.7% by 1972, but declined

to 25.6% by 1985. When Japan’s economy boomed in 1987, Nissan doubled its production

capacity and strengthened its sales network. As a result of rapid expansion, Nissan’s debt rose to

$19.4 billion by 1998. When the Japanese economy went into recession in the early 1990s,

Nissan found itself in a debt trap. Nissan’s productivity and financial problems turned for the

worst in the 1990s, and in 1993 it recorded its first loss since going public in 1951. The efforts

of restructuring of the 1990s did not improve Nissan’s financial performance and by 1998 it had

incurred losses for seven years of the prior eight years. Ultimately, to avoid bankruptcy, Nissan

was forced to enter into alliance with French Renault in March 1999.

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4.1 JIT implementation in Nissan

With a just-in-time approach, specific vehicles and their components are produced just-in-time to

meet the demand for them. Sub-assemblies move into the final assembly plant just as final

assemblers are ready to work on them, components arrive just in time to be installed, and so on.

In this way, the amount of cash tied up in stocks and in work-in progress is kept to a minimum,

as is the amount of space devoted to costly warehousing rather than to revenue-generating

production. Nissan’s just-in-time process depends not on human frailty but on machine precision.

Every vehicle is monitored automatically throughout each stage of production. A transponder

attached to the chassis leg contains all of a vehicle’s production data e.g. its required colour,

specification and trim. This triggers sensors at various points along the production line thus

updating the records.

When, for example, the transponder sends a message to the production system at a supplying

company to produce a seat in a particular colour and trim, this triggers the relevant response and

a seat to the required specification is produced. Further along the production line the specifically

produced seat arrives to meet the vehicle to which it belongs - just in time.

4.2 Production methods and Actitvites of Nissan:

The Times 100 series of case studies cover a wide range of real business situations, one of which

is a study of the production methods in use at Nissan's Sunderland car plant. The plant is one of

the most modern car plants in Europe and has consistently been in the very top of the

productivity league tables. The case study helps you to have some understanding of the factors

that contribute to this success.

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4.3 Workforce and Productivity of Nissan:

NMUK is one of the most productive car plants in Europe, producing more 'cars per man' than

any other factory. There are 4,500 staff directly employed by NMUK, and approximately 500

contracted, indirect staff. Employees at NMUK work a standard 39 hour week. While Office

staff work on a fixed 'Day shift' basis, manufacturing staff work alternating morning and evening

shifts. Morning shifts run from approximately 7am to 3pm. Evening shifts run from

approximately 4pm to midnight. Shift times can vary depending on requirements. When

required, overtime is worked, although it balanced out during the year with planned downtime.

A '3-shift' system has been discussed, and if adopted, will mean the factory will be active 24

hours a day. The shift pattern is such that a night shift can be introduced, although this will

require the hiring of an entirely new shift of workers. This is something which will only be

introduced if NMUK officials can be sure demand for vehicles is high enough to warrant the

increase in volume. Line 1 ran three shift production from August 2008 to the start of January

2009 due to unprecedented demand for the P32L, however due to the credit crunch and falling

orders the third shift was suspended and people released by voluntary redundancy.

Although staff have been accommodating to all management changes in working practices and

have seen a steady decline in benefits over the years this has not been reflected in the wages. A

2% increase has been offered to staff this year (2007) with a further 2% the following year. This

is a reflection of the state of the motor industry and manufacturing in general in the UK. The

proliferation of low cost countries (eastern Europe, China and India) is fueling a migration of

manufacturing from the UK. In response to this, UK manufacturers are having to cut costs in

order to survive in an increasingly competitive world market. The pay negotiations were

suspended for 2009/10 due to the instability in the world markets, effectively meaning there has

been no pay award agreed.

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5.0 Comparison between Toyota and

Nissan:

5.1 Performance Level of Toyota and Nissan:

Toyota had a healthy growth in its market share, revenue, and profit from early 1970s, but

Nissan did not fair well in the 1980s. Nissan’s performance turned for the worst in the 1990s,

and it incurred seven years of annual losses in eight years of operation from 1992 to 1999

(Figure 1). Its automobile production declined significantly in the 1990s; its domestic market

share declined from 18.6% in 1989 to 13.3% in 1999; and its global market share declined from

6.6% in 1991 to a low of 4.9% in 1998. Toyota widened the gap in total number of automobile

production in the early 1980s and by the end of 2000 it was producing two million more cars

annually than Nissan (Figure 2).

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5.2 Manufacturing Technology and Operational Efficiency

Toyota and Nissan mastered the American truck manufacturing techniques during the 1930s and

1940s and subsequently learned small car technology from the European automakers in the

1960s. By then, they had surpassed American automakers in terms of the productivity; and the

quality, performance, and price of their small cars were competitive with European automakers.

Their success in manufacturing technology took decades and it involved a unique combination of

technology transfer and process innovation. However, the approaches of Toyota and Nissan in

technology transfer were very different.

Toyota:

Toyota mostly relied on indirect technology transfer that consisted of selective coping of designs

and manufacturing techniques from different foreign automakers, whereas Nissan relied mostly

on direct technology transfer through formal tie-ups with foreign automakers like British,

American, and German automakers or part manufacturers. For Nissan, tie-ups had an advantage

of speedy introduction of new models comparable to imports, but this approach locked Nissan

into designs that were not the most advanced and suppliers that most often were not cost

efficient. Toyota’s advantage with indirect technology transfer was three fold:

First, Toyota engineers were able to duplicate proven technologies selectively from

different manufacturers and to incorporate advanced features much faster than Nissan in

their automobile designs.

Second, indirect technology transfer provided Toyota a valuable experience in

engineering design that became highly valuable for development of new products or

improvement of existing designs.

Third, Toyota’s reliance on in-house engineering prevented them from adopting

manufacturing techniques and, more importantly, equipments that were better suited for

larger manufacturers that emphasized economics of scale in manufacturing as was the

case for American and European automakers.

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Moreover, Ohno devised a revolutionary approach to assembly of parts and lean manufacturing

through the reversal of the information flow from a forward push to a backward pull. The

classical forward push system of assembly line resulted in a tremendous amount of work-in-

progress inventory or idle parts sitting at different stages of production line. The backward pull

asked workers to go back to the previous stations to take only materials or parts they needed, and

a rule was established that no station should produce more parts than the next station could

handle immediately. By reversing the system, Ohno could identify waste in manufacturing,

transport, buffer stocks, equipment operation, worker motions, defective production, inspection,

and finished product inventories. As a result, the backward pull system forced process

improvement. By 1970, the backward pull (Kanban) and Just-in-time inventory system had

become the most important techniques that increased productivity and at the same time reduced

the production cost at Toyota.

Nissan:

Nissan managers were aware of the Ohno’s techniques from early 1950s, but some major factors

inhibited them to copy Toyota’s manufacturing techniques.

First, the types of machinery that Nissan had were highly specialized and not suitable for

reconfiguration to be used for multiple purposes as was the case for Toyota’s machinery.

Second, the union at Nissan opposed cycle time reduction and worker’s overtime.

Finally, geography affected how Nissan and Toyota reacted to the production

management since Toyota’s rural workers had lower consciousness of labor and

management distinction, i.e. higher power distance, versus Nissan’s urban labor force

that demanded greater role in running the company.

So, Nissan’s answer to Ohno’s techniques was wide spread use of high speed single function

machine tools with the goal of higher productivity through automation. During the 1970s, as

manufacturing volumes and product complexity rose, Nissan improved its computer based

production system and linked factories to main suppliers through on-line terminals and added

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highly automated robots. Nissan managers expected to bring the same results as Ohno’s

techniques, but by mid 1980s the Toyota workers produced more cars, added more value, and

yielded more profit per employee than Nissanites.

5.3 Productivity of Toyota and Nissan:

Several important factors helped Toyota to set the standard for productivity and profitability.

Most of Toyota’s assembly plants and its parts suppliers were both located in the rural areas of

Japan. This became critical in subsequent years for the effectiveness of Just-in-time

manufacturing due to the proximity and ease of part transportation in the supply chain. This was

not the case for Nissan who had plants in the urban areas of Japan mostly close to large

metropolitan areas. The unions of Toyota and Nissan also played an important role in the

differences between productivity and the manufacturing cost structure of the two companies.

The union at Nissan, unlike Toyota’s, opposed methods to compress cycle time, raise assembly

line speeds, or use overtime when the demand was high. Figure 3 shows the productivity per

employee at Toyota and Nissan from 1950 to 1983.

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6.0 Benefits for Implementing JIT Method:

Toyota:

Toyota’s Global Competitive Advantage:

Toyota’s global competitive advantage is based on a corporate philosophy known as the Toyota

Production System. The system depends in part on a human resources management policy that

stimulates employee creativity and loyalty but also on a highly efficient network of suppliers

and components manufacturers.

Defeating the Rivalry:

One reason why Toyota is overtaking GM (General Motors) in the market is its highly

efficient production system. Toyota groups its workers on the assembly line in teams, and

gives them individual responsibility to correct mistakes before the cars reach the end of the

line.

In the graph you can see how 'The Big Three' take more time to build a car than a Japanese

company like Nissan, Toyota and Honda. Toyota produces more environmentally friendly and

reliable cars. Now Toyota is set to overtake GM as the world’s largest carmaker, ending 70

years of dominance.

Reducing the Production time:

JIT Reduces set up times in warehouse - the company in this case can focus on other

processes that might need improvement. Improved flows of goods in/through/out warehouse -

employees will be able to process goods faster. As a result, the production level increases.

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Nissan:

Cost Reduction:

Like Toyota, Nissan uses 'Kaizen' and a 'Just-in-Time' production system. Nissan, however,

have taken 'Just-in-Time' a stage further. A separate company makes parts on the same site as

the car plant in order that components may be delivered just in time for assembly. This saves

transport and storage costs as well as theft and is an innovative system for a car plant.

More labor efficiency and less production time:

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How long does it take to build a car?

That’s a crude indication of what is involved. Management is particularly keen to monitor total

machine-hours and total labour-hours that each vehicle requires.

Other facilities of Toyota and Nissan for implementing JIT method in their production process

are:

Employees who possess multi-skills are utilized more efficiently - the company can use

workers in situations when they are needed, when there is a shortage of workers and a

high demand for a particular product;

Better consistency of scheduling and consistency of employee work hours - if there is

no demand for a product at the time, workers don’t have to be working. This can

save the company money by not having to pay workers for a job not completed or could

have them focus on other jobs around the warehouse that would not necessarily be done

on a normal day;

Increased emphasis on supplier relationships - having a trusting supplier relationship is

important for the company because it is possible to rely on goods being there when

they are needed;

Supplies continue around the clock keeping workers productive and businesses focused

on turnover - employees will work hard to meet the company goals.

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7.0 Competitive advantage of Toyota and

Nissan:

a. War of attrition between Nissan and Toyota before Toyota even entered the American market

resulted in a great cost advantage for Toyota over American car companies

b. Rivalry for market share in Japan was fierce, with both Toyota and Nissan looking for ways to

cut their costs and make better cars at the same time.

c. Toyota and Nissan saw increased market share in Japan as another way of speeding up the

learning curve: whoever produced more cars would learn faster how to produce better, cheaper

cars.

.

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8.0 Obstacles in JIT Implementation:

Toyota

Toyota company is experiencing cultural barriers to JIT as they globalize operations; e.g.,

globalization does not automatically export the trust requisite to JIT into foreign suppliers

(Cusumano, 1994). Historically, Japanese practitioners of just-in-time relied on well-trained

workers capable of broad responsibility to eliminate waste and JIT productivity gains (Aggarwal,

1985; Cusumano, 1994). Recent shortages of Japanese blue-collar labor, an employment

category resisted by Japan’s current generation, forced the importation of less-skilled foreign

labor, in turn negatively impacting quality and productivity advantages, and requiring

inspected-in quality tactics (Cusumano, 1994). In general, the foundational culture on which

Japanese production methods rely does not translate well; consider the difficulty Toyota

managers encountered in persuading adoption of their traditional familial references, ie, where

direct laborers are referred to as "children" of the company.

Nissan

Nissan began to experience difficulties with JIT deliveries in congested, urban areas as early as

the 1970's when they adopted the Toyota style, difficulties not then experienced by suppliers

enjoying the proximities of Toyoda City. In recent years, increasing congestion effected by

rising rates of JIT deliveries forced the Japanese government to launch a media campaign

encouraging companies to actually reduce the frequency of their material deliveries (Cusumano,

1994).

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9.0 Conclusion

After all, I think that if the company wants to have a JIT concept it does not mean that

everything must be done very fast. The most important thing for the company is to have

good organized resource allocation. Also, the management and employees must have on

their mind that this concept can help the organization to solve many problems in logistics.

It is true that implementation and development of JIT is a long-lasting and expensive process,

but if the company can manage with these difficulties it is possible to achieve high levels

of workflow.

The JIT concept is only one part in the value chain that brings the satisfaction to the customers.

It means that the JIT concept cannot must solve existing problems in other organization

processes. Everything in enterprises is needed to be healthy, through the hierarchy of employees

and all workflow processes. Synergy is the only thing that can improve business results. And in

the bottom line, the JIT concept is just one link in the whole chain, but very important.

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10. References:

Information Emerges on Transportation’s Fifth Modes.” Purchasing(17 July 1997).

“JIT: A Process with Many Faces; JIT.” Purchasing (04 Sept. 1997)

Johnson, G.S. “JIT Makes Big Three Vulnerable to Strikes.” Journalof Commerce (18 Sept. 1997).

Lambert, D.M., and J.R. Stock. Strategic Logistics Management, 3rd ed. New York: McGraw-Hill, 1993.

Online, Internet: WWW address: http://fedwx.com/us/about/facts.html/ (01 Mar. 1998).

Online, Internet: WWW address: http://miras.com/html/products.html/ (16 Feb. 1998).

Online, Internet: WWW address: http://roberts.com/technology.htm/ (02 Mar. 1998).

Online, Internet: WWW address: http://ups.com/about/glance.html/ (01 Mar. 1998).

Porter, A.M. “The Problem with JIT; JIT Inventory Systems.”Purchasing (18 Sept., 1997).

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