“Just in Time” Production System in Toyota

Toyota's JIT (Just in Time) production system, or Kanban(看板) system, has revolutionized the car industry since it was firstly adopted by Toyota in the 1950s. As defined in the Wikipedia, the JIT system is “an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and related carrying costs.” Simply speaking, JIT is designed to achieve high-volume production using minimal inventories of raw material. The concept behind it is that a company can save money on parts and components by not having to store them, because in the JIT system they are delivered to the assembly line just in time to be installed on the car. It is based on the philosophy that nothing will be produced until it is needed in order to reduce waste, which is caused by activities that add cost without adding value, such as the unnecessary moving of parts, the accumulation of materials in the warehouse.

To meet JIT objectives, there are two key points. Firstly, the process relies heavily on billboards, or Kanban, between different points in the process. Before the Kanban system was introduced, upstream parts suppliers decided how many parts to manufacture based on their own experience and predictions. This had often caused overproduction and thus unnecessary waste. The Kanban system has soundly solved the problem. As its name suggests, in Kanban system, orders were firstly written on billboards, or Kanban, which informed suppliers of the number of parts needed. Today Toyota as well as other major car makers uses electronic systems instead of the traditional billboard system. But the essential function remains the same. The second factor that weighs in JIT production system is that the smoothness of the whole production line should be ensured. Thus, JIT demands high levels of quality at each stage of the whole process. Unlike traditional production lines, in the JIT production system there is little or no need for warehouse storage of parts as they should arrive in time just when you need them. While saving time and money by avoiding repeated handling of parts, there are also downsides in the JIT production system. When an unexpected holdup in delivery or bad parts emerged on the production line, the entire production line has to be slowed, or even stopped. Thus, there can be a serious loss of production while awaiting parts or other materials. You can imagine the chaos if a delivery vehicle has broken down and fail to deliver materials in time. The production line could lay idle until the materials do arrive. Actually, during the early years after the JIT system was introduced, line stops did frequently occur almost on a daily basis. However, as time went on, the rate had fallen to only a few per week. In sum, only when the smoothness of the production line is guaranteed, can the JIT production system work well.