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 politicoeconomic 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

1 |Page

TABLE OF CONTENT

1.0 INTRODUCTION3

PURPOSES OF THE RESEARCH:...............................................................................................................................3

3.1 LEAN DEVELOPMENT IN TOYOTA: .................................................................................................................8
LEAN PRINCIPLES ADOPTED BY TOYOTA TO ACHIEVE THEIR GOALS ARE:.............................................8
3.2 ACTIVITIES OF TOYOTA:..................................................................................................................................10
3.3 METHODS USED IN CONTROLLING WASTE:...............................................................................................12
3.4 PROCESS IMPROVEMENT.................................................................................................................................12
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

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

2 |Page

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

Purposes of the research:

3 |Page

 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 Toyotas 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)].

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

4 |Page

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

5 |Page

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.

6 |Page

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

7 |Page

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 twothirds 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.

8 |Page

 Make the value flow without interruptions.

Let the customer pull value from the producer.
Pursue perfection
Toyotas approach to product development can be labeled lean development:

Its starting point is Toyotas 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 cars 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 Camrys 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.

9 |Page

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 cars production to make sure that it will be built within the
targeted cost brackets once the design is released. Toyotas emphasis on lean production
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.

10 | P a g e

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 Toyotas 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-workers problem
immediately triggered a specific team leader to do his or her assistance work, and the team
leaders 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 firsttier 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 drivers view. The workers 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

11 | P a g e

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.
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 suppliers 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

12 | P a g e

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

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 seventyfour 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.
Aikawas 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 1930s 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. Nissans domestic market share grew to a high of 33.7% by 1972, but declined
to 25.6% by 1985. When Japans economy boomed in 1987, Nissan doubled its production

13 | P a g e

capacity and strengthened its sales network. As a result of rapid expansion, Nissans 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. Nissans 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 Nissans 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.

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. Nissans 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 vehicles 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:

14 | P a g e

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.

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

15 | P a g e

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.

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. Nissans 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).

16 | P a g e

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

17 | P a g e

into designs that were not the most advanced and suppliers that most often were not cost
efficient. Toyotas 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, Toyotas 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.

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-inprogress 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:

18 | P a g e

Nissan managers were aware of the Ohnos techniques from early 1950s, but some major factors
inhibited them to copy Toyotas 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 Toyotas machinery.

Second, the union at Nissan opposed cycle time reduction and workers overtime.

Finally, geography affected how Nissan and Toyota reacted to the production
management since Toyotas rural workers had lower consciousness of labor and
management distinction, i.e. higher power distance, versus Nissans urban labor force
that demanded greater role in running the company.

So, Nissans answer to Ohnos 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
highly automated robots. Nissan managers expected to bring the same results as Ohnos
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 Toyotas 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 Toyotas, opposed methods to compress cycle time, raise assembly

19 | P a g e

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.

6.0 Benefits for Implementing JIT Method:

Toyota:

Toyotas Global Competitive Advantage:

Toyotas 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:

20 | P a g e

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 worlds 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.

How long does it take to build a car?

Nissan:

21 | P a g e

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:

Thats 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 dont 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;

22 | P a g e

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.

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.
.

23 | P a g e

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 Japans 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

24 | P a g e

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).

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

25 | P a g e

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.

10. References:

Information Emerges on Transportations 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).

26 | P a g e

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).

27 | P a g e