Case A

THERMOCOUPLE MANUFACTURING
The case deals with the possibility of introducing a new system of production control,
Toyota’s “Just-In-Time” system at the thermocouple product division of General Electric’s
Aerospace Instruments and Electrical Systems Department.

The inventory levels have been a perennial problem at the division and the division aimed at
reducing the inventory levels through the introduction of JIT to $2.1million (from $6.2
million) in three years and to less than $1.4 million after five years.

Program

The Impact Program was designed by GE with the aim of improving the quality and
productivity of its operations. Every year around 25 executives attended a 14 day program –
the first 4 days were classroom sessions on manufacturing strategy, operating systems and a
contrast of the US and Japanese manufacturing systems; the last 10 days were spent in Japan
visiting 3 Japanese companies, analyzing their manufacturing and management practices and
discussion on the findings.

On the completion of the program, the executives were expected to identify areas of
improvement within their own operations and propose projects. The group again met a week
later to discuss projects and strategies so that each could then start working on their
individual projects after the group disbanded.

Just-In-Time system for the thermocouple division was proposed by Bill Draper after
attending the Impact Program at GE in 1981.

Answers

What Incentives are to be provided to the workers for the improvements, when promotion at
thermocouple division is based on seniority?

Profit sharing system can be used. Also the leverage of moving the production line to another
plant can be used if there is no improvement

Workers think they will be laid off after productivity increases due to implementation of JIT.

JIT will make the workers more versatile, JIT cannot be implemented without the help of the
wokers, and it is the responsibility of the management to take the workers into belief. Also
JIT is a continuous process, it is based on a long term relationship so the relationship with
workers is also essential