just in time inventory systems journal article

In recent years the company has put increased focus on managing this network so that it could respond quickly to changes, trying to both meet customer demand and minimize supply chain risks. For its North American assembly operations, this meant a large, flexible trucking network with dedicated routes. Just-in-time assembly requires strictly scheduled deliveries – a low inventory “pull” system with high frequency, small lot size parts deliveries. As the company expanded production globally, it also worked hard to ensure that logistics processes would support its production flow. When Ohno designed TPS, most of Toyota’s suppliers were geographically close.

Much less cash tied up in inventory meant lower production costs which could be passed on to consumers in the form of lower prices. Toyota, in contrast, had perfected a system in which parts for its assembly lines might be delivered daily or several times a day. He pointed out that in 1984, General Motors had 3,500 suppliers compared to 225 for Toyota, and carried five days of inventories valued in 1982 dollars at $5 billion. Estall writing in the journal Area in 1985 commented, “current high interest rates, fiercely competitive markets and low profit margins have made inventory management a much more serious matter for manufacturing firms.” He went on to describe just-in-time as “a more lasting possibility of major cost reduction,” citing the potential for reducing cash tied up in inventory. Western companies first began to understand TPS as a fundamentally different and better approach to production in the 1980s. (Photo by Kurita KAKU/Gamma-Rapho via Getty Images) Gamma-Rapho via Getty Images

Toyota Factory In Nagoya, Japan In March, 1990.

Just in time inventory systems journal article