Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Impact of JIT
Inventory on
procurement
function in
Perspective of
Toyota Motor
CorporationPresented to Mr. Usman Khalid
Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan2
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
Group Members
Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
ContentsIntroduction and History of
Toyota
JIT and other TPS Terms
JIT Process & Principles
Toyota Production System (TPS)
Questions......
JIT Philosophy
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Origin of Toyota Production System Sakichi Toyoda (1867-1930)
Automatic Loom
Kiichiro Toyoda (1894- 1952)Used chain conveyor into the Assembly
line
Eiji Toyoda (1913)Implementation of Jidoka and JIT
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Toyota Production System(TPS)
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
JIT
KANBAN
KAIZEN
MUDA
NEMAWASHI
POKAYOKE
YOKOTEN
ANDON
GENCHI GENGUSTU
HEIJUNKA
OSHIN
JIDOKA
JISHUKAN
TPS TERMS
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Take timeContinuous
Fow
The pull system
Just In Time ConceptOne of the two main pillars of TPS. It
refers to the manufacturing and
conveyance of only “what is needed,
when is needed, and in the amount
needed in the system”.
1. The Pull System
2. Continuous Flow Processing
3. Take time
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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JIT is a philosophy of continuous improvement in which non-value-
adding activities (or wastes) are identified and removed for the
purposes of:
◧ Reducing Cost
◩ Improving Quality
◨ Improving Performance
◪ Improving Delivery
♦ Adding Flexibility
▬ Increase innovativeness
Just In Time Philosophy
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
“A philosophy of manufacturing based on planned elimination of all
waste and continuous improvement of productivity. It encompasses
the successful execution of all manufacturing activities required to
produce a final product, from design engineering to delivery and
including all stages of conversion from raw material onward. The
primary elements include having only the required inventory when
needed; to improve quality to zero defects; to reduce lead time by
reducing setup times, queue lengths and lot sizes; to incrementally
revise the operations themselves; and to accomplish these things at
minimum cost."
The American Production and Inventory Control Society (APICS) has the following definition of JIT
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan10
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Limitations/Disadvantages of JIT⋑ Higher amount of machine/worker idle time
⋑ More efficient when demand pattern is stable
⋑ When there is a sudden change in the demand pattern it will
take time for JIT system to react since there is no central
information unit
⋑ It may be difficult and expensive to introduce
⋑ There is little room for mistakes as minimal stock is kept for re-
working faulty product
⋑ Production is very reliant on suppliers and if stock is not
delivered on time, the whole production schedule can be
delayed
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Limitations/Disadvantages of JIT⋑ Higher amount of machine/worker idle time
⋑ It requires more training, more consciousness, more employee
commitment
⋑ More difficult goals to be attained
⋑ Coordination between customer and suppliers need to be much
better and disciplined
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
KANBANA small time that is the key control for JIT production
instruction
tool
cont
rol
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
KANBAN (Contd…)
A unique production control method
It can be based on supermarket method
Taiichi Ohno ,promoted the idea of JIT, applied this concept
KAN= card BAN=signals
It is a Japanese word for card & the use of card is central to many
Japanese control systems including one at Toyota whose kanban
system has received
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Types of Kanban System
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
MUDANon-value added. Muda is translated as waste
There are Seven types of muda
OVER
PRODUCTION
WAITING
CONVEYANCECORRECTION
PROCESSINGINVENTORY
MOTIVE
MUDA
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Reduction of MUDAReduce Setup Times
All setup practices are wasteful because they add no value and they tie up labor and equipment. By organizing procedures, using carts, and training workers
Small-Lot Production
Producing things in large batches results in huge setup costs, high capital cost of inventories. Because Toyota has found the way to make setups short and inexpensive
Employee Involvement and Empowerment
Toyota organized their workers by forming teams and gave them the responsibility and training to do many specialized tasks
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Reduction of MUDA (Contd…)Quality at the SourceTo eliminate product defects, they must be discovered and corrected as soon as possible. If a defect cannot be readily fixed, any worker can halt the entire line by pulling a cord (called Jidoka)
Equipment MaintenanceToyota operators are assigned primary responsibility for basic maintenance since they are in the best position to detect signs of malfunctions
Pull ProductionTo reduce inventory holding costs and lead times, Toyota developed the pull production method wherein the quantity of work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage
Supplier InvolvementToyota treats its suppliers as partners, as integral elements of Toyota Production System (TPS)
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
KAIZENA system of continuous improvement in which instances of Muda (waste)
are eliminated one-by-one at minimal cost. This is performed by all
employees rather than by specialists
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Questions….
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