Just in time inventory control toyota

IGCSE Business Studies Operations management

1. Just in time inventory control- Toyota Presented by Pratyay Ganatra

2. Definition Just in time or JIT is a production method whose focus is on reducing or virtually eliminating the need to hold inventories of raw materials or components and on reducing. A production process is said to be Just-In-Time when it uses the raw materials to make the good or service after the product has been ordered. 2

3. History of Toyota Toyota's origins lie in the Japanese weaving industry when Sakichi Toyoda invented the world's first automatic loom and, subsequently, set up the Toyoda Spinning and Weaving Company in 1918. His invention reduced defects and increased yields since a loom stopped and would not go on producing imperfect fabric and using up thread after a problem occurred. This principle of designing equipment to stop automatically and call attention to problems immediately ( jidoka ) remains crucial to the Toyota Production System today. The loom impressed a British Company, the Platt Brothers, so much that, in 1929, they bought the production and sales rights for £100,000. Sakichi gave those proceeds to his son, Kiichiro, to develop automotive technology at Toyoda. This in turn led to the launch of the Company's first ever passenger car in 1936, the Model AA, and in 1937, the Toyota Motor Company was born. Production of Toyota vehicles outside Japan began in 1959 in Brazil and now, besides its own plants, manufacturing subsidiaries and affiliates in Japan, Toyota manufactures Toyota and Lexus brand vehicles and components throughout the world. 3

4. How does Toyota use JIT? Toyota is considered by many to be the poster child for JIT success. The Toyota production strategy is highlighted by the fact that raw materials are not brought to the production floor until an order is received and this product is ready to be built. No parts are allowed at a node unless they are required for the next node, or they are part of an assembly for the next node. This philosophy has allowed Toyota to keep a minimum amount of inventory which means lower costs. This also means that Toyota can adapt quickly to changes in demand without having to worry about disposing of expensive inventory. Important Factors to Toyota Success: Small amounts of raw material inventory must be kept at each node in production, so that production can take place for any product. These parts are then replenished when they are used. Accuracy of forecasting is important so the correct amount of raw materials can be stocked. 4

5. Advantages of j.i.t. Cost of storage reduces Less wastage Can respond to trend changes Customer-designing is possible Mistakes of raw materials can be spotted easily. Perishable goods wont be damaged 5

6. Dis-advantage of j.i.t. Cant complete big orders quickly Cost of production can be high Transport issues 6

7. Toyota using j.i.t https :// www.youtube.com/watch?v=FkVJ5no4UlA 7

8. conclusion The advantages and disadvantages of the just-in-time production have been discussed. There are more possible advantages than the possible disadvantages for a firm. Thus, a firm selecting J.I.T. production has to see which product are they manufacturing; if it is a product where variations in the product are not given and raw materials, product are not perishable, they can avoid having J.I.T. But still, they can use J.I.T. 8

9. Bibliography http:// www.toyotauk.com/about-toyota/history-of-toyota.html https:// www.linkedin.com/pulse/20140630074645-133871272-real-life-examples-of-successful-jit-systems http:// www.accountingtools.com/questions-and-answers/the-advantages-and-disadvantages-of-just-in-time-inventory.html 9

10. Thank you 10