Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation

1. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan

2. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan2
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation

3. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Introduction 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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4. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
 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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5. Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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6. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
JIT
KANBAN
KAIZEN
MUDA
NEMAWASHI
POKAYOKE
YOKOTEN
ANDON
GENCHI GENGUSTU
HEIJUNKA
OSHIN
JIDOKA
JISHUKAN
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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7. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Take time
Continuous
Fow
The
pull system
One 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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8. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
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
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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9. 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."
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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10. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan10
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation

11. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
⋑ 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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12. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
⋑ 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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13. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
A small time that is the key control for JIT production
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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14. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
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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15. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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16. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Non-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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17. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Reduce 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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18. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Quality at the Source
To 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 Maintenance
Toyota operators are assigned primary responsibility for basic maintenance
since they are in the best position to detect signs of malfunctions
Pull Production
To 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 Involvement
Toyota 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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19. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
A 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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20. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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21. Project Procurement and Contracts, MSPM, Riphah International University, Islamabad, Pakistan
Impact of JIT Inventory on procurement function in Perspective of Toyota Motor Corporation
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