Whenever you buy a complex piece of equipment such as a TV or a car do you ever wonder how exactly it
all came together.
Ever since the Industrial Revolution that how has been a likely question for many businesses today they
are going to look at how in post-war Japan Toyota helped to create one of the smartest production systems
card just in time.
They will look at how it works and how you can apply the philosophy and practices to many other areas
of your business.
After World War Two Japan faced some difficult problems.
They didn't have a lot of cash resources were scarce and they did not have a lot of free land to expand
factories.
However Taichi Ono at Toyota managed to turn these problems in advantages by slowly creating the Justin
dine system.
The idea didn't come all at once.
Throughout the 50s and 60s various changes were implemented and improved in the 70s.
The wired world began to realize the benefits and adopted a similar approach.
So what is just in time.
The philosophy is to make the entire production system only work with what it needs and to minimize
wait time between each stage.
The biggest savings is normally around inventory before adjusting time.
A company would keep a warehouse filled with the parts and raw materials it needed.
When supplies were getting low they would reorder when they had just enough to keep going until a new
delivery came in.
But Toyota realized what if you could just keep making the same order as soon as the next one arrives.
That way you never need to keep the stockpile of spare parts the cost savings were huge.
Since warehousing was seriously expensive you need to pay for a massive space bother staff security
and for all the parts that are just sitting there waiting not making you money or adding value to your
product.
And this is the core of just in time you look at each area of production and ask is this adding value
to the product.
If it isn't.
Maybe there is a better way to do it.
You cut everything down to its most efficient form with almost no room for error which is where the
risk ingesting time lies.
Toyota used Japan's relatively small size to its advantage.
You could rely on suppliers delivering exactly on time because they only had to travel smaller distances.
This is important because if you get problems with supply it can shut down the whole system.
But it is normally worth the risk because the savings are huge on inventory and staff costs more than
this though you are forced to create a working philosophy that there is no room for error.
You don't have spare parts or spare time so you have to make sure everything functions perfectly.
Often efficiency comes at the cost of quality but not in this case in just in time you are forced into
quality in order to be efficient.
That's why it's applicable to many other areas of business.
The best way to think about this if we simplify everything to two approaches just in time and just in
case just in case you're trying to minimize risk by always giving yourself a buffer you will get extra
stocks so you can swap out for the items you will overstaffed certain areas because they occasionally
have too much work to do it you will support a service that just a few customers ask for.
With just in time you don't simply guard these areas and cross your fingers that nothing bad happens.
No you work out how you can avoid them happening in the first place because this is money that's wasted
unless a bad thing happens.
You are effectively investing in instincts better quality control means staff can trust the stock they
have so they don't need a backup.
As for work laws the only reason one department is hit by a workload that they can't handle is because
there is not enough visibility between departments.
If your sales team know about the capacity of production and its current status they want to put in
an order that can be filled.
And as for offering a service with limited customer appeal.
Well maybe you cut it out completely.
Or you can just find a way to merge it with other services so the resources it requires are absolutely
minimally when done well there just in time philosophy should be good for morale too because the whole
point of it is telling your staff.
I'm trusting you to perform consistently and I think most of us respond well to that kind of respect.
With that we come to the end of this case study.
You're now all set to begin your journey of jesting buying specialization.
See you in the next lecture.