Toyotas Lean Production And Just In Time Accounting Essay

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Lean production defines as a business system for managing and organizing product development, operations, suppliers and customer relation that requires less human effort, less time, less space, less capital to produce a product. Toyota started to implement the lean production after II. Word War. Basically, it was required half human effort, half manufacturing space capital investment for a given amount of capacity. Toyota uses Toyota product system (TPS) to deliver lowest cost with best quality, short time for product manufacturing. Generally Toyota aims to focus on the task responsibilities of those employees who can rise value of the car and reduce all other non-value-added tasks and labour.

TPS is comprised of three pillars; first one is just-in-time (JIT) with just-in-time inventory. Second is built quality at each step without reinsertion and finally respect for the employee. Toyota is defining the quality as "meeting or exceeding customer expectations" TPS was aiming customer satisfaction above all else and their ability is stop thing and make improvements. During the last decade, Toyota was loosing its first aim of produce their product because of its ambition. Toyota was trying to growth their market share and it lost costumer satisfaction.

This essay will consider Toyota's background lean production system, focusing manufacturing and supply chain management however it will illustrate Toyota's competitiveness in international car market, existing problems and finally, will be given some recommendation in conclusion.


Engineer Ohno is credited with developing the principles of lean production after World War II. He tried to focus on reduce waste workers, waste inventory and improved productivity. Instead of maintaining resources in anticipation of what could be required for next production, as Henry Ford did with his production line, the management team at Toyota built partnerships with suppliers. In effect, under the direction of Ohno, Toyota became made-to-order. By maximizing the use of multi-skilled workers, Toyota was able to flatten their management structure and focus resources in a flexible manner. Lean production means basically is with less: with less inventory less space, less than normal labour and spend less money in the production. That production is known Toyota Production System (TPS).

It is also described, the systematic elimination of waste overproduction, waiting transportation, inventory, motion, over-processing, defective units and the implementation of the concepts of continuous flow and customer pull.

In addition this, Toyota Production System is not only flow and pull production or cellular manufacturing. TPS first aims in Toyota are satisfying the customer with highest quality with the lowest cost and with the shortest time while developing the talents and skills of its workface through improvement and problem solving disciplines. There are five areas drive lean production; cost, quality, delivery, safety and morale.

2.1 Why Was Needed the Lean Production?

At the first time Toyota was being called Toyoda started to manufacture engines, small delivery cars and trucks. Management was not strong and their decisions were going into bankruptcy. Losing face, the Sr. Management resigned, and/or changed their ways. First of all they changed their name Toyoda to Toyota and granted workers life-long employment. "They went on an aggressive improvement program to try and work their way back from near oblivion. The motivations for TPS were now established. Soon the tools and techniques started to emerge that eased the frustrations with the old, inefficient ways, and allowed Toyota to achieve its TPS goals"

2.2 Benefits of Lean Production and JIT

There are many advantages of lean production, first off all the system would allow Toyota achieve waste reduction by %80, also production cost can be reduced by %50 in addition manufacturing cycle times could be decreased by 50% .On the other hand labour reduction by 50% while maintaining or increasing throughput and inventory reduction by 80% while increasing customer service levels.

Over all, it brings higher quality, higher profits and however higher system flexibility in reacting to changes in requirements improved.

TPS aims twin production of JIT. It means make and deliver the right part, in the right amount, at the right time. JIT is known as Toyota Production System. According to this system items only move trough the production when they are needed. It was thought that there were many wasting state and identified a number of sources of waste that should be eliminated. For example; overproduction, time spent waiting, transportation. It was being wasting associated with keeping stocks and wasting associated with defective items. Toyota wanted to reduce that kind of problems in the production and started to use JIT progress.

There are so many benefits of using JIT to Toyota. Firs of all, after started using JIT system the company had better quality production than before. Using the system also reduces cycle times and scraps and rework, lower setup times as well.

During to production, less inventory of raw materials, work in progress and finished products. One of the most important benefits is reduced operating costs.

In addition those advantages, reduce space requirements, higher worker participation and productivity are advantages of JIT. Those are very important manufacturing process.

However it should be absolutely clear that implementing a JIT system is a task that cannot be undertaken lightly. It will be expensive in terms of management time and effort, both in terms of the initial implementation and in terms of the continuing effort required to run the system over time.

3. Suppliers of Lean Production and Toyota Problems

Suppliers are so crucial for lean production and JIT. There should be long term guaranteed contract between suppliers and the company. The suppliers have to provide steady demand for the company. Good price and minimal paper work are considerably important between supplier and the company. In the lean production Toyota needs its some of important points its supplier to produce impeccable product like; quality components with zero defects, guaranteed delivery times and contingency plans to cope with disruptions. A company should have only one supplier for suppliers satisfying that point the company can reduce the number of suppliers, indeed it looks like logical so to do. For example if a company has a five or six suppliers, it would be so difficult to under control all the suppliers and all the good which are coming from the suppliers. In the lean production might be decided to have one supplier or one more supplier for safety reason but it should not be more than two suppliers.

4. Analysis Toyota Problems

Toyota problems were starting with numbers of suppliers. In 2002 Toyota wanted to market share from %11 to %15 and wanted the world's number one. In that time Toyota's existing supplier could not answer all demand. However the company tried to cover its supply from the tier-two and even tier-three. The problem was the other suppliers were not able to cover Toyota's demand. To be a lean production supplier take time and need many qualities which are stated above. The most important point is suppliers provide a product with zero defects. According to key study Toyota's of tier-two and tier-three could not provide those requirements. Because of suppliers problem Toyota had big problems about its manufacturing. The company had to retake its cars from the costumers because of inaccurate productions. During to period Toyota had to control its supplier's product but because of over production the company overlooked some important points and those overlook got credit lost to Toyota. There was pedal problems in 2009 and "Toyota's admission follows 200 reports of complaint from costumers in Japan and the USA and follows worldwide recalls of almost 8 million cars due to separate floor mat and pedal problems".

In addition to it was lost huge number of money because of this problem. The most important problem was the company lost its reliability. Before the period the firs aim of Toyota was customer satisfaction above all else but this pedal problem caused losing customer satisfaction and it lost huge number of costumer as well. It means the firm lost huge number of money too.