4 ms·

This may be a dumb question, but is it still "Just In Time" if the parts are just stockpiled on shelves owned by someone else?

ethagknight 6y ago
Thanks for all the responses, makes a lot of sense. It seems like the answer is “Yes, from Toyota’s perspective” in that Toyota gets to focus solely on the manufacturing process, and let the others figure out the chaotic bits to get the required parts in the right place at the right time, because that’s a different skill set that certain other corporations are far more adept or have specific resources like rolling stock. To use an analogy: a surgeon operating on a patient, holds a hand out and says “scalpel” and a scalpel instantly placed in hand. Does it matter that their are trays and trays of parts and other people in the room if we are just evaluating the surgeon’s efficiency?
quotemstr 6y ago
Sure. That's technically not inventory for tax purposes.
notyourwork 6y ago
I had the same question, I'm not versed on manufacturing processes but "Just in time" would seem to imply inventory is nearly 0 and as parts come in, they are used for assembly and go right back out the door. Perhaps they realized the limits of JIT and have looked at storying inventory based on the impact to assembly continuity?
- wheelinsupial 6y ago
  Worked in automotive, not at Toyota. > storying inventory based on the impact to assembly continuity? It's always been about that. JIT can be looked at as, "right part in the right quantity at the right time." That can mean "milk runs" where assemblies are delivered to the final assembly plant twice a day. An AM delivery where the last assembly is bolted to a car as the PM delivery arrives. Or it means "kanban orders" where 1 week supply of parts is delivered on a Monday and a refresh the next Monday. Or it means you buy in bulk and get 3 months supply at once. JIT and everything around "Lean manufacturing" and the "Toyota Production System (TPS)" are ideals to strive for. Not everything in Toyota operates according to the ideals. There are certain fundamental things (e.g., stability in material, personnel, machinery, and methods) that need to be in place before starting to reduce inventory. When suppliers have trouble with providing defect free parts, the orders start to increase in quantity and decrease in frequency. These can be subject to 100% incoming inspection if the supplier's quality comes into question enough.
noelsusman 6y ago
That has always been the core innovation of JIT. Offloading inventory costs onto suppliers makes your books look a lot better. Toyota did make a bunch of other improvements to streamline their manufacturing processes, but the just in time part is really just bullying suppliers into taking on some of your cost and risk.
- _s 6y ago
  Partially - suppliers can offset that by increasing their cost to do business; but also most contracts in that world are multi-year deals with ranges of minima / maxima for quantity, time etc.
- simonh 6y ago
  It also means you can customise your product closer to the delivery time. The vast majority of parts are the same between dozens of final variations of the cars. Having low final product inventory, but plenty of parts stockpiled, means if demand shifts between your final variations you can respond to that quickly while also still being resilient to sudden increases in total demand.
pradn 6y ago
I think the article is implying that they moved away from a "pure" JIT model, to somewhat of a hybrid model. Their in-depth knowledge of their suppliers is orthogonal to their stockpiling, but it still helps them plan better.
goodoldneon 6y ago
Having the supplier store them still uses the same distribution network as if they were shipped directly. If Toyota stored them, they'd need to develop an equally robust network from their warehouses to their factories. It's more expensive to maintain your own distribution network and warehouses than to just pay the supplier to store stuff
- lifeisstillgood 6y ago
  That's ... brilliant. I genuinely had never thought of that
- imtringued 6y ago
  To be more specific, it is cheaper to maintain warehouses for the products your company produces and more expensive for products your suppliers are producing. 1 chip warehouse per supplier vs 1 chip warehouse for each customer. Toyota is an expert in storing cars, it is not an expert in storing thousands of different car parts.
sanarothe 6y ago
From Toyota perspective yes -- they can maintain appropriate kanban stocks in their individual factories and still pull as needed. Sounds like the suppliers might be "strongarmed" by Toyota purchasing power.
- cortesoft 6y ago
  Except if Toyota's business is worth the cost of keeping 2-6 months of product in the warehouse, it isn't really like an "unneeded resource" that the JIT approach would want to avoid. They are being paid (in a sense) to hold those parts, so it is not wasted.

ethagknight 6y ago

Thanks for all the responses, makes a lot of sense. It seems like the answer is “Yes, from Toyota’s perspective” in that Toyota gets to focus solely on the manufacturing process, and let the others figure out the chaotic bits to get the required parts in the right place at the right time, because that’s a different skill set that certain other corporations are far more adept or have specific resources like rolling stock. To use an analogy: a surgeon operating on a patient, holds a hand out and says “scalpel” and a scalpel instantly placed in hand. Does it matter that their are trays and trays of parts and other people in the room if we are just evaluating the surgeon’s efficiency?

quotemstr 6y ago

Sure. That's technically not inventory for tax purposes.

notyourwork 6y ago

I had the same question, I'm not versed on manufacturing processes but "Just in time" would seem to imply inventory is nearly 0 and as parts come in, they are used for assembly and go right back out the door. Perhaps they realized the limits of JIT and have looked at storying inventory based on the impact to assembly continuity?

wheelinsupial 6y ago
Worked in automotive, not at Toyota. > storying inventory based on the impact to assembly continuity? It's always been about that. JIT can be looked at as, "right part in the right quantity at the right time." That can mean "milk runs" where assemblies are delivered to the final assembly plant twice a day. An AM delivery where the last assembly is bolted to a car as the PM delivery arrives. Or it means "kanban orders" where 1 week supply of parts is delivered on a Monday and a refresh the next Monday. Or it means you buy in bulk and get 3 months supply at once. JIT and everything around "Lean manufacturing" and the "Toyota Production System (TPS)" are ideals to strive for. Not everything in Toyota operates according to the ideals. There are certain fundamental things (e.g., stability in material, personnel, machinery, and methods) that need to be in place before starting to reduce inventory. When suppliers have trouble with providing defect free parts, the orders start to increase in quantity and decrease in frequency. These can be subject to 100% incoming inspection if the supplier's quality comes into question enough.

noelsusman 6y ago

That has always been the core innovation of JIT. Offloading inventory costs onto suppliers makes your books look a lot better. Toyota did make a bunch of other improvements to streamline their manufacturing processes, but the just in time part is really just bullying suppliers into taking on some of your cost and risk.

_s 6y ago
Partially - suppliers can offset that by increasing their cost to do business; but also most contracts in that world are multi-year deals with ranges of minima / maxima for quantity, time etc.
simonh 6y ago
It also means you can customise your product closer to the delivery time. The vast majority of parts are the same between dozens of final variations of the cars. Having low final product inventory, but plenty of parts stockpiled, means if demand shifts between your final variations you can respond to that quickly while also still being resilient to sudden increases in total demand.

pradn 6y ago

I think the article is implying that they moved away from a "pure" JIT model, to somewhat of a hybrid model. Their in-depth knowledge of their suppliers is orthogonal to their stockpiling, but it still helps them plan better.

goodoldneon 6y ago

Having the supplier store them still uses the same distribution network as if they were shipped directly. If Toyota stored them, they'd need to develop an equally robust network from their warehouses to their factories. It's more expensive to maintain your own distribution network and warehouses than to just pay the supplier to store stuff

lifeisstillgood 6y ago
That's ... brilliant. I genuinely had never thought of that
imtringued 6y ago
To be more specific, it is cheaper to maintain warehouses for the products your company produces and more expensive for products your suppliers are producing. 1 chip warehouse per supplier vs 1 chip warehouse for each customer. Toyota is an expert in storing cars, it is not an expert in storing thousands of different car parts.

sanarothe 6y ago

From Toyota perspective yes -- they can maintain appropriate kanban stocks in their individual factories and still pull as needed. Sounds like the suppliers might be "strongarmed" by Toyota purchasing power.

cortesoft 6y ago
Except if Toyota's business is worth the cost of keeping 2-6 months of product in the warehouse, it isn't really like an "unneeded resource" that the JIT approach would want to avoid. They are being paid (in a sense) to hold those parts, so it is not wasted.