A STUDY ON JUST IN TIME PRATICE AT TOYOTA

PROJECT REPORT

Submitted to Mahatma Gandhi University in partial fulfillment

of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

HARIKRISHNAN R

Reg. No. 190031000647

Under the guidance of

Dr. Neethu Ann Georgie

Accredited by NAAC with ‘A’ Grade

DEPARTMENT OF MANAGEMENT STUDIES

MAR ATHANASIOS COLLEGE FOR ADVANCED STUDIES

TIRUVALLA

2021
 MAR ATHANASIOS COLLEGE
FOR ADVANCED STUDIES
TIRUVALLA
Ph: 0469 2730323, Fax: 0469 2730317, macfast@macfast.org
www.macfast.org

CERTIFICATE

This is to certify that the project report entitled “A STUDY ON JUST IN TIME
PRATICE AT TOYOTA” is a bonafide report of the project work undertaken by
HARIKRISHNAN R, fourth semester MBA student of our college during a
period of 8 weeks commencing from 1 st April to 30 th May,2021.

Dr. Neethu Ann Georgie Dr. Sudeep B. Chandramana

Faculty Guide Head, Dept. of Management Studies

Fr. Dr. Cherian J. Kottayil University Examiner

Principal, MACFAST
 DECLARATION

I hereby declare that this project report entitled “A STUDY ON JUST IN

TIME PRATICE AT TOYOTA ” is a bonafide report of the study undertaken
by me, under the guidance of Dr. Neethu Ann Georgie Department of
Management Studies, MACFAST, Tiruvalla.

I also declare that this project report has not been submitted to any other
University or Institute for the award of any degree or diploma.

Place : Tiruvalla HARIKRISHNAN R

Date :
 ACKNOWLEDGEMENT

“It is not possible to prepare a project report without the assistance and encouragement of
other people. This one is certainly no expcetion”

On the very outset of this report, I would like to extend my sincere & heartfelt obligation
towards all the personages who have helped me in this endeavor. Without their active
guidance, help, cooperation & encouragement, I would not have made headway in the
internship

I am ineffably indebted to REV. DR. CHERIAN J KOTTAYIL, Principal of Mar

Athanasios College for Advance studies Tiruvalla for providing me permission for taking up
my internship.

I also pay my deep sense of gratitude to DR. SUDEEP B CHANDRAMANA, Head of the
Department to encourage me to the highest peak and to provide me the opertunity to take up
internship and his prompt inspiration

I am extremely thankful and pay my gratitude to my faculty Dr. Neethu Ann Georgie for
her valuable guidance and support on completion project presently.

I also acknowledge with a deep sense of reverenee, my gratitude towards my parents and at
last but not least gratitude goes to all of my friends who directly or indirectly helped me to
complete this project report.

Any omission in this brief acknowłedgement does not mean lack of gratitude.

Harikrishnan R

(i)
 LIST OF TABLES

Table No. Title Page No.

1 Company Profile 22

(ii)
 LIST OF FIGURES

Fig. No. Title Page No.

1 Pull system 2

2 Demand: Quality vs revenue 15

(iii)
 ABBREVIATIONS

EU European Union

RoHS Restriction of Hazardous Substances

ELV End of Llife Vehicles

OE Moriginal Equipment Manufacturer

PV Passenger Vehicle

FADA Federation of Automobile Dealers Associations

RMI Rocky Mountain Institute

(iv)
 CONTENTS

Page No.

ACKNOWLEDGEMENT (i)

LIST OF TABLES (ii)

LIST OF FIGURES (iii)

ABBREVIATIONS (vi)

Sl.No. CHAPTERS PAGE NO

1
INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 2

1.3 Relevance & Scope of the Study 3

3
1.4 Objectives of the Study
3
1.5 Report Structure
3
1.6 Limitations of the Study

2 INDUSTRY PROFILE
2.1Business Process of the Food Products Industry 5
2.2 Market Demand & Supply – Contribution to GDP –
Revenue Generation 7
2.3 Level and Type of Competition – Firms Operating in the
Food ProductsIndustry 9
2.4 Pricing Strategies in the Food Products Industry 14
2.5 Prospects and Challenges of the Food Products Industry 18
2.6 Key Drivers of the Food Products Industry 20
2.7 Company Profile 22
3 REVIEW OF LITERATURE
3.1 Brief Theoretical Construct related to the Problem 26
3.2 An Overview of Earlier Studi 31
3.3 Uniqueness of Research Study 37

4 METHODOLOGY OF STUDY
4.1Research Approach and design 38
4.2 Sources of Online Data 40
4.3 Sampling Design 40
4.4 Data Analysis Tools 41
4.5 Report Structure 42
4.6 Limitations of the Study 43

5 FINDINGS AND CONCLUSION 44

6 CONCLUSION 49

7 BIBLIOGRAPHY 51
 CHAPTER-1
INTRODUCTION – STATEMENT OF THE PROBLEM

1.1 BACKGROUND OF THE STUDY

Toyota Motor Company is very well known around the globe for manufacturing high
quality automobiles. Toyota has been in the automobile industry for a long time now and
every time they introduce new automobiles, they introduce newness and innovation of its
own kind. But manufacturing automobiles is not the only contribution from Toyota
Company. Over the years, after World War II, Toyota has put in a lot of efforts to meet the
advancement required in the Japanese automobile to give a stiff competition to its western
nations. Toyota introduced many techniques for its famous Toyota Production System like
Just-in-Time System, Kanban System and Jidoka. The main goal was to lower down
production costs and increase in productivity by simply removing the unwanted functions and
practices in the factories. But these systems were so unique in its own way that other
companies around the globe in manufacturing sector implemented the Toyota Production
System strategies, but very few were able to reach the success of Toyota. The sole reason for
the failure of implementation of Toyota Production System in overseas companies was the
difference in industrial relationship, many small social systems and its business climates
available in Japanese firms.

Moreover, the whole Toyota Production System took many years of patience and struggle
to form this successful system, which is currently the heart of Toyota Company. There were
no scholars who formed and laid out rules and structure for this Toyota Production System, it
was the regular practice and daily situation occurrences in the Toyota factories which laid
down these methods by trial-and-error processes in manufacturing sites of Toyota Motor
Company. Lately, there has been a lot of criticism for Toyota for sticking to its decades old
production system, which has led to shut down on various occasions in the past, mainly due
to its Just-in-Time System.

Just-in-Time system stresses the importance to increase production efficiency and

decreasing the wastage of goods only if they are required in the production process, which
helps in lowering down inventory costs[Monden, 2012]. While it can be argued that due to

1
Toyota‟s Just-in-Time System, in the past there have been situations which ultimately lead to
closure of Toyota factories only because of lack of inventory for its production.

The Goals of JIT

The ultimate goal of JIT is a balanced, smooth and rapid flow of materials through the
system. This can be achieved by approaching the following supporting goals first;

1. Zero defects.

2. Zero inventories.

3. Zero set – up time.

4. Zero handling.

5. Zero break – down.

1.2 STATEMENT OF THE PROBLEM

The topic of the study is “Just in Time practice at Toyota”.Just-In-Time is a Japanese

manufacturing management method developed in 1970s. It was first adopted by Toyota
manufacturing plants by Taiichi Ohno. The main concern at that time was to meet consumer
demands. Because of the success of JIT management, Taiichi Ohno was named the Father of
JIT. The just in time manufacturing system considered as a pull system. The principle of Just
in time (JIT) is to eliminate sources of manufacturing waste by getting right quantity of raw
materials and producing the right quantity of products in the right place at the right time.

Pull system

Fig: 1 Pull system

2
 Is a manufacturing system in which production is based on actual demand, and where
information flows from market to management in a direction opposite to that in traditional
(push) system.

1.3 RELEVANCE AND SCOPE OF THE STUDY

As a part of completing the post graduate degree in Master of Business Administration, it is

required to undertake a project work on operations management, which is one of my
specialisation subject. This study helped to familiarize the practical side of an organization.
An analysis is made during the study on the basis of theoretical aspect. This study is
significant to analyze the “Just in Time practice at Toyota” by using secondary data.

The purpose of the research is to understand about the awareness regarding practice,
implementation,advantages,limitations and prerequisites for implementing JIT at Toyota.
This study helps to find out how quickly they manufacture the product and satisfy the market
demand.

1.4 OBJECTIVES OF THE STUDY

1. To get an awareness regarding JIT practice with reference to Toyota.

2. To understand the advantages and limitations of JIT pratice.
3. To analysis the prerequisites for implementing JIT.
4. To get an awareness regarding the process of JIT implementation with reference to
Toyota.

1.5 LIMITATIONS OF THE STUDY

Project is done by using secondary data due to covid 19 pandamic so their are many research
biases

1.6 CHAPTERISATION

CHAPTER 1: INTRODUCTION-STATEMENT OF THE PROBLEM

It includes Background of the study, Statement of the problem, Relevance and Scope of the
study and Objectives of the study

3
CHAPTER 2:AUTOMOTIVE INDUSTRY PROFILE

It includes Business process of the industry, Market demand and supply- Contribution to
GDP-Revenue generation, Level and type of competition-Firms operating in the industry,
Price strategies in the industry, Prospects and challenges of the industry and Key drivers of
the industry.

CHAPTER 3: REVIEW OF LITERATURE

It consists of Brief theoretical construct related to the problem, An overview of earlier

studies and Uniqueness of research study.

CHAPTER 4: METHODOLOGY OF THE STUDY

This includes Research approach and design, Sources of data, Sampling design, Data
analysis tools, Report structure and Limitations of the study.

CHAPTER 5: DISCUSSION

It includes the observations by the Candidate from Literature Review – Comparisons and
Logical Conclusions related to the Business Problem

CHAPTER 6: FINDINGS OF THE STUDY

Through data analysis, interpretation and inference findings are obtained. These findings are
added in the 6 th chapter

CHAPTER 7:CONCLUSION

As the final stage, the conclusions which have obtained through the research work from the
perspective of researcher is mentioned in this chapter.

4
 CHAPTER 2

INDUSTRY PROFILE

2.1 BUSINESS PROCESS OF THE AUTOMOTIVE INDUSTRY

Automotive manufacturers in Europe are facing major changes to several processes. These
processes include their new product introduction, manufacturing, and service after sales
processes. The changes come in the wake of the European Union (EU) Directive on end of
life vehicles (ELV) and Directive on the restriction of the use of hazardous substances
(RoHS) in electrical and electronic equipment. Failure to reach regulation targets will cost
each original equipment manufacturer (OEM) approximately 1 billion euros annually. Thus
as the automotive industry grows and adheres to new government regulations, it demands
robust, flexible solutions that provide insight into business processes in order to remain
competitive and profitable.

Marketplace growth, outsourcing product development activities, customer demands for

improved reliability, human-vehicle interaction software, and competition are changing the
dynamics in the automotive industry. The changes are brought on by the following driving
forces (according to IBM research into the automotive industry):

Marketplace growth

In the next four years, the number of vehicles produced in the automotive industry is
expected to increase from 60 million to 70 million due to expansion in the global
marketplace. The automotive industry accounts for 15% of the world‟s gross domestic profit
with a $31 billion aftermarket industry growing 6% annually and new product introductions
up by 34% since 2004.

Outsourcing

Automotive product development activities are increasingly outsourced from OEMs, for
example, automotive vehicle production and delivery companies such as Ford, Toyota, and
Honda. By 2015, the prediction is that more than 75% of the value created in the industry will
be driven by suppliers.

5
Technology

Customer demands for improved reliability and vehicles that use technology to improve the
human-vehicle interaction are driving increased electronic and software content to account
for 40% of the value of the vehicle by 2010. One focus in this area is on information
technology, which includes the following topics:

– Communication technologies

Wireless, vehicle-to-vehicle and vehicle-to-base station, driver notification systems,

telecommuting, and communications-assisted travel

– Software

Software safety and reliability for safety critical and high reliability systems

– Embedded systems

Onboard intelligence, vehicle systems integration, improved hardware-software synthesis,

fault-tolerant, and fail-safe systems

– Information systems

Driver assistance systems, data security, confidentiality and privacy, economics of

transportation-based systems, transportation management systems, and integrating humans
into diverse sensor, communications, control, and information systems

– Biotechnology

Highly efficient diesel engines and optimized gasoline engines, new fuels from ethanol,
biodiesel and hydrogen, and new power train technologies that use advances in hybrid and
fuel cell applications

Competition

The automotive marketplace has become incredibly competitive. For example, for the OEMs
to meet price, quality, and innovation challenges, they must continuously improve their end-
to-end processes and ensure quality and integrity of data used at every point in the life cycle.
OEMs are careful to leverage emerging marketplaces, especially in China and India, while
maintaining customer satisfaction in traditional marketplace

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2.2 MARKET DEMAND & SUPPLY–CONTRIBUTION OF GDP–REVENUE
GENERATION

In 2019, India was the fifth-largest auto market, with ~3.81 million units combined sold in
the passenger and commercial vehicles categories. It was the seventh largest manufacturer of
commercial vehicles in 2019.

The two wheelers segment dominate the market in terms of volume owing to a growing
middle class and a young population. Moreover, the growing interest of the companies in
exploring the rural markets further aided the growth of the sector.

India is also a prominent auto exporter and has strong export growth expectations for the near
future. In addition, several initiatives by the Government of India and major automobile
players in the Indian market is expected to make India a leader in the two-wheeler and four-
wheeler market in the world by 2020.

Domestic automobiles production increased at 2.36% CAGR between financial year 16-20
with 26.36 million vehicles being manufactured in the country in financial year 20. Overall,
domestic automobiles sales increased at 1.29% CAGR between financial year 16- financial
year 20 with 21.55 million vehicles being sold in financial year 20.

Two wheelers and passenger vehicles dominate the domestic Indian auto market. Passenger
car sales are dominated by small and mid-sized cars. Passenger cars accounted for 12.9%
market share,accounting for a combined sale of over 20.1 million vehicles in financial
year20.

Passenger vehicle (PV) sales stood at 3,10,294 units in October 2020, compared with
2,71,737 units in October 2019, registering a 14.19% growth. As per Federation of
Automobile Dealers Associations (FADA), PV sales in December 2020 stood at 271,249
units, compared with 218,775 units in December 2019, registering a 23.99% growth.

Overall, automobile export reached 4.77 million vehicles in financial year20, growing at a
CAGR of 6.94% during financial year16- financial year20. Two wheelers made up 73.9% of
the vehicles exported, followed by passenger vehicles at 14.2%, three wheelers at 10.5% and
commercial vehicles at 1.3%.

EV sales, excluding E-rickshaws, in India witnessed a growth of 20% and reached 1.56 lakh
units in financial year20 driven by two wheelers. According to NITI Aayog and Rocky

7
Mountain Institute (RMI) India's EV finance industry is likely to reach Rs. 3.7 lakh crore
(US$ 50 billion) in 2030.

Premium motorbike sales in India recorded seven-fold jump in domestic sales, reaching
13,982 units during April-September 2019. The luxury car market is expected to register
sales of 28,000-33,000 units in 2021, up from 20,000-21,000 units sold in 2020. The entry of
new manufacturers and new launches is likely to propel this market in 2021

The Indian automobile industry is one of the driving forces of the economy, contributing
about 49% to the country‟s manufacturing GDP and 7.5% to its overall GDP. The sector‟s
value chain employs about 32 million people. In 2018, the Indian automobile market pipped
Germany to become the fourth-largest in the world. In the last decade, while the production
of two-wheelers in India has nearly trebled, the production of passenger vehicles and
commercial vehicles in the country has doubled.

The USD 100-billion Indian automobile industry has also seen a massive qualitative jump as
products have become safer and more environment- friendly, driven by a mix of policy
changes and buyers‟ demands. However, the high octane growth of the last decade seems to
have come to a screeching halt, with demand and sales hitting historic lows every passing
month.

The industry has been shrouded in gloom and muddled by inconsistent views and U-turns of
the industry leaders and stakeholders. While many see green shoots appearing in the near
future, some still seem to be mostly sceptical. On the future trends too, the cloud of confusion
continues to pose challenges to the scale of introducing electric vehicles (EVs) and the impact
of BS-VI enforcement.

Indian Auto Industry Status Report 2020 is an effort to bring clarity amidst all the commotion
by presenting the real scenario, backed by extensive research of the automotive clusters of the
country and in-person interviews of over 100 top industry leaders and experts. Based on
objective extrapolation of data and facts, the report is easily the most accurate and holistic
document on the current status and future prospects of the Indian automotive industry

8
2.3 LEVEL AND TYPE OF COMPETITION– FIRMS OPERATING IN THE
AUTOMOTIVE INDUSTRY

The top competiters in the automotive industry are Toyota, General Motors, Volkswagen,
Hyundai, Ford, and Honda. Given below is the competitive profile for each one of them.

1. Toyota

Toyota is a large, multinational auto manufacturer headquartered in Japan. Toyota also owns
several other companies, including Lexus, Scion, Daihatsu, and Hino Motors. Toyota Motor
Corporation, abbreviated TMC, is a multinational automaker headquartered in Toyota, Aichi,
Japan. According to the 2008 Fortune Global 500, Toyota is the fifth largest company in the
world. The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's
company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a
department of Toyota Industries, it created its first product, the Type A engine, and, in 1936,
its first passenger car, the Toyota AA. TMC is part of the Toyota Group, one of the largest
conglomerates in the world.

Toyota's management philosophy has evolved from the company's origins and has been
reflected in the terms developed by it and known as "Lean Manufacturing" and “Just In Time
Production”. Toyota's managerial values and business methods are known collectively as the
Toyota Way. Toyota has grown to a large multinational corporation from where it started and
expanded to different worldwide markets and countries.

Toyota was hit by the global financial crisis of 2008 as it was forced in December 2008 to
forecast its first annual loss in 70 years. In 2008, it overtook General Motors to become the
world's largest auto manufacturer. In January 2009 it announced the closure of all of its
Japanese plants for 11 days to reduce output and stocks of unsold vehicles. In 2010, Toyota's
sales were $235.89 billion USD. It employed approximately 317,000 people.

In 2011-2012 Toyota employs 317,716 people and has to cope with a slowdown in
production due to massive factory damage caused by March's devastating earthquake and
tsunami in Japan. While sales in North America, Europe, and Japan declined during 2010,
Toyota sales picked up in emerging car markets, including Asia, Central, and South America

9
and Africa. Emerging markets ended up being strong enough to carry the company, which
sold over 7 million units in 2010, an increase of 71,000 from the previous year.

Toyota has dominated the market through innovation in hybrid vehicles. Their vision for
2015 plans to foster demand in emerging markets with locally produced core models,
including the innovative international multipurpose vehicle models and newly developed
subcompact models. They intend to deploy hybrid models extensively in markets worldwide.

2. General Motors:

General Motors, or GM for short, is an American-based auto manufacturer headquartered in

Detroit, Michigan. Formerly incorporated (until 2009) as General Motors Corporation, is an
American multinational automotive corporation and was the world's largest automaker, by
vehicle unit sales, in 2011. For most of the 20th century, General Motors remained the
biggest company in the most important automobile industry in the world. It was the world‟s
largest carmaker from 1931 to 2008, when it was surpassed by Toyota. GM employs 202,000
people and does business in some 157 countries. General Motors produces cars and trucks in
31 countries and sells and services these vehicles.

In December 2008, it received $9 billion in federal aid at the order of President George W.
Bush to sustain its operations. In March 2009, the government rejected the company‟s
restructuring plan and forced it into bankruptcy court. The bankruptcy process was completed
on July 10, 2009, when G.M. sold its good assets to a new, government-owned company.
Brands like Chevrolet, Cadillac, and GMC were folded into the new company, renamed the
General Motors Company. In 2009, the company emerged from government-backed Chapter
11 reorganization. In 2010, GM made an initial public offering that was one of the world's
top 5 largest IPOs to date. GM returned to profitability in 2011. GM's business is focused
around six core brands: GMC, Chevrolet, Buick, Cadillac, Opel, and Vauxhall.

The new G.M. is far smaller and leaner. Brands like Saturn, Hummer, and Pontiac were shut
down or sold. Hourly labor costs were cut by more than two-thirds, to $5 billion from $16
billion in 2005 and the company announced in February 2011 that it earned $4.7 billion in
2010, the most in more than a decade. It was the first profitable year since 2004 for G.M.,

10
which became publicly traded in November 2010, ending a streak of losses totaling about $90
billion.

The company, which went through bankruptcy protection in 2009 and is 26 percent owned by
the federal government, earned $7.1 billion through the first nine months of 2011. In the first
quarter of 2012, G.M. posted $1 billion in net income attributable to common stockholders,
down from $3.2 billion a year earlier. Revenue in the first quarter of 2012 increased 4 percent
to $37.8 billion.

3. Volkswagen:

Volkswagen AG is a Germany-based automobile manufacturer. The Company develops

vehicles and components, and also produces and sells vehicles, in particular Volkswagen
brand passenger cars and commercial vehicles. The Company consists of two divisions:
Automotive and Financial Services division. The Automotive division is responsible for the
development of vehicles and engines, the production and sale of passenger cars, commercial
vehicles, trucks and buses, and the genuine parts business. The Financial Services division's
portfolio of services includes dealer and customer services in the field of financing, leasing,
direct bank, insurance, and fleet business. It became part of an integrated automotive firm
with Porsche in 2009.

The Company's brands include Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT,
Skoda, Scania, and Volkswagen Commercial Vehicles and each brand offers a product range
from low-consumption small cars to luxury class vehicles, as well as pickups, busses and
heavy trucks in the commercial vehicle sector.

During 2011 Volkswagen reported record results by claiming sales of more than eight million
vehicles for the first time in its 75-year history. It reported a net income of $20.6 billion with
revenue soaring to almost 26 percent to €159 billion. Volkswagen‟s sales move it to the No.2
spot worldwide, behind General Motors, which sold 9.03 million vehicles in 2011, and ahead
of Toyota Motor.

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4. Hyundai:

Hyundai is a Korean multinational auto manufacturer based in Seoul. Hyundai vehicles run
the gamut from budget cars to luxury sedans to commercial trucks. South Korea's leading
carmaker, Hyundai Motor produces compact and luxury cars, SUVs, minivans, trucks, buses,
and other commercial vehicles. Its cars are sold in 180 countries through some 6,000
dealerships, employing 80000 people. Hyundai generates about half of its sales in South
Korea, but its vehicles are also popular in emerging markets such as China and India. The
company operates a dozen manufacturing plants in China, the Czech Republic, India, Russia,
South Korea, Turkey, and the US. It earned revenue of over $97 billion USD in 2011. It sold
3.6 million passenger cars in 2010 and almost 3 million vehicles in 2011.

The group was formed through the purchase of 51% of South Korea's second-largest car
company, Kia Motors, by Hyundai Motor Company in 1998. As of July 2, 2011, Hyundai
owns 49.2% of Kia Motors. The company also produces Kia automobiles and has been the
world's fourth-largest automaker since 2009. Consumer Reports magazine ranked Hyundai as
the fourth-best auto manufacturer in the world.

5. Ford:

Ford Motor Company was founded in 1903 by automotive and industrial pioneer Henry Ford
in Dearborn, Michigan. Being first to implement a moving assembly line for automotive
manufacturing, Ford was able to more efficiently mass produce their products than their
competitors. In 1908 the Model T was introduced and went on to sell over 15 million
vehicles, firmly establishing Ford as the major player in the early automotive industry with a
50% market share by the 1920s. The company went public in 1956 and since then has grown
to be a significant presence in the global automotive market.

Ford Motor Company (Ford) is a producer of cars and trucks. The Ford Motor Company is an
American-based auto manufacturer headquartered in Dearborn, Michigan. Ford Motor began
a manufacturing revolution with mass production assembly lines in the early 20th century,
and today, it is one of the world's largest automakers. It operates about 70 plants worldwide
but gets more than half of its sales from North America.

12
The Company and its subsidiaries also engage in other businesses, including financing
vehicles. It's Automotive Sector includes Ford North America, Ford South America, Ford
Europe, and Ford Asia Pacific Africa. In addition to the Ford and Lincoln brands, Ford is also
a shareholder and strategic partner with Mazda and Aston Martin. Ford North America
includes the sale of Ford- and Lincoln-brand vehicles and related service parts in North
America (the United States, Canada, and Mexico), together with the associated costs to
develop, manufacture, distribute and service these vehicles and parts.

In 2008, Ford was the fourth-largest automaker in sales. In 2008, Ford sold its Jaguar and
Land Rover brands to the Indian firm, Tata Motors. The company also discontinued its
Mercury brand. Ford operates approximately 90 plants and facilities worldwide. In 2011,
Ford's sales were $128.954 billion USD and it employed approximately 164,000 people.

The Ford Motor Company reported a net income of $1.4 billion against total revenue of $32.4
billion. The net income was 45 percent less than the $2.55 billion it earned in the same period
of 2011, profit felling by almost half in the first quarter of 2012.

6. Honda

Honda Motor Co. (HMC) was established by Soichiro Honda in 1946. It originally began
producing motorcycles in the mid-20th century and began manufacturing automobiles (the
Honda Civic) in 1972. After the original Civic‟s inception, Honda produced many variants of
this highly successful vehicle, such as the four-door sedan, wagons, hatchback, coupe, and
more recently the hybrid. Honda currently has two automotive brands (Honda and Acura) and
it produces over 20 other vehicle models, such as the Accord, Element, Insight, Odyssey
Minivan, Pilot SUV, and Ridgeline Truck, CR-V, and Fit; gasoline-electric hybrid versions of
the Civic and Accord; and seven models of the luxury Acura line. Almost 70% of Honda
Motor sales come from outside of Japan.

Since Honda began producing automobiles it has been a leader in producing fuel-efficient
and low emissions vehicles. In 1977 and 1983, Civic models ranked first in U.S. fuel-
economy tests. Honda has also introduced hybrid vehicles such as the Insight, Civic, and
Accord, in 1999, 2002, and 2004, respectively, with the 2006 Insight being the most fuel-
efficient car of 2006.

13
Currently, Honda ranks sixth in sales within the automotive industry. They have overseas
plants in over 12 countries including the U.K., Italy, Brazil, Taiwan, Indonesia, Malaysia,
Thailand, Nigeria, U.S., and Canada. Honda has been increasing its production capacity
worldwide in response to its steady growth in total sales over the last few years.

As of March 31, 2012, the Company had 378 consolidated subsidiaries and 88 associated
companies. It employed 187000 employees in 2012.

2.4 PRICING STRATEGIES IN THE AUTOMOTIVE INDUSTRY

Approximately 30 percent of a car‟s list price reflects distribution cost, including dealer
margins. Automakers often fail to impose rigorous analytics on these expenses and so
overspend. For example, on a typical new car sold in Europe with a list price of €25,000,
roughly €17,000 represent the vehicle maker‟s cost and profit, while the other €8,000 are split
in €4,000 sales cost and €4,000 for the dealer‟s margin. However, after customer
negotiations, the actual transaction price usually drops to about €20,000, consuming both
dealer and automaker margins.

Although automakers wield considerable market experience, they partly lack data driven
tools needed to make optimized pricing decisions. What this means is nothing less than a
paradigm change in car distribution, from experience driven behavior to fact-based decisions.
Several factors contribute to the industry‟s pricing problems. Automakers usually determine
vehicle list prices with a cost-plus approach and comparisons to competitive pricing, but do
not fully take into account customers‟ perspective. Additionally, they tack on significant sales
incentives that lead to the typical transaction price levels. These incentives frequently do not
follow a differentiated, systematic approach and do not optimally leverage customers‟
willingness to pay. Improper offer structures and vehicle configurations play a role, too. Cars
stand unsold, manufacturers fail to realize vehicles‟ full profit potential, and dealers resort to
additional incentives and discounts to “move the metal.

Traditional market allocation processes are also a widespread problem. Allocating car
volumes within and across markets is complicated, with many allocation strategies favoring
volume over profit considerations or else going with a “business as usual” approach. Finally,
opportunistic steering can send pricing strategies into the ditch. In fact, pricing plans typically
fail because they lack adequate steering and monitoring across vehicle types – tasks made
more difficult by the local, decentralized nature of pricing decisions.

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 Fig:2 Demand: Quality vs revenue

Some of the pricing strategies in the industry are;

 Price Positioning & Strategy

 New Product Pricing
 Market Launch Pricing
 Value Communication
 Price Increase Implementation
 International Pricing
 Promotional Optimization

Price Positioning & Strategy

Setting the overall price position against other products in the assortment, or against
competitors, is always a key challenge in automotive.

If you need to price a product (or service) in a new market, it makes all the difference in the
world if you understand customers' willingness-to-pay.

Demand curves like the ones above, show the optimal price point where the curve peaks. In
this example, the best price to optimize quantity is 10, whereas the optimal price for
optimizing revenue is 15.

In the old days when research was expensive, this could be difficult to get through a
corporate approval if launching in many markets at once. These days, with cost-effective

15
research options from e.g. PriceBeam, the cost of getting these crucial insights should no
longer be an issue.

New Product Pricing

Understand consumers' willingness-to-pay for new products, and use such insights to
optimize prices when launching innovative products. In automotive, innovation is crucial for
many brands. It is quite common that 20-30% of all products sold are recently launched.
Companies spend many millions in launch marketing and advertising across multiple
channels. However, they often struggle to set the right price. With PriceBeam's price
research, you can test different concepts and communication strategies before launching, and
understand consumers' willingness-to-pay for those options. This provides solid facts and
improves the likelihood of success of the launch, when launch prices are aligned with value
perception of the consumers.

Market Launch Pricing

Setting the right prices when launching into new markets is often a challenge in automotive
companies. PriceBeam helps understanding market differences and setting optimal price
points for each.

Value Communication
Understand the benefits and features that consumers value as well as those attributes that
don‟t impact consumers‟ willingness-to-pay.

While overall willingness-to-pay is a useful start, for really professional new market pricing,
the next step should be to break down the willingness-to-pay into the individual value drivers.
For what features or benefits are customers willing to-pay, and how much.

A good method for understanding the individual value-drivers is to use choice-based conjoint
analysis. In this type of research , respondents are shown a set of product choices. He/she
then chooses his preference and is shown a new set of choices with other configurations; and
again; and again. Through the choices it is possible to determine how much value the
respondent puts on the individual features. The outcome: a series of value-drivers and the
value potential customers put on them in the new market.

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Price Increase Implementation
Prices should not be static. Quite the contrary, it is best practice to adjust prices upwards
regularly, at least in line with competition and inflation, but often also higher thanks to brand
innovations.

In most businesses and industries, it is likely to be a more solid strategy to start high and then
over time reduce the price is necessary. This is often associated with human psychology,
where it is easier to accept a price reduction than a price increase. Especially start-ups get this
wrong, where they value themselves too low to begin with, and then struggle to increase
prices later. But also big corporations get it wrong from time to time.

International Price Management

Prices vary across countries. Understand differences in willingness-to-pay per market and set
prices accordingly. Actually, in most industries there is a marked difference in prices between
countries. This for a good reason: customers are willing to pay a higher price in some markets
than others. So while it can in certain instances be tempting to introduce a single, global price
to simplify IT systems or manage customers who exploit price differences, the upside and
benefit from differentiated pricing around the world is significant. So don't fall in the trap of
harmonizing prices.
PriceBeam market research can be run seamlessly in 109 countries around the world, with
results ready and comparable in less than a week. Use our cost-efficient research to monitor
WtP and optimize prices globally

Promotional Optimization Distribution

Understand consumers' potential reaction to different promotional mechanisms or discount
levels, and optimize the overall revenue. Discounting and promotions are prevalent in most
industries. Running a promotion or giving a discount can, when done properly, deliver
incrmental sale or help gaining access to new customers. With PriceBeam's Willingness-to-
pay research you can quickly research what your customers really are willing to pay for a
product or service in a given market.

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Companies often find it helpful to approach pricing excellence in different stages and
modules. First, take action to capture quick wins and boost efficiency. This scenario enhances
existing structures, creates transparency and therefore reduces incentives and discounts based
on big data insights. The next step is to differentiate vehicle and option list prices and to
optimize vehicle packaging and configuration decisions, with a specific focus on avoiding
unnecessary discounts. Finally, to achieve full optimization firms need to adjust distribution
channels and processes. This scenario builds on actions undertaken during the first stages and
concentrates on introducing new distribution channels with online and direct sales elements,
plus the according margin system adaptions. Capturing from €1,000 to €3,000 per vehicle,
full optimization pursues all possible measures and can save up to 30 percent of total cost of.
Facing growing competitive threats, disruptive technological shifts, and the intrusion of
innovative new mobility business models, automotive players can no longer rely on the
inefficient pricing strategies of the past. Instead, they will need to adopt analytically-based
and customer-centered methodologies to make sure their offer, price, and incentive bundles
are always on target.

2.5 PROSPECTS AND CHALLENGES OF THE AUTOMOTIVE INDUSTRY

The Indian auto industry is expected to see stronger growth in 2021-22, after recovering
from the devastating effects of the COVID-19 pandemic, with electric vehicle sales,
especially two-wheelers, also likely to see positive movements, according to Nomura
Research Institute Consulting & Solutions India.

However, in the personal vehicles segment, the levels reached in 2018-19 would be reached
only in 2023-24, it added.In 2018-19, passenger vehicle sales rose 2.7 per cent to 33,77,436
units from 32,88,581 units in 2017-18, according to the Society of Indian Automobile
Manufacturers (SIAM).

"After the devastating effects of the COVID-19 pandemic, it is expected that the auto
industry will see stronger growth in 2021-22," Ashim Sharma, partner and group head
(business performance improvement consulting-auto, engineering and logistics) at NRI
Consulting & Solutions India, said.As far as personal vehicles are concerned, the 2018-19
levels would be reached only in 2023-24 ."In addition price hikes expected with the
introduction of new regulations could delay the recovery even further,"

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As far as electric vehicles (EVs) are concerned, Sharma said 2021-22 would also see positive
movements, especially in the two-wheeler EV segment, with new players like Ola Electric
getting into the fray."In addition, on the EV components side, we could finally see cell level
manufacturing starting off in India with technological collaborations focusing on cutting-edge
technologies such as LTO (lithium titanium oxide) batteries," he said.The LTO batteries can
be fast-charged at high temperatures as well as last for 10,000-plus cycles and other enhanced
chemistries like NMC811,. NMC811 is a cathode composition with 80 per cent nickel, 10 per
cent manganese and 10 per cent cobalt.In case of other EV components such as motors and
controllers, "We could see a wider participation by local component players and also the
entry of some new players especially to cater to the rise in domestic EV two-wheeler and
three-wheeler demand."In addition, export opportunities for EV components as well as
batteries could certainly emerge for domestic players as the world struggles to find alternative
sources for supply chain resilience.

Challenges

The Indian automotive industry will be up agnist the challenges of the delayed launches, labour
shortage and productivity lossess, besides having the need to come up with vehicles with new
features for disinfection due to the coronavirus pandemic, according to Nomura Research Institute
Consulting & Solution India

There is a lot of uncertainty towards the scenarios that could unfold post the pandemic in the
near future. Irrespective of the scenario that will prevail eventually, the automotive industry
should be prepared for the new normal that will emerge after the crisis.
The rapid outbreak of Covid-19 has hit the global demand-supply clusters and has adversely
impacted the Indian automotive industry as well, with the automotive demand and supply
clusters of Maharashtra, Delhi-NCR, Tamil Nadu, Andhra Pradesh and Kerala becoming the
hotspots of the pandemic, the report noted.
NRI Consulting said the challenges include delayed launches following delay in product
development activities adding time to market, thereby leading to uncertain future R&D
programmes due to lack of clarity on future projects amid hold up in launches, apart from
restricted cash positions and ambiguity on continuation of government policies in the face of
the economic crisis.
The problem will be more acute for those companies that have global R&D centres in Covid-
19 hit regions leading product development with minimal involvement at local level; and for

19
those with highly integrated product development chain with both domestic and overseas
centres closely co-working.Companies having Indian R&D centres but relying majorly on
external centres for testing will also face the problem of delayed launches, the report said,
however, adding the impact will be the least on automobile manufacturers with Indian R&D
centre with its own design and development and testing capabilities.
In the post-coronavirus world, there will also be "need for new features for disinfection"
which will require funds, resources, future planning as well as innovative thought process to
identify future looking features, it added.The other big challenge that automotive firms will
face is labour shortage following migration of workers due to financial and psychological
issues such as apprehensions of working in a group on the shop floor.They will also have to
deal with loss of production due to the nationwide lockdown, adoption of safe distancing on
shop floors, delayed capex decisions due to subdued demand and fiscal conservatism, it
added.
Automotive OEMs will also face material shortages due to financial and labour distress at
domestic suppliers, especially tier-2 and below, and limited operations anddisrupted supply
chains especially of global suppliers in Covid-19 regions, The companies will also face
supplier management challenges as there would be limited options for second source
development for domestic supplies, high working capital pressure leading to supplier
insolvency and delay in ports and custom clearance due to mandatory shipment quarantine

2.6 KEY DRIVERS OF THE AUTOMOTIVE INDUSTRY

There are four key business drivers that impact the automotive industry: economic
conditions, consumer preferences, government, and technological advances. Globalization is
also influencing the industry to a great extent.

Economic Conditions:

When economic conditions are favorable, people are more likely to purchase new vehicles
giving momentum to the industry. The slowdown in economic output leads to reduced
consumer and business confidence and levels of vehicle consumption go down.

Automotive manufacturers need to plan capacity to achieve economies of scale. Companies

plan their capacities based on their sales predictions which are totally dependent on economic
cycles. The capacity issue has a strong influence on industry economics as vehicle prices are

20
calculated on forecast capacities and reduced capacity means higher unit costs. Vehicle
makers, therefore, get heavily impacted due to economic conditions.

Consumer Demand and Interests

The second key driver is consumer interest, preferences, and demand. There is a growing
demand for more choice. Volume production may become similar to that for premium cars,
with a greater number of vehicles being made to order on the basis of a multi-option choice.
The market for niche vehicles is growing, as consumers demand more variation of body
shape and styling. This has led to a variety of body shapes being constructed on standard
platforms.

There is an increased awareness of occupant and pedestrian safety, and consumers also look
for greater fuel economy, exemplified by the growing rise of fossil fuel prices. Consumers is
becoming more aware of specifications and looking for the inclusion of more on-board
electronics and telecommunications systems. Automobile safety is tremendously important to
consumers in all markets and consumers are willing to pay more for vehicles with safety
features.

Globalization

The third key driver is globalization and global industry influences. Today, the modern global
automotive industry operates in a globally competitive marketplace. Globalization of the
automotive industry has been greatly accelerated during the last half of the 1990s due to the
construction of important overseas facilities and the establishment of mergers between giant
multinational automakers. The world's largest automobile manufacturers invest in production
facilities in emerging markets in order to reduce production costs. Automakers have merged
with, and in some cases established commercial strategic partnerships with other automobile
manufacturers, enabling them to expand in overseas markets.

Increasing global competition amongst the global manufacturers and positioning within
foreign markets has divided the world's automakers into three tiers, the first tier being GM,
Ford, Toyota, Honda, and Volkswagen, and the two remaining tier manufacturers attempting

21
to consolidate or merge with other lower-tier automakers to compete with the first tier
companies.

Technological Innovations

The fourth key driver influencing the automotive industry significantly is Technology.
Automotive companies seek to take advantage of sophisticated technology to address the
competitive pressure and to meet increased customer expectations on quality and cost.
Technological advances help them add value to their vehicles and offset the squeeze on costs
and profit margins. Technology also helps them meet the demands of environmental
legislation. It is through technology that manufacturers are able to address consumer demands
for increased safety and sophistication.

2.7 COMPANY PROFILE

Company name Toyota Industries Corporation

Established November 18, 1926

Head office 2-1, Toyoda-cho, Kariya-shi, Aichi 448-8671 JAPAN

President Akira Onishi

Business Manufacture and sales of textile machinery, materials handling

activities equipment, automobiles and automobile parts

Capital 80.4 billion yen (as of March 31, 2021)

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Net sales 2,118.3 billion yen (fiscal year ended March 31, 2021)

Operating profit 118.1 billion yen (fiscal year ended March 31, 2021)

Profit before
184.0 billion yen (fiscal year ended March 31, 2021)
income taxes

Profit 136.7 billion yen (fiscal year ended March 31, 2021)

Employees 66,947 (as of March 31, 2021)

Table 1 : Company Profile

Toyota Industries Corporation engages in a wide variety of businesses including automobile

(vehicles, engines, car air-conditioning compressors, and car electronics), materials handling
equipment, and textile machinery.Here are some of the products and services Toyota
Industries offers.

Automobile

Toyota Industries develops and manufactures automobiles and automobile-related products,

such as vehicles, engines, car air-conditioning compressors, car electronics components and
devices, and stamping dies.

Vehicles

Introducing motor vehicles Toyota Industries manufactures.

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Engines

Introducing engines Toyota Industries manufactures.

Car Air-Conditioning Compressors

Introducing car air-conditioning compressores Toyota Industries manufactures.

Car Electronics

Introducing car electronics products Toyota Industries manufactures.

Stamping Dies

Introducing stamping dies Toyota Industries manufactures

Materials Handling Equipment

Toyota Industries develops, manufactures, and markets industrial vehicles, such as lift trucks,
and other materials handling equipment and systems related to transportation, storage, and
sorting of goods. In order to help our customers overcome their logistics challenges, we offer
optimized materials handling solutions based on our technological capabilities and materials
handling know-how.

We provide materials handling products and service to our customers around the world
through Toyota Material Handling Group (TMHG), under the brands of TOYOTA,
RAYMOND and CESAB. Under the AICHI brand, we provide aerial work platforms.

TOYOTA MATERIAL HANDILING GROUP (TMHG)

Toyota Industries‟ materials handling umbrella organization Toyota Material Handling Group
(TMHG) is the world‟s leading manufacturing group of lift trucks with a global reach. We

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provide financing, leasing, fleet management, insurance and innovative material handling
solutions.

OUR BRANDS

Toyota Industries‟ materials handling umbrella organization Toyota Material Handling Group
has two strong brands: TOYOTA and RAYMOND, offering optimal materials handling
solutions to customers all over the world. We also have the CESAB brand, which is highly
recognized in the Italian market

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 CHAPTER 3

REVIEW OF LITERATURE
3.1 BRIEF THEORETICAL CONSTRUCT RELATED TO THE PROBLEM

Studies regarding Just-in-Time System activities of various firms are mainly focused on large
companies. This research is mainly focused on the overall production system of Toyota and
its essential strategy of Just-in-Time.

In plain words, Just-in-Time is basically an inventory strategy deployed by companies to

decrease its waste, allowing it to increase its efficiency in the production process. By doing
so, it allows the company to receive goods only in hour of actual requirement. This further
lower downs the cost of maintaining the inventory and requires accurate forecast of demand
from the top management. The main advantage of this strategy is to allow manufacturers
easily move from one type of product to another by keeping the production run span short.
Moreover, this allows complete removal ofwarehouse storage requirements and lowering the
spending on raw materials, resulting in lower cost of production. But Just-in-Time inventory
strategy has also received a lot of criticism due to disruptions in the supply chain. For
instance, a single supplier of raw material faces some sort of challenge and is unable to
deliver the required goods on time, it could lead to shut down for the production house. To
make this strategy work in a positive way, manufacturers and retailers should work together,
so that they can monitor the supply of resources from manufacturers and meet the demand
from consumer end (JIT, 2016).

On February 24, 2010, Mr. Akio Toyoda in his testimony mentioned, “At Toyota, we believe
the key to making quality products is to develop quality people. Each employee thinks about
what he or she should do, continuously making improvements, and by doing so, makes even
better cars” (The Guardian, 2010). Furthermore, Mr. Toyoda also discussed the philosophy of
Toyota‟s quality control. “I myself, as well as Toyota, am not perfect. At times, we do find
defects. But in such situations, we always stop, strive to understand the problem, and make
changes to improve further. In the name of the company, its long-standing tradition and pride,
we never run away from our problems or pretend we don‟t notice them. By making
continuous improvements, we aim to continue offering even better products for society. That
is the core value we have kept closest to our hearts since the founding days of the company”
(The Guardian, 2010).

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Yasuhiro Monden, an author of Toyota Production System, said “This explains the basic idea
of “continuous improvement” in the Toyota Production System and in Toyota‟s quality
assurance activities” (Monden, 2012).

Moreover, Monden specified that, “strength of Toyota Production System lies in the fact that
it is a system of supply chain management in the industry as a whole. Inter-firm coalitions are
well-executed in Japanese industries. These inter-firm networks work well in the product
development phase as well as in manufacturing. The Toyota Production System is equivalent
to the management system of inter-firm relations” (Monden, 2012).

According to David Hutchins, “nature of the Japanese quest for continuous project by project
improvement. Every deviation is examined, the causes identified and remedies applied.
Nothing is left to chance, and no deficiency, no matter how rare, is ever regarded as a purely
random event which should be ignored. This mentality is essential to the achievement of real
Just-in-Time. All attention is focused on the continued uninterrupted flow of operations. In
the calendar 1986, from a labor force of 60,000, Toyota received 2.6 million improvement
proposals, 96 per cent of which were implemented either by management or by the
employees themselves” (Hutchins, 1999).

The literature discussed in this research stresses on the overall working and importance of
Toyota Production System and its most valued element “Just-in-Time” system.

Just-in-Time System In automotive industry, efficient production system is only possible by

removal of following three distinguished problems.

The typical automotive industry will consists of mass production assembly type, which will
involve assembly of each vehicle from several thousand parts which have also gone through
numerous processes. So removal of any obstacle in any of these processes will keep the
proper functioning of the production system. Otherwise, it may create a huge mess in whole
production system if any of these processes are having trouble.

Huge fluctuations as per the demand of a particular model. Whereas, the production house
consists of numerous types and variations in other models.

After every couple of years, the vehicle is completely remodeled. This also leads to change of
various other small and big parts to complete a particular model.

In automotive industry, the ordinary production control system allows fulfill the schedules of
production by holding work-in-progress inventory. It allows in absorbing troubles of

27
processes and fluctuation in demand for all the processes. On the other hand, such a system
also creates excessive and unbalanced inventory within many processes, which are mostly not
sold at the same time.

Moreover, such a situation in production house will lead to condition of excessive

equipment‟s and more than required labor, which does not match up with Toyota‟s
expectation.

Just-in-time production system helps in avoiding such situations, where problems related to
unbalanced inventory and excessive equipment‟s and labor are due to troubles and demand
fluctuations. In order to achieve this, all efforts are put in to develop a production system that
will reduce the lead time from the moment materials are entered to the completion of vehicle.

Important Points in Just-in-Time

In just-in-time production method, the production lead time can be greatly reduced with due
respect to maintain the conformity to changes by making sure that – all processes are
producing only the necessary parts at the necessary time and have only minimum stock in
order to hold all the processes together.

After checking the required number of inventory quantity and production lead time, this
production system still needs to look into excessive labor and equipment‟s. This also leads to
initiating the second most important concept of Toyota Production System, which leads to
maximum usage of labors potential. As per the above, following points are to be implemented
in the production system:

1. Withdrawal by Subsequent Processes:

The first and the foremost important part of just-in-time production, to gather accurate
knowledge related to timing and quantity required. Normally, every production system, but
in case of Toyota Production System, follows the production schedule of a particular product
in automotive plant which is based on the various parts schedules and instructions given to
all the processes.

The production of these parts as per their schedule, lead to the implementation of preceding
process of supplying the parts to its subsequent process. But this process could only make it
worse and difficult to adapt the constant changes to meet the production targets. On the other

28
hand, Toyota adopted the opposite of preceding process of supplying the parts to its
subsequent process.

In just-in-time production, parts are being produced as per various processes in the exact
required numbers and exact timeline for completing the assembly of a vehicle, which is
regarded as the final product of Toyota. In such a scenario, it won‟t be wrong to say that the
final assembly line will be able to judge the number of parts it requires and how much time it
will take to finish the vehicle.

After connecting the above discussed processes and put into the chain fashion process, it
would be right to say that whole production process of the company is engaged in just-in-
time production without making unnecessary bulky production orders.

2. One Piece Production and Conveyance:

This is the second important part of just-in-time production. In this, all the processes must
be able to fulfill the criteria of producing one part in their respective process, so that, they are
only left with one piece as stock and the other part is moved to subsequent production
processes to complete the vehicle.

Therefore, no process in the production is allowed to produce more number of parts and
maintain surplus inventory between the processes. So it was necessary to understand this by
every process and keep their approach in such a way, that it only produces and conveys a
single piece of unit for the final assemble line. All in all, it meant no lot production and no
lot conveyance.

Reduction of lot size by shortening the setup time, leads to improvement in production
methods which also includes the elimination of inventory within the processes. By following
this, it results in ordering of multipurpose vehicle equipment adhering to processing
requirements for a single product line. Toyota successfully carried out all of these with its
Toyota Production System and also with its large number of sub-contractors.

3. Levelling of Production:

To meet the requirements of this important point in just-in-time production, all the processes
must have small lot of production and conveyance. If the situation arises and the huge
quantity for the following processes is withdrawn. This will lead to have excessive stock
within the company and with sub-contractors all the time. To make just-in-time succeed,
priority should be given tofinal assembly line, so that it can level the production.

29
To meet the requirements of levelling of production in just-in-time, assistance from
managerial positions is very much required. Firstly, the final assembly lines at Toyota are
mixed product lines. Furthermore, the production per day is calculated by the average
number of vehicles produced in the monthly schedule divided by the number of working
days. Secondly, calculating the cycle time of different vehicles on daily basis in the
production sequence, so that all the different vehicles appear according to their own
cycletime. Once the assembly line levels up with production, then the production of process
of withdrawal and once piece production and conveyance are also leveled.

Another important point of levelled production is to satisfy the basic rule of just-in-time
production, that is, to produce what is required to be sold without exceeding the limit. It also
needs to adjust its production level as per the market changes and is able to produce as
smoothly as possible. Once the monthly schedule for production is rolled out, Toyota still
keeps on making the changes for different vehicles on daily basis orders. If the market
situation changes, it will force Toyota to make further changes for monthly schedules, so that
Toyota is able to lower down the drastic changes in demand.

Therefore, when the above mentioned production system is compared to general schedule
production system, it will be easier to operate with former system with minimal changes to
production than the latter system. Hence, it will allow in completing the task with less
equipment‟s and more stable numbers. Practicing the above three general rules in production
control system is called KANBAN SYSTEM.

4. Elimination of Waste from Over-Production:

Derecognizing the value of existing inventory is the most essential part of just-in-time
production system. As per the classical production control system, availability of inventory
is very much appreciated in order to combat the troubles and fluctuations of demand, and to
smoothen the fluctuations in load of processes.

Whereas, Toyota sees this stock on hand, leading to collection of troubles and bad causes.
Most of the unwanted stock on hand is caused by over-producing the particular item than the
required amount, which is considered as the worst waste in Toyota Production System,
leading to overall increase in the production cost.

There is a reason behind for terming over-producing as the worst waste in Toyota Production
System because it hides away the actual causes of waste like trouble in various processes,

30
unbalanced between the workers allotted to a particular process, workers being idle,
excessive labor, insufficient preventive maintenance, etc. Now this prospect of waste makes
it harder for employees to display their actual potential and also leads to hamper the overall
growth of the company.

3.2 AN OVERVIEW OF THE EARLIER STUDIES

Case Study – I: AISIN Seiki Fire (1997)

Aisin Seiki Co., Ltd. is a Japanese corporation in the automotive industry which deals in
development and producing the automobile systems and components. It was established on
August 31, 1965. Its Head Office is located in Aichi, Japan. It has a employee strength of
99,389 (as of March 31, 2016). AISIN Group currently deals in three business lines as
mentioned below:

Manufacture and Sales of Automotive Parts: Adhering to the principle of “Quality First”,
the AISIN Group provides high quality automobile parts which are very essential towards the
completion of a vehicle like brake system, chassis, body, engine and information technology.

Lifestyle and Energy: AISIN Group is also related with the lifestyle products that help in
contributing towards more comfortable living environment, energy-related products that
maximum efficiency and minimum resource consumption.

Wellness: AISIN Group offers welfare-related equipment‟s which ultimately help senior
citizens in leading fulfilling lives which includes. Most of its equipment‟s are based as per the
ergonomic principles.

Disruption in Supplies of P-valves to Toyota – AISIN FIRE (1997)

AISIN Seiki is a major and trusted supplier of automobile components to Toyota. During
1990‟s, Toyota was largely depended upon AISIN Seiki for its proportioning valves; also
known as P-valves, used in Toyota vehicles for break-related part.

On February 1, 1997, a fire erupted at one of the AISIN Kariya plant number 1. This leads to
halt in Toyota Group operations for couple of weeks. Both Toyota and AISIN Seiki were
dedicated towards the principles of just-in-time production, which allowed both of them to
have a stock of two or maximum three days available. A Toyota plant at that time was in full

31
capacity which had a lot of temporary workers. Everyday lost was potentially huge in
financial losses in sales and profits for Toyota.

P-valves control the pressure on rear brakes which helps in preventing skidding. It was no
bigger than a pack of cigarettes. It was produced in mass quantity using the dedicated transfer
lines, which helps in lowering down the costs and resulting in higher productivity and
reliability. AISIN Seiki was the only sole supplier at that time in Japan of such a part.

Toyota on February 3, 1997, suddenly found itself in deep trouble. It forced, Toyota shut-
down its 20 lines out of 30 lines. February 4 and February 5, both days the Toyota plants and
its related firms were shutdown.

Toyota‟s Tahara and Hino‟s Hamura plants were reopened on February 6. It was the
delivery of first alternative to P-valves which lead to stabilizing the whole crisis. By February
6, all Toyota plants were back to normal. But the number of P-valves produced by AISIN
Seiki was less than 10% as compared to actual demand. Although, it gradually increased, but
it took more than a month to reach 60% by March 14 and 100% by the end of March.

The overall cost to AISIN Seiki was 7.8 billion yen and Toyota was around 160 billion yen in
revenues. Toyota was able to lower down the losses amounting between 20-30 billion yen by
recouping through increased production through overtime and holiday shifts.

Outcome

It was very difficult to meet the target of 32,500 P-valves per day. Then six firms jointly took
up the initiative, they were Toyota, Koritsu Sangyo,AISIN Seiki, Kayaba Industry, Taiho
Kogyo and Denso. They were very different in respect to position in value chain,
specialization, and size. But all these firms had same characteristics of commitment,
capabilities, Just-in-time production and problem solving ability.

All the firms from outside and within Toyota Group set up another P-valve production site.
AISIN Seiki on the other hand respected this initiative and provides the design drawings, jigs,
technical specifications, machine tools, and raw materials which were salvaged from the fire.

Another 62 firms also responded to AISIN Seiki call and immediately began the preparations
for manufacturing. Around 150 more firms joined including 70 machine-tool makers. AISIN
Seiki gathered all machines through exhibitions, showrooms and readily available near the
plant.

32
Many firms were requested to produce necessary parts required by looking into the drawings
of design models and forged blocks. They were also responsible for delivering them back to
AISIN Seiki for final assembly. Moreover, AISIN Seiki was also responsible for quality
control check and delivery to all firms including Toyota.

Many firms cross checked their production with the design drawings, equipment‟s and
technical specifications and every firm had to confirm AISIN Seiki about their participation
in the recovery effort. It was difficult for all the firms because they never produced P-valves
and also had less knowledge.

It was very difficult for AISIN Seiki to transfer the knowledge and technical equipment‟s to
every firm. Due to this, many firms left the initiative due to lack of machinery and know-
how. Toyota instructed its Honsha plant site for producing P-valve. Once the prototypes from
various firms were approved by AISIN Seiki, every firm started producing large number of
volumes.

Once the major problems were handled, the firms picked up speed in production of P-valves.
All firms, including Toyota,started working towards shortening set up times. Resuming to
full just-in-time production shows Toyota Production System is integrated into these firms
working in depth.

These examples showcase the successful outcome of the P-valve recovery effort, which
involved many measures taken to set-up alternate sites. Flow of employees from one site to
another for providing technical solutions and drills were performed constantly.

Summary of the Study

AISIN Seiki fire incident showcases the benefits of Toyota and its partner firms for self-
organized, response in crisis and routine problem solving. Many known practices like just-in-
time system and proper application of Kanban and Jidoka system helped in finding the
defective products and solving the relevant problem before it got too late.

It can also confirm that these practices are very essential part of Toyota and it will help
Toyota only reaching new heights. Moreover, managers and workers learned and inherited
capabilities for effective problem solving skills. Furthermore, the AISIN Seiki fire incident
also confirms that just-in-time system is not vulnerable to small disruptions.

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Case Study – II: Niigata Earthquake (2007)

RIKEN is a 100 years old research organization. It is the largest research organization in
Japan. RIKEN has world-class research centers over whole Japan. Its main research center is
in Wako, Japan. Since 1917, RIKEN has mastered itself in the fields of natural sciences,
biology, neuroscience, quantum physics and computer science.

RIKEN also deals in automotive and machinery parts like Piston rings, camshafts, seal rings,
brake parts, valve seats and lifters, and parts for suspension systems and steering systems.

RIKEN has also indulged itself in other products and services like EMC products dealing in
radio frequency, shield rooms. Moreover, it has also got into thermal engineering products
like industrial furnaces and electric heating materials.

Disruption in Supplies of Piston Rings to Toyota – Niigata Earthquake (2007)

In 2007, if you wanted to buy a piston ring from RIKEN would only cost you around 1,500
yen in the market. But due to its lack of availability during the Niigata earthquake, it
paralyzed the whole automobile production sector in Japan for a week.

On July 16, 2007, Central Japan was struck with a massive earthquake of 6.8 Richter scale. It
damaged the most of the plants in RIKEN, who supplies piston rings for most of the major
car makers in Japan like Toyota, Honda, Mazda, and Mitsubishi. Due to non-availability of
piston rings which are specifically designed as per the car model, closure of plants was the
next step because all the Japanese firms follow the philosophy of just-in-time production
system. All the car makers were left with low stock of available piston rings.

In 2007, RIKEN with a market share of more than 50%, employee strength of 1,500 and
revenue of more than 600 million dollars, made huge impact on the industry. RIKEN also
maintained its reputation for quality in products and relationships with major car brands in
Japan.

Due to closure of RIKEN, it also forced many car makers to cease its cars production.
Toyota, the No.1 car maker, closed all of its 12 domestic plants for at least couple of days,
which lead to overall loss of more than 20,000 vehicles and more than 55% of it were made
for export purpose. Honda was also forced to close that plant which produced well known
Fiat and Civic models. Nissan also felt the heat of non-availability of piston rings, leading to
closure of its all four plants too. Mitsubishi, Mazda and Suzuki also joined the rest by either
slowing down the production or completely shutting down.

34
This sudden blow to the automotive industry came swiftly and no one had an idea of impact
it will leave to U.S production segment of Japanese cars. Toyota also confirmed that such a
disaster was a big worry, “In the case of special parts like piston rings, there is no back up” a
company spokesperson made this statement(Chozick, 2007).

RIKEN was a crowned king in piston ring market since 1940s. Two of its plants and nine
facilities were hugely affected by the earthquake. A week later after the earthquake, RIKEN
confirmed that it will start resuming its production for piston rings. RIKEN further
emphasized that it will need at least another week to reach its full potential in production.

Outcome

It was really hard to come out of such situation, where your enemy is nature and you cannot
fight or control the laws of nature. Similarly, RIKEN was also in spot of bother due to natural
disaster.

Toyota, Mitsubishi and other firms came as one force to help RIKEN to get back to normal
operations. Around 500 employees from Toyota and 650 from other companies were sent to
resume the production at the disaster site. Kashiwazaki plant, piston rings main plant for
RIKEN, was restored on July 23 and Toyota also resumed its operations on the same day.
The other car makers resumed to normal operation on July 25.

Summary of the Study

RIKEN Piston Rings was a crucial part required to complete the vehicle. But due to the
natural disaster occurrence and non-availability of piston rings, it halted the whole Japanese
auto production industry. As it has happened in the past, once more Japanese firms
collectively come together to support RIKEN in best possible way to restart much more
quickly than it would have been able to on its own.

This natural disaster scenario raised many questions and exposed vulnerabilities in Toyota
Production System, Just-in-time system philosophy, Jidokaand Kanban system, for keeping
little and only required level of inventory to work. By now, we know that just-in-time system
allows keeping the production cost low and gives high quality products. But in addition to
specialization, “Just-in-Time” had stopped productions of automobile in Japan. And to some
extent, Jidoka, which means stopping immediately if there is any defect or problem
encountered in production, also led to shut-down.

35
After the disaster restoration, RIKEN planned to open production plants across whole Japan.
Moreover, keeping in mind the future disasters, RIKEN has initiated to at least a week‟s
inventory nearby its customers factories.

Case Study – III: Kumamoto Earthquake (2016) Disruption in Supplies from AISIN
Seiki to Toyota – Kumamoto Earthquake (2016)

Couple of earthquakes in April, 2016, rattled Toyota and many other car makers.
Earthquake measuring to 6.5 and 7.3 on Richter scale struck Kumamoto city in Japan, leaving
more than 30 people dead and causing disruption to many crucial supplies.

Toyota again had to shut down more than 20 vehicle assembly lines across the whole Japan.
The main reason behind this move from Toyota was due to AISIN Seiki as a supplier, was
not able to provide with the supplies like doors and engine components from its Kumamoto
plant.

It‟s twice in three months that Toyota was forced to stop production due to supplier troubles.
In February, 2016, due to explosion in one of the steel plants of Toyota‟s supplier, Aichi
Steel Corp., productions lost numbers were as high as 90,000 vehicles. The steel plant
shutdown hampered the entire industrial output for supplies related to engine, transmission
and chassis components.

Toyota‟s operational profits were reduced by 30 billion yen in the first quarter of 2016. It was
quite evident from such a big loss, which will leave its impact on the second and third quarter
too. Toyota‟s shares plumbed down by 25% this year only.

Summary of the Study

These shutdowns mainly occur due to Toyota‟s famous and world-wide adopted policy of
just-in-time system philosophy. Toyota resumes production by April 25, 2016, which is a
week later from the first earthquake struck in Kumamoto City, Japan.

AISIN Seiki moved its production to other plants in Japan and overseas to meet it consumers
demand and get over from this halt as early as possible. But it couldn‟t wash away the
vulnerabilities shown by the famous just-in-time system. Many online portals are criticizing
the Toyota‟s most valued system, but no matter how many preparations you do or infuse new
systems, any natural disaster will tear it down.

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3.3 UNIQUENESS OF THE RESEARCH STUDY

The study on effectiveness of awareness regarding JIT practice, understand the advantages and
limitations prerequisites for implementing and to get an awareness regarding the process of
JIT implementation with special reference to Toyota.

Researcher can say that no research studyregarding this topic has not been conducted in the
company. It will be definitely a new initiative.In order to understand the effectiveness of Just
in Time, each factor is taken into consideration and it is analyzed through exploratory
research method.

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 CHAPTER 4

METHODOLOGY OF THE STUDY

4.1 RESEARCH APPROCH AND DESIGN

A Research Design is a methodical, well-organized procedure utilized by a researcher, or a

scientist to carry out a scientific study. It is a comprehensive co-existence of already
identified elements and any other information or data leading to a reasonable end result.
The research design is required to follow a pre-planned, well-thought-out methodology, in
agreement with the pre-selected research type, in order to come up with an error-free,
authentic conclusion.

Purpose of Research Design

A Research Design provides a scientist, or a researcher with a well-structured, objective plan
of study that enables him or her to efficiently assess causes and effect relationships between
various dependent and independent variables such as the Classic Controlled Experiment.

Types of Research Design

A Research Design is necessary since it enables the smooth sailing of the varying research
components, thus making your research more reliable, efficient, and flexible.

There are four major types of research designs, which include:

 Descriptive Research
As the name implies, this is an in-depth sort of research design that answers what and how.

 Explanatory Research
This sort of research design explains the subject of the research and thereby answers what,
why, and how.

 Exploratory Research
This sort of research explores the subject matter and answers what and how.

 Evaluation Research
This sort of research determines the productivity of the subject matter, or a program and is,
therefore, quite extensive.

The Types of Evaluation Research are:

1. Quantitative Research
2. Qualitative Research

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 The Types of Quantitative Research are:

 Descriptive Design
 Correlational Design
 Quasi-Experimental Design
 Experimental Design

Quantitative Research Design

Quantitative Research – A Quantitative Research analyzes variable relationships in terms of
numbers and statistical strategies to review findings, and is generally divided into four main
types, namely:

 Descriptive Design
This sort of design describes the present status of a phenomenon, or a variable, and does not
require any hypothesis for initiation: It is developed only after the data is collected. For
instance; case-study, naturalistic observation, surveys, etc.

 Correlational Design
This sort of design utilizes statistical analysis in order to determine whether two variables are
related or not e.g., case-control study, observational study.

 Quasi-Experimental Design
This sort of design resembles a true experimental design, and is utilized when a standard
research design is not applicable, however; it is not based upon randomized sample groups.

 Experimental Design
This sort of design determines cause and effect relationships among various variables in such
a way that the independent variable is changed in order to observe its effect on the dependent
variable e.g., experiment with random assignment.

Qualitative Research Design

Qualitative Research – A Quantitative Research is known as exploratory research since it is
utilized to explore the answers to „what‟ and „how‟ rather than just predicting the results of
research and it may share certain features with the research, such as:
 A central question that states the objective, or the problem;
 Has a pre-set procedure or sequence in order to answer research questions;
 Reviews the generated data;
 The collection and analysis of data are done in order to draw conclusions.
Difference between Research Design and Approach
A Research Design is the overall framework, or outline, or structure of a research proposal
whereas a Research Approach incorporates various tools, techniques, procedures or processes
utilized to collect or review data or information. A Research Design demonstrates how your
selected research design or method is applied to tackle a specific research question while a
Research Approach utilizes different methods to answer different research questions.

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4.2 SOURCES OF ONLINE DATA

Secondary data

The secondary data was obtained through the articles, booklets, and profile of the company,
manuals and also from records available in the internet.

4.3 SAMPLING DESIGN

Sampling design is the integral part of the data collection process as it is not feasible to
secure data from each and every unit of entire population. Specifically, it addresses three
questions:

 Whom to survey (The Sample Unit)

 How many to Survey (The Sample Size)

 How to select them(The Sampling Procedure)

Making a census study of the whole universe will be impossible on the account of limitations
of time. Hence sampling becomes inevitable.

Sampling Technique

Non probability sampling method is used here. In non probability sampling technique,
judgment sampling is adopted. Non-probability sampling is defined as a sampling technique
in which the researcher selects samples based on the subjective judgment of the researcher
rather than random selection. It is a less stringent method. This sampling method depends
heavily on the expertise of the researchers. It is carried out by observation, and researchers
use it widely for qualitative research.Non-probability sampling is a sampling method in
which not all members of the population have an equal chance of participating in the study,
unlike probability sampling. Each member of the population has a known chance of being
selected. Non-probability sampling is most useful for exploratory studies like a pilot survey
(deploying a survey to a smaller sample compared to pre-determined sample size).
Researchers use this method in studies where it is impossible to draw random probability
sampling due to time or cost considerations.

Judgmental sampling

In the judgmental sampling method, researchers select the samples based purely on the
researcher‟s knowledge and credibility. In other words, researchers choose only those people

40
who they deem fit to participate in the research study. Judgmental or purposive sampling is
not a scientific method of sampling, and the downside to this sampling technique is that the
preconceived notions of a researcher can influence the results.

Population

From a statistical point of view, the term population refers to the total of items about which
information is desired. The attributes that are the object of study are referred to as
characteristics and the units possessing them are called as elementary units. The aggregate of
such units is generally described as population. All the items in any field of enquiry constitute
as a universe or population.

Sample size

Response of 150 persons are collected. It is then sorted by considering the response they
have given. Partly filled and incomplete responses are discarded. After sorted out 100
responses are obtained, it is then taken into consideration for the study.

Sample unit

A decision has to be taken concerning a sampling unit before selecting sample. Sampling unit
may be a geographical one such as state, district, village etc.., or a construction unit such as
house, flat etc.., or it may be a social unit such as family, club, school etc.., or it may be an
individual. The researcher will have to decide one or more of such units that he has to select
for the study.

Sample Frame The elementary units or the group or cluster of such units may form the basis
of sampling process in which case they are called as sampling units. A list containing all such
units is known as sampling frame. Thus sampling frame consists of a list of items from which
the sample is to be drawn. If the population is finite and the time frame is in the present or
past, then it is possible for the frame to be identical with the population. In most cases they
are not identical because it is often impossible to draw a sample directly from population. As
such this frame is either constructed by a researcher for the purpose of his study or may
consist of some existing list of population.

4.4 DATA ANALYSIS AND TOOL

The analytical tools are used for the analysis of the collected data for the data analysis and
interpretation the researcher has applied Microsoft excel and for the representation of the

41
analyzed data has made use of tools like tables and charts. Simple percentage method is used
for data analysis. Bar chart and tables are used for analysis and interpretation of data.

4.5 REPORT STRUCTURE

CHAPTER 1: INTRODUCTION-STATEMENT OF THE PROBLEM

It includes Background of the study, Statement of the problem, Relevance and Scope of the
study and Objectives of the study

CHAPTER 2:AUTOMOTIVE INDUSTRY PROFILE

It includes Business process of the industry, Market demand and supply- Contribution to
GDP-Revenue generation, Level and type of competition-Firms operating in the industry,
Price strategies in the industry, Prospects and challenges of the industry and Key drivers of
the industry.

CHAPTER 3: REVIEW OF LITERATURE

It consists of Brief theoretical construct related to the problem, An overview of earlier

studies and Uniqueness of research study.

CHAPTER 4: METHODOLOGY OF THE STUDY

This includes Research approach and design, Sources of data, Sampling design, Data
analysis tools, Report structure and Limitations of the study.

CHAPTER 5: DISCUSSION

It includes the observations by the Candidate from Literature Review – Comparisons and
Logical Conclusions related to the Business Problem

CHAPTER 6: FINDINGS OF THE STUDY

Through data analysis, interpretation and inference findings are obtained. These findings are
added in the 6 th chapter

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CHAPTER 7:CONCLUSION

As the final stage, the conclusions which have obtained through the research work from the
perspective of researcher is mentioned in this chapter.

4.6 LIMITATIONS OF THE STUDY

Project is done by using secondary data due to covid 19 pandamic so their are many research
biases

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 CHAPTER 5

DISCUSSION

5.1 OBSERVATIONS BY THE CANDIDATE FROM LITERATURE REVIEW -

COMPARISONS

Studies regarding Just-in-Time System activities of various firms are mainly focused on large
companies. This research is mainly focused on the overall production system of Toyota and
its essential strategy of Just-in-Time.

In plain words, Just-in-Time is basically an inventory strategy deployed by companies to

decrease its waste, allowing it to increase its efficiency in the production process. By doing
so, it allows the company to receive goods only in hour of actual requirement. This further
lower downs the cost of maintaining the inventory and requires accurate forecast of demand
from the top management. The main advantage of this strategy is to allow manufacturers
easily move from one type of product to another by keeping the production run span short.
Moreover, this allows complete removal ofwarehouse storage requirements and lowering the
spending on raw materials, resulting in lower cost of production. But Just-in-Time inventory strategy
has also received a lot of criticism due to disruptions in the supply chain. For instance, a single
supplier of raw material faces some sort of challenge and is unable to deliver the required goods on
time, it could lead to shut down for the production house. To make this strategy work in a positive
way, manufacturers and retailers should work together, so that they can monitor the supply of
resources from manufacturers and meet the demand from consumer end.

On February 24, 2010, Mr. Akio Toyoda in his testimony mentioned, “At Toyota, we believe
the key to making quality products is to develop quality people. Each employee thinks about
what he or she should do, continuously making improvements, and by doing so, makes even
better cars” (The Guardian, 2010). Furthermore, Mr. Toyoda also discussed the philosophy of
Toyota‟s quality control. “I myself, as well as Toyota, am not perfect. At times, we do find
defects. But in such situations, we always stop, strive to understand the problem, and make
changes to improve further. In the name of the company, its long-standing tradition and pride,
we never run away from our problems or pretend we don‟t notice them. By making
continuous improvements, we aim to continue offering even better products for society. That
is the core value we have kept closest to our hearts since the founding days of the company”.

44
Yasuhiro Monden, an author of Toyota Production System, said “This explains the basic idea
of “continuous improvement” in the Toyota Production System and in Toyota‟s quality
assurance activities”.

Moreover, Monden specified that, “strength of Toyota Production System lies in the fact that
it is a system of supply chain management in the industry as a whole. Inter-firm coalitions are
well-executed in Japanese industries. These inter-firm networks work well in the product
development phase as well as in manufacturing. The Toyota Production System is equivalent
to the management system of inter-firm relations”.

According to David Hutchins, “nature of the Japanese quest for continuous project by project
improvement. Every deviation is examined, the causes identified and remedies applied.
Nothing is left to chance, and no deficiency, no matter how rare, is ever regarded as a purely
random event which should be ignored. This mentality is essential to the achievement of real
Just-in-Time. All attention is focused on the continued uninterrupted flow of operations. In
the calendar 1986, from a labor force of 60,000, Toyota received 2.6 million improvement
proposals, 96 per cent of which were implemented either by management or by the
employees themselves”.

The literature discussed in this research stresses on the overall working and importance of
Toyota Production System and its most valued element “Just-in-Time” system.

5.2 LOGICAL CONCLUSION RELATED TO THE BUSINESS PROBLEM

Just in time is „one best way‟ approach to running operations.To pursuit of strategic fit
grounded in the development of capabilities that allow organizational adaptability in the face
of internal disturbances, external changes, and emerging opportunities. This makes obvious
sense. In the product domain for instance, designers would be considered daft if they
encourage a single „best design‟ for all computer users. Rather, the market has unveiled
numerous designs whose architectural, interface, and component differences are driven by a
different value proposition at the system level.

For many years, TPS and its derivatives such as lean manufacturing have been viewed as a
one-best way approach for managing operations. There are inherent problems presented by a
universal adoption of „best practice‟, and the obvious practical problems are certainly

45
illuminated when we extend the idea of „one best way‟ from the design of complex work
systems to the design of complex technical systems, as in the preceding paragraph.
Nevertheless, the methods associated with Toyota had an impressive currency largely
because of the long-standing recognition that Toyota is an outstanding manufacturer.

As a result, great attention has been paid, on one hand, to Toyota‟s „Just-in-Time‟ production
control tools and, on the other hand, to its ability to improve continuously on the other. This
paper argues that the practices are tightly integrated. Toyota designs work systems so that
they generate information immediately that a problem has occurred. These signals become
the impetuous for the problem solving activities that allow TPS-managed organizations to
engage in an adaptive, hierarchical search for superior designs for an organization‟s system
„value proposition‟, architecture, interfaces, and component activities. Thus, TPS, as
embodied in Rules-in-Use, is not a one-best-way, per se, in terms of the final organizational
form it discovers, but it is certainly a superior way for facilitating situated, problem-solving
based learning that leads to organizational forms that fit strategically with the organizational
mission

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 CHAPTER 6

FINDINGS OF THE STUDY

 Toyota has the most fuel efficiency.

 Toyota features are good. They are best known for its design and comfort. Then
comes handiling and fuel efficiency.
 If Toyota is made more affordable then it would win more customers.
 To make it the best car in its class it should be made more futuridtic.
 The inventory turn over ratio was 7.46% in 2015 which has decreased to 7.07% in
2016 but then it was decreased drastically in 2017 to 6.74% but slowly is
accelerating from 2018 on wards to 6.91% in 2017-2018.
 Toyota should continue to undertake concerted effort to strrengthen its management
platform and raise corporate value.
 Toyota should accelerate its business expansion into rapidly growing emerging
countries by thoroughly and meticulously monitoring market conditions in respective
regions and introducing products suited to the characteristics and needs of each
market.
 Toyota should also strive to establish production and supply structures to realize
optimum product pricing and delivery, and to enhance the value chain to provide wide
range of customer services in each country and region.
 Toyota should pursue the development of environmentally conscious, encrgy-saving
products while incorporating functions and services demanded by customers (value
chain) and delivering them to the global market. Acting on these measures. Toyola
should aim for growth in three business units, namely, "solutions" in the areas of
materials handling equipment, logistics and textile machinery: "key components" in
the fields of car air-conditioning compressors and car electronics; and "mobility" in
the domains of vehicles and engines
 To support consolidated management on a global scale, Toyota should enhance the
power of the workplace and diversity in the use of human resources, and strive to
nurture global human resources
 In addition to placing top priority on safety, Toyota should thoroughly enforce
compliance, including observance of laws and regulations, and actively participate in
social contribution activities.

47
 Toyota should aim to support industries and social infrastructures around the world by
continuously supplying products and services that anticipate customers' needs in order
to contribute to engendering a compassionate society.
 Toyota must at the moment carry out a feasibility študy for launching a vehicle in the
domestic market where it has models like the Innova and Camry amongst others. –

48
 CHAPTER 7

CONCLUSIONS

This report has helped us understand properly all about Toyota Production System and more
importantly its core elements. Also with the help of cases discussed in this report, it reveals
that the multiple shut down decisions were due to influence from either Just-in-Time or
Jidoka system. But in the end, the decisions taken at the right time for closure of production
lines were not wrong.

Moreover, as per the initial hypothesis and objective set out for this report, it clearly makes
sense that, there are some limitations for Just-in-Time system only due to disruptions in
supply of small but crucial parts from its suppliers required for the production during severe
disaster situations. Otherwise, Toyota Production System has not encountered many such
incidents which directly pose a threat to the existence of Just-in-Time System in Toyota and
other manufacturing firms in Japan.

Most of the time, Toyota has suffered a lot due to these shortages from its supplier. But no
one is to be blamed for it because most of the shortage occurrences were due to natural
disasters or unforeseen events. Japan is located on one of the most active seismic plates of
earth crust. So it will naturally make it prone to such disaster events across Japan. This has
also given a spark by respected scholars in Japan and across the globe, why Toyota is not
making any efforts to combat such situations for future and secondly, it should move towards
other production systems.

Toyota‟s Just-in-Time system, Jidoka and Kanban system are very well known across the
globe because Toyota showed huge success in most of its production department. Since
1950‟s, Toyota has been using Toyota Production System and it has made it better and better
over the time. It will be wrong to say usage of such old system shall be abolished and
replaced with something else, just because it only proves it‟s insufficiency during unforeseen
disasters.

Moreover, in 1997, when AISIN Seiki plant caught fire, it was Toyota‟s production methods
which helped AISIN Seiki to recover sooner because most of the firms, who lend their hand
for help, were aware about the Toyota Production System, Just-in-Time, Jidoka and Kanban
System. This further allowed getting it perfected as per the requirements sooner than
expected.

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Same thing happened during Niigata earthquake in 2007, but there was no alternative for the
RIKEN Piston Rings at that time, which lead to stoppage of all the assembly lines in Toyota.
Furthermore, during Kumamoto city earthquake in 2016, it again faced the same back-clash
against its prestigious production system and leads to halt of 20 assembly lines in production
across Japan.

Toyota used and still uses day-to-day supplies as per just-in-time system in all the above
cases. Toyota has more faith in long term benefits of quality, learning, efficiency and low
cost of production, so that it can have bigger impacts than the risks of raredisruption. But one
should consider that increasing production costs for the sake of increase in inventory, during
natural disasters, only to meet the demanding requirements lacks a rational explanation.

Interestingly, Toyota has looked into inventory system and adjusted accordingly when it
comes to forecasted events. For instance, Toyota‟s plants across Toyota city have gathered
long stockpile of parts during its winter season for west of Seki-Ga-Hara, Japan.Moreover,
Toyota has emphasized more on multiple suppliers are able to manufacture the same part.

After observing such changes in Toyota, experts and scholars are saying that Toyota will now
be able to recover sooner than expected from any natural disaster occurrence in future as
compared to past. But said that, it will still pose a challenge to bring the necessary parts or
equipment‟s, if the highways are closed and restrictions are put in for earthquake affected
zones.

Takaki Nakanishi, an auto analyst who runs his own research firm in Tokyo, said “They
can‟t simply switch production from one site to another immediately. It‟s not a flaw in
Toyota‟s Production System. It‟s that Japan‟s manufacturing is built on a land that is prone to
earthquakes”.

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