Japanese Transplants Level Their Own Production example essay topic

The key strategy that Japanese transplants are using in the US is extensive collaboration and information sharing on the innovative manufacturing-management practices and technologies with US suppliers; the key production concept is lean manufacturing. Lean manufacturing is a system of production that focuses on delivering the highest quality product at the lowest cost. It can be also seen as a value stream that consists of all the steps needed to convert raw material into desired products. The goal is to make production process as lean as possible by minimizing the waste that occurs during different steps of production. JIT is just part of the picture, a necessary but not sufficient condition for a lean production process. Japanese manufacturers in the US work close with their suppliers to develop lean capabilities.

They emphasize long term business relationships with a small number of suppliers and have invested significant time and capital in developing them. The results on suppliers' efficiency were astonishing. For example, the average improvement in productivity on the model lines for Toyota suppliers was 124% in less than a year (and the reduction in inventory 75%). Japanese automakers require from their US suppliers low inventory levels, maintaining level production and building in quality. For the suppliers to hold low inventory, Japanese transplants level their own production schedules to avoid big fluctuations in demand (and the bull whip effect). According to Liker&Wu' data, suppliers serving Japanese manufacturers achieve an average inventory turnover of 38.3 (Toyota suppliers 52.4) as compared with 25.4 for their US customers.

As surprising as it may be for old-fashioned suppliers and manufacturers, low inventories mean also better service levels: Japanese transplants paid less than half in emergency shipping than US automakers. In order to achieve Just-In-Time Transportation and Delivery, Japanese manufacturers developed close relationships with a small group of select carriers (core carriers) that can provide reliable service in areas like consolidation, tightly scheduled deliveries, shipment tracing and effective communication. Toyota, for example, uses only one carrier, while GM uses seven. As a result, GM has higher rate of late deliveries (62%) and lower on-time pick-ups (72%) than Toyota (with 30% and 90%, respectively). Japanese transplants also encourage suppliers to ship only what is needed by the assembly plant at a particular time, even if this means partially filled trucks (only 47% of trucks to Japan manufacturers are fully loaded, compared with 68% of trucks to US customers). Another key of Japanese transplants's uc cess in US is to establish stringent delivery requirements referring to: . frequent daily shipments from their suppliers (an average of 3.6 shipments per day, compared to 2.4 for the US Big Three). delivery within specific time periods, to avoid chaos and congestion at their delivery stocks (trucking firms for Japanese transplants arrive within the pickup window 89% of time, compared to 79% of the time for US customers). efficient loading and unloading.

The use of side-loaded truck, sequenced loads and efficient truck transfer (that separates the roles of truck drivers and loaders) increase efficiency. As a result, average loading time for Japanese transplants is only 38 minutes per shipment compared to 58 minutes for US suppliers. Japanese manufacturers managed also to compensate for the big geographical distance to suppliers in US. They developed lean transportation systems to handle mixed-load, small-lot deliveries.

Compound deliveries ("milk runs" that involve stopping at several suppliers or assembly plants to take different parts) gave Japanese manufacturers a substantial competitive advantage. For example, only 13% of the deliveries to Toyota plants from the sample of suppliers consist of single product, point-to-point loads. Toyota is also the master of cross-docking in the North America auto industry: cross-docks redistribute large loads into smaller loads (they reconfigure truckloads of product received at one side of the warehouse to different mixes of truckloads products leaving the other side)..