Impact of Jit in Aisin Seiki Crisis Essay
What kind of impact has the JIT system played in the Aisin Seiki crisis (Toyota)? Due to the just in time stock keeping philosophy of the Toyota Production System, Toyota and Aisin had only about one days’ worth of P-valves stock on hand, with Aisin Seiki as the sole supplier. It became the main cause of a disaster, when the fire burned down the Kariya plant No 1, disrupted the supplies of the P-valves. If the problem was not handled carefully, the shutdown of the Toyota-group plant would be unavoidable.
The circumstances that it might be causing are: Toyota and related firms would suffer great loss of sales and profit; tiered suppliers of Toyota group would have to wait for their reopening of plant to resume deliveries, then indirectly affecting the local electricity, gas and transportation company (or we should call it as the entire network). It would then became like a ‘snowball’ effect, first affecting this network, then the industry, further then, the other industries, last but not least, the nation’s or even world economic.
However, application of just in time also has its positive side of impacts in the crisis. First, JIT is a key mechanism, allowing Toyota to make its supply chain management efficient and highly adaptable to rapid change within its operational environment. Toyota’s JIT system requires close and careful coordination and cooperation of micro-operations supported by the Kanban system, a plate-based demand-supply coordination system originally invented by Toyota and now further assisted by a highly sophisticated computer network.
JIT operations in the Toyota supply network hold the ability to develop the functional capabilities, which are required to perform specific tasks and achieve specific targets in day-to-day operations, and the relational capabilities, which make it easier to collaborate with customers and suppliers. JIT institutionalizes cooperation among units to achieve both day-to-day results (such as meeting consumer demand) and long-term – improvements in group performance through interpersonal and inter-organizational interaction.
These are crucial, especially shown in the recovery efforts carried out to resume P-valves production and thus settling the crisis. Besides that, various discussion forums among suppliers are held regularly and irregularly, serving as a catalytic role for sharing information and know-how concerned with various parts productions. Among them, particularly noteworthy are Kyohokai, regular meetings of supplier association, and Jishuken, voluntary study groups that re organized beyond formal organizational boundaries of suppliers. Although both Kyohokai and Jishuken were initiated by Toyota’s direction, the meetings and workshops are in effect organized and held on suppliers’ voluntary basis with little intervention of Toyota management. Those face-to-face forums among suppliers, facilitating the diffusion of contextual knowledge that offers suppliers solution to a given problem and helps them identify which practice are effective and or whom to contact for more details.
These JIT practices as per mentioned above, facilitate the rapid diffusion and sharing of best practice and inter-organizational learning by institutionalizing the accumulation and crystallization of highly tacit and contextual knowledge of detailed production management processes. Moreover, they help fostering a strong sense of common fate and mutual familiarity within the whole group and among the suppliers.
The case of the Aisin fire crisis shows that, Aisin and Toyota’s rapid response to the destructive crisis is not of coincidence but rather the manifestation of the potential capability of organizing dynamic knowledge emergence, which have been fostered through various institutionalized practices within the Toyota group, such as continuous adjustment of organizational settings in the JIT operations, and knowledge sharing in inter-supplier discussion forum.