Agile Manufacturing - Relation to JIT, Operational Performance and Firm Performance - Article Example

Article Analysis Student’s Name Course Professor Date The article highlights the application of lean production in Japanese automobile companies. It argues that the production system was very viable in 1980s but a wide-range of interrelated problems facing Japan in particular may hinder the ultimate benefits in near future. First it describes the concept of lean production and how it has influenced change in the automobile industry in Japan. Secondly, it highlights the internal and external environmental influences including increased traffic notorious for congestion and pollution, reaction of the public due to the introduction of variant and new products, the global economy, and international expansion and ageing workforce. It concludes with an analysis of four case studies concluding that adaptable production can be an alternative to lower costs and increase competitiveness. Lean production has for long been hailed for its quick response, quality products and ultimately increasing revenues for the companies. Japan automobile companies especially Toyota revealed great benefits from the production system by conforming to a system with short cycle time capabilities. However, in 1980s, the viability of the system can be related to a number of factors that dominated Japan market and workforce. The domestic market demands for vehicles due to severe inspection and lower average model age compared to other countries and a workforce that would respond to pressures for higher performance accelerated the higher market share for Japanese companies. The increased adoption of lean production elsewhere means that the Japanese companies cannot rely on it alone to gain competitive advantages in future. Lean production has had its effects and particularly increasing competitive pressure on companies. In an attempt to respond by increasing market share and price competition, there is a reduction in profits which in turn necessitate cost reductions. One way recently adopted by companies is continuous improvement to stimulate price competition, larger sales volumes and diversification of products introduced in the market. Continuous improvement alone was not responsible for maintained continuous cycle in Japanese industry but the “bubble” economy, increased value of yen and reduced reliance on exports much of which are no longer prevalent for the current situation in Japan. A number of weaknesses and threats are manifest from the external environmental influences and they have substantial negative impacts on Japanese automobile companies’ application of lean production. As Inman, Sale, Green & Whitten (2011) observes, competitiveness result from a combination of strategies. For instance, increased traffic resulting from pressure of smaller and frequent deliveries has not only caused congestion and pollution but has also caused public uproar due to inconvenience in the roads. It is an issue of concern noting that Japan alone contributes to a quarter of total sales a condition which is hard to find in other countries. When such reports increase in the mainstream media, the domestic buyers will lower the level of loyalty to Japan-made autos for companies which has a negative image. Secondly, the introduction of new products and variants forms of those that exist in the market is also confusing to customers and might annoy those who feel that the products they just bought have become obsolete at a shorter period of time. In fact it is manifest that many imported vehicles are on Japanese roads for foreign models that do not undergo that fast changes on an ever-increasing rates in Japan. Consumers may tire of the trend which will in turn mean that foreign competitors will soak up domestic consumers’ dollars by launching their similar but stable models. The global economy that has promoted international expansion for Japanese automobile companies has generated competition between the parent plants and subsidiaries overseas. The manufacturing cost for most products is half that in Japan or 20% lower even in Europeans countries. Overreliance on overseas manufacturing will limit the parent plats production capacities meaning that they will not expand in the domestic market. Such a situation which already exists reveals that lean production is more viable elsewhere than it was in Japan some years back. It is most likely that the impacts are as a result of differences in resource inputs and manufacturing system which are core aspects and essential elements of lean production. Output performance as an element of lean product arises when the industry has the capability to extern pressures for higher performance (Fishman, 2012). However, ageing workforce in Japan automobile companies affect the application of lean production since they are not as fast as younger workforce in applying new technologies. The existing competitive pressures require most companies to reduce costs and a major cost-reduction mechanism is reducing the recurrent expenditures. However, with a seniority-based pay system following an increased ageing population pose a threat as in others countries in East Asia labor are relatively cheap. Lowered number of young employees will compound the situation in near future due to labour shortage. Though various industries are adopting unique approaches to production systems and use of technologies, a number of problems are far from being dealt with. Among them includes; production systems that do not meet uncertain situations, falling domestic sales, lower proportion of sales for specialized products, seasonal sales and reliance of supplies from overseas. Though the application of lean production is manifest in most industries, versatile design of the production system is a necessity. In turn, the industries can remain viable and competitive under changing economic and market conditions. What the research suggests is more of proactive approach to production (Yauch, 2011). In conclusion, it is possible to see how various factors that increase competitiveness are intertwined and a change in one factor can cause a ripple effect in the overall profit objectives. As it is manifest, the lean production that has contributed to increased market share and profit for Japanese companies worked better when other factors such as the domestic market, characteristic of their workforce and product release cycle was in line the required performance in the industry and with consumer interests. However, continuous improvement has failed to compare with consumer interests while international subsidiaries have reduced costs of production making the domestic ones more dependent on imported operations and products making the industry market less viable in the current situation. References Fishman, C. (2012). The in sourcing boom. The Atlantic, 28. Inman, R. A., Sale, R. S., Green, K. W., & Whitten, D. (2011). Agile manufacturing: relation to JIT, operational performance and firm performance.Journal of Operations Management, 29(4), 343-355. Yauch, C. A. (2011). Measuring agility as a performance outcome. Journal of Manufacturing Technology Management, 22(3), 384-404. Read More