Innovation and Technology - Essay Example

 Innovation and Technology Introduction Science, Technology and Innovation are essential for our economy and social progress. In today’s era which is totally technology-oriented, high levels of investments on research and innovations are vital, both for economic competitiveness and to yield the new ideas and innovations that would make tangible improvements to our quality of life (Gordon, 2003). The visionaries who led the growth of science and technology were quite confident that it could play an important role to transform a nation into a modern and industrialized society (Albright & Kappel, 2000). Looking at the current status of the globe, it can certainly be said that this confidence was well placed. Scientific knowledge and expertise, innovations, creative ideas advanced technology industrial infra-structure and skilled work-force are surely the precious assets of this new era. This paper is also a research on the organizations that give immense importance to technology and innovation. Moreover, I will also discuss its positive and negative results. Just in Time System Just in Time (JIT) system is an easy concept to grasp for anyone. It actually means making only what is needed, when it is needed and the exact quantity that is required (Cooper & Edgett, 2009). For example, if an automobile organization gets a huge order for making automobiles which would consist of nearly 30,000 parts, it is necessary that a proper production plan Is created that would consist parts procurement as well. Now, if the JIT system is implemented in the production plan it can eliminate waste, inconsistencies, unnecessary requirements and eventually this would surely increase the efficiency in productivity. According to a research it was found that Toyota Production System implements a unique production control method that plays a vital role in producing efficient results for them. This method is called as Kanban System. It is also known as the supermarket method because the idea of the kanban system was initially borrowed by the super markets. Such mass merchandizing stores use product control cards which have got all the relevant information about the product such as product ID, product’s name and the place where it is located (Farrell & Saloner, 1992). Similarly Toyota also implemented the same process. They also made the product control cards to use in their production processes and since these cards had the sign of Kanban, this is the reason why it is named as Kanban System. Therefore at Toyota, the processes in which the parts are retrieved, it uses a kanban to communicate to know that which parts have been utilized. Now, after doing a detailed research on the Toyota Production System, one thing that caught my mind was to know the reason that why such a multinational Organization is implementing a supermarket method for its production processes. This is something very strange but at the same time it is quite interesting as well. The reason behind using a supermarket concept was that the supermarket stocks the items that are required by its customers when they are needed in the quantity needed, and has all these items available for sale at any time. It was Taiichi Ohno (former vice president of Toyota) who was the first person to promote the concept of Just in Time System at this level. He applied this concept by equating the supermarket and the customer with the previous process and the next process. By having this record it was easy to judge that the customer will go to the supermarket to purchase the required items when they are needed and in the quantity needed. This also made possible to improve the quality of the existing inappropriate production system. Furthermore, it was also found that the supermarket was not making excess parts and delivering them to the customer resulting in an efficient production system. Below is the conceptual diagram of the kanban system which describes all of its steps and which would be easy to understand (Innovative Hybrid Marketing Campaign, 2000). Advantages and Disadvantages of JIT system for TOYOTA Advantages Lower Ware House Cost To store excess inventory is very expensive for an organization. It is important that the amount of inventory should be reduced which would reduce the carrying costs as well. The implementation of Just in Time System in Toyota helped them to reduce the number of ware houses which means that their maintenance cost has also been decreased (Faria & Bruce, 2002). Improved Supply Chain Management It was also found that JIT system also helped Toyota to be more competitive and efficient in terms of supply chains and the way they handle their parts to assemble products for their customers. As result Toyota was able to produce an efficient supply chain management which helped them to lower their cost in the manufacturing process and this lowered cost was then passed on to their customers. Better Customer Satisfaction Implementing the just in time inventory management model allowed Toyota to serve their customers quickly and efficiently. The reason behind this was their outstanding control over the entire manufacturing process. It was due to this fact that they were able to respond the customers faster in case of any amendments in the given order. This certainly attracts the customers towards Toyota and no one can deny that the quality service they provide to their customers is extra ordinary. Less Waste The companies that are still following the traditional of inventory management and control are found to end up with lots of unsold items that are simply wasted. These items are then sold on a very low price just to get rid of it. But this is not the case with Toyota. The JIT system helps them to produce the amount of items that are required and no excess of items are made which automatically means that no items are wasted. This is indeed very fruitful for Toyota. Disadvantages Lack of Coordination A drawback of JIT system is that it requires almost perfect coordination between the suppliers and the retailers in the distribution channel (Kirk, 2009). For this, Toyota needs to work a lot on their employees in order to train them as there is no margin of error. One small mistake committed by any employee can almost put the shutters down. Therefore Toyota needs to spend a lot for the training of their employees and to maintain discipline within the distribution channel. Risks A lot of risk is involved with the implementation of the JIT system. This is because a very limited inventory is stored in the companies using JIT. Similarly Toyota is also associated with major risks, for if the demand of the customer increases suddenly it would be a tough task for company to respond quickly due to which the business risks upsetting its customers with stock outs. Firm’s Reputation The automobile industry has been through a lot since 2008, but it seems that the consumers have still a lot of confidence in the industry. It was clearly noticed that the brand which worked on new ideas and technology made a big leap in their rankings within a couple of years such as General Motors who jumped from 123 to 85. This is a very big achievement for them. As far as Toyota is concerned, things are not going well for them for the last couple of years. The Japanese automaker had to recall for more than 10 million vehicles due to floor mat and gas pedal issues, and therefore exponentially dropped from 18th position to number 139 (Rogers & Shoemaker, 1971). But it is also quite true that this downfall has not exactly reduced the sales of Toyota as people are still after this brand in big numbers. This reflects the reputation of Toyota in the market. Toyota is loved by many people all over the globe because of their quality of service and product. I can say this because even going through bad times hasn’t exactly affected the total sales of Toyota. This is something that should be appreciated and no one can deny the fact that Toyota undoubtedly holds a unique place in the market. JIT and Market Survival Today’s business environment is extremely competitive and therefore firms have to focus on value addition all the time. JIT system allows a firm to lower its warehousing cost and wastage, and at the same time adds value to the final product. This technological innovation therefore is very important for businesses of today. Firms have to build competitive advantage in a time where customer demands are changing rapidly, and JIT system is one way to achieve gain competitive advantage. This technology is already in the market and firms have adopted it which shows the economic viability of the technology. Characteristics of JIT System JIT system is a process not a service or a product. It is a process that aims to minimize wastage and warehousing cost by making sure that inventory arrives at the exact time when it is needed. For the implementation of a JIT system, a firm has to completely change its production system and its supply chain management. A complete overhaul is required if a firm wants to implement JIT system. The scope of the technology is inventory management and production. The market of this technology is firms that sell high value products whose storage cost is very high. The technology involves the participation of the whole organization and needs support from the top management. All resources of the organization are required for the implementation of JIT system as this system makes the whole organization function in an automated manner. Top management has to communicate to all employees regarding how JIT system can add value to the firm. Commitment at all levels of the firm is required and it is only possible through effective communication. One of the problems with JIT is that it requires standardization which is only achieved by trial and error method. The main lesson learned by firms is that JIT system takes time to function properly and there are necessary hiccups. Porter’s Five Forces and Recommendations JIT system can help a firm achieve high bargaining power in the industry. This technology lowers wastage and cost of production and therefore allows a firm a great leverage in the industry. JIT system also increases the bargaining power of customers as they are able to enjoy products at lower rates. Threat of new entrants is not high for a firm using this system because it is almost impossible for a firm to perfectly copy the system. Threat of substitute products is also low because many changes are required to implement this system. This technology also lowers the rivalry as it gives a firm competitive advantage over other firms. It is highly recommended that firms do their homework before adopting this system. JIT system is not for every firm and a significant level of commitment is required at all levels. It is therefore vital that everyone is on board when decision about adopting JIT is being taken. Also it is important for firms to give time for the firm to adapt to the new system as it will not happen very quickly. Toyota and JIT System Toyota was the first firm to start using JIT system. It was a first mover and it was massively advantageous for the firm. The company was able to lower its cost and increase its profitability significantly. It also allowed the company to grow in a very short period of time. There were however some disadvantages as well for Toyota. The company had to spend a lot of time and energy on standardization. Also many mistakes were made in the process as there was no set example they could follow. Overall the choice of being the first mover was justified because it made the company leaders in the automobile industry. Complimentary Services and their Availability The JIT system needs a wide range of complementary services like forecasting tools, efficient supply chain, and highly responsive production system. Without these complimentary services JIT system would lose its effectiveness. Their availability is not an issue because many firms have successfully adopted this system. Firms have to invest in their communication infrastructure in order to successfully adopt JIT system. Conclusion All in all, after doing a detailed research in the technology-oriented organizations, I came to a conclusion that the firms that believe in new ideas and innovations are certainly travelling on the road to success. Therefore one thing is for sure; to acquire a unique place in the market it is essential that high level of investment on research and innovations should be encouraged. Otherwise it would be impossible for any organization to match up with this fast moving technology-oriented world. References Albright, R. & Kappel, T. (2000). Roadmapping in the Corporation. Research-Technology Management, 46(2), pp. 31-40 Cooper, R. & Edgett, S. (2009). Product Innovation and Technology Strategy. Product Development Institute, 44: 55-100. Farrell, J., & Saloner, G. (1992). Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation. American Economic Review 76: 940-955. Faria, A., & Bruce, A. (2002). Determinants of Adoption of Flexible Production Technologies: Evidence from Portuguese Manufacturing Industry. Economics of Innovation and New Technology 11(6): 569-80. Gordon, R. J. (2003). Five Puzzles in the Behavior of Productivity, Investment, and Innovation, in Global Competitiveness Report, 2003-2004, World Economic Forum. Innovative Hybrid Marketing Campaign. (2000). Toyota’s Clean Car for the Future. Automotive Intelligence. Retrieved on June 25, 2011 from http://www.autointell-news.com/news-2000/July-2000/July-25-00-p5.htm Kirk, B. (2009). Creating an Environment for Effective Innovation. Presentation given at the Stage-Gate Innovation Summit 2009, 29: 133-167. Rogers, E.M., & Shoemaker, F. (1971). Communication of Innovations: A Cross-Cultural Approach. New York: Free Press. 72: 423-470. Read More