The competitiveness of Japanese manufactured products has focused attention on their manufacturing systems since the basis of their success has been high quality, competitively priced products. Indeed, the Japanese market strategy seems to be rooted in their production systems, and the literature is filled with reports of remarkable quality levels, achieved along with lower costs through higher productivity and very low in-process inventories. Some examples of these achievements both in Japan and in Japanese plants in the United States are discussed in the following paragraphs.
Sepehri (1986) reports on a sample of five Japanese companies that employ just-in-time (JIT) methods producing the necessary parts in the quantities needed at the time they are needed as a basis for comparing the results of 13 US companies that have installed JIT concepts. The summary results of the five Japanese companies in improving productivity, reducing set-up time, reducing inventory, improving quality, saving space, and reducing lead times are shown.
The productivity increases are quite remarkable, ranging from a 45 percent increase by Tokai Rika to a 250 percent increase by Canon. The reductions in the set-up times of specific operations by Hitachi and Yanmar suggest that economical batch sizes would be reduced, leading to in-process inventory reductions. Indeed, the inventory reductions reported for all five Japanese companies are indicative of lower cost operations that are responsive to market needs. Quality improvements are significant for all five companies, and all show important space savings and reduced lead times.
In addition, there is the study of room air conditioner quality cited at the beginning on quality assurance, in which the Japanese quality levels were extremely high and were coupled with high productivity. The companies with the best quality records also had the highest labor productivity. This union of high quality with high productivity is in contrast with previous conventional wisdom, which commonly held that these two measures represented trade-offs. How the Japanese achieve levels in quality and productivity simultaneously will be of central interest in this article.
Japanese firms have also established manufacturing facilities in the United States where they apply their manufacturing techniques. For example, in the early 1970s, Matsushita bought the Motorola TV assembly plant in Franklin, Illinois. This plant had a poor record for both productivity and quality (more than 150 defects per 100 completed sets) but within three years, Matsushita was able to increase productivity by 30 percent and reduce defects to below 4 per 100 sets. However, the quality standards were still not as high as the 0.5 percent achieved in comparable plants.
In 1977, Sanyo bought the Warwick TV plant in Forest City. Arkansas. Sales had declined to such an extent that 80 percent of the plant’s capacity had been closed down. Sears owned 25 percent of the stock and had been buying of Warwick’s production output under its own label, but quality had been so poor that Sears had turned to Japanese manufacturers for most of their needs. Within two months after Sanyo’s takeover, quality had been improved from a defect rate of about 30 percent to less than 5 percent while assembly line production had improved substantially.
Finally, there is extensive reporting on the Lincoln, Nebraska plant of Kawasaki Motors by Schonberger (1982). Kawasaki opened the plant in 1975 to manufacture motorcycles and added other products later. Originally, the plant was staffed with American managers and workers, but Japanese were installed as top managers in 1981. The JIT program was actually started by an American plant manager, based on knowledge he had gained about Kawasaki’s Japanese operations, but the Japanese managers completed the conversion of the US plant to Japanese methods.