Japanese Style of Management

Submitted To: Madam Adeela Parveiz

Submitted By:

Muhammad Abdullah

(BUSB51F20R030)

Waseem Abbas

BUSB51F20R047

Imran Ali

BUSB51F20RO29

Muhammad Usman Abid

BUSB51F20RO17

Session: 2020-2024

Semester: B.B.A 8th Regular

Department:

MFKNBS, University of Sargodha

The Reasons for Japanese Success:
Due to the massive industrial initiatives, they have undertaken,
the Japanese have secured a significant share of the global market for numerous
products. One factor contributing to their success is the Japanese management
style. Second factor is the invention and adaptation of several new technologies.
Third factor is using innovative approaches for material management and
control. The Japanese approach to material management and control is known
as Just-In-Time (JIT). JIT is a concept aimed at eliminating waste, including
superfluous inventory and junk in production. JIT production techniques are
transforming the way manufacturing companies do business across the world.
Japanese Approach to Productivity:
The way the Japanese work to make things better and faster has
had a big effect on industries worldwide, especially in cars. But it's not just
cars—stuff like TVs, cameras, and even ships are being made better and
cheaper by Japanese companies. They're not just competing on price; their
quality is top-notch too. The Japanese have been able to do this with far lesser
investments. Japan's vehicle and truck inventory turnover rate is more than
double that of the United States. In practically every industry, Japanese turnover
rates are higher.
For example, in 1977, Hertz Corporation conducted a study to determine which
automobiles in its fleet of vehicles required the fewest repairs within the first
12,000 miles, which were covered under warranty.
The findings are provided in the table below, which reveals that the Japanese
quality was significantly superior.
Table 1: 1977 Hertz repair study
MODELS REPAIRS PER 100 VEHICLES%
Chevrolet 425
Ford 326
Pinto 306
Toyota 55

In 1977, Matsushita, a Japanese company, bought a TV factory in Chicago from

an American company. In the deal, Matsushita agreed to keep all the hourly
workers. After 2 years, they still had about 1,000 hourly employees but
managed to cut the number of other staff in half. During that time:
 1- They doubled their daily production.\
2- The quality improved a lot — they had to fix things way less often.
3- Outside quality measures also improved.
4- They only spent about $2 million a year on fixing things under warranty,
while the American company they bought it from (Motorola) was
spending $16 million a year for twice as many TVs.
So, the difference was big. And all this improvement happened in the USA with
American workers.
Table 2: Quasar Plant Productivity
Under Motorola Under Matsushita
Direct Labour
Employees 1000 1000
Indirect Labour
Employees 1,600 1,300
Daily Production 1,000 2,000
Assembly Repairs 130% 6%
Annual warranty costs
($m) 16 2

Establishing The Elements:

Japan has aimed for full employment through industrialization

since 1945. To achieve this, they focused on becoming leaders in specific
industries rather than spreading their efforts too thin. They did this by:

1- Bringing in technology from other countries, like the semiconductor

industry, which started with a $25,000 deal with Texas Instruments.
2- Putting a lot of focus on making their factories super-efficient to keep
costs down.
3- Working hard to make sure their products were the best quality
possible, giving customers reliability that other companies couldn't
match.

The implementation of these tactics was guided by two essential concepts:

1- Eliminate Waste.
2- Respect for People.
1- Elimination of Waste:

To the Japanese, waste means anything that's more than the bare
minimum needed for production—like extra equipment, materials, or workers.
So, if you don't need something right away, making it anyway is seen as
wasteful.
This notion consists of seven essential elements:

i) Focused Factory Network:

As opposed to creating a huge manufacturing facility that
performs everything (very vertically integrated), the Japanese create
small, specialised units. Managing a big facility can be tough because
it tends to become more bureaucratic. But the Japanese prefer a
different management style. They believe that when a plant is built to
do one specific task, it's cheaper to construct and run than a plant
designed for multiple purposes. For them, it's not just about how much
each person can produce, but also about spending less money upfront
to make the facility work well.
ii) Group Technology:
Group Technology (GT) is an approach to manufacturing
that involves organizing similar parts or products into groups based on
their similarities in design, manufacturing processes, or functions. The
goal of GT is to improve efficiency and productivity by reducing setup
times, minimizing manufacturing lead times, and enhancing workflow
by grouping similar items together for processing. This method
enables companies to standardize processes, reduce production costs,
and increase product quality by applying specialized knowledge and
tools to each group or "family" of products. In Japanese factories, they
use a group technology, which originally came from the USA but is
used a lot in Japan. To make this work, employees need to be
adaptable. And to be adaptable, they need to feel connected to their
company and have confidence that their jobs are secure.
iii) JIDOKA - Quality at the Source:
JIDOKA, a term used in lean manufacturing and the Toyota
Production System, refers to the principle of autonomation or
automation with a human touch. It involves designing processes and
machines to stop automatically when an abnormal condition occurs,
 preventing defects from being passed downstream. JIDOKA
empowers workers to identify and solve problems quickly, improving
quality and efficiency in production. This concept, known as JIDOKA,
relies on management having trust in their employees. It means
stopping everything if something goes wrong. Instead of relying on
quality inspectors, workers in Japanese factories inspect their own
work. Each worker is responsible for the quality of the part they're
working on. They're given only one part at a time to prevent hiding
problems. If anything goes wrong or if there's a safety concern, the
worker pushes a JIDOKA button, which stops the whole assembly
line. Workers then fix the problem right away while others help or do
other tasks to stay productive. JIDOKA also involves automated
inspection to speed up the process and ensure consistency. The goal is
to prevent the production of defective parts and improve overall
quality.

iv) Just-In Production (JIT):

This concept is all about producing exactly what's needed,
when it's needed, and in the right amounts. The goal is to hit the target
without going over or under. Producing even one extra item is seen as
wasteful, just like not making enough. Anything beyond what's
necessary is considered a waste because resources used for
unnecessary items could have been used elsewhere. JIT (Just-in-Time)
is mainly for manufacturing processes that repeat the same tasks but
not always in big batches. In JIT, the goal is to produce one piece at a
time, and ideally, each worker finishes their part and hands it directly
to the next worker as soon as they're ready for it. The goal is to bring
all queues towards 0 to:
1- Reduce inventory investment.
2- Lower the production lead time.
3- React quickly to variations in demand (consumer reaction).
4- Identify any quality faults.
The Japanese see inventory as a problem, not a benefit. They believe it
leads to quality issues and waste. By keeping very little inventory on
the shop floor, any slight change that results in extra parts is
immediately noticeable and needs quick action. They keep transfer
quantities small, usually only enough for a fraction of a day's
production. Suppliers deliver multiple times a day to keep inventory
levels low. The goal is always to reduce the number of inventories lots
 in the system. JIT production does not account for unforeseen
circumstances, this:
a) Each item is required to be precise when received.
b) Every machine is intended to be available when required to
create parts.
c) Every delivery obligation is required to be fulfilled at the exact
time planned.
As a result, the Japanese place a great value on quality,
preventative maintenance, and mutual trust among all
manufacturers. Everybody follows this topic religiously.

Just – In - Time

What It Is What It Does

• Management philosophy attacks, waste (time, scrap inventory etc)
• "Full" system in the plant Exposes problems & bottlenecks
Achieves streamlined production

What it Requires What it assumes

• Employee participation stable environment
• Industrial engineering/basics
• Continuing improvement
• Total quality control
• Small lot sizes

v) UNIFORM PLANT LOADING:

To make Just-In-Time (JIT) production work smoothly, the key is to keep
production steady and predictable. This starts with evenly distributing work
throughout the factory, which helps to prevent big disruptions when there are
changes in the schedule. For example, if there's a big change in the final assembly,
it can cause ripple effects throughout the production process due to things like
how many items are made at once, setup times, waiting in line, and so on. By the
time the effects reach the beginning of production, a small change at the end could
turn into a big change at the start.
Japanese companies that excel in this approach stick to a fixed monthly
production plan. They aim to make the same mix of products every day, even if
they're not making huge quantities of each item.
For example, if they are only making 100 pieces a month, they will make 5 each
day. Since they expect to produce same quantity of everything that is on the
 schedule daily, they always have a total mix available to respond to variations in
demand. They will take those 5 units and intermix them on the assembly line.

Below is shown how Toyota would do this.

Toyota Example of mixed‐model Production cycle in a Japanese Assembly Plant.

MODEL MONTHLY DAILY CYCLE TIME

QUANTITY QUANTITY (MINS)
Sedan 5000 250 2

Hardtop 2500 250 4

Wagon 2500 250 4

Sequence: Sedan, Hardtop, Sedan, Wagon, Sedan, hardtop, Sedan, Wagon etc.
20 - Day month

After setting up the monthly production plan, Japanese companies break it down into daily
goals. They calculate how much they need to make each day and figure out how long it takes
to make one item from start to finish. They focus on making exactly what's needed each day,
without worrying about running their machines at full speed. So, they're more concerned about
meeting the demand precisely rather than maximizing their machines' output.
vi) KANBAN APRODUCTION CONTROL SYSTEM:
In this approach, having a straightforward and automatic control
system is important for effective management oversight. On the shop floor, they use
a system called Kanban, which is like a card in Japanese. It's a paperless system
where they use special containers and recycle cards to keep track of what needs to
be done and when. This system works like a pull system, meaning work centres and
suppliers follow schedules and do their tasks based on these cards. And it's all done
manually, without relying on computers or fancy technology.

The flow of Kanban cards between two work centres is depicted below.

FLOW OF 2 KANBANS
Production withdrawal
Kanban Kanban
Machine centre assembly line
Storage

The machining centre is producing two parts, A and B, which are stored in standard
containers next to the work centre.
When the assembly line needs part A, a worker takes a card from the container and
goes to the storage area.
 1- There, the worker finds a container of part A, switches the card with the
one she brought, which lets her move the container.
2- The card she took off is then put on a rack near the machining centre,
telling them to make more of part A.
3- Parts are made in the order the cards are on the rack, making the cards on
the rack a list of what needs to be made next.
The Kanban system works the same way for authorizing shipments from
suppliers. When both the customer and supplier use Kanban, the withdrawal
card acts as the shipping document for the supplier, while the production card
at the supplier's place controls their production. Having cooperative workers
is really important for this system to work well. Just-In-Time (JIT) helps boost
productivity, turnover of inventory, and cuts down on overtime and space
needed.

vii) MINIMIZED SETUP TIMES:

The Japanese believe in producing small batches to boost
productivity. However, this can't happen if it takes hours to set up the machines.
Instead of accepting long setup times as a given, they flip the traditional approach
on its head. They focus on making the batch sizes really small and then work hard
to reduce the time it takes to set up the machines.
They break down setup time into two parts:
Internal (stuff done when the machine is stopped) and External (things
that can't be done while the machine is running). This shift in mind-set,
coupled with methodical engineering, makes reducing setup time a lot
easier and more successful.External category represents half of the usual
setup time. Another 50% reduction can be obtained through the
application of time and motion studies and practice.

Minimizing setup time - Hood & Fender Press Comparison (800 -ton
press)

Toyota USA Sweden Germany

Setup time 10 minutes 6 hour 4 hour 4 hour
Setups/day 3 1 - ½
Lot size 1 day 10 days 1 month -

Respect for people:

This principle also has 7 basic elements:
i) Lifetime employment:
When a Japanese worker starts a job at a big company, it's typically for life or until
they reach retirement age, as long as they work diligently. Even if times get tough
economically, the company will try to keep its workers on board, even if it means
 risking financial trouble. This encourages workers to give their all to help the
company succeed.
ii) Company Unions:
In Japan, workers don't typically feel a strong connection with others in the
same profession outside of their company. Instead, they form unions that include all
employees of their specific company, regardless of their job. Both the union and
management aim to make the company successful so that everyone can benefit
together in a secure way. This creates a cooperative atmosphere rather than a
confrontational one. This cooperative culture is further supported by the Japanese
compensation system, which is tied to the company's performance through bonuses.
Every employee, from the lowest to the highest rank, receives bonuses twice a year.
These bonuses can be significant, sometimes reaching up to half of one's salary in
good times or none at all during tough times. This setup encourages workers to help
improve productivity because they understand that when the company thrives, so
do they.
iii) Attitude toward workers:
In Japan, how management treats workers is really important. They don't
see workers as just machines; they believe that if a task can be done by a machine,
then a person shouldn't have to do it because it's not respectful. So, the management
system should give every worker a chance to show what they're capable of. That's
why Japan invests more in training and educating employees than any other
developed country.
iv) Automation/ robotic:
When employees feel secure, connected to their company, and believe
they have opportunities to showcase their skills, the introduction of automation and
robotics isn't seen as just a way to cut jobs. Instead, the Japanese view it as a way
to get rid of boring tasks so people can focus on more important work. Because of
this mindset, there's not much resistance from workers when robotics are brought
in. Japan has put a lot of money into these kinds of technologies: they've invested
about a third of their national income into upgrading equipment, compared to just
under a fifth in the USA. When it comes to automation, Japan started by making
small, affordable upgrades to existing machinery. And in terms of robotics, they've
focused on programmable robots. Japan actually has six times more programmable
robots than the USA. In fact, Japan leads the world in both producing and using
robots.
v) Bottom‐round management:
In Japan, they have a management style called bottom-round management,
also known as consensus or committee management. This approach values the
group's needs over individual ones. It involves everyone concerned to reach a true
agreement, not just a compromise. Because Japan is a small, crowded island with
most of it being mountains, people live closely together in small homes. This means
they have to respect their neighbours a lot, or social harmony would be impossible.
This mindset works well in manufacturing because it requires people to collaborate
closely to make products - individuals can't do it alone. In bottom-round
management, decisions are made at the lowest possible level and then move up
through the organization's structure. So, top management in Japanese companies
 don't make many day-to-day decisions; they focus more on long-term planning.
This makes it challenging to manage large, complex manufacturing facilities, which
is why they prefer to build specialized factories.
vi) Subcontractor networks:
Because Japanese factories are highly specialized, they've built a large
network of subcontractors. Over 90% of Japanese companies are connected to this
network, which has many layers because these factories don't do much of their own
production. There are two types of suppliers:
a) Specialists in a narrow field who serve multiple customers (very much like US
suppliers).
b) Captives, who usually make a small variety of parts for a single customer‐this
is more predominant in Japan.
In Japan, sole source agreements work well because they're built on a strong
foundation of trust. They aim for long-term partnerships between customers and
suppliers, where suppliers feel like they're part of the customer's family. Often,
important suppliers are invited to company events like picnics or parties. In return,
these suppliers provide high-quality parts multiple times a day, often delivering
them straight to the customer's assembly line without needing separate checks.

vii) Quality circles:

The Japanese refer to these small group improvement activities as Quality
Circles. These circles consist of employees who volunteer to meet regularly,
typically once a week, for three main purposes:
1- To talk about the issues, they're facing in their work.
2- To brainstorm and come up with possible solutions to these problems.
3- To present these solutions to management for consideration.
The group might be headed by a supervisor or a production worker, and it
usually consists of people from the same department or area of production. It
can also include people from different backgrounds, like material handlers who
deliver materials and industrial engineers who work in that department.
However, it needs to be led by someone trained as a group leader. Circle
members are taught:
a) Brainstorming techniques
b) How to define a problem
c) How to evaluate solutions
d) How to prepare flowcharts
e) Data collection of use of histograms
f) Utilize the cause of effect analysis
g) Use of Pareto or ABC analysis
h) Sampling
i) Control charts
They learn how to make a presentation to management so their proposal
will sell. This takes time, effort and money,
 Some companies do this all on company time while others allow 30
minutes on company time and 30 minutes of personal time. However, full
realization of its benefits will take time (e.g. 10 years at Toyota) and
should not be embarked upon to obtain quick fix solutions.

Basic Kanban Formula:

n=D*T(1+X)/C
Where n =Total number of containers
D =demand rate of the using centre
X = Percentage of safety stock
C =Container size in number of parts, usually less than 10% of daily demand
T =Time for a container to complete an entire circuit: filled, wait, moved, used and
returned to be filled again. This is also called lead time for work centre A.

Numerical Example:
Let’s say you work at a stationery company and use special card stock. You
don’t want to order too much and overload the office with supplies, but you always want
to have enough on hand. How do you know when to order more card stock?

Let’s assume the following information:

• D = 500 sheets of card stock used per day

• T = 2 days, the time it takes to fulfil an order after getting more card stock from the
supplier
• X = .10 (your percentage of safety stock)
• C = 100 sheets per pack

Now, plug the numbers into the formula:

• N = 500*2(1+.10)/100
• N = 1,000(1.10)/100
• N = 1,100/100
• N = 11

This means that you’ll see a kanban card indicating you need to purchase more inventory
when you have 11 boxes of card stock left.