Introduction to Inventory Management in Car Manufacturing Business

This section introduces the role of an inventory manager in a car manufacturing business and the challenges they face with fixed quantity supplies and varying demand.

Challenges in Forecasting Demand

• The parts needed for vehicle production are supplied to the warehouse every month at a fixed quantity.

• The actual monthly parts consumption often differs from the forecasted demand due to unforeseeable events.

• Surplus supplies create problems in the warehouse, requiring time-consuming inventory checks.

Development of Toyota Production System

This section discusses how Toyota Motors developed a system to manage inventory, which became the foundation of the Toyota Production System and lean manufacturing.

Just-In-Time (JIT) Inventory Management

• Beginning from 1948, Toyota Motors developed a system called Just-In-Time (JIT) for managing inventory.

• JIT involves interlinking production, suppliers, and customers to optimize inventory levels.

• Unlike other car manufacturers like Ford with huge inventories, Toyota focused on minimizing excess stock.

• Taichi Ohno, inspired by a self-service store called Piggly Wiggly, developed JIT based on customer demand and replenishment only when materials are used.

Inspiration for JIT from Piggly Wiggly Store

This section explains how Taichi Ohno got inspiration for JIT from visiting a self-service store called Piggly Wiggly.

Self-Service Concept of Piggly Wiggly Store

• Taichi Ohno visited Piggly Wiggly store in Michigan and was struck by its self-service concept.

• Customers purchase goods only when needed, in desired quantities, and at their convenience.

• Stock is replenished only when materials are used, minimizing excess inventory.

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