Comparison of Toyota and Nissan Manufacturing Company

This paper evaluates the factors that contributed to the performance difference of Toyota and Nissan during the application of the JIT technique in their manufacturing process.

Running head: COMPARISON OF TOYOTA AND NISSAN COMPANY
Comparison of Toyota and Nissan Manufacturing Company
Name
Institutional Affiliation

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Introduction
The automobile company was started in France and arose as a contemporary business
through the line of assembly in mass production of the Model-T in 1913 by the establisher of the
Ford Motor Industry, Henry Ford, in the year 1903 (Alagaraja, 2013). In 1908 the General
Motors were established by William Durant, and in 1925, Chrysler was developed (Alagaraja,
2013). The two main automakers in Japan have been based within the same business,
experiencing similar global forces and politico-economic problems globally and domestically.
Even though they have had the same industrial resources like information, work force,
technology, capita and products, major dissimilarities in their monetary performance started to
arise during the 1980s.
This paper’s purpose is to evaluate the factors that subsidized to the performance
difference of the two main automakers, Nissan and Toyota, during the application of the JIT
technique in their manufacturing process. It is discussed that the enactment of the two
corporations can be associated to lean manufacturing to augment productivity, enhance the
quality of the products and the period of manufacturing cycle, lessen inventory, decrease the lead
time and eradicate industrial wastes. To attain the above, the philosophy of lean production
makes use of various concepts like scrap reduction, on-piece flow, work place management,
kaizen, pokayoke standardized working, cellular manufacturing, inventory management and
synchronous manufacturing to lower productivity wastes (Russell and Taylor, 1999). In JIT
manufacturing schemes, trials are made to eradicate wastes via constant process improvement of
the whole value chain within the organization. Having cultivated a mindset of lean
manufacturing among the workers, it helps in the accomplishment of continuous flow of
products through the control and physically rearranged mechanisms. A research illustrates that

COMPARISON OF TOYOTA AND NISSAN COMPANY 3
“many of the western producers have been conscious of the necessity to enhance their
competitiveness and performance for about two decades”.
Just-In-Time
Just -in -Time (JIT) manufacturing is a productivity idea which eradicates waste related
with storage space, time, and labor (Alagaraja & Egan, 2013). The concept’s basics are that
Industries produce only the needed products, when they are required and in the quantities that are
needed. The company manufactures what the customer asks for, to real orders and not to
forecasts. Therefore, JIT can be described as the process of creating the essential units, with the
needed quality, in the required quantities during the last harmless moment (Bhasin, 2012).
Therefore, it means a corporation can easily allocate and manage their resources. It means that
company can manage with their own resources and allocate them very easily. Figure 2 indicates
an illustration of the JIT theory.
Source: (Alagaraja, 2013)

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Lean manufacturing or Just-in-time (JIT) manufacturing. The innovators of these approaches
were Shigeo Shingo, a renowned consultant and engineer and Taiichi Ohno, a previous executive
and Toyota. In Shigeo’s book of 1989 ‘The Study of the Toyota Production System from an
Industrial Engineering Perspective’, he recognized these elementary aspects of TPS (Bhuiyan,
Baghel, & Wilson, 2005):
1. It accomplishes cost discounts by eradicating waste, be it materials, staff time, or other
assets.
2. It decreases the possibility of over-production by sustaining limited inventories ("non-
stock") and maintains labor charges low by making use of minimal manpower.
3. It drastically cuts on the time of the production cycle with inventions such as the Single-
Minute Exchange of Die (SMED) scheme, which reduces the downtime and allows
small-lot production.
4. It stresses that invention orders should lead the decisions of productivity and processes,
an exercise referred to as order-based invention.
History of Toyota Production System (TPS)
TIS is known for having taught the current automobile industry on how to assemble
proper cars. Few organizations had been aware of the Toyota Production Systems until the
programme ran by the by Massachusetts Institute of Technology (MIT) about the process
(Bonavia & Marin-Garcia, 2011). The institute also wrote a book in the year 1991, “The
Machine that Changed the World”, the book defined the practices and principles used in lean
production established at Toyota company by executive, Taiichi Ohno. Taiichi in turn had
acquired motivation from W. Edwards Deming, who was an important quality-control expert and

COMPARISON OF TOYOTA AND NISSAN COMPANY 5
statistician, he had played a major role in the development of the rapid-manufacturing practices
that were used by the Americans during the 2nd World War (Bhuiyan, Baghel, & Wilson, 2005).
At the fundamental point of TPS, there is waste elimination and absolute focus on constant high
quality by the Kaizen process which ensures continuous improvement. The catch JIT idea of
assembling various motor parts appropriately is the clearest display of a persistent drive to
eradicate wastes from the production process. For these reasons, the globe’s motor company,
together with the other manufacturing branches rushed in adopting and embracing the TPS
principles. Toyota’s achievement began with its excellent production engineering as it gives the
workers the responsibility of quality control, therefore, they can stop the process or call for
assistance in case a problem arises.
Lean development at Toyota:
Lean doctrines embraced by Toyota to attain their objectives are:
 Precisely describe value by a precise product.
 Recognize the value flow for every product.
 Make the product’s value stream without interruptions.
 Let the consumer pull the value from the manufacturer.
Toyota Activities:
In the organizations that are managed by TPS where data was gathered, a consistent
methodology was manifested in the assembly design of the line work. At the Kentucky plant,
that was mentioned earlier, fixing a seat needed a total time of 51 seconds, the process was
drawn into 7 different steps, and every step had an expected outcome, sequence, completion time
and location. Design deviations could trigger indications that the worker needed help (Brown,

COMPARISON OF TOYOTA AND NISSAN COMPANY 6
2012). The exact approach was applied in the other assembling jobs within the Toyota plant at
Kentucky. Installation of seats and other works at various Toyota firms such as Kyushu and
Takaoka had a specific process that involved self-diagnostic and built in tests. However, having
done some assembly line jobs and seat installation at the competitors of Toyota one realizes that
the work is not accurately defined (Byrne, 2013). Additionally, there is less capability to give an
immediate signal when a problem arises. At Toyota Company, a problem of a line-worker
immediately triggers a particular team leader who comes in for assistance and if the leader is
challenged in providing assistance then a group leader is signaled to offer help.
Techniques Used In Waste Control:
TPS’s purpose is to lower the time consumed on non-valuable exercises by placing the
tools and materials very close to the assembling point. The major categories of non-value
addition wastes in production processes and businesses are unused creativity of the employees,
excess inventory, overproduction, unnecessary conveyance or transportation, incorrect or over
processing and unnecessary movement.
The motivating force behind the production system of Japan is waste elimination thus
maximizing the efficacy of the process and the profits of the resources a large number of
practices and principles can be applied to attain this objectives. As per Shingo’s perspective,
people impulsively acknowledge the necessity of waste elimination once it is recognized as
waste, so the mission of lowering waste is usually centered on first the identification of the
unnecessary need for physical, human or capital assets, once the waste is identified and targeted
novel practices or processes need to be invented to deal with the problem.
Process Improvement

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A significant aspect of waste elimination is the designing efficacy into the methods and
processes of production. For instance, in the Toyota scheme there is great emphasis on reducing
the complexity and time needed to alter a die in the production process. A die-changing process
that is time-consuming is usually wasteful in two aspects, one, while the process is occurring
productivity is usually at a hold thus increasing the time cycle, therefore, increasing the costs of
production (Byrne, 2013). (However, in TPS theory, the standstill period for individual
machineries is not always taken as wasteful.) Second, the workers' effort and time are expended
on practices that are not related directly to production (that is, no value is added during the die-
changing process) Due to such apprehensions, the Toyota’s pushes to significantly reduce the
time taken in changing dies.
Brief History of Nissan
Aikawa Yoshisuke began the development of the Japanese automobile manufacturing
business in the year 1993 (Danova, 2013). Yoshisuke achieved the vehicle industry by merging a
motor parts unit of Tabata Casting and a small vehicle manufacturer and repair shop belonging to
DAT motors. Nissan a prevalent term in the Tokyo stock market came about in the 1930s like a
short form for Nippon Sangyo (Japan Industries). Nippon managed to develop more than 74
enterprises by the termination of WW II (World War II) including Hitachi, Nippon Mining,
Nissan Motor Company, and Nissan chemical (Deluzio, 2006).
Production methods and Activities of Nissan:
It is worth to note that the Times 100 series has conducted several case studies on real
business across the world (Dora, Kumar, Van Goubergen, Molnar, & Gellynck, 2013). One of
the studies conducted involved featured the production methods used at the Nissan’s Sunderland

COMPARISON OF TOYOTA AND NISSAN COMPANY 8
automobile Plant. The study defines the Nissan Sunderland motor plant as the most up-to-date
vehicle plants in Europe. Additionally, the Nissan plant tops the throughput league table in the
car world.
Workforce and Productivity of Nissan:
NMUK produces more ‘cars per man’ than any other car factory in the world. Therefore,
it is the most productive motor factory in Europe. NMUK has employed around 4500 personnel
and about 500 being on a contract program. The staff at NMUK works for 39 hours a week with
the office personnel working on a fixed Day shift (Eisenhardt & Graebner, 2007). The
production staff works on alternating morning shifts that run from 7am-3pm and evening shifts
running from 4 pm to midnight. The shifts are dependent on the factories requirements. If need
be, overtime is worked, though it is balanced out in the course of the year with planned
downtime.
A new work shift, the ‘3-shift system, has been tabled, and if adopted will make the
factory work on a 24-hour time scale thus more productivity. The new shift will involve the
introduction of a night shift which will automatically necessitate for the hiring of new
employees. Owing to the unprecedented demand for line P32L between August 2008 and Jan
2009, this ‘3-shift system will only be applicable if there is surety that the demand for cars will
be satisfactory to permit the upturn in volume (Emiliani & Emiliani, 2013).
Comparison between Toyota and Nissan:
Performance Level of Toyota and Nissan

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Since the early 1970s Toyota experienced a steady growth in its revenue, margins, and
market share, however, the same cannot be said for Nissan which did not have a fair as well in
the 1980s (Fullerton, 2009).
Nissan hit its worst performance in the 1990s, incurring annual losses in eight
consecutive years of operation spanning from 1992 to 1999 (Gupta, Acharya, & Patwardhan,
2013). Its production of automobiles significantly declined in the 1990s; it experienced a
significant decline in its market share domestically from 18.6% in 1989 to a lower ratio of 13.3%
in 1999 while its general market share globally shot down from the 1991 ratio of 6.6% to a much
lower ratio of 4.9% in 1998 (Emiliani & Emiliani, 2013). Toyota managed to widen the gap in
the number of automobiles it produced in the early 1980s and as soon as 2000 the automobile
giant had reached an annual production level of two million cars higher than Nissan (Figure 2).
Source: (Emiliani & Emiliani, 2013)
Manufacturing Technology and Operational Efficiency

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Both Toyota and Nissan had the mastery of the techniques used in manufacturing
American trucks during the 1930s and 1940s and had to subsequently learn the technology in
small car production from their European automaker counterparts in the 1960s (Hartwell & Roth,
2010). By then, the two automakers were more competitive against European automakers and
much better in terms of the price, quality, productivity, and performance of their small cars
American automakers. The two manufacturers owe their technological success to a unique
combination of process innovation and transfer of technology which took decades to achieve.
The approaches utilized by both Toyota and Nissan in the techniques of technology transfer were
however very different.
Toyota:
Unlike Nissan which relied much on direct technology transfers from various vehicle
manufacturers such as British, German, and American part and automakers, Toyota relied much
on indirect technology transfer that composed of selective aping of designs and manufacturing
techniques from various foreign automakers (Jusko, 2007). Toyota’s use of indirect technology
had the following advantages:
 Toyota engineers were in a position to copy and produce proven technologies carefully
from a number of automakers and in turn make advances quicker than Nissan in in
making automobile designs.
 Toyota was able to avoid using products from other manufactures and thus increased use
of the machinery produced by themselves.

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 Toyota gained meaningful experience in terms of engineering as a result of indirect
transfer of technology. This helped in development of improved products compared to
the existing designs.
Nissan:
Nissan managers faced a number of challenges that made it difficult for them to implement
Ohno’s techniques despite the fact that they knew about way early in the 1950s (Katz, 2012).
Below are the factors that were hindering the process.
 Nissan feared the cost of acquiring new machinery since the once in their possession
were highly specialized and could not be easily changed to conform to those used at
Toyota.
 Workers union were against reduction of reduction of worker’s overtime. The union
believed the system could affect the company’s operations.
 The difference that existed in terms of employees. Nissan employees were largely from
urban areas unlike the Toyota workers who were from the rural area. Nissan employees
understood their rights as employees and thus wanted to be in control of the system and
imposing the system on them could result to labor issues.
Nissan managers had the option of bringing in a high speed single function machine in bid to
increase productivity by making systems automatic. In the 1970s, Nissan made three major
changes to arrest the challenges that were being brought about in in manufacturing and product

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complexity (Koenigsaecker, 2005). The management first improved its computerized systems,
secondly it made links to all the main suppliers by use of internet connections for efficiency
purposes and lastly it acquired other automated robots. Despite all the efforts by Nissan
managers the results could not match Ohno’s techniques. Since by mid 1980s the Toyota had
performed way better than Nissan. Toyota had produced more cars and increased its profits
significantly (Koenigsaecker, 2006).
Productivity of Toyota and Nissan:
Toyota has the advantage of geographical location. The factories were located in the rural
areas and also the major suppliers of spare parts. This therefore, made it easy to transport spare
parts and as a result increased efficiency in the production process. On the other hand, Nissan
factories were located in Japan urban areas. More so, the union of the two companies had a role
to play in the process of manufacturing (Koenigsaecker, 2013). Nissan being in urban area the
union were conversant with the labour laws and were against techniques that would compress
cycle time, raise assembly line speeds, or use overtime when the demand was high.

COMPARISON OF TOYOTA AND NISSAN COMPANY 13
Source: (Koenigsaecker, 2005)
Conclusion
If the company needs to incorporate the JIT concept, it does not mean that all must be
done in a hurry. The most significant thing for the business is to have a well-organized resource
allocation. Similarly, the officials and employees should know that the JIT concept can be of
great help to the organization in solving logistical problems.
It is worth noting that the implementation and development of the JIT concept is a long-
lasting and expensive process. However, if the company manages to overcome these challenges
it will realize high levels of work-flow.
The JIT model is just a section in the value chain that brings satisfaction to customers. It means
will that the concept will not help solve all the issues in the business enterprise. In any business,
all things need to be in a good state, through the hierarchy of staffs and all work-flow
developments. Synergy is vital in the improvement of an organization’s outcomes. The JIT idea
is just a link within the chain, but very crucial.
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