Toyota’s Inventory Management

Inspiration can be found in the least likely of places. It was while shopping at a supermarket that the minds over at Toyota created the Toyota Production System, or more commonly known as “TPS.” The idea for this system was sparked when examining a vending machine with the simple process of a customer buying a drink, and the machine simultaneously replacing it. The Toyota Production System was originally called “Just-In-Time Production,” and fuels off of ideas composed by the founder of Toyota, Sakichi Toyoda, his son, Kiichiro Toyoda, and engineer, Taiichi Ohno.
The primary goals of the TPS are to find solutions to overburden, inconsistency, and to get rid of waste. This systems philosophy is to produce intelligently and eliminate aspects like over-production, waiting, and correction, so that inventory is not needed. One principle under the Toyota Production System is Small-lot production. Finding a way to make setups shorter and less expensive, gave Toyota the freedom to economically produce a variety of things in small quantities.
Another principle under the TPS is the process known as “Pull Production.” The intention of this process is to cut down inventory holding costs, as well as lead time. Toyota developed this idea so that the quantity of work performed at each stage of the developmental process is determined strictly by the demand for needed materials in the following stage.
These methods of cost cutting and inventory management are all becoming mimicked within different companies all over the world. Toyota was one of the pioneers to first adopt these unique methods and continue to do so today.