Production and International Logistics Case Study

Production and International Logistics - Case Study Example In the early 1900, Henry Ford, the owner of Ford Motor company became the world's richest men by his mass production success in the automobile industry. During World War II, the US government also requested him to mass produced bomber air crafts for the US Air Force. Ford Motor Company's production system during those years is a good example of a mass production system. Demand was so high, Ford has to mass produced to satisfy demand. Ford has all the good reason to hold high inventories during those years, that was, to please his customers by keeping a steady supply of his automobiles. This is also one of the reasons why some firms chose to mass produced. Another reason is the uncertainties in supply and supply capacity (Morton 1999). Toyota saw the success of Ford Motor but cannot replicate Henry Ford's production strategy due to the devastation suffered by Japan's economy after the war. This gave birth to a new concept of production where inventory level is zero, the lean production system, otherwise known as the Just-in-Time or JIT system. In the Machine That Changed the World, James Womack, used 'the term lean production to describe the profound revolution in manufacturing that was initiated by the Toyota Production System (cited by Asay, D. and Ott, S ,1998 ). Toyota's factories, along with most of its suppliers, can be spotted around Toyota City. Delivery of components and parts depended on the speed of the assembly line, and parts were delivered using logistics just at the right time when these are needed. The system eliminates the need to carry large inventories but close coordination between suppliers and logistics for the success of the system. When delivery of components or raw materials lagged behind, or when there are defects on deliveries, the strategic advantage and benefits that could have been gained from using the lean concept would be defeated. This led adherents of JIT to embark on a system of managing inventory and logistics in collaboration with total quality management (Heizer, Render 2001). The movement of supplies and other commodities from suppliers to users or consumers in the supply chain is a function of logistics. This is particularly important in a global economy where competition is borderless. International logistics therefore plays an important role in the success of production. The following section compares and contrast the traditional mass production system and lean production system. 2.0 Mass Production vs. Lean Production Traditional mass production differs from lean production in its overall organizational characteristics and manufacturing methods. Let us compare and contrast mass production as against lean production on the following terms: business strategy, organizational culture, customer relationship, production and scheduling, inventory management, quality assurance, information management and manufacturing cost. 2.1 Business Strategy In mass production strategy, the focus is on exploiting economies of scale of existing products and technologies. This strategy takes advantage of the decrease in the unit cost of the product as the volume of production per period of time increases (Kroll, et al, 1996). On the other hand, lean production strategy is customer focused. It seeks to identify and exploit new opportunities and competitive advantage through product design,