Inventory Reduction in the Japanese Automotive Sector, 1965-1991

Abstract

This paper traces the diffusion of “just-in-time” production in the Japanese automotive sector, as reflected by inventory reductions in a sample of 52 suppliers and assemblers. We show that most inventory reductions occurred during a remarkable burst of activity starting in the late 1960s. Companies affiliated with Toyota were the early adopters but were followed very quickly by others in Japan. By the late 1970s nearly all of the firms in the sample had made drastic reductions in inventory. Work-in-process and suppliers’ finished goods fell by nearly two thirds on average.