Just-in-Time Inventories in Old Detroit

Abstract

Just-in-time inventories were not an invention of Toyota or of Japanese industrialism. Twice in the early history of the American automobile industry (before and after World War I), the same system – known then as hand-to-mouth inventories – was prevalent in Detroit. The article chronicles this double rise and demise, demonstrating that this earlier system had the same basic structure and functions as the later Japanese system. Most significantly, in the 1920s the hand-to-mouth system was a central component of the most innovative era in American automotive history, facilitating improved production methodology, rapid product innovation, and decreasing consumer prices. Like its Japanese cousin, the hand-to-mouth system was a key determinant of the relationships between assemblers and suppliers; but, because of the geographical clustering of the Big Three in Detroit, the dynamics of these relationships were quite different.