ABSTRACT
This chapter examines the idea of proximity and networks between firms through an examination of Toyota's production system, especially developments in the 1990s. The Toyota just-in-time production system has often been seen as the epitome of efficiency, a system that aims to eradicate waste wherever it may exist. Indeed, Toyota was the first company to earn the attribute lean that was given to it by a group of researchers at the Massachusetts Institute of Technology (Womack, Jones and Roos 1990; Womak and Jones 1995, 1996). Certainly, Toyota-style manufacturing aims to use as little labor, inventory, development time and factory space as possible, and at its foundation is a spirit of innovation that tries to utilize limited business resources efficiently. These key elements made it possible for Toyota, and other firms that favored its approach, to achieve extremely high levels of quality through absence of defects, and productivity approaching two to three times higher than US or European automobile plants in the late 1980s. Central to the success of lean management has been Toyota's just-in-time (kanban) system of inventory-control in which materials and parts are procured and delivered just before they are needed.1
The objective of just-in-time is to minimize the level of inventories, especially when different models or parts are to be produced. Toyota Motor Company (TMC) developed the system to initially coordinate in-plant activities between different processes of production and before long to control the timing of deliveries made by subcontractors. Centered on Toyota City (located in Aichi prefecture, Japan), TMC perfected a unique localized production system and close integration of its major suppliers and
