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The Toyota Production System

Japanese 101

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Why study Toyota?

• Total annual profit on March 2003 was $8.23 billion- largerthan combined earnings of GM !hr"sler and #ord. rofitmargin is 8.3 times higher than industr" a%erage.

• To"ota shares rose 2&' from their 2002 %alues. Mar(et

capitali)ation was $*0+ billion as of 2003 , higher than totalof ig 3.

• n 2002 /eus outsold M1 !adillac and Mercedes en) inthe for the third "ear in a row.

• n 2003 sold more %ehicles than #ord and !he%rolet.• The compan" has made profit e%er" "ear o%er the last 2+ "ears

and has approimatel" $20-$30 billion in cash on a consistent basis.

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More laurels

• n 2003 To"ota recalled 45' fewer %ehicles in than #ordand 52' fewer than !hr"sler.

• 6ccording to !onsumer 7eports *+ out of the 38 most reliablemodels from an" manufacturer o%er the last se%en "ear came

from To"ota/eus.• 6ccording to 9.:. owers ran(ing for initial ;ualit" and long-term durabilit" /eus was

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How did it happen?

• ncredible consistenc" comes from operational ecellence.

• The operational ecellence is based on the ;ualit"impro%ement tools and methods de%eloped b" To"ota Aunderthe TBC such as 9T (ai)en one-piece-flow Dido(a and

heiDun(aE• These techni;ue triggered a ?lean re%olution@ in the

manufacturing sector.

• Ff course To"ota s"stem is much deeper and in fact is at a

philosophical le%elE• To"ota 1a" , *& principles which constitute this philosoph".

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The Toyota Way

?&@ model

• hilosoph" A/ong-term thin(ingB

• rocess Aeliminate wasteB ai)en

• eople and partners A7espect !hallenge them to achie%emore Grow leadersB

• roblem-sol%ing A!ontinuous impro%ement and learningB

Genchi genbutsu

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What is "Toyota# lean?

Hnd result of appl"ing the T to all areas of business. 6 fi%e-step processC

• :efining customer %alue

• :efining %alue stream

• Ma(ing it ?flow@

• ?ulling@ from the customer and bac(

• tri%ing for ecellence.

Taiichi Fhno Afounder of TB “All we are doing is looking at thetime line from the moment the customer gives us an order tothe point when we collect the cash. And we are reducing thattime line by removing the non-value-added waste.”

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Truths %rom the TPS philosophy

• Fften the best thing "ou can do is to idle a machine stop producing parts.

• Fften it is best to selecti%el" add and substitute o%erhead fordirect labor.

• t ma" not be a top priorit" to (eep "our wor(ers bus" ma(ing parts as fast as possible.• t is best to selecti%el" use information technolog" and often

better to use manual process e%en when automation isa%ailable and would seem to Dustif" its cost in reducing "our

headcount.

“Identify activities that add value to raw material, and get rid ofeverything else.”

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Truths %rom the TPS philosophy

• tart with the customer b" as(ing "ourself, ?what %alue are

we adding from the customerIs perspecti%eJ@

• The onl" thing that adds %alue in an" t"pe of process is the

ph"sical or information transformation of that product ser%ice

or acti%it" into something the customer wants.

• !omparison of people and material in "our shop , donIt ma(e

them wait. ecause it transforms into "our internal and

eternal customer becoming impatient.

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Toyota story

• The ?mista(e-proof@ loom became To"odaIs most popular

model and in *525 his son ichiro negotiated the sale of

patent rights to latt rothers of Hngland for K*00000.

• n *530 these funds were used to start building the To"ota

Motor !orp.

• ichiroIs contribution to the To"ota philosoph" , 9T.

• 1hat is 9TJ , marriage between the #ordIs idea of assembl"

line and supermar(et s"stem of replacing products on the

shel%es Dust in time as customer purchased them.

• >ot much later 11 started.

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Toyota story

• ost-11 rampant inflation meant getting paid b" customerswas %er" difficult. !ash-flow problems lead to pa" cuts.

• 1hen situation worsened *L00 wor(ers were as(ed to ?retire%oluntaril".@

• The resultant wor( stoppages and public demonstrations b"wor(ers led to resignation of ichiro.

• HiDi To"oda too( o%er as president.

• HiDiIs main contribution , leadership towards de%elopment of

the T.• HiDi hired Taiichi Fhno as the plant manager and as(ed him to

impro%e To"otaIs manufacturing process so that it e;uals the producti%it" of #ord.

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Toyota story

• Taiichi Fhno benchmar(ed the competition b" %isiting #ord

and studied =enr" #ordIs ?boo(.@

• mpressed with #ordIs philosoph" of eliminating waste. #ord

itself didnIt seem to practice it.

• Too( idea of reducing in%entor" b" implementing ?pull@

s"stem from the supermar(ets.

• ?ull@ s"stem was implemented b" anban cards.

• Fhno also too( ideas from :eming when he was lecturing in9apan about ;ualit" and producti%it".

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Toyota story

• :eming told the 9apanese industr" about meeting andeceeding customer satisfaction. 6lso broadened the definitionof customer to include both internal as well as eternalcustomers.

• ?The net process is the customer@ became the mostsignificant epression for 9T because in a pull s"stem itmeans the proceeding process must alwa"s do what thesubse;uent process sa"s. Ftherwise 9T wonIt wor(.

• :emingIs :!6 c"cle led to ai)en.

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#ord %s. To"ota

• #ordIs mass production s"stem was designed to ma(e huge

;uantities of limited number of models.

• To"ota needed a s"stem to ma(e low %olumes of different

models using the same assembl" line.

• #ord had cash and a large mar(et.

• To"ota needed to turn cash around ;uic(l".

• To"ota didnIt ha%e the resources for huge %olumes of

in%entor" and economies of scale afforded b" #ordIs mass production s"stem.

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#ord %s. To"ota

• The mass production s"stem was focused on short-term costs.

• ?Ma(e bigger machines and through economies of scale dri%edown cost.@

• ?6utomate to replace people if it can be Dustified in terms of

cost.@

• Then the business world got the ;ualit" religion from :eming9uran shi(awa and other ;ualit" gurus.

• !ombining these To"ota de%eloped the T which focused on

speed in the suppl" chainC?hortening lead time b" eliminating waste in each step of a

process leads to best ;ualit" and lowest cost while impro%ingsafet" and morale.@

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#ord %s. To"ota

• To"ota s"stem demonstrates that focusing on ;ualit" actuall"

reduced cost more than focusing onl" on cost.

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14 Toyota*Way Principles

Section I !ong-term philosophy

• rinciple *C ase "our management decisions on a long-term philosoph" e%en at the epense of short-term financial goals.

Section II "he #ight processes will produce the right results• rinciple 2C !reate continuous process flow to bring problem

to the surface.• rinciple 3C se ?pull@ s"stem to a%oid o%erproduction.• rinciple &C /e%el out the wor(load AheiDun(aB. Awor( li(e a

tortoise not the hare.B• rinciple +C uild the culture of stopping to fi problems to get

;ualit" right the first time.

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• rinciple LC tandardi)e tas(s are the foundation for

continuous impro%ement and emplo"ee empowerment.

• rinciple 4C se %isual control so no problems are hidden.

• rinciple 8C se onl" reliable thoroughl" tested technolog"that ser%es "our people and processes.

Section III Add value to the organi$ation by developing your

people and partners• rinciple 5C Grow leaders who thoroughl" understand the

wor( li%e the philosoph" and teach it to others.

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• rinciple *0C :e%elop eceptional people and teams whofollow "our compan"Is philosoph".

• rinciple **C 7espect "our etended networ( of partners andsuppliers b" challenging them and helping them impro%e.

Section I% &ontinuously solving root problem drivesorgani$ational learning

• rinciple *2C Go and see for "ourself to thoroughl" understand

the situation Agenchi genbutsuB.• rinciple *3C Ma(e decisions slowl" b" consensus thoroughl"

considering all options implement decisions rapidl".

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• rinciple *&C ecome a learning organi)ation through

relentless reflection AhenseiB and continuous impro%ement

A(ai)enB.

• o we see that the 9T /ean + etc. are Dust tools that enable

;ualit" and producti%it". T is much more than thatE

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The TPS house dia)ram

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• Two main pillarsC

*. 9T Athe most %isible and highl" publici)ed characteristics ofTB

2. 9ido(a Ane%er letting a defect pass to the net station and

freeing people from machinesB

• aseC =eiDun(a , /e%eling out production schedule for both%olume and %ariet". 6 le%eled production is necessar" to(eep the s"stem stable and to allow for minimum in%entor".

ig spi(es in the production of certain %ariet" whileecluding others will create part shortages unless hugein%entor" is maintained.

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• 9T means remo%ing as much as possible the in%entor" used

to buffer operations against problem that ma" arise in

production.

• The ideal one-piece flow is to ma(e one unit at the rate of

customer demand or ta(t AGerman for meterB.

• sing smaller buffer means ;ualit" defects become

immediatel" %isible.

• This will reinforce Dido(a which can halt the production

A6ndonB.

• The production line restarts once wor(ers resol%e the problem.

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• /ess in%entor" and the 6ndon forces urgenc" among the

wor(ers.

• f the same problem happens repeatedl" the management

reali)es the critical situation and in%ests in Total roducti%e

Maintenance where e%er"one learns how to clean inspect and

maintain e;uipment.

• n traditional s"stem if the machine is down the urgenc" is

missing because the maintenance department is scheduled to

fi it while production continues through the depletion ofin%entor".

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• eople are the center of the house because onl" through

continuous impro%ement can the operation e%er attain the

s"stem stabilit".

• eople must be trained to see waste and sol%e problem at the

root cause b" repeatedl" as(ing wh" the problem reall"

occurs.

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+liminatin) Waste ,Muda-

• #irst ;uestion the T as(s is ?1hat does the customer wantfrom this processJ@ Aboth internal as well as eternalcustomersB. This defines %alue.

• Through the customerIs e"es we can then obser%e the process

and separate the %alue-added steps from the non-%alue addedsteps.

• This can be applied to an" process , manufacturing or aser%ice.

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Types o% waste

• F%erproductionC roducing items for which there are noorders which generates such wastes as o%erstaffing andstorage and transportation costs because of ecess in%entor".

• 1aitingC 1or(ers ha%ing to stand around waiting for the net processing step tool part etc. Fr no wor( because of stoc(-outs lot processing dela"s e;uipment downtime and capacit"

bottlenec(s.

• nnecessar" transportC !arr"ing 1 long distances creatinginefficient transport or mo%ing parts in and out of storagefacilit".

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Types o% waste

• F%er-processing or incorrect processingC Ta(ing unneededsteps to process the parts. nefficient processing due to poortools and product design causing unnecessar" motion and

producing defects. 1aste generated when pro%iding higher-;ualit" products than is necessar".

• Hcess in%entor"C Hcess raw material 1 or finished goodscausing longer lead times obsolescence damaged goods.Htra in%entor" hides problems such as productionimbalances late deli%eries from suppliers defects e;uipmentdowntime and long set-ups.

• nnecessar" mo%ementsC 6n" wasted motion emplo"ees ha%eto perform during the course of their wor( such as loo(ing forreaching for or stac(ing parts tools etc. 1al(ing is a waste.

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Types o% waste

• :efectsC roduction of defecti%e parts or correction. 7epair or

rewor( scrap replacement production and inspection mean

wasteful handling time and efforts.

• nused emplo"ee creati%it"C /osing ideas s(ills

impro%ements and learning opportunities b" not engaging or

listening to "our emplo"ees.

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+liminatin) Waste

• #irst step in remo%ing non-%alue added steps from a process isto map the process. Map the %alue stream following the actual

path ta(en b" the part in the plant.• 1al( the full path "ourself Agenchi genbutsuB.

• Fne can draw the path on a la"out and calculate the time anddistances tra%eled Aspaghetti diagramB.• Traditional cost sa%ing focuses on %alue-added items and tr"

to impro%e those.• T focuses on the entire %alue stream to eliminate the non-

%alue adding items.

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Traditional process impro.ement .s/

TPS

• Traditional approach focuses on identif"ing local efficiencies.?Go to the e;uipment the %alue-added processes and impro%euptime or ma(e the c"cle faster or replace the person withautomated e;uipment.@

• n T large number of non-%alue-added steps are s;uee)edout.

• Fne wa" to achie%e this is through cell formation Acellularmanufacturing B which should ideall" result in one-piece flow of products or ser%ices.

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ene%its o% ne*Piece low

• uilds in ;ualit" , H%er" operator is an inspector and wor(s tofi problems in station before passing them on. f defects doget passed on the" are detected ;uic(l" and problem can beimmediatel" diagnosed and corrected.

• !reates fleibilit" , f shorter lead times more fleibilit" torespond and ma(e what customer reall" wants. ushes for set-up time reduction.

• !reates higher producti%it" , H%er" eas" to spot the bus" oridle station and easier to calculate the %alue-added wor(.

• #rees up floor space , ecause of in%entor" storage reduction.

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ene%its o% ne*Piece low

• mpro%es safet" , maller batches means simpler

transportation s"stem and less accidents because of for(lifts.

• mpro%es morale , eople do high percentage %alue-added

wor( and can see the results of their wor( faster.

• 7educes cost of in%entor" , Fb%iousE

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"Pull# system to a.oid o.erproduction

• Mil( eample , wee(l" batch or dail" purchaseJ• >et purchase triggered when "ou start using the onl" bottle

of mil( "ou ha%e.• >ot an eample of )ero-in%entor" but still a pull s"stem.

• ecause of demand uncertaint" and lead-times in man" casesin%entor" is necessar" to allow for smooth production.

• =ence T follows the supermar(et model or (eeping a smallamount in stoc(. 6s soon as customers ta(e products awa"the" are replenished.

• Hach demand instance triggers a part being pulled fromupstream.

• The triggering mechanism is called ?anban@ which meanscards signboard or a poster.

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an(an system

• 6t To"ota empt" bin Aa (anbanB is send upstream after a

demand instance.

• t is a signal to refill it with a specific number of parts or send

bac( a card with detailed information about the part location.

• H%en toda" one can see anban cards and bins mo%ing on the

shop-floor.

• nstead of using sophisticated computer scheduling techni;ues

this is a simple effecti%e and %isual s"stem of managing and

ensuring the product flow and 9T production s"stem.

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an(an system

• Gas tan( eample.

• To"ota philosoph" about (anbanC

?anban is an organi)ed s"stem of in%entor" buffers and as per

T in%entor" is waste whether it is in pull s"stem or push

s"stem. o (anban is something "ou stri%e to get rid of.@

• To"ota uses (anban to force process impro%ements.

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an(an system

• uppose we ha%e four (anban cards for a particular products.

Fne each for four bins of products. T will conduct studies in

which one of the (anban cards Aalong with the corresponding

binB is thrown awa".

• >ow if the machine brea(s down the downstream process

will run out of parts 2+' faster.

• The stress in the s"stem will cause production shutdowns and

will force teams to come up with process impro%ements.

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ot 5ust pull

• urel" from the production perspecti%e it should be noted thatTo"ota also uses push s"stem where pull simpl" cannot beimplemented.

• HamplesJ

• n such cases the emphasis in on lead-time reduction.• >owada"s because of To"ota eperimenting e-(anban cards

combination of push and pull s"stem is used whene%ernecessar".

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6e.el out the wor7load ,hei5un7a-

• :emand uncertaint" ma" lead to bump" production scheduleif one-piece-flow is followed literall".

• T reali)es that strict build-to-order s"stem will again build-up in%entor" and increase waste AMudaB.

• =ence T tries to e%en out the production b" consolidatingorders. Three-pronged approachC Hlimination of ,

*. Muda Anon-%alue-addedB

2. Muri Ao%erburdening people or e;uipmentB

3. Mura Aune%ennessB• To"ota achie%es the combination of 9T and heiDun(a b"

following the principle of change-to-order Anot build-to-orderB b" dela"ed customi)ation.

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8ulture o% stoppin) production to %i9

pro(lems , 5ido7a-

• Traditional production %iewC ?:o not shut down the assembl"

lineE@ The managers are Dudged b" their abilit" to deli%er the

numbers.

• T %iewC ?f "ou are not shutting down the assembl" plant it

means that "ou ha%e no problems. 6ll manufacturing plants

ha%e problems. o "ou must be hiding problems. lease ta(e

out in%entor" so that problems surface. Then "ou will ha%e to

shut down the assembl" line and fi the problems.@

• f we continuall" follow this %iew we can ma(e e%en better-;ualit" products more efficientl".

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Jido7a

• =ence we need a method to detect defects when the" occurand automaticall" stop production so an emplo"ee can fi the

problem before the defect continues downstream.

• 9ido(a is also referred to as autonomation , e;uipment

endowed with human intelligence to stop itself when it has a problem.

• n-station ;ualit" is much more effecti%e and less costl" thaninspecting and repairing ;ualit" problem after the fact.

• /ean manufacturing dramaticall" increases the importance of building things right the first time.

• 1ith %er" low le%els of in%entor" there is little buffer to fall bac( on in case there is ;ualit" problem.

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:ndon system

• 1hen the e;uipment shuts down because of a ;ualit" problem

flags or light usuall" with accompan"ing music signal that

help is needed to sol%e the problem.

• This signaling s"stem is called the andon s"stem.

• 6t To"ota the andon is called a ?fied-position line stop

s"stem.@

• 1hen a wor(station in the assembl" line signals a problem

the production line is not stopped immediatel".

• The manufacturing team has until the product mo%es to the

net wor(station to respond and address the problem before

the andon turns red and stops the assembl" line.

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:ndon system

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:ndon system

• f the problem is small enough that can be sol%ed in the lead-

time between two wor(station *00' ;ualit" is achie%ed

without stopping the line.

• f the problem is comple the team leader can conclude that

the line should stop.

• n T the wor(station detects the defects b" using

countermeasures and error-proofing A po(a-"o(eB.

• 6pplications of andon s"stem to ser%ice organi)ations li(e

call-center are ob%iousE

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;se .isual controls

+ program

*. ort AseiriB , sort through items and (eep onl" what isneeded while disposing what is not.

2. traighten AseitonB , ?6 place of e%er"thing and e%er"thing

in its place.@3. hine AseisoB , the cleaning process often acts as a form of

inspection that eposes abnormal and pre-failure conditionsthat could hurt ;ualit" or cause machine failure.

&. tandardi)e Asei(etsuB , de%elop s"stems and procedures tomaintain and monitor first three Is.

+. ustain Ashitsu(eB , maintain a stabili)ed wor(place is anongoing process of continuous impro%ement.

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;se .isual controls

• /i(e traffic signals , well-designed which donIt re;uire "ou tostud" them their meaning is immediatel" clear.

Hamples at To"otaC

• 6 shadow of a tool painted on the wall to indicate the correct

position of the tool.• Futwardl" pasted Fs.

• anban cards.

• 6ndon signals.

• Fffice auditing s"stem at To"ota.• Fne-page reporting s"stem.

Documents

TPS.ppt