The Toyota Production System A Transition from Mass Production to Lean Manufacturing and Supply Chain Management Genaro J. Gutiérrez McCombs School of Business The University of Texas at Austin Greater San Antonio Chamber of Commerce San Antonio, Texas April 15, 2003

Major Revolutions in Manufacturing 1776, Adam Smith “The Wealth of Nations” 1910, Henry Ford and Mass Manufacturing. 1980, The Toyota Production System. Lean Manufacturing. Supply Chain Management.

1776, Adam Smith “The Wealth of Nations”

1910, Henry Ford and Mass Manufacturing.

1980, The Toyota Production System.

Lean Manufacturing.

Supply Chain Management.

The Gestation of TPS Eiji Toyoda visit to Henry Ford’s factory in 1950. The SMED (Single-digit in Minutes Exchange of Dice) program at the stamping plant. Deming’s quality movement in Japan. The Engineers: Taiichi Ohno and Shigeo Shingo “ Japanese” Manufacturing hits America in 1970

Eiji Toyoda visit to Henry Ford’s factory in 1950.

The SMED (Single-digit in Minutes Exchange of Dice) program at the stamping plant.

Deming’s quality movement in Japan.

The Engineers: Taiichi Ohno and Shigeo Shingo

“ Japanese” Manufacturing hits America in 1970

Main Features of TPS Greater Product Variety Fast Response (Flexibility) “ Stable” Production Schedules Supply Chain Integration Demand Management

Greater Product Variety

Fast Response (Flexibility)

“ Stable” Production Schedules

Supply Chain Integration

Demand Management

Elements of TPS The SMED Program. Highlight Problems (Jidoka). Gradual Elimination of Waste. Continuous Improvement (Kaizen), Root-Cause Analysis (5-whys?) and Fool-proofing (Poka-Yoke). Cross-Trained Workers. Just-In-Time Production. Stable Production Schedules (Heijunka)

The SMED Program.

Highlight Problems (Jidoka).

Gradual Elimination of Waste.

Continuous Improvement (Kaizen), Root-Cause Analysis (5-whys?) and Fool-proofing (Poka-Yoke).

Cross-Trained Workers.

Just-In-Time Production.

Stable Production Schedules (Heijunka)

Traditional “Buffered” Supply Chain Assembler 2 nd Tier 1 st Tier Flow of Production Flow of Information Customer Demand

The Just-in-Time Supply Chain: “Look Ma” No Stocks! Toyota 2 nd Tier 1 st Tier Flow of Production Flow of Information Customer Demand

Expectations from Suppliers Frequent deliveries. Hours (not days) lead time. Rapid response capability (not from stocks). Delivery to assembly line at the right time in the right sequence without inspection. Reliability (quality and timing).

Frequent deliveries.

Hours (not days) lead time.

Rapid response capability (not from stocks).

Delivery to assembly line at the right time in the right sequence without inspection.

Reliability (quality and timing).

Supplier Relationships Long-term, steady relationships with a few suppliers. Negotiation based on a long term commitment to productivity and quality improvement. Interested in supplier capabilities. Continuous improvement. Product/process technology. Design for manufacturability.

Long-term, steady relationships with a few suppliers.

Negotiation based on a long term commitment to productivity and quality improvement.

Interested in supplier capabilities.

Continuous improvement.

Product/process technology.

Design for manufacturability.

What’s in it for a supplier? A Stable Manufacturing Environment. Steady production volume. Leaner Processes. Cost/Flexibility/Quality Profits.

A Stable Manufacturing Environment.

Steady production volume.

Leaner Processes.

Cost/Flexibility/Quality

Profits.