Toyota Production System


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Toyota Production System - TPS - Project Report

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Toyota Production System

  2. 2. TABLE OF CONTENTS Title Page Table of Contents 11. History of Toyota 22. Toyota Production System 23. TPS and Its Technics 24. Toyota in US 35. Reason for TPS took hold in Toyota 36. SCM strategies adopted in Toyota 47. Operational Strategies adopted in Toyota 58. Improvement in Other Dimensions 69. Organizational Changes 710. Conclusion 7 2
  3. 3. HISTORY OF TOYOTAThe Toyota Motor Corporation was founded in 1937 by Kiichiro Toyoda. It originally started as asubsidiary of his father‟s company Toyoda Industries. After studying American manufacturing andmarketing techniques, Toyota began to make inroads in the automotive market in the late 1960s.Today, its the worlds largest automaker. But it recorded $7.7 billion in losses in the first quarter of2009, the largest ever by a Japanese automaker. Famous for their production systems, they do thingsthe “Toyota Way”. Toyota is currently one of the largest corporations developing hybrid vehicles forthe commercial market. Toyota has also been involved in many cutting edge technologicaldevelopments involving aerospace research and robotics.TOYOTA PRODUCTION SYSTEMToyota production system is a production system that follows the philosophy of the completeelimination of all waste and that includes all aspects of production which will enhance the mostefficient production method. TPS was invented by Taichi Ohno, and existed in Toyota‟s DNA but itwas noticed by the world during the 1973 global oil crisis. When everyone was in economicdepression and losses, Toyota was still making profits and this was only possible due to TPS. TPS was“not simply a set of techniques, but a way of thinking about teamwork, products, and efficiency. TPSin simple terms are ways to make the assembly line faster, simpler, safer and ways to do the workperfectly. It is all about making the employees feel the enthusiastic about the process improvement.TPS & ITS TECHNICS:TPS is a system based on two techniques: JIT (Just in Time) & Lean Production.JIT: It is a technique in which the manufacturing unit doesn‟t need to acquire the materials before theneed arise for them.Lean production: It maximizing the outputs by minimizing resources through the elimination ofwaste by the constant refinement of practices and procedures.There are two more additional technic with TPS. They areJIDOKA: It is continuous process of identifying and solving problems during the manufacturingprocess itself. When a problem or defect was discovered, the Toyota manufacturing line would bestopped and the problem corrected immediately.KAIZEN: Continuous improvement. In Toyota, it was carried out in an incremental and constantimprovement, on a day-to-day basis. All employees participated, a process of improvement that waswell accepted in the company‟s procedures themselves. 3
  4. 4. TOYOTA IN USSince the 1980s, American automobile companies had studied and attempted to implement TPS tovarying degrees. Although other automakers had improved the quality of their vehicles in recentyears, they had clearly not yet matched Toyota. The reasons which they thought were, 1. Difference between American and Japanese cultures made the Japanese worker better suited for the system. Then later the thought was cleared and found that, Toyota’s corporate culture, not Japanese culture in general, was the driving force behind the system. TPS proved successful not only with American workers, but also with workers from South America, India, China and Europe. 2. U.S. manufacturers had structural disadvantages like dealing with unions, the enormous financial burden of retired employees‟ pensions and health care, or legacy costs. Toyota had only 1,600 retirees in the United States, so even if the legacy-cost argument had some validity, it would be minimal on a per vehicle basisAccording to Jeffrey Liker, author of The Toyota Way says, In Big Three, We could find improvement projects just like Toyota, but they would be led by an engineering group / a Six Sigma black belt / a lean manufacturing guru. But then instead implementation, it will turn as PowerPoint and u can see at every place in the company. In a year it happens couple of time and they will get proud about it to get publicity. But Toyota is doing it in every single department, every single day. It is subversive in its quality when it is implemented. That is the heart of it.REASON FOR TPS TOOK HOLD AT TOYOTA 1. Even though TPS was started as a survival culture when Japan lay in ruins, limited resources, and almost Toyota was on the verge of bankruptcy. Demand for its cars was too small to justify the capital investment that would allow it to mass-produce vehicles at costs that were comparable to those of Ford or GM, so other ways had to be found. 2. When TPS was developed, Toyota was open to adopting a new and radical corporate culture, which is an integral part of the essential need for an organization to go for TPS. 3. It hired its workforce from high schools and trained them properly. As for Toyota‟s older workers concerned they had mastered several skills in the manufacturing process, due to war situations. 4. Toyota‟s inability to make payroll and the decision of laying off workers, resulted in a strike. That changed the company‟s view of its work force, from seeing employees as a commodity to seeing them as people. 4
  5. 5. 5. Ohno, who implemented this TPS didn‟t stop there, but the force of his personality, vision, and drive made TPS work in Toyota. Because it was not a program with a definable set of goals, but rather a way of viewing the world. He very well communicated the philosophy of not be obscure and motivated everyone to highlight problem then correct it. 6. Ohno taught demonstrating the essential requirement for leadership that understood the system and believed in it. Ohno‟s students, in turn, mentored others. 7. Kaizen stressed small, incremental improvements that occurred over a long period of time. The company thinks in years and decades, instead in months and quarters.SCM STRATEGIES ADOPTED IN TOYOTAI) JIT in Toyota Making only "what is needed, when it is needed, and in the amount needed!". Great attention has been paid on 1. Toyota designs work systems:  When a vehicle order is received, a production instruction must be issued to the beginning of the vehicle production line as soon as possible.  The assembly line must be stocked with required number of all needed parts so that any type of ordered vehicle can be assembled.  The assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process (the preceding process).  The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process.  It generates information immediately when a problem has occurred, then production stops and problem can be fixed immediately.2. Suppliers: Toyota treats its suppliers as partners, as integral elements of Toyota Production System. For successful JIT, suppliers are trained in ways to reduce set up times, inventories, defects, machine breakdowns etc.3. Reducing Inventory holding cost by JIT: To reduce inventory holding costs and lead times, Toyota developed the pull production method wherein the quantity of work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage. The Kanban scheme coordinates the flow of small containers of materials between stages. This is where the term Just-in-Time (JIT) originated. 5
  6. 6. II) Lean Manufacturing Term "Lean", in a business or manufacturing environment, describes a collection of tools and techniques into the business processes to optimize time, human resources, assets, and productivity, while improving the quality level of products and services to their customers. Implementation requires a commitment and support by management, and participation of the all personnel within an organization to be successful. Following are the advantages that Toyota gained by using Lean Management SCM strategy. 1. Reduced Set up Times: By organizing procedures, using carts, and training workers to do their own set ups, Toyota managed to slash set up times from months to hours and sometimes even minutes. 2. Small-Lot Production: Producing things in large batches results in huge set up costs, high capital cost of high-speed dedicated machinery, larger inventories, extended lead times, and larger defect costs. Toyota has found the way to make set ups short and inexpensive; it became possible for them to economically produce a variety of things in small quantities. 3. Employee Involvement and Empowerment: Toyota organized their workers by forming team and gave them the responsibility and training to do many specialized tasks. 4. Quality at the Source: To eliminate product defects, they must be discovered and corrected as soon as possible. Since workers are at the best position to discover a defect and to immediately fix it, they are assigned this responsibility. 5. Equipment Maintenance: Toyota operators are assigned primary responsibility for basic maintenance since they are in the best position to defect signs of malfunctions. Maintenance specialists diagnose and fix only complex problems, improve the performance of equipment, and train workers in maintenance.OPERATIONAL STRATEGIES ADOPTED IN TOYOTAI) JIDOKAHighlighting / visualization of problems. Quality must be built in during the manufacturing process!-If equipment malfunction or a defective part is discovered, the affected machine automatically stops,and operators cease production and correct the problem. For the Just-in-Time system to function, allof the parts that are made and supplied must meet predetermined quality standards. This is achievedthrough Jidoka. 6
  7. 7. 1. Jidoka means that a machine safely stops when the normal processing is completed. It also means, that a quality / equipment problem arise, the machine detects the problem on its own and stops, preventing defective products from being produced. As a result, only products satisfying quality standards will be passed on to the following processes on the production line. Since a machine automatically stops when processing is completed or when a problem arises and is communicated via the "andon" (problem display board), operators can confidently continue performing work at another machine, as well as easily identify the problems cause to prevent its recurrence. This means that each operator can be in charge of many machines, resulting in higher productivity, while continuous improvements lead to greater processing capacityII) KAIZENThe philosophy of kaizen is one of Toyota‟s core values. It means „continuous improvement‟. Noprocess can ever be declared perfect but it can always be improved. Kaizen in practice means that allteam members in all parts of the organization are continuously looking for ways to improveoperations, and people at every level in the company support this process of improvement.Kaizen also requires the setting of clear objectives and targets. It is very much a matter of positiveattitude, with the focus on what should be done rather than what can be done.  Teamwork  Personal discipline  Improved morale  Quality circles  Suggestions for improvement.Continuous improvement is supported by three key principles:  TPS - Thinking People System  „5 whys?  „5S‟IMPROVEMENT IN OTHER DIMENSIONSEmployees Involvement in TPSIn JIDOKA & KAIZEN the employees improvement is the main factor for its success. 1. Line workers constantly monitored the production process for problems and was empowered to stop the process if a problem was detected. 2. Workers reviewed their jobs and improved or adapted them pursuant to the new conditions. 3. Improvements that were developed implemented right away or bunched together. 4. Experts coach everyone to see and solve problems. 7
  8. 8. Many companies in U.S. attempted to implement TPS to varying degrees and with varying levels ofsuccess. Other players in the market improved their techniques and procedures but no one was nearToyota.Uniqueness: When other organizations basically didn‟t want to change their culture they practice toimplement TPS. They just simply wanted to take the technics. If the culture stagnates, so do thebenefit of TPS. Theorists recognized that this cultural aspect of TPS made it difficult to replicateORGANIZATIONAL CHANGESToyota faced challenges in executing and controlling the operations in US market has grown in bothsize and scope. There were other challenges as follows.  Lack of TPS experienced workers.  Training hindered by the language difficulties.Toyota‟s steps to overcome these challenges were,  TPS Manual: Toyota created the TPS manual to facilitate the employees to learn its system without mentor.  Toyota Institute: Toyota created Toyota Institute. The Institute sends off its executives to offices around the world as missionaries of sorts to teach Toyota way. This was the company‟s best effort to avoid corporate short-sightedness and to keep company true to its original mission of winning customers with quality cars.CONCLUSION:Even though the TPS was an “Survival Effort” for Toyota, When money started roll in, the survivalmentality faded; people started to talk about “winning and rowing.” They didn‟t look this asoperational improvement; instead everyone looked this as human development. Toyota wellunderstood that, TPS will not work with normal business “incenting” method. To do thissuccessfully a collective survival mentality is needed and people need a genuine, intrinsic convictionof the need for excellent work and motivation beyond mere profits and paychecks.Toyota doesn‟t have the issue of complacency. So the continuous improvement mentality is being anintegral part of its employees‟ work. In order to be all time lead in the industry, Toyota shouldconcentrate more on increasing its‟ TPS trained mid-level executives to run it effectively. So that theculture it follows will definitely help Toyota to survive and also to improve its bars up for future. 8