Toyota Production System

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. Vilas-Boas Afonso Taira, n? 61793, GEB1 Diogo Bustorff-Silva, n? 54746, GEB1 Manuel Trincao de Oliveira, n? 54730, GEB1 Pedro Neves, n? 38415, GEB1 Afonso Taira, n? 61793, GEB1 Diogo Bustorff-Silva, n? 54746, GEB1 Manuel Trincao de Oliveira, n? 54730, GEB1 Pedro Neves, n? 38415, GEB1 Index * Introduction – The Automotive Industry History – The History of Toyota * Case Study – Question 1 – Question 2 – Question 3 * Conclusion – What does the TPS mean, both industrially and culturally Mass & Craft Production – The Toyota System Support Centre Automotive Industry History The history of the automobile begins when European engineers began experimenting with motor powered vehicles in the late 1700’s. By the late 1800’s steam, combustion, and electrical motors had been experimented. The combustion engine continually beat out the competition, and the early automobile pioneers built reliable combustion engines. Automotive production on a commercial scale started in Europe in 1890 but it was the USA who were the global leaders in total automobile production for many years.
In 1929, before the Great Depression, the world had around 32 million automobiles in use (over 90% of them were produced by the US automobile industry). After World War II the USA produced about 75% of world’s automobile production. But in 1980 the U. S. was overtaken by Japan and became the world leader again in 1994. In 2006, Japan narrowly passed the US in production and continued leading until 2009, when China claimed the first place with 13. 8 million units. In 2011 China produced 18. 4 million units which is more than twice the number of automobiles made by the US (second place with 8. million units) which is followed by Japan (third place with 8. 4 million units). History of Toyota Toyota’s history started in 1897 when Sakiichi Toyoda entered the textile machinery business. In 1902 he founded Toyota, the Toyoda Group. The Toyoda Model G Automatic Loom was invented in 1924, and in 1929 the patent for this machine was sold in order to generate the capital for the automobile development to start. The Automobile Department was started in 1933 as a division of Toyoda Automatic Loom Works (TALW) devoted to the production of automobiles under the direction of the founder’s son, Kiichiro Toyoda.
In 1936, Toyoda’s first passenger car, the Model AA, was completed and the price was 400 yen cheaper than Ford or GM cars. In September 1936, the company presented its new logo and the name Toyota was chosen. The newly formed word was trademarked and the company was registered in August 1937 as the “Toyota Motor Company”. By the early 1960s, the US had begun placing stiff import tariffs on imported vehicles. In response Toyota, Nissan Motor Co. and Honda Motor Co. began building plants in the US in the 1980s. Due to the 1973 oil crisis, consumers in the US market began turning to small cars with better fuel economy.
Toyota received its first Japanese Quality Control Award at the start of the 1980s. In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the Toyota Motor Corporation. Two years later, Toyota entered into a joint venture with General Motors called the New United Motor Manufacturing, Inc, (NUMMI), operating an automobile-manufacturing plant in Fremont, California. In the 1990s, Toyota began to diversify from producing mostly compact cars by adding many larger and more luxurious vehicles to its lineup.
Toyota also began production of the world’s best-selling hybrid car, the Prius, in 1997. Toyota was also present in Europe and so, the corporation decided to set up Toyota Motor Europe Marketing and Engineering, TMME, to help market vehicles in the continent. In 1999, the company decided to list itself on the New York and London Stock Exchanges. In 2002, Toyota managed to enter a Formula One works team and established joint ventures with French motoring companies Citroen and Peugeot a year after Toyota started producing cars in France.
In 2005 Toyota ranked eighth on Forbes list of the world’s leading companies but fell to 55 in 2011. The company was number one in global automobile sales for the first quarter of 2008. Lately the company has found success with its smaller models (like the Corolla and the Yaris) as gasoline prices have increased rapidly in the last few years due to the oil crisis. Toyota reached 200 000 000 vehicles as of July 2012 (after 77 years of production) but in October 2012, Toyota announced a recall of 7. 43 million vehicles worldwide to fix malfunction, showing Toyota’s pursue for perfection.
QUESTION 1 The TPS was one of the most efficient manufacturing systems in the world. Describe the various elements of the TPS. What was Ohno’s contribution to the development and implementation of the system? Toyota Production System – TPS The Toyota Production System (TPS) is an integrated socio-technical system that includes Toyota’s management philosophy and practices. Also known as “Lean Manufacturing” or a “Just-in-Time system”, the TPS has become well known and frequently studied around the world. The TPS, which s a production control system, was based on many years of continuous improvements with the objective of eliminating all “waste” and defects of the production line “making the vehicles ordered by customers in the quickest and most efficient way, in order to deliver the vehicles as quickly as possible” with high quality and low cost. The Toyota Production System (TPS) was established based on four concepts: The first is called Just-in-Time (JIT), the second is called Kaban (the Japanese word for Signboard), the third is called Kaizen and the fourth is “Jidoka” (which can be roughly translated as “automation with a human touch”).
Based on the philosophies of JIT, Kanban, Kaizen and Jidoka, the TPS can efficiently and quickly produce vehicles of confirmed quality, one at a time, that fully satisfy customer requirements. Concepts of TPS Just-in-Time Just-in-time (JIT) is a production strategy that strives to increase a business return on investment by reducing in-process inventory and associated carrying costs. JIT is considered the foundation of Toyota Production System and was created by Taiichi Ohno who was inspired by the functioning of the US supermarkets.
The main principle of JIT is to produce “only the necessary products at the necessary time and in the necessary quantities” and the main objective of JIT is to eliminate waste of all kinds by producing or supplying materials only when they are needed and not earlier. The adoption of the JIT strategy allowed Toyota to cut out the costs related with inventory and stores. JIT’s objective was to make the production process smoother by avoiding or eliminating unnatural peaks and gullies in production which could later create inventory problems.
One of Ohno’s beliefs was that a smooth and continuous process would make all the production and quality problems float to the surface and these could then be corrected. Ohno’s motto was “speed without continuity is meaningless”, this means that a production line too fast or too slow will create inventory problems later on. JIT was based on reverse reasoning and the working of the production line started at the point of customer demand. This implied that when there was a demand for a certain model of car, its assembly began at the factory.
When the assembly was ready to begin, the needed parts were delivered by the preceding process in the production line and when the parts had to be delivered to assembly, the supplier supplied the raw materials for their manufacture. In brief, the demand pulled the factory’s workflow. This concept is based on the Pull System of manufacturing which is the opposite of the regularly used Push System (where each process manufactured components to its highest potential and pushed them down the line creating excess inventory and blocking of the production line).
In an ideal scenario, if JIT was achieved throughout the organization, inventory would be completely eliminated and the factory would have no need for stores or warehouses, thereby eliminating their costs. However, for factories like Toyota, which required thousands of parts to manufacture one car, achieving JIT in all processes automatically would be very difficult. The high complexity of the system would make it difficult for the previous process to correctly anticipate the exact quantities demanded by the subsequent processes. To surpass this difficulty the Kanban System was developed.
Kanban Kanban is the pillar of JIT and helped Toyota achieve a high level of outsourcing. Kanban (meaning Signboard in Japanese) is a tool to effectively control production quantities that looked at the production flow contrarily. Workers of a process in the need of components wrote the details about the kind of units and the quantity which they needed on a card called Kanban. Another worker then took the Kanban card to the antecedent process and withdrew the amount required from it. This system was made up of a fixed number of containers, each holding a specific fixed number of parts.
Every container had a set of kanbans attached to it which comprehended two types of kanbans: a withdrawal kanban and a production kanban. The withdrawal kanban detailed the kind and quantity of product that the subsequent process should withdraw from the previous process and the production kanban specified the same information about the parts that must be produced by the previous process. And so, all the processes in the production line were connected to each other through kanbans. The total number of containers and the number of parts each container should hold were calculated through Ohno’s formula.
This formula showed the maximum amount of inventory that could be present in the system to “hold the process together”. By the early 200’s, the Kanban process had evolved into a sophisticated inventory management tool that ensured production in the required quantities at the exact right time in all manufacturing processes within the factory. Kaizen Kaizen is another important part of TPS. It meant ‘Continuous Improvement’ and required all employees to participate in eliminating all activities that were classified as ‘waste’.
Kaizen was a continuous process, not periodic like in other companies and therefore, all activities that would improve productivity and safety fell under its scope. In this process all supervisors and team leaders had to be on the constant lookout for problems and resolve as many as possible on the spot. But they also looked for ways to improve productivity even when things were running smoothly. Kaizen involved a great deal of observation of workers and their work processes but the changes were usually small and incremental.
Ohno believed that observation was the best way to spot problems and the constant observation would reveal problems that would otherwise escape one’s notice. He also emphasized the importance of people being in touch with ‘gemba’ or the place where the action was (in our case the factory). He would advise and urge managers to go to factories every day and come back with at least one idea for Kaizen. Ohno insisted that people asked ‘Why’ five times when confronted with any problem in order to reach the essence of the problem so it would not occur again.
The focus of Kaizen was not only the identification of a problem and the development of a solution but the understanding of the problem and all of its alternatives thoroughly. Another important element of Kaizen was the Poka-Yoke or error proofing. This included the creation of processes that moved smoothly from step to step, without giving room for errors to appear in. This tool was also used to control the assembly line, sometimes by using cameras to find more efficient solutions or spotting minor wastes.
Due to the extensive nature of Kaizen activities, support and commitment from the management was indispensable for a successful implementation and performance. Some analysts claimed that Toyota’s employees were trained to look for possible enhancements even in efficient processes, and it surprised many to see the improvements that were possible even in the best of systems. Some analysts even felt that Kaizen was the main reason why Toyota achieved its global success. Jidoka The human element played an important role in TPS and Toyota made an effort to promote their employee’s flexibility, teamwork and empowerment.
This could be seen as most of Toyota’s worker were cross trained and could be shifted between different production lines. This flexibility of the production process, known as “Shijinka”, was a huge advantage because the company could adapt to the demand and had no need to recruit new workers when a demand for a certain product increased. Jidoka was the manifestation of Toyota’s commitment to empowerment of their workers. Jidoka was a philosophy that motivated and allowed workers to stop the equipment or operations whenever an unusual or defective situation was found in the line.
The workers were also given the responsibility of improving their workstations as any employee at any level of the hierarchy had the right and almost obligation to make improvements in processes if he would see fit. This process was called “visible control” and all the workers took positive steps to improve or eliminate any waste that they identified. The priority order of the parts were also transmitted to the workers allowing each shop to conduct production activities without orders from the control department.
This compensated the monotony of mass production and helped improve the production rates and the morale in the factories. The thought behind Jidoka was it was men who operated the conveyor and not the other way around and the confirmation of this was the trust that Toyota placed on their employees. Whenever a worker detected a defect or abnormality in the production line or even if he found himself unable to keep pace with the line, he could stop the operation simply by pulling a cord called the ‘andon’ cord.
When pulled, the ‘andon’ cord would set off an alarm system and illuminate the color coded andon electric light board. This would alert all the workers and supervisors to the presence of a problem or defect in the line and if it was not rectified within a specific length of time, then the entire line would stop. This system helped direct attention to the problems as soon as they were discovered and that prevented a great deal of further complications. Usually the problem could be corrected immediately by directing attention to it and to the worker that had sounded the alert.
Identifying the problem as soon as it occurred prevented the line from producing a complete lot of defective goods therefore this process helped Toyota achieve high levels of quality. This also showed the faith in Toyota’s workers ability as thinkers. To facilitate the spotting of deviations or defects, Ohno called for the work to be as standardized as possible with specific work instructions being given for every job. Stopping a line hundreds of time in one shift was a common practice at Toyota’s factories. Taiichi Ohno 1912 – Taiichi Ohno was born in Manchuria, China 932 – Joined the Toyoda Automatic Loom Works (TALW) 1943 – Moved to the Automotive Business as an Assembly Manager Late 1940’s – Started experimenting with different ways of setting up equipment to produce items needed in a timely manner Early 1950’s – Expanded on the ideas of Kiichiro Toyoda on JIT inventory systems 1956 – Visited the USA to study the manufacturing processes used by American Companies 1975 – Was made Vice President of Toyota 1978 – Retired but remained associated with Toyota until 1982 1990 – Died at Toyoda City Ohno’s Contribuition to TPS
Although the TPS was not Ohno’s work alone, he was the prime mover of its creation and is considered to be the father of TPS. Ohno streamlined and developed the TPS concepts into a formal and practical system. He was responsible for training a number of Toyota’s engineers in how to use and implement the system. Since Ohno was a great believer in the importance of people, he treasured values like respect, loyalty and lifetime employment and was accountable for developing the lifetime employment concept at Toyota which made workers more committed to the company.
Ohno also initiated the practice of supervisors wearing the same uniforms as workers, creating the feeling of flat, non- hierarchical structure. He realized that the efficiency of manufacturing processes depended on the timely availability of raw materials therefore he gave a lot of importance to suppliers He also stressed the importance of observation to reveal problems that would otherwise escape one’s notice. Some analysts said that the systematic and continuous development and implementation of the TPS was due to Ohno.
The evidence of Ohno’s importance and influence in Toyota could be seen when, in later days, employees began to ask themselves “What would Ohno have said or what would Ohno have done” when they faced a difficult problem Toyota’s advantages by adopting TPS The Toyota Production System and its concepts are the main reason why Toyota is one of the major automobile makers in the world. All the concepts behind the TPS were a great aid for Toyota’s development making it the company it has become today.
While JIT allowed Toyota to eliminate costs related with inventory, warehouses and stores, the Kanban process facilitated the movement of inventory between different processes in the production line and ensured production in the required quantities at the right time and the concepts like Kaizen and Jidoka ensured that high levels of quality were maintained. Jidoka was not only a benefit in terms of quality as it, combined with other HR tools, resulted in high morale amongst the workers, who knew they were valued at Toyota.
TPS conferred a great amount of flexibility and productivity therefore enhancing capabilities at Toyota. The flexibility provided by the TPS allowed Toyota to make the best use of its resources for greater productivity and quality. QUESTION 2 The TPS gave as much importance to people as it did to technical systems. What was Toyota’s HR philosophy? How do you think it benefited the company? The Toyota Production System is very much dependent on its Human Resources.
Workers and their working time are one of the most-valued resources in a Toyota production line, maybe the most precious, and for this to be improved the workers need to be not only technically evolved but mentally available. The continuous improvement and eliminating of waste are based on workers’ experience, sight, and trained perfectionism. All the improvement to be made is based on workers’ experience in the working line. This happens because the worker is in the best position to spot errors, helping the development and improving techniques, and makes good contact with his supervisor.
Due to their position in the working line, workers are the only ones with true sight of what is happening in their work place, also tracked by others, by the Kaizen observation. Following up the “Shijinka” ideal, it was possible for workers in a Mass Production factory to change between production lines, shifts, team positions, and the choice was given to choose to the employees according to their characteristics – workers were the decision makers in this task.
The “soft” aspect of TPS, also known as the respect for the humans/workers, cared for by the Human Resources, was a ‘new’ trend when it was implemented; until the day Taiichi Ohno took the lead of Toyota no one had ever worried about worker satisfaction and development before. The TPS showed concerns for work safety and the improvement of workers’ responsibility and authority, making them more productive and helpful to the TPS. Productivity was a constant goal, but means to an end were important, and sacrificing safety for an increase in productivity was not embraced. Jidoka’ – a rope used to stop a production line; a symbolism to a process with the intention of improvement, and learning, without being disregarded by other colleagues and also improving the production rates and the morale of all workers, is part of the integral Human Resources ideal of valuing the worker. “Man operates the conveyor, not the other way around”. “Jidoka”, as well as helping Toyota achieve high quality, proves that a worker may as well be a “thinker”, and not just an input as the general industry considered them until Ohno proved them wrong.
Because training and development of human resources were elemental in the Toyota Production System, the company invested substantially in developing the full potential of workers. Apart from the company’s aim for each new recruit, the company only allowed him to start his functions when he felt completely comfortable and confident, not one day earlier. In accordance to their Human Resource ideals, relations between Toyota and its suppliers were also carefully driven. As mentioned before, Toyota had a technical need for products and raw materials provided by suppliers.
The understanding of urgency by the suppliers could be attempted by force and imposition, as was normal in the Western competitors, or could be achieved by a close trait, with strong cooperation and mutual help. Lastly, loyalty, and an expectation of a lifetime employment, gave the workers a sense of commitment to the company, and legitimate interest to help improving Toyota and themselves as workers in the Toyota Motor Company. Toyota’s mentality started on Ohno himself and went down even to the most standard technician. Question 3
What were the main advantages and challenges related to the TPS? What were the primary differences between Japanese companies and their western counterparts in terms of industrial culture? Like any other production system, the TPS is not immaculated as a whole. In terms of facts and figures, we may believe that such as system, that is able to combine both mass and craft production, is therefore the Pandora of production systems. In fact, we come across a number of advantages – some are just ‘better than the competitors’ factors, some we can call pioneer values in the industry.
Speed, the most eye-catching characteristic in this industry, is one where Toyota definitely proved to be a few steps ahead of its major competitors, since the 5 days needed to complete a car is no less then 6 times faster than their closest competitor General Motors. Another valued asset in the industry is the flexibility of the workforce and the production process, something that allows for rapid response to either production inefficiencies. Not only is the TPS an extremely agile system, it proved to be the first ever to be prepared to assemble two different models f cars in the same assembly line. Another factor that comes into play when contemplating the highly efficient nature of the TPS is one of the major values of the company: Kaizen. As explained before, Kaizen made workers look at the bigger picture, growing in them a sense of constant dissatisfaction, a sense that even when things run smoothly, there is room for improvement. This, together with the strengths mentioned before (speed and flexibility) are features of the TPS which allow the company to deliver a high quality product, at extremely competitive prices, the motherload of any market.
Furthermore, in complete contrast to their worldwide competitors (GM, etc), their human resources policy and Jidoka value springs high morale amongst the workforce, pushing towards the two last levels of Maslow’s Hierarchy of Needs, with greater worker input. The relationship established and meticulously kept with Toyota’s suppliers further exploits the JIT methods, and boosts flexibility, to respond to almost any shock in demand, in quantity and in tendency standards.
On the other hand, we have hostile relations with their workers, and suppliers kept at a distance; both representations of the industrial culture in the West – the sense of power is very much enjoyed by those in administrative positions in the West, it is part of a culture not only displayed in the industries, but in matters of everyday life. This means the hierarchical feeling and the extremely vertical display is hard to dismantle, proving to be the major difference with their counterpart in Japan. Being coherent with my opening statement, the TPS has several challenges that it must face.
It is obvious that Toyota fits just right into the philosophy followed by the system, hence it seems flawless at first sight. Following attempts at its implementation in other realities, we come across that the time it requires for it to be put in practice is often the reason for several companies to have dropped it halfway: it needs years to reformulate and retrain the thinking ways of both the administrators and the workforce, hence calling for a reform in the company’s organizational culture – the case is that the company values must be altered to fit into the TPS and not the other way around.
As a result, we have a reality where things first become worse before getting better; the TPS requires sustainability, since it is an ‘n’ year programme, ‘n’ being the years the company wishes to work under its matrices. Conclusion What does the TPS mean, both industrially and culturally? Mass & Craft Production. The Toyota System Support Centre The final stage of our case study is to find the relevance of the TPS in the worldwide industry over the years, as the world advances and evolves. The TPS is unlike any other logistics programme.
The analysis we have presented shows that is not bound to analyze a production process and improve on its weaknesses; it means retraining and restructuring a whole company, from its production methods to every worker and administrator in terms of mentality. We can hereby conclude that the TPS is a whole philosophy, meaning it is no ‘1-year programme’ that lasts for life, it is an infinite year programme that requires constant implementation and therefore a committed leadership to the philosophy.
Culturally, having on opposing ends the highly efficient modus operandi of the far-east Asian world and the much valued status and power feeling of the West, we have the main reason why TPS works wonders in some companies, and is a total disaster in others. It is not about the System, it is about the mentality. A company ruled in an autocratic manner, with little responsibility given to the workforce, old-fashioned leadership styles and alienisation of the employee – a reality in the Western culture – are the basic requirements for mass production.
On the contrary, a highly creative and focused group, with little rule and hardly any concept of responsibility is the core of craft production – typical of artists and designers. In the middle lies the TPS, a system that combines the speed of an assembly line and the flexibility of a focus group, the peculiarity being the focus group is in fact the whole workforce, in which every employee participates in the production planning and production process.
Lastly, bringing the Toyota group to the industrial world of now-a-days, we can get a sense of the impact the company and the System devised by Taiichi Ohno had had on the industry throughout the World. Toyota and its TPS have become objects of study throughout the industrial business, as seen in the ‘Additional Readings & References’ section of the case study.
On practical terms, the TPS has become a benchmark for companies around the World, accounting for Fujitsu’s turnaround plan and Japan Post’s privatization in Japan, and various brands in the US, such as General Mills, helping these companies take a leap forward in the early years of the new millennium. Furthermore, following through with the statement that the true essence of Toyota and its success with the TPS is the mentality, we must highlight the TSSC.
The TSSC (Toyota System Support Centre), headquartered in Kentucky in the 1990s, was set up with the aim of aiding companies implement the TPS. That alone shows Toyota’s open minded approach, additionally Toyota charges no fee whatsoever for its services. Toyota, with its philosophy, is not satisfied if they are the best amongst the worst; they are happy to let everyone ‘step up their game’ to increase competitiveness.

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