The Toyota Production System: High Quality and Low Cost

The Toyota Production System
High Quality and Low Cost

COST VS DEFECTS
Readings; James Womack, Daniel T. Jones and Daniel Roos, The Machine that Changed the World, 1990, Ch 3 and 4 Kenneth N. McKay, The Evolution of Manufacturing ControlWhat Has Been, What Will Be Working Paper 03 2001 Michael McCoby, Is There a Best Way to Build a Car? HBR Nov-Dec 1997
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Consumer Reports
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Toyota vehicle sales
Ward's U.S. Light Vehicle Sales Summary 2002

Septem ber Units Current Domestic Cars Import Cars Total Cars Domestic Light Trucks Import Light Trucks Total Light Trucks Domestic Light Vehicles Import Light Vehicles Total Light Vehicles Year-Ago % Share Current Year-Ago DSR % Chg. Current Year-Ago January - Septem ber Vol % Chg.
431,496 170,554 602,050 545,865 75,999 621,864 977,361 246,553 1,223,914
481,318 158,897 640,215 573,329 75,575 648,904 1,054,647 234,472 1,289,119
35.3 13.9 49.2 44.6 6.2 50.8 79.9 20.1 100.0
37.3 12.3 49.7 44.5 5.9 50.3 81.8 18.2 100.0
-2.6 4,594,203 4,865,569 16.7 1,708,780 1,566,286 2.2 6,302,983 6,431,855 3.5 5,769,260 5,621,805 9.3 798,656 711,178 4.2 6,567,916 6,332,983 0.7 10,363,463 10,487,374 14.3 2,507,436 2,277,464 3.2 12,870,899 12,764,838
-5.6 9.1 -2.0 2.6 12.3 3.7 -1.2 10.1 0.8
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1. 2. 3. 4. 5.
Historical View Performance measures Elements of TPS Six Eras of Manufacturing Practice Difficulties with Implementation
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Three Major Mfg Systems from 1800 to 2000
Machine tools, specialized machine tools, Taylorism, SPC, CNC, CAD/CAM
1800 Interchangeable Parts at U.S. Armories
1900 Mass Production at Ford
2000 Toyota Production System
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Key Elements for New Mfg Systems

Element/ System Need of Society Work Force Motivation Yankee Ingenuity Enabling Technology Machine Tools, Division of Labor Moving Assembly Line,etc CNC, Integration of Labor Leader Resources
Interchange- Military able Parts
Roswell Lee/ John Hall Henry Ford Taiichi Ohno
U.S. Govt
Mass Production Toyota Production System

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Trans$5/day portation Immigrant Post War Jobs, Security
Earnings
Japanese Banks
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Q. By what method did these new systems come about? A. Trail and Error
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History of the Development of the Toyota Production System ref; Taiichi Ohno
1945
1975
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1. 2. 3. 4. 5.
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Summary of Assembly Plant Characteristics, Volume Producers, 1989 (Average for Plants in Each Region)
Ja panese in Japan Pe rformance: Produ cviti ty (ho urs/Veh .) Qua li ty (a ssembl y de fe cts/10 0 veh icle s) La you t: Sp ace (sq .ft./ve hi cl e/yr) Si ze o f Rep ai r Area (as % of assemb ly spa ce) Inve ntorie s(days for 8 sampl e parts) Work Fo rce: % of Wo rk Force i n Tea ms Jo b Rotati on (0 = n one , 4 = fre que nt) Su ggestio ns/Emp lo yee Nu mb er o f Job Cl asses Trai ni ng of New Prod ucti on Worke rs (h ours) Ab sen te ei sm Au toma ti on : Wel di ng (% of di rect step s) Pa inti ng(% of d irect ste ps) Asse mbl y(% o f di rect steps) 16 .8 60 Ja panese in North America 21 .2 65 American in North America 25 .1 82 .3 36 .2 97 All Europe
5.7 4.1 0.2
9.1 4.9 1.6
7.8 12 .9 2.9
7.8 14 .4 2
69 .3 3 61 .6 11 .9 38 0.3 5
71 .3 2.7 1.4 8.7 37 0 4.8
17 .3 0.9 0.4 67 .1 46 .4 11 .7
0.6 1.9 0.4 14 .8 17 3.3 12 .1
86 .2 54 .6 1.7
85 40 .7 1.1
76 .2 33 .6 1.2
76 .6 38 .2 3.1
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So urce: IMVP Worl d Assembl y Pl an t Survey, 198 9, a nd J. D. Po wer Ini tia l Qua li ty Surve ry, 19 89
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Cost Vs Defects
Ref. Machine that Changed the World Womack, Jones and Roos
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1. 2. 3. 4. 5.
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How do you get this kind of performance?

1. Womack, Jones and Roos
2. J T. Blacks 10 Steps 3. Demand Flow Technologys 9 Points 4. MSDD, D. Cochran and Students
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Womack Jones and Roos

Automation?
Yes, but.
DFM?
Probably
Standardized Production?
No!
Lean Characteristics?
Integration of Tasks Identification and removal of defects

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Cost Vs Automation
Ref. Machine that Changed the World Womack, Jones and Roos
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J T. Blacks 10 Steps
1. 2. 3. 4. 5. 6. 7. 8. 9.
Ref; JT. Black Factory with a Future 1991
Form cells Reduce setup Integrate quality control Integrate preventive maintenance Level and balance Link cells KANBAN Reduce WIP Build vendor programs Automate
10. Computerize
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Demand Flow Technologys 9 Points

1. Product Synchronization 2. Mixed Model Process Maps 3. Sequence of Events 4. Demand at Capacity 5. Operational Cycle Time 6. Total Product Cycle Time 7. Line Balancing 8. Kanbans 9. Operational Method Sheets
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Current Value Stream Map
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Future Value Stream Map
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Manufacturing System Design Decomposition (MSDD)

ROI Sales Costs Investments
- s quality
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resolving problems
predictable output
m delay reduction Lower level actions

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J T. Black 1, 2
1. Form Cells Sequential operations, decouple operator from machine, parts in families, single piece flow within cell 2. Reduce Setup Externalize setup to reduce downtime during changeover, increases flexibility
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TPS Cell
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Standardized Fixtures
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J T. Black 3, 4
3. Integrate quality control Check part quality at cell, poke-yoke, stop production when parts are bad 4. Integrate preventive maintenance worker maintains machine , runs slower
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J T. Black 5, 6
5. Level and balance Produce to Takt time, reduce batch sizes, smooth production flow 6. Link cells- Kanban Create pull system Supermarket System
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J T. Black 7, 8
7. Reduce WIP Make system reliable, build in mechanisms to self correct 8. Build Vendor program Propagate low WIP policy to your vendors, reduce vendors, make ontime performance part of expectation
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Manufacturing System Design Decomposition (MSDD)

ROI Sales Costs Investments
- s quality
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resolving problems
predictable output
m delay reduction Lower level actions

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Example from Cochran Minimize production disruptions

FR-P1
Minimize production disruptions
DP-P1
Predictable production resources
(people, equipment, info)
FR-P11
Ensure availability of relevant production information
FR-P12
Ensure predictable equipment output
FR-P13
Ensure predictable worker output
FR-P14
Ensure material availability
DP-P11
Capable and reliable information system
DP-P12
Maintenance of equipment reliability
DP-P13
Motivated work -force performing standardized work
DP-P14
Standard material replenishment system
FR-P121
Ensure that equipment is easily serviceable
FR-P122
Service equipment regularly
FR-P131
Reduce variability of task completion time
FR-P132
Ensure availability of workers
FR-P133
Do not interrupt production for worker allowances
FR-P141
Ensure that parts are available to the material handlers
FR-P142
Ensure proper timing of part arrivals
DP-P121
Machines designed for serviceability
DP-P122
Regular preventative maintenance program
DP-P131
Standard work methods to provide repeatable processing time
DP-P132
Perfect Attendance Program
DP-P133
Mutual Relief System with cross-trained workers
DP-P141
Standard work in process between sub systems
DP-P142
Parts moved to downstream operations according to pitch
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Some Basics Concepts of TPS

1. Smooth Flow and Produce to Takt Time
2. Produce to Order 3. Make system observable and correct
problems as they occur
4. Integrate Worker Skills
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Two Examples;
1. Takt Time
2. Pull Systems
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Takt Time to pace production
Available Time Takt Time ProductDemand

Calculate Takt Time per month, day, year etc. Available time includes all shifts, and excludes all nonproductive time (e.g. lunch, clean-up etc). Product demand includes overproduction for low yields etc.
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Takt Time
Automobile Assembly Line; Available time = 7.5 hr
X 3 shifts = 22.5 hrs or 1350 minutes per day. Demand = 1600 cars per day. Takt Time = 51 sec
Aircraft Engine Assembly Line; 500 engines per
year. 2 shifts X 7 hrs => 14 hrs/day X 250 day/year = 3500hrs.
Takt time = 7 hrs.
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Engines shipped over a 3 month period at aircraft engine factory B

12
month 1
month 2
month 3
10
engines shipped per week
0
7-Jun 15-Jun 23-Jun 30-Jun 7-Jul 15-Jul 24-Jul 31-Jul 7-A ug 15-A ug 24-A ug 31-A ug
Wee k s
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Engines shipped over a 3 month period at aircraft engine factory C

7
engines shipped
0
may june jul y august
we e ks
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On-time performance of engine plants

10 0%
80 %
late
engines delivered
late
60 %
on time
40 %
on time on time
20 %
0%
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Push and Pull Systems

Machines
Parts
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Orders
Push Systems
Order arrives at the front of the system and is produced in the economical order quantity. Q. How long did it take for the order to go through the system?
Time = 0
Time = 1 Time = 2 Time = 3
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Time = 4 37
Pull Systems-
The order arrives at the end of the line and is pulled out of the system. WIP between the machines allows quick completion.
Pros and Cons; Pull can fill small orders quickly, but must keep inventory for all part types. Design can help here but not in all cases.
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Comparison in delivery times

If the process time per part is t, and the batch size is n, it takes Nnt time to process a batch through N steps. To deliver one part it takes; Nnt time from a push system plus setup and transportation delays, and t for a pull system.
See HP Video
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HP Video Results
Push system (6) Space WIP CycleTime Rework Units Quality prob. Production Rate L=W
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Pull (3) 2 Tables 12 1:40 10 visible 7.2
Pull (1) 1 Table 4 19 sec 3 visible 12.6

40
2 Tables 20 3:17 26 hidden 6.1 parts per minute
HP Video Results Revisited

Push system (6) Space WIP = L CycleTime = W Rework Units ~WIP Quality prob. Production Rate L=W
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Pull (3) 2 Tables 12 3X =12 1:40 3t(1:40 or 40) 10 visible 7.2
Pull (1) 1 Table 4 1X =4 19 sec (say 20) 1t (50 or 20) 3 visible 12.6 4/50/60=4.8
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2 Tables 20 6X =24 3:17 6t(3:20 or 2:00) 26 hidden 6.1 parts per minute
So what are the advantages of the pull systems?

continuous (synchronous) flow single piece flow capabilities observable problems
(if stopped = problem)
sensitive to state of the factory

(if no part = problem)
possible cooperative problem solving

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1. 2. 3. 4. 5.
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Six Eras of Manufacturing Practice, Ken McKay

1. 2. 3. 4. 5. 6.
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Pioneering Systemization Technology and Process Internal Efficiency Customer Service Systems Level Re-engineering
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Ken McKay 1, 2
1. Pioneering sellers market, competition is not by manufacturing large margins emphasize throughput not efficiency
2. Systemization - firm grows and system gets complex gross inefficiency becomes apparent, competition begins to make its presence felt. Need for standard operating procedures, demand still high, inventory used to buffer against instabilities.
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Ken McKay 3, 4
3. Technology and 4. Internal Efficiency Process competition competition cherry pickers enter the market is increasing, sales are they dont offer all of the softening, options and parts service but manufacturing is still in focus on the 20% which early maturity and yields 80% of the revenue competition is limited stream. Internal plant is put into order, problems are to firms in similar pushed outside to suppliers, situation. Focus shifts best in class, bench marking from increasing identifies the silver bullet. production rate to Still using inventory to increasing the amount cushion production support variety, and maintain of product per unit functional features. time. 2.810 T.G.Gutowski 10/29/01 46
Ken McKay- 5, 6
5. Customer Service talk to the customer, identify core competency, outsource, be responsive, reduce lead time, eliminate feature creep, focused factory etc.
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6. System Level Reengineering firms have addressed the internal system and factory no more to squeeze out look to improving indirect and overhead, era of mass customization, supply chain development.
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1. 2. 3. 4. 5.
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TPS Implementation
Physical (machine placement, standard
work etc) part
Work practices and people issues

Supply-chain part
Corporate Strategy
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Work practices and people issues

Failed TPS attempts; GM Linden NJ, GM-Suzuki, Ontario Canada. Successes GM NUMMI, Saturn. see MacCoby art Innovative Work Practices Ref; C. Ichniowski, T. Kochan et al What Works at Work: Overview and Assessment, Industrial Relations Vol 35 No.3 (July 1996)
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Examples of Innovative Work Practices

Work Teams
Gain Sharing
Flexible Job Assignments

Employment Security
Improved Communications
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What Works at Work: Overview and Assessment,

Conclusion 1; Bundling Innovative human resource management practices can improve business productivity, primarily through the use of systems of related work practices designed to enhance worker participation and flexibility in the design of work and decentralization of managerial tasks and responsibilities.
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Conclusion 2; Impact New Systems of participatory work practices have large economically important effects on the performance of the businesses that adopt the new practices.
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Conclusion 3; Partial Implementation
A majority of contemporary U.S. businesses now have adopted some forms of innovative work practices aimed at enhancing employee participation such as work teams, contingent pay-for-performance compensation, or flexible assignment of multiskilled employees. Only a small percentage of businesses, however, have adopted a full system of innovative work practices composed of an extensive set of these work practice innovations.
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Conclusion 4; Barriers to Implementation
The diffusion of new workplace innovations is limited, especially among older U.S. businesses. Firms face a number of obstacles when changing from a system of traditional work practices to a system of innovative practices, including: the abandonment of organization change initiatives after limited policy changes have little effect on performance, the costs of other organizational practices that are needed to make new work practices effective, long histories of labor-management conflict and mistrust, resistance of supervisors and other workers who might not fare as well under the newer practices, and the lack of a supportive institutional and public policy environment.
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Barriers to Implementation
Early abandonment
Costs History of conflict and distrust Resistance of supervisors Lack of supportive infrastructure
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Summary
High quality and low cost ( and originally low volumes) Relationship to previous systems (see McKay paper), yet new,. in fact revolutionary Many elements
Overall, see The Machine that Changed the World Cells, next time People, see Maccoby Article
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Summary .. continued
Autonomation automation with a
human touch
Worker as problem solver

TRUST
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The Toyota Production System

High Quality and Low Cost

Toyota vehicle sales

Ward's U.S. Light Vehicle Sales Summary 2002

431,496 170,554 602,050 545,865 75,999 621,864 977,361 246,553 1,223,914

481,318 158,897 640,215 573,329 75,575 648,904 1,054,647 234,472 1,289,119

35.3 13.9 49.2 44.6 6.2 50.8 79.9 20.1 100.0

37.3 12.3 49.7 44.5 5.9 50.3 81.8 18.2 100.0

-5.6 9.1 -2.0 2.6 12.3 3.7 -1.2 10.1 0.8