The Toyota Production System

High Quality and Low Cost

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 Control-
What Has Been, What Will Be Working Paper 03 2001
Michael McCoby, Is There a Best Way to Build a Car?
HBR Nov-Dec 1997
COST VS
DEFECTS
Consumer Reports
Gains of imports
The Toyota Production System
!"Historical View
#"Performance measures
$"Elements of TPS
%"Difficulties with Implementation
&"Six Eras of Manufacturing Practice
Three Major Mfg Systems
from 1800 to 2000
1800 1900 2000
Machine tools, specialized machine tools, Taylorism, SPC, CNC, CAD/CAM
Interchangeable
Parts at U.S.
Armories
Mass
Production
at Ford
Toyota
Production
System
Key Elements for New Mfg Systems
Japanese
Banks
Taiichi
Ohno
CNC,
Integration
of Labor
Jobs,
Security
Post War Toyota
Production
System
Earnings Henry
Ford
Moving
Assembly
Line,etc
$5/day
Immigrant
Trans-
portation
Mass
Production
U.S.
Govt
Roswell
Lee/
John
Hall
Machine
Tools,
Division of
Labor
Yankee
Ingenuity
Military Interchange-
able Parts
Resources
Leader Enabling
Technology
Work
Force
Motivation
Need of
Society
Element/
System
Q. By what method did these
new systems come about?
A. Trial and Error
History of the Development of the Toyota
Production System ref; Taiichi Ohno
1945
1975
The Toyota Production System
!"Historical View
#"Performance measures
$"Elements of TPS
%"Difficulties with Implementation
&"Six Eras of Manufacturing Practice
Japanese Japanese in American in Al l Europe
in Japan North America North America
Performance:
Producvitity (hours/Veh.) 16.8 21.2 25.1 36.2
Quality (assembly
defects/100 vehicles) 60 65 82.3 97
Layout:
Space (sq.ft./vehicle/yr) 5.7 9.1 7.8 7.8
Size of Repair Area (as %
of assembly space) 4.1 4.9 12.9 14.4
Inventories(days for 8
sample parts) 0.2 1.6 2.9 2
Work Force:
% of Work Force in Teams 69.3 71.3 17.3 0.6
Job Rotation (0 = none,
4 = frequent) 3 2.7 0.9 1.9
Suggestions/Employee 61.6 1.4 0.4 0.4
Number of Job Classes 11.9 8.7 67.1 14.8
Training of New Production
Workers (hours) 380.3 370 46.4 173.3
Absenteeism 5 4.8 11.7 12.1
Automation:
Welding (% of direct steps) 86.2 85 76.2 76.6
Painting(% of direct steps) 54.6 40.7 33.6 38.2
Assembly(% of direct steps) 1.7 1.1 1.2 3.1
Source: IMVP World Assembly Plant Survey, 1989, and J. D. Power Initial Quality Survery, 1989
Summary of Assembly Plant Characteristics, Volume Producers,
1989
(Average for Plants in Each Region)
Cost Vs Defects
Ref. Machine that Changed the World Womack, Jones and Roos
Cost Vs Automation
Ref. Machine that Changed the World Womack, Jones and Roos
The Toyota Production System
!"Historical View
#"Performance measures
$"Elements of TPS
%"Difficulties with Implementation
&"Six Eras of Manufacturing Practice
How do you get this kind of
performance?
!"Womack, Jones and Roos
#"J T. Blacks 10 Steps
$"Demand Flow Technologys 9 Points
Womack Jones and Roos
New Technology?
No silver bullet
Automation?
Yes, but integrated with system
Standardized Production?
Not in the usual dont stop the line sense
Lean Characteristics?
Integration of Tasks (opposite of deskilling)
Identification and removal of defects (stop the line!)
kaizen institutionalizing change
J T. Blacks 10 Steps
Ref; JT. Black Factory with a Future 1991
1. Form cells
2. Reduce setup
3. Integrate quality control
4. Integrate preventive maintenance
5. Level and balance
6. Link cells KANBAN
7. Reduce WIP
8. Build vendor programs
9. Automate
10. Computerize
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
Current Value Stream Map
Future Value Stream Map
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 down-time
during changeover,
increases flexibility
TPS Cell
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J T. Black
Standardized Fixtures
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
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
Balancing and Leveling
Balanced line: each process has the same
cycle time. Match process time to
assemble time, match production rate to
rate of demand (Takt time)
Leveled Line: each product is produced in
the needed distribution. The process must
be flexible to do this.
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 on-
time performance part
of expectation
Some Basics Concepts of TPS
!"Smooth Flow and Produce to Takt Time
#"Produce to Order
$"Make system observable and correct
problems as they occur
%"Integrate Worker Skills
&"Institutionalize change
Two Examples;
!"Takt Time
#"Pull Systems
Takt Time:
demand time interval
Demand Product
Time Available
Time Takt =
Calculate Takt Time per month, day,
year etc. Available time includes all
shifts, and excludes all non-
productive time (e.g. lunch, clean-up
etc). Product demand includes over-
production for low yields etc.
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.
Engines shipped over a 3 month period
at aircraft engine factory B
0
2
4
6
8
10
12
7-Jun 15-Jun 23-Jun 30-Jun 7-Jul 15-Jul 24-Jul 31-Jul 7-Aug 15-Aug 24-Aug 31-Aug
Weeks
e
n
g
i
n
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s

s
h
i
p
p
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d

p
e
r

w
e
e
k
month 1 month 2 month 3
Factory B
Engines shipped over a 3 month period
at aircraft engine factory C
0
1
2
3
4
5
6
7
may june july august
weeks
e
n
g
i
n
e
s

s
h
i
p
p
e
d
Factory C
On-time performance of engine
plants
A B C
0%
20%
40%
60%
80%
100%
e
n
g
i
n
e
s

d
e
l
i
v
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r
e
d
A B C
on
time
late
on
time
on
time
late
Push and Pull Systems
Machines
Parts Orders
1 2 3 4
Push Systems
Order (from centralized decision process) arrives at the front of the
system and is produced in batches of size B.
Q. How long does it take to get one part out of the system?
1 2 3 N
Time = T
3
Time = T
2
Time = T
N
Time = T
1
Time = 0
..
Push Systems
Time = 0
1 2 3 N
Time
= T
N
..
If the process time per part is t at each of
N processes, and the batch size is B,
it takes time T
N
= NBt to get
one part through the system.
Comment; Of course, this
part can come from inventory
in a much shorter time, but the
point is that the push system
is not very responsive.
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.
Q.How long does it take to pull out
one part?
A.The time to finish the last opetration t.
Comparison between
Push and Pull Systems
Push system characteristics: Central
decision making, local optimization of
equipment utilization leads to large
batches, large inventories and a sluggish
system.
Pull system characteristics: Local decision
making, emphasis on smooth flow,
cooperative problem solving.
See HP Video
HP Video
Dots Tacks Tape Pack
Inventory in the system = L
Time in the system = W
Littles Law L = ! W
0.21 0.12 0.15
Production Rate
! = L / W
Visible Visible Hidden Quality Problem
3 10 26
Rework Units !
WIP
0:19 1:40 3:17 Cycle time = W
4 12 30 WIP = L
1 Table 2 Tables 2 Tables Space
Pull (1) Pull (3) Push system (6)
HP Video Results
Graphical Interpretation
0
50
100
150
200
250
0 2 4 6
Batch Size "B"
N
u
m
b
e
r

o
r

T
i
m
e

[
s
]
Inventory, L
Time in System, W
L = ! W
L ! k
1
B
W ! k
2
B
! = L / W = k
1
/ k
2
So what are the advantages of
the pull systems?
quick response
low inventories
observable problems
(if stopped = problem)
sensitive to state of the factory
(if no part = problem)
possible cooperative problem solving
The Toyota Production System
!"Historical View
#"Performance measures
$"Elements of TPS
%"Difficulties with Implementation
&"Six Eras of Manufacturing Practice
TPS Implementation
Physical part (machine placement,
standard work etc)
Work practices and people issues
Supply-chain part
Corporate Strategy (trust, job security)
Work practices and people
issues
Failed TPS attempts; GM Linden NJ,
CAMI, GM-Suzuki, Ontario Canada.
Successes GM NUMMI, Saturn. Toyota
Georgetown, KY
See MacCoby article
Other Ref: Just Another Car Factory Rinehart,
Huxley and Robertson, Farewell to the Factory,
Milkman
Work practices and people
issues
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)
Examples of Innovative Work
Practices
Work Teams
Gain Sharing
Flexible Job Assignments
Employment Security
Improved Communications
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.
What Works at Work: Overview
and Assessment,
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.
What Works at Work: Overview
and Assessment,
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.
What Works at Work: Overview
and Assessment,
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.
Barriers to Implementation
Early abandonment
Costs (training, commitment, benefits..)
History of conflict and distrust
Resistance of supervisors
Lack of supportive infrastructure
The Toyota Production System
!"Historical View
#"Performance measures
$"Elements of TPS
%"Difficulties with Implementation
&"Six Eras of Manufacturing Practice
Six Eras of Manufacturing
Practice, Ken McKay
!"Pioneering
#"Systemization
$"Technology and Process
%"Internal Efficiency
&"Customer Service
'"Systems Level Re-engineering
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.
Ken McKay 3, 4
3. Technology and
Process competition is
increasing, sales are
softening, manufacturing
is still in early maturity
and competition is limited
to firms in similar
situation. Product options
grow. Mfg focus shifts to
efficiency.
4. Internal Efficiency -
competition cherry pickers
enter the market they dont
offer all of the options and
parts service but focus on the
20% which yields 80% of the
revenue stream. Internal plant
is put into order, problems are
pushed outside to suppliers,
best in class, bench marking
identifies the silver bullet. Still
using inventory to cushion
production support variety, and
maintain functional features.
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.
6. System Level Re-
engineering - firms
have addressed the
internal system and
factory no more to
squeeze out look to
improving indirect and
overhead, supply chain
development.
Toyota Summary
High quality and low cost
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
Summary .. continued
Autonomation automation with a human
touch
Worker as problem solver
TRUST