The Toyota Production System

HighQualityandLowCost
COST VS
DEFECTS

Readings;
JamesWomack,DanielT.JonesandDanielRoos,
TheMachinethatChangedtheWorld,1990,Ch3and4
KennethN.McKay,TheEvolutionofManufacturingControl
WhatHasBeen,WhatWillBeWorkingPaper032001
MichaelMcCoby,IsThereaBestWaytoBuildaCar?
HBRNovDec1997

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Consumer Reports

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 Toyota vehicle sales

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

Septem ber January - Septem ber
Units % Share DSR Vol
Current Year-Ago Current Year-Ago % Chg. Current Year-Ago % Chg.

Domestic Cars 431,496 481,318 35.3 37.3 -2.6 4,594,203 4,865,569 -5.6
Import Cars 170,554 158,897 13.9 12.3 16.7 1,708,780 1,566,286 9.1
Total Cars 602,050 640,215 49.2 49.7 2.2 6,302,983 6,431,855 -2.0
Domestic Light Trucks 545,865 573,329 44.6 44.5 3.5 5,769,260 5,621,805 2.6
Import Light Trucks 75,999 75,575 6.2 5.9 9.3 798,656 711,178 12.3
Total Light Trucks 621,864 648,904 50.8 50.3 4.2 6,567,916 6,332,983 3.7
Domestic Light Vehicles 977,361 1,054,647 79.9 81.8 0.7 10,363,463 10,487,374 -1.2
Import Light Vehicles 246,553 234,472 20.1 18.2 14.3 2,507,436 2,277,464 10.1
Total Light Vehicles 1,223,914 1,289,119 100.0 100.0 3.2 12,870,899 12,764,838 0.8

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. 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 1900 2000

Interchangeable Mass Toyota

Parts at U.S. Production Production
Armories at Ford System

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 Key Elements for New Mfg Systems
Element/ Need of Work Enabling Leader Resources
System Society Force Technology
Motivation
Interchange- Military Yankee Machine Roswell U.S.
able Parts Ingenuity Tools, Lee/ Govt
Division of John
Labor Hall
Mass Trans- $5/day Moving Henry Earnings
Production portation Immigrant Assembly Ford
Line,etc
Toyota Post War Jobs, CNC, Taiichi Japanese
Production Security Integration Ohno Banks
System of Labor
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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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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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Summary of Assembly Plant Characteristics, Volume Producers,
1989
(Average for Plants in Each Region)
Japanese Japanese in American in All 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
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Cost Vs Defects
Ref. Machine that Changed the World Womack, Jones and Roos

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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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
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

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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 CostsInvestments

resolving problems
quality predictableoutputdelayreduction
Lowerlevelactions
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J T. Black 1, 2
1. Form Cells 2. Reduce Setup
Sequential Externalize setup to
operations, reduce down-time
decouple operator during changeover,
from machine, increases flexibility
parts in families,
single piece flow
within cell

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TPS Cell

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Standardized Fixtures

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J T. Black 3, 4
3. Integrate quality 4. Integrate preventive
control maintenance
Check part quality worker maintains
at cell, poke-yoke, machine , runs
stop production slower
when parts are bad

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J T. Black 5, 6
5. Level and balance 6. Link cells- Kanban
Produce to Takt Create pull
time, reduce batch system
sizes, smooth Supermarket
production flow System

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J T. Black 7, 8
7. Reduce WIP 8. Build Vendor
Make system program
reliable, build in Propagate low WIP
mechanisms to self policy to your
correct vendors, reduce
vendors, make on-
time performance
part of expectation

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 Manufacturing System Design
Decomposition (MSDD)
ROI

Sales CostsInvestments

resolving problems
quality predictableoutputdelayreduction
Lowerlevelactions
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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 FR-P12 FR-P13 FR-P14

Ensure Ensure Ensure Ensure
availability of predictable predictable material
relevant equipment worker output availability
production output
information

DP-P11 DP-P12 DP-P13 DP-P14

Capable and Maintenance of Motivated Standard
reliable equipment work -force material
information reliability performing replenishment
system standardized system
work

FR-P121 FR-P122 FR-P131 FR-P132 FR-P133 FR-P141 FR-P142

Ensure that Service Reduce Ensure Do not interrupt Ensure that Ensure proper
equipment is equipment variability of availability of production for parts are timing of part
easily regularly task completion workers worker available to the arrivals
serviceable time allowances material
handlers

DP-P121 DP-P122 DP-P131 DP-P132 DP-P133 DP-P141 DP-P142

Machines Regular Standard work Perfect Mutual Relief Standard work Parts moved to
designed for methods to
preventative Attendance System with in process downstream
serviceability provide

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maintenance repeatable
Program cross-trained between sub - operations
program processing time workers systems according to
pitch
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
Product Demand
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-
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10/29
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-Aug 15-Aug 24-Aug 31-Aug

Weeks

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Engines shipped over a 3 month
period at aircraft engine factory C

6
engines shipped

0
may june july august

weeks

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On-time performance of
engine plants

100%

80%
late
engines delivered

late
60%

on
time
40%
on
time

20% on
time

0%

A B C

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Push and Pull Systems
Machines

1 2 3 4

Parts Orders

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 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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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
Pushsystem(6) Pull(3) Pull(1)

Space 2Tables 2Tables 1Table

WIP 20 12 4

CycleTime 3:17 1:40 19sec

ReworkUnits 26 10 3

Qualityprob. hidden visible visible

ProductionRate 6.1partsper 7.2 12.6

L=W minute
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 HP Video Results Revisited

Pushsystem(6) Pull(3) Pull(1)

Space 2Tables 2Tables 1Table

WIP=L 20 12 4
6X=24 3X=12 1X=4
CycleTime=W 3:17 1:40 19sec(say20)
6t(3:20or2:00) 3t(1:40or40) 1t(50or20)
ReworkUnits 26 10 3
~WIP
Qualityprob. hidden visible visible

ProductionRate 6.1partsper 7.2 12.6

L=W minute 4/50/60=4.8

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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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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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Six Eras of Manufacturing
Practice, Ken McKay
1. Pioneering
2. Systemization
3. Technology and Process
4. Internal Efficiency
5. Customer Service
6. Systems Level Re-engineering

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Ken McKay 1, 2
1. Pioneering - 2. Systemization - firm
sellers market, grows and system gets
complex gross
competition is not inefficiency becomes
by manufacturing apparent, competition
large margins begins to make its
presence felt. Need for
emphasize standard operating
throughput not procedures, demand
efficiency still high, inventory
used to buffer against
instabilities.

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Ken McKay 3, 4
3. Technology and 4. Internal Efficiency -
Process competition is
increasing, sales are
softening, manufacturing
is still in early maturity
and competition is
limited to firms in
similar situation. Focus
shifts from increasing
production rate to
increasing the amount of
product per unit time.
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.

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Ken McKay- 5, 6
5. Customer Service - 6. System Level Re-
talk to the engineering - firms
have addressed the
customer, identify
internal system and
core competency, factory no more to
outsource, be squeeze out look to
responsive, reduce improving indirect and
lead time, eliminate overhead, era of mass
feature creep, customization, supply
chain development.
focused factory etc.

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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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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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.

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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.

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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.

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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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