Rationale Operations Management is concerned with the production of goods and services ensuring that the produced goods are efficient and use minimum resources. It is also concerned with the fact that the produced goods should be effective, i.e. they should meet customer requirements.
The Toyota Production System is an excellent example of an effective and efficient production system, which is symbolic of excellent operations management. TPS also signifies the role that effective operations management can play in shaping the future of the company. The study helps us in realizing how little methods of improving operations can make a huge difference for any company. Company Profile
Toyota Automobiles has centered its activities around the principle of contributing to the development of a prosperous society through the manufacture of automobiles” . By contributing to the society, the company means two things. Firstly, it means that they would try to manufacture automobiles that are in synchronization with the needs of the society and that are able to make the lives of people better.
Secondly, they would try to help society at the grass roots level by providing employment, being profitable and paying taxes, thus, consequently, strengthening the economy of the country they operate in. Toyota Motor Corporation is the third largest automobile manufacturer in the world. The company was formed on 28 August 1937 in Japan. It is has 12 plants in Japan, and besides these plants, the company owns 54 manufacturing plants in 27 countries. It has 246700 employees around the world and markets vehicles in more than 160 countries of the world. Timeline of Events
1924 – Foundation of the Toyota Corporation by the invention of Toyoda Model G Automatic Loom 1929 – A British company bought the patent for Automatic-loom. 1933 – The automobile department for the company was established by the name of Toyoda Automatic Loom Works, Ltd. 1936 – The manufacturing of the AA Sedan was completed
1937 – Establishment of Toyota Motor Co. Ltd. 1938 – Production at the Honsha Plant began 1950 – A massive financial crisis for the company, as a result the Toyota Motor Sales Co. was formed 1951 – The company formulated a suggestion system to gather innovative ideas and minimize faults
Hino Motors and Daihatsu Motors are group companies of Toyota. Toyota Co. started collaborating with Hino Motors back in 1966, and with Daihatsu in 1967. The company also got the first Japan Quality Control Medal in 1970. Hence, it is quite clear that right from its establishment, the company has always kept a close check of the quality control measures. Initially, the Toyota Motor Co. Ltd. and the Toyota Motor Sales Co. Ltd. operated separately. However, they were merged in the year 1982. the Toyota Production System
Introduction The Toyota Production System is designed for “the complete elimination of the all waste and that imbues all aspects of production with the philosophy in pursuit of the most efficient production methods.” The Toyota Production System is a very robust manufacturing system that is also referred as ‘Just-in-Time (JIT) system’. It is a very famous system, which is studied as well to understand the reasons behind its success.
The production control system was not a onetime affair, the system currently at work at Toyota Motors is the results of years of continuous hard work and improvements brought to the old system. The main purpose of building such a system was to make the vehicles ordered by customers in the fastest way possible while keeping the delivery time to a minimum.
Two concepts lie in the core of the TPS, namely: Jidoka, and Just-in-time. Jidoka means automation with a human touch, which means that as soon as the system encounters a problem, it stops immediately preventing the production of defective products. The concept of Just-in-time in production means that each process of the system would only produce what is needed by the next process in the flow. Relying on its core principles of Jidoka and JIT, it allows the system to produce vehicles of top-notch quality, one at a time, and that are in full synch with customer requirements.
The system has an inevitable effect on the safety, quality, productivity, and the cost of the product produced. The main objective of the system is to produce the automobile of highest quality at the lowest possible cost. Another important objective is to minimize the lead time of production. Mostly, in the market companies go by either of the two approaches. One is the traditional approach, which is the cost plus approach. The cost plus approach adds profits to the cost to find the sales price, which results in a higher sales price irrespective of the market. The second approach, which is also the TPS approach, is cost minus approach that first sets the sales price according to the market and then tries to reduce costs to earn profit. Foundations of TPS
JIT (Just-In-Time) An automobile consists of 30,000 parts; therefore, it is very important to have a detailed production plan that manages the procurement of parts. If the supply of parts is followed according to a production plan then it could result in the reduction of: •MUDA (waste) – Anything that is of no value or does not add value to a product can be tagged as Muda. •MURI (overburden)
•MURA (inconsistencies) Heijunka – Leveled Production Heijunka means leveled and sequenced production. Different products are produced on a single assembly line while keeping a balance in their quantity and sequence. The quantity of production is consistent every day. It helps in making the production system as efficient as possible and there is no need of overtime by the employees. The Pull System
TPS follows the Pull system, which links production directly to real demand. Production is carried out in response to order received by dealers. Kanban System The TPS also makes use of a unique production control method inspired from the supermarket style of operations. Supermarkets use product control cards on their products to save product related information. Similarly, Toyota followed similar strategy and assigned each product kanban signs that indicate the parts used as it goes to the next process. The former vice president of Toyota, Taiichi Ohno employed this concept. The following diagram is an appropriate illustration of how the Kanban system works.
Flow Processing This process allows one item to be produced and be passed onto the next step. JIDOKA Jidoka is described as any machine that has human like intelligence and that has the ability to make decisions. In TPS, the machines are also responsible for finding faults in a produced item.
Working of the Toyota Production System
Step 1 -Order information The customer communicates the order to the dealer, which is incorporated into the production line. The production plan consists of three phases: monthly production plan, weekly, and daily production plan. The daily production plan is responsible for deciding the sequence of vehicles to be produced so that they could be manufactured at a consistent speed (Heijunka). Step 2 – Timely Production
The next step is producing according to the production instruction Kanban sign attached, then it goes to paint shop for a paint. More parts are assembled according to the specifications provided by the Kanban Sign. The manufacturing facility has the ability of producing vehicles with different specifications at the same time. The work force uses the production instruction pasted on every vehicle indicating the assembly parts, and work details. The assembly line consists of all the parts for various vehicles so that the ones needed could be used. Restocking is carried out only for those parts that have been used. Step 3 – Parts Replacement
Kanban signs are again employed at this stage to replace only those parts that have been used. Whenever a worker uses a part, he removes the Kanban sign from the box and takes it to the parts plant. The plant has all kinds of parts so that they can be retrieved after every production. The part is retrieved according to the Kanban sign. The Kanban sign is also known as a parts retrieval Kanban under this step.
Of the several changes brought to the company for over the years, TPS has the biggest share in making Toyota the company it is today. Getting the status of the leader in the automotive manufacturing industry has all been because of doing efficient operations management in the form of implementation of TPS. The following are the major advantages that resulted from the use TPS:
•The leadtime and cost of production were minimized using TPS and the overall quality was improved as well. •Toyota is one of the tenth largest car manufacturing companies in the World and became the largest car manufacturer in 2007. •A number of companies from other industry have tried to adapt the principles of TPS in their companies, especially from the construction and health care side. Usability of TPS for any organization
The excellence of the Toyota Production System is not limited for Toyota Motors only. Any company that applies the principles of TPS and uses similar techniques in terms of reducing wastes and minimizing costs would be able to benefit from it. TPS would be able to identify and extend customer perceived value.
It also decreses wastes and costs in the manufacturing process. Moreover, effective implementation results in an improved product along with on-time delivery. The operations are optimized in such a way that they could match with any world class manufacturing operation. All in all, TPS provides a company a blue print that ensures excellence in manufacturing.