Toyota-case study

Introduction: Toyota is one of the world's largest automobile manufacturers, selling over 8.8 million models on all five continents. A Top 10 Fortune Global 500 enterprise, Toyota ranks among the world's leading global corporations and is proud to be the most admired automaker, an achievement the company believes stems from its dedication to customer satisfaction .Toyota has been shaped by a set of values and principles that have their roots in the company's formative years in Japan. The Toyota story begins in the late 19th century, when Sakichi Toyoda invented Japan’s first power loom, which was to revolutionize the country’s textile industry.

In January 1918, Sakichi founded the Toyoda Spinning & Weaving Company, and with the help of his son, Kiichiro Toyoda, he fulfilled his lifelong dream of building an automatic loom in 1924. Two years later, he established Toyoda Automatic Loom Works. Like his father, Kiichiro was an innovator, and during his visits to Europe and the U.S. in the 1920s, he became deeply interested in the nascent automotive industry. Making the most of the £100,000 that Sakichi Toyoda received for selling the patent rights of his automatic loom, Kiichiro laid the foundations of Toyota Motor Corporation (TMC), which was established in 1937. From looms to cars, the Toyota experience has been shaped by extending the boundaries of manufacturing.

INTERNAL AND EXTERNAL CONSTRAINTS: Poor Quality and Primitive Technology: Toyota Motor Corporation struggled through the 1930s, primarily making simple trucks. In the early years, the company produced poor-quality vehicles with primitive technology (e.g., hammering body panels over logs) and had little success.

Fund Flow: Towards the end of the 1940s Toyota was experiencing a severe cash flow problem. In trying to stave off bankruptcy, it called for strict cost cutting and a request for “voluntary” retirements. This led to a labour dispute that was only quelled when the president, Kiichiro, accepted responsibility and resigned.

Space: The batch and queue system of making parts. Large companies like Ford and GM could afford to make a lot of one part at one time and have huge inventories of it sitting around to be used, Toyota didn’t have that luxury.

Labour: Following a labour dispute in 1950, mutual trust between labour and management was adopted as the foundation of labour-management relations in the joint labour and management declaration concluded in 1962. Since then, repeated discussions have led to deeper understanding and trust between labour and management.

Environmental: CO2 and other harmful gas emissions.

INITIATIVES TAKEN:

Just-in-Time – smooth, continuous, optimised workflows The Toyota Production System fulfils customer demand efficiently and promptly by linking all production activity to real marketplace demand. Just-in-time production relies on finely tuned processes in the assembly sequence using only the quantities of items required, only when they are needed - – ones in which inventory costs are minimised by having the parts required arrive at their point of use only as they are needed.

Jidoka – building in quality When it comes to quality, there is no room for compromise in the Toyota Production System. The TPS principle of jidoka builds quality checks into each step of the production process. By ensuring that all processes are visible, jidoka helps ensure that abnormalities are made visible and addressed immediately. Improvements are often made as a result of discovering problems. Therefore, problems need to be properly understood through genchi - genbutsu, which means ‘going to the source’ of the problem and assessing it for yourself rather than relying on information supplied by others, in order to gain a complete and accurate understanding. ANDON BOARD

The andon board is a simple but highly-visible electronic sign displaying the status of production lines. It notifies management immediately if a worker has identified a fault, precisely identifying its location. Workers take responsibility for production quality, with the power to stop the production line as required. The production line will not be restarted until the reason for the fault has been resolved STANDARDISATION

Another key element for quality assurance is a focus on standardisation. Developing and relying on standardised work tasks not only ensures consistently high levels of quality, but also maintains production pace and provides a benchmark for implementing continuous improvement MISTAKE-PROOFING AND LABELLING

Devices that make it difficult or impossible for a worker to make typical errors at his or her workstation are a common sight on Toyota production lines. Known as poka-yoke, this principle is a simple but creative and reliable way to reduce errors and maintain quality. Furthermore, all commonly used items are clearly labelled so that they can be found and used by everyone with the same ease .

Kaizen – improvement is a continuous process In many organisations the process of change can be challenging. At Toyota change is a way of life, thanks to the company’s fundamental philosophy of continuous improvement known as kaizen. Kaizen means that all team members throughout the organisation are continuously looking for ways to improve operations, and people at all levels in the company support this process of improvement. Kaizen also requires clarity in terms of what is to be achieved – setting clear objectives and targets for improvement.

It is very much a matter of positive attitude, with the focus on what should be done rather than what can be done. TESTING THE LOGIC – ‘5 WHYS?’

Kaizen requires the logic and benefit of all improvements to be carefully evaluated before implementation. The concept of ‘5 whys?’ is employed to achieve this. Every planned improvement needs to be tested by questioning ‘why?’ at five levels to ensure that the logic and value of the improvement is clear. This reduces the risk of making changes without sufficient justification A CULTURE OF CONTINUOUS IMPROVEMENT – ‘5S’

The Toyota Production System goes beyond principles that are purely related to production processes. It also extends to the whole organisation – sales and marketing, administration, product development and management. Every employee, regardless of position, receives the same treatment. Toyota takes care to nurture a sense of pride and efficiency in the workplace. This is supported by ‘5S’: • SEIRI – Sifting

• SEITON – Sorting • SEISO – Sweeping and cleaning • SEIKETSU – Spic-and-span • SHITSUKE – Sustain These principles ensure that every team member is actively involved in keeping processes as effective and efficient as possible.

The Environment – Toyota’s commitment Throughout its wide range of activities Toyota always considers the environment as part of its daily operations. Its policy is to analyse the effects of every stage in its products’ lives: development, manufacturing, operation, and recycling.TPS philosophy also includes the 3Rs – reduce, reuse, recycle.

With respect to manufacturing, the reduction of waste (muda) is one of the key principles and, therefore, benefits of TPS. Reduction of waste in processing, inventory, conveyance, overproduction, motion, waiting, and manufacturing defects delivers direct environmental benefits .At a lower level, waste sorting has long been practised at Toyota Material Handling Europe’s manufacturing plants. TMHE’s manufacturing sites have all achieved ISO 14001 certification.

Health and Safety Safety is always the focus in all of the complementary philosophies and practices that make up TPS. Not just a priority but a necessity. The tireless effort to do things in the best possible way could never progress if safety were to be compromised by apparent efficiencies. When processes

are improved to increase quality, safety is also improved. Manufacturing sites have achieved OHSAS 18001 certification – the international standard for occupational health and safety management. They work to anticipate and reduce potential risks factors efficiently and strive to prevent workplace accidents. The maintenance or improvement of health, safety and ergonomy are essential when processes are revised or new equipment is considered. This is not new, however. TPS has always used automation and process improvement to protect workers.

The flexibility required of team members in TPS helps them to be alert and better focused as their tasks change. In all cases, workstations are designed to be easy-to-use, making work quick, comfortable and efficient. As with kaizen, all team members, from management to the shop floor, participate in safety training and in making suggestions for improvements in safety across all processes

CONCLUSION Starting with the values Sakichi Toyoda learned from his father and continuing with the preservation, enhancement, and passing on of those values right upto the present day, Toyota has become one of the most successful, admired, and imitated companies in the world. Throughout its history Toyota has had to overcome many problems. Probably the reason so many companies that try to imitate Toyota never achieve its level of performance is they, either consciously or not, have failed to develop a culture essentially based on the Toyota Way.