Toyota Motor Manufacturing, U.S.A., Inc.

Situation Analysis Toyota, the Japanese auto maker had set up a plant in Georgetown, Kentucky, USA for manufacturing Camry sedans. It wanted to achieve the same reputation of high quality at low cost.

The company tried to replicate its unique Toyota Production System (TPS) in its Georgetown plant. In July 1988, Toyota Motor Manufacturing U.S.A. (TMM) began the production of Camry sedans in its plant in the USA. Later in March 1992, TMM started producing wagon versions of the new Camry, and became the sole source of these cars for the first time for Toyota worldwide. This new model created some problems related to seats in the cars.

Toyota Production System Toyota had always striven for “better cars for more people”. It believed in high quality at low cost. But after the Second World War, running plants only in Japan seemed less profitable due to country’s low labour productivity as well as the absence of scale economies due to low demand of cars in Japan, which was due to low income of people. But, when Toyota started the plant in the US, for producing high quality cars at low cost, they needed to replicate the Toyota Production System (TPS) in the USA plant. TPS aimed at cost reduction by eliminating waste.

The waste may be due to overproduction, rework (due to production of defective product), longer set-up as well as idle time and inefficient material handling. To identify what waste was in reality was a critical process. TPS provided two guiding principles for this: * Just-In-Time Production (JIT): Produce only what is needed, only how much is needed and when is needed. Any production from what is truly needed is a waste. * Jidoka: Make any production problems instantly self-evident and stop producing whenever problems are detected.

This means build quality product and any deviation from it is a waste. A variety of tools were used to implement TPS principles. For JIT, information flow was kept as close to the physical flow of parts as possible. Parts were pulled based on actual usage rather than planned schedule. This required systems capable of changing over parts with minimal setup time. Hence, creating a flowing production process was a prerequisite. For Jidoka, tools were required for immediate problem detection. Thus, standardization of process and documentation of standards was required. TPS also depended on human infrastructure. Training and problem solving attitude was needed. It also enabled people to seek kaizen: change for the better.

Operations at Georgetown Plant In Georgetown, the power train plant supplied engines and axles to the assembly plant, which performed: * Sheet-metal stamping * Plastic molding * Body welding * Painting * Assembly operations In all these as well as in their support functions, TPS was deployed as a set of management tools to be practiced daily. Assembly Assembly operations were performed along 353 stations on a conveyor line, over 5 miles in length and consisting of several connected line segments: the trim lines, chassis lines and final assembly lines. The line cycle time was 57 seconds. It required 769 team members, who were paid an average of $17 per hour, plus 50% premium for overtime. Every station on the assembly line deployed jidoka and kaizen tools. Each workstation was marked by a green, yellow and red line.

Start70% completedEnd If the team member was behind the yellow line or if he found any other problem, he or she pulled the andon cord, which stopped the line. Production Control The mission of the production control department was to feed the necessary parts into TMM operations, so that the right number and mix of cars could be delivered to the sales department just-in-time. For ensuring this, extensive forecasting and planning was done.

For example, to prepare for May production, the order was received by the production control department from the sales department in January. This order was revised in February and fixed in March. Then, then order was broken down weekly: by the end of second week of April, it was done for first week of May and by third week of April; the initial May week’s information was translated into final part orders.

JanuaryFebruaryMarchAprilMay

Order ReceivedRevise PPOTotal Vehicle Order (TVO)OrderProduction Production Planning Order (PPO)Placed JIT principles were implemented in Production control in two ways: * Heijunka: Balancing daily production sequence among different models of car produced. * Kanban: Kanban cards triggered part production at supplier’s end. A kanban card included a part code number, its batch size, its delivery address and other relevant details. Every part container alongside the assembly line contained a card. The card would physically travel between the part-use point on the assembly line and the supplier, to signal the actual parts needed. Quality Control

TMM’s quality control (QC) department performed the following important functions: * Setting tough quality standards. * Inspecting every vehicle against the standards and following customer’s experience on the shipped vehicles. * Solving assembly line quality problems. * Solving part quality problems with the suppliers. It also provided direct feedback to the operations including final assembly. On the last stretch of the assembly line, the cars were inspected and the defective cars sent to an assembly group, which checked the cars in the clinic area. Feedback was given to the appropriate teams. When 8 cars filled up the clinic area, the assembly line was shut down under a “Code 1” status. Purchasing

Purchasing department was concerned with managing costs over the long term. It concentrated on identifying suppliers which could produce the parts at low costs, so that they could easily provide parts at low prices. New Camry Wagon Model and the Seat Problem

A Camry seat consisted of several pieces – the front left and right assemblies, the rear seat bench and backrests, and the rear side bolsters. TMM was having only one seat supplier – Kentucky Framed Seat (KFS), with whom it operated on a system of sequential pull. Every 57 seconds, as a Camry passed through one of the final assembly line workstations, a seat matching the model and the colour of the car popped up by the side of the line. This was made possible by installing transmitters which transmitted the information of the model and colour of the sequence of cars produced on the assembly line to the KFS, when the car was at the paint workstation.