Toyota Motor Manufacturing USA. KEY ISSUES / PROBLEM STATEMENT Toyota Motor Manufacturing USA, Inc., (TMM) is confronted with its rising problem with seat supply and one of the main culprits is the seat defects. Reflected in the decreasing run rat
KEY ISSUES / PROBLEM STATEMENT Toyota Motor Manufacturing USA, Inc., (TMM) is confronted with its rising problem with seat supply and one of the main culprits is the seat defects. Reflected in the decreasing run ratio; as a result there is a growing number of cars sitting off-line with defective seats or no seats at all requiring overtime to make up for the loss production. Another issue worth mentioning is the way TMM handles the defective seats as they deviate towards the Toyota Production System (TPS) norms.
SUPPORTING ARGUMENT The seat supply problem is the major issue because it constricts the company to supply the cars on time to the sales company. The seat problem resulted with a ten point drop on the run ratio from around 95% down to a meager of 85%. This shortfall is equivalent to 45 cars per shift which will give a potential loss of $73,593,000 / year. This shortcoming requires high overtime for the personnel to cope up with the demand in the market. It notches a 50% premium for overtime, resulting to an additional cost of $7,311,542 per annum.
The increasing number of cars sitting off the line with defective seats or with no seats at all, end result to a loss in production because of waiting and rework. There are 18 vehicles found at the parking area having defects in seats which have an equivalent potential loss in sales with $ 679,320 per annum, based on the 17% pretax profit. ALTERNATIVE STRATEGIES The following alternatives were identified by the group with their corresponding analysis: 1. Send TMM - QC in KFS and assign inspector at the receiving dock. Advantage: Ensure quality compliance prior delivery based on TMM standards, minimizes possible loss and eliminates overtime due to offline inventory.
Disadvantage: Additional labor cost incurred. (See Appendices for Exhibit 4: Cost Benefit Analysis). 2. Re-train employees in proper handling and communicating of problems on the line. Advantage: Immediately address problems at the source 1. (See Appendices for Exhibit 2: Problems Arising from Current Process of Handling Seat - Set Mismatch), aligned with the TPS principles, empower employees to remedy problems therefore preventing inventory of problematic cars sitting at overflow, prevents feedback delay through timely information it is copied from online