The Toyota Company is the biggest auto-manufacture in the world. T.docx
- 1. The Toyota Company is the biggest auto-manufacture in the world. The company headquarters are located in Japan but has global plants in Europe, North America, Australia and Asia. The company has indulged in a customer driven philosophy that has kept top amid economic recession in Europe and North America, its chief customers. This philosophy is known by the company employees as the Toyota Production system (TPS). The three main objectives of this philosophy includes: providing their customers with the best quality vehicles in terms of cost and timely delivery, to treat their employees in such a way that they are satisfies with their jobs and ensure job security. Thirdly, TPS intends to give the company flexibility to respond to market while recording returns through cost reduction measures (Wilson, 2012). According to Toyota (2012) TPS has the responsibility of minimizing wastes and overloading its employees. It works to ensure that the whole process of production through distribution flows smoothly and efficiently. The integration of human and mechanical resources to ensure maximum quality of the cars as well as improving efficiency and reduction of wastes is the foundation philosophy of the Toyota Company and defines best kaizen. To achieve this, the employees continuously work to improve the standards of increasing their efficiency and waste elimination. This is called kaizen in Japanese ‘or change for the better’ in English. The kaizen was invented by Toyota decades ago and have since acquired a universal acceptance. Just in time production was also coined by the same company in an effort to respond to the forces of demand and supply. The whole process is initiated once the customer places an order to the company. The company then moves to produce the exact parts ordered, assemble and dispatch the car. This limits the production of inventory since production is proportional to the magnitude of the demand (Toyota. (2012). Lean Production 2
- 2. For instance, if the company received a daily order of 400 cars and happen to be operating in 920 minutes daily, the takt time (from German ‘taktzeit’ meaning cycle time) will amount to 2.3 minutes. If this time is operated at a minimum, then the resources will be increased. Jidoka is a Japanese word for automation. The Toyota Company defines the word as 'automation with a human touch'. This allows all employees the responsibility to stop the production process in case he or she identifies a problem within the production line (Toyota, 2012). Lean Production Philosophy Lean production encompasses the reduction of wastages through labor, inventory management, time, space with the primary objective of delivering high quality products. This strategy strives at responding to the market needs through introduction of the right product in the right place in the quantity in the right time. In turn, the production process helps in the realization of reduced wastes and responds to fluctuating market demands. The process entails a continued improvement through measurement and reduction of inventory as well as streamlining the production process. It grows gradually before a company reaches maturity stage. For the process to be successful, the top management must remain committed towards the gradual improvement of step-by-step training, innovation and production changes. The name ‘lean’ is actually derived from consumption of less input materials such as employees, inventory and space (Wilson, 2012). Lean Production 3 If an existing company decides adopt the lean production process, a practical process for the adoption of lean production can be implemented in two phases. The first phase will be a pilot project and will be referred to phase A. It will be divided into four tasks. The first task will comprise of the top management appointing a team to oversee the overall implementation of the project. The team should formulate the roles and responsibilities of each member of the implementation
- 3. team. The second task involves a selection of tool for the actual implementation of the pilot program that will be utilized in phase 2. The requirements that will be needed for the implementation of lean production as well as training of staff will be gathered at this stage. The third task involves the actual implementation of the lean production. The Typical Versus Lean Production Methods According to (Wilson, 2012) the traditional methods were based on mass production or in other words concentrated on machine utilization and economy of scale. The machines were kept running at all costs since the then managers believed that that leaving the machine idle was a big loss for the production process. In order to maintain their customers, they kept large inventories in an effort to meet their demands. They capitalized on reducing their costs through keeping the machine running at all costs. The most common method was batch and queue. In this method, production parts were moved to a queue awaiting the next step. Machine set up time solely defined the time it would take to finish the product run time. Some of the disadvantages of these methods include longer time machine set ups that led to high wastage of production time since production ceased when the machine broke down. In case the machine produced defective goods, it is hard to identify and rectify the mistakes until the next batch. This led to frequent reworking Lean Production 4 and led to increased costs and tying of valuable resources. On the other hand, the chief goal and objective of the lean production is to minimize wastes and to deliver the customer expectation using the shortest time possible (Wilson, 2012). Toyota Application of Lean Production In line with cost reduction on the production process, Japanese based car manufacturer Toyota practice a comprehensive lean philosophy that recommends that all products produced and delivered within the shortest time possible when utilizing the minimum possible resources. Initially, the company produced cars and stocked them in their warehouses as the marketing
- 4. team sought to dispose them in the international markets. Despite being the biggest car manufacturer in the world, the company faced challenges from international competition, economic downturn in Europe and America that form majority customer base. The fast growth in motor vehicle technology in Europe and the US pushed the company to adopt a new system with the goal of reducing their overall production cost (Toyota, 2012). In practice, the company upstream process requires suppliers to deliver a specific number of inputs dictated by the quantity of merchandise ordered by their customers. The downstream process obtains the merchandise immediately and thus the cost of inventory is shunned. Although it is practically impossible to do away with inventory handling and Work-in Process (WIP), the approach taken reserves a limited number of inventories to cater for production deficits. These deficits arise because of technical defaults in finished products, employee absenteeism and machine breakdown. However, the main objective of lean production is to ensure that efficiency is maintained at high level by progressively perfecting their production process. This ensures that few defects are realized by the end of the production process. Otherwise, the number of quality defects determines the percentage efficiency in the production Lean Production 5 process (Toyota, 2012). The company has embarked on multi-training their employees to enable them handle more than one operation. For instance, machine operators can combine their main role with engine assembly since there is enough correlation between the two procedures. Innovation is highly encouraged within the production process. Workers are allowed to table their opinions towards the improvement of production procedures and technology. The combination of continuous flow in production with properly conducted teamwork in the production process saves a lot of time and thus promotes the company in its efforts of reducing the overall cost of production (Hino, 2009).
- 5. In case of defective machine, the machine automatically stops and the technicians stop the production process in order to rectify the problem. The mechanization process is set in a way that machines detect problems as they arise and then send a signal to another team within the production line. This automatically stops production in the line and thus prevents further production of defective products. Only the quality standards products are allowed to the next stage of production. Additionally, the automatic stopping of the defective machine relays a signal to the technical team in charge of maintenance and are thus in a position to continues servicing another machine. They then identify the underlying problem of the defective machine in an effort to prevent a reoccurrence of the same. This gives the company a chance to hire few technicians or operators to service a wide range and number of machines. It also allows continuous improvements in production capacity through specialization and division of labor (Hino, 2009). Toyota being the pioneer of lean production in the modern world has mastered procedures that have made the company a reference point for many global industries. The production is inclined toward total elimination of wastes, unreasonable requirements and inconsistencies in production. The chief objective is to deliver the orders place by the customers in the fastest time possible. In order to achieve this, the following procedure is strictly adhered to: Lean Production 6 After the order is received, the shortest duration of time is used to notify the production line especially at the beginning of the production line. The assembly line managers ensure that the production line has all the needed parts so that all car models that have been ordered can be manufactured at any given time. It is a requirement to replace every used part using the same number of parts that have been consumed during the past production. Forecasting on Demand One of the key marketing strategies at Toyota is to improve on
- 6. the customer satisfaction index through cost reduction of the finished products. To achieve this, the supply management should ensure a well-connected network topology of the supply chain that will in turn identify adequate supply of raw materials necessary for the production of electric fans. Toyota also makes practical and well researched forecasting to ease future production of their products (Hino, S, 2009). Toyota utilizes a three-year based forecast or in other words, the company uses the theory of moving averages. The production unit ensures they are supplied with all necessary raw materials for the production of completed units. The demand for the following year is calculated based on a three-year average of total sales. The company also forecasts on the demand of customized cars on a small scale. The demand forecast is made on a yearly based on cost of planning, scheduling, production and distribution but fails to meet fluctuations created by dynamics of supply and demand. This also integrates lean production techniques in their operation. This strategy strives at responding to the market needs through introduction of the right product in the right place in the quantity in the right time. In turn, the production process helps in the realization of reduced wastes and responds to fluctuating market demands (Wang, 2011). The 5s Tool Lean Production 7 Another element of the lean process that ensures comprehensive strategy is called the 5S tool. These stand for Sort, Sustain, Setting in order, Shine, Stabilize and Sustain (Toyota, 2012). Sort Sort in management refer to elimination of unnecessary items from the workplace that are not required in the current operations. Managers evaluate the necessity of various items in the working area and ‘red tag’ them and thus eliminate the items which are least needed. The red tagged items are then moved to a central area where they are either disposed or reassigned to
- 7. other duties. This kind of organization helps managers to get rid of broken tools and excess raw materials. Set Set in order works after the sorting has been accomplished. It creates a reliable storage system in order to ensure they are easier to locate. This is mainly achieved through painting floors, affixing labels and placards as well as installation of cabinets and shelves. Shine Once the unwanted or least used items have been removed from the work place, the next step involves cleaning the working area and maintaining the area clean fro the subsequent days. This enables employees to take note of malfunctioning of the machinery in the production plants more easily. Managers are thus advantaged since this eliminates and reduces the rate of equipment failure. Standardize After the above three 5’s have been completed, the next stage involves standardizing the best practices in the working area. This includes the company leadership on drawing workable Lean Production 8 frameworks in areas involving work duties and checking on the sustainability of the 5’s. Sustain Sustain: this is arguably the most challenging aspect on this model since managers find it hard to maintain their employees to the new status quo. It focuses on redefining the status quo and the implementation of the new standards. Some of the tools which managers use include issuance of newsletters, pocket manuals, posters and performance reviews (Lean Thinking and Methods, 2012). Conclusion The paper analyzed the benefits of lean production and compared it with the typical production methods. The main objective of the lean production is to deliver the exact amount of ordered products. The production line does not hold inventory but rather continually produce the products as they are ordered. This method started in Japan but has since been
- 8. adopted across the world. This has led to improved customer service and has placed the Toyota Company ahead of its competitors. The reduction of wastes and space gives the company added financial advantage since it reduces overhead costs. Finally, this paper recommends to most companies to strive to adapt to the lean production methods.