MMZG 538 Toyota Production System

Rajiv Gupta BITS Pilani January 2014 Session 1

Session 1
Module 1 Introduction to Dr. Rajiv Gupta, faculty for MFGO 635 Introduction to the course Overall course guidelines Module 2 Current global challenges and trends
Competition Globalization Customer Preferences

Module 3 Current global challenges and trends

Technology Government Regulations Uncertainty Environment

What It Means
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Session 1
Module 4
Evolution of lean manufacturing

Module 5
Summary and wrap up

Session 1
Begin Module 1
Introduction to Dr. Rajiv Gupta, faculty for MMZG 538 Introduction to the course and guidelines for the course

Session 1
End of module 1

Session 1
Begin Module 2
Current global challenges and trends
Competition Globalization Customer Preferences

Current Global Challenges

Competition Globalization Customer Preferences Technology Government Regulations Uncertainty Environment
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Competition
Shrinking market share Lower margins Shorter product life cycles Higher variety Smaller volumes to depreciate fixed costs Globalization is an imperative Competition for customers as well as employees
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Globalization
Goes beyond imports and exports Global markets and global sources Potential for increased markets Increased potential for lower costs, but increased complexity due to international regulations and other differences Greater risk due to currency fluctuations
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Customer Preferences
We cannot sell what we manufacture. We must manufacture what we can sell. Need to reduce response and lead times Logistics needs to be better integrated with the entire supply chain Need to keep a tight control on costs Need to bring new products to the market faster
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Session 1
End of module 2

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Session 1
Begin Module 3
Current global challenges and trends
Technology Government Regulations Uncertainty Environment

What It Means

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Technology
Technology has to be harnessed. Dont let it control you Dont be seduced by sexy gadgets Inefficient utilization of technology is expensive Technology includes approaches such as TQM, TPS, TPM, Six Sigma etc.
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Government Regulations
Within a country, there may be laws pertaining to inter-state commerce Environmental responsibility green production Labor laws Customs and other duties Tax laws Currency exchange rates Other
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Uncertainty
Growing uncertainty in the global market with greater access to information Uncertainty has an impact on production and delivery schedules and on the inventory levels Some of the uncertainty is due to increased climatic events, tsunamis, earthquakes, etc. There is also a growing threat due to the increased incidence of terrorism and piracy Logistics systems need to be able to respond to changing situations and conditions
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Environmental Concerns
Extended Producer Responsibility (EPR) is becoming more prevalent Reverse logistics is assuming greater importance as part of a companys logistical activities Fuel emissions and spills and leaks in the ocean are receiving more focus Companies are assuming a more responsible position in regard to the environment Better planning, measurement (emissions), control and use of sustainable technologies will have an impact on logistics
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What It Means
Focus on
The customer Value and waste Doing more with less The entire purchasing experience Flexibility Partnerships Longer term thinking

Move away from

Numbers games Fads Production focus alone
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Business Formula
Selling price = Cost of manufacturing + cost of delivery + profit Profit = Selling price cost of manufacturing cost of delivery

The critical factor is how we view the formula

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Competitive Priorities
Price
Ability to profit in price competitive markets

Quality
Ability to offer consistently low defect products Ability to provide high performance products Ability to provide reliable/durable product Ability to anticipate customer preferences

Delivery
Ability to provide fast deliveries Ability to make dependable delivery promises Ability to accommodate customer-generated changes
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Competitive Priorities
Service
Make the purchase experience as effortless as possible for the customer Ability to customize the product/service to suit customer needs Ability to provide effective and efficient aftersales service

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Session 1
End of module 3

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Session 1
Begin Module 4
Evolution of lean manufacturing

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What is Lean?
A lot of confusion exists about the term Term first mentioned in The Machine That Changed The World in the 1980s It got further defined in Lean Thinking in 1994 Today it is synonymous with Toyota Production System
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Evolution of Lean
Craft manufacturing Mass Manufacturing Lean Manufacturing

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Craft Manufacturing
Each product unique Long lead times Inconsistent quality Close interaction between producer and the customer High cost

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Mass Manufacturing
Advent of the moving conveyor Establishment of standardized, interchangeable parts Development of standard methods of production Increased productivity Lower costs

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Mass Production Without Variety in the 1920s

Schedule Suppliers

Steel Mill

Stamping

Painting

Foundry

Fabrication

Sub-assy

Fin-assy

Dealers

From: Profit Beyond Measure, H. Thomas Johnson and Anders Broms, 2000

Customers
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Mass Producing Variety in Batches by the 1970s

Forecast Plan Stamping Foundry Orders

100s 0f suppliers

Power Train Body & Frame Painting Rework

Whse

Final Assy

Dealers

Customers

From: Profit Beyond Measure

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Mass Production
Downsides:
Worker alienation Higher capital costs leading to batch manufacturing Distance from the customer Management by numbers as advocated by Alfred Sloan at General Motors management disconnected from the shop floor Engineering became specialized lack of communication among different specialties and with manufacturing longer product development time
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Mass Production
Downsides:
Due to large expensive equipment that had to be kept busy to justify the high cost, production was in large batches, whether, or not, this was required by the customer Due to management by numbers, accounting became a very important discipline. Inventory was treated as an asset in accounting leading to high inventories
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Lean Production
Evolved as a necessity
Limited capital Limited space Need to protect domestic markets Focus on people and their capabilities

Leading to
The use of general purpose machines to produce a variety of products in small batches Layouts to optimally utilize space Focus on quality Regular upgradation of people capabilities
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Lean Production
People policies
Due to a major economic depression following the war, Japan faced labor unrest when president Kiichiro Toyoda tried to fire workers As part of the negotiations, workers who remained were promised lifetime employment and were permitted the use of company facilities still in use today Kiichiro Toyoda took responsibility for the situation and resigned from the presidency of Toyota
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TMMK Production 1990s

Single vehicle order Batched orders

Stamping

Body weld

Paint shop

Final assy

Dealers

Engine Build

Seat Build

Plastics

Customers

From: Profit Beyond Measure

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Session 1
End of module 4

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Session 1
Begin Module 5
Summary and wrap up

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Summary
Current business climate poses pressure on manufacturers to be responsive and efficient Manufacturers need to be able to meet varied demand while controlling costs Lean grew as a response to meet the requirements of a demanding customer Lean manufacturing evolved from craft and mass manufacturing
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Summary
Craft manufacturing was close to the customer but with no standardization and at a high cost Mass manufacturing brought about standardization and low product cost, but with distance from the customer and alienation of the workers Lean manufacturing brings some of the benefits of craft and mass manufacturing together

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Session 1
End Module 5
Summary and wrap up

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