toyota motor mfg om

EPGP 07 Qtr 2OPERATIONS MANAGEMENTSUBMITTED BY : EPGP-07-001 Aarthi Balamurali KrishnaEPGP-07-022 Avinash SahuEPGP-07-024 Bimal KumarEPGP-07-086 Sushil SoniEPGP-07-088 Thejaswaroop SalemEPGP-07-096 Vipin Suresh T

IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *TOYOTA Motors Mfg Case Analysis & Report

IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis

IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *BackgroundToyota Motor Corporation (TMC), Japan opened its greenfield plant at Kentucky ,US in 1988 called Toyota Motors Mfg U.S.A, Inc. (TMM) with a capacity of 2,00,000 Toyota Camry per year to replace its imports from japan.

The capacity was expected to be increased to 2,40,000 by 1992 with new version of Camry and the Wagon version .

TMC trained the employees towards Toyota Production System (TPS) about the concept of built-in quality (through immediate detection of defects)-JIDOKA , waste elimination - and continuous improvements- KAIZEN.

TMC closely worked with their suppliers also for cost reduction and quality improvements.

The seats for Camry were supplied by the sole supplier called Kentucky Framed Seat (KFS) which operated based on JIT supply ensuring supply of the right model of seat at the assembly point.

Initially there were 3 styles and 4 colours of seats , which after model changeover became 5 styles and 3 colours. And orders for North America, Europe, Japan and Middle East added another 36 variants of seats by 1992.


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *BackgroundThe run ratio started coming down from 95% to 85% (almost 45 cars loss per shift) due to line stoppages related to seat problems.

The clinic area and overflow parking area started getting filled with cars waiting for seat rectification / replacement and instances of cars waiting for days together also started popping up.

This seat related problem was affecting the running of TMM both in terms of economy as well as delivery as the to make up the daily losses, it required overtime of the operators/workers at a higher wage rate and waiting for seat replacement affected flow of the products to dealerships and to customers.

Mr Doug Friesen , the Assembly Manager is analysing the problem and trying to find the root cause of the issue and also trying to find out why the TPS practices were unable to prevent the losses.


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *Did TMM deviate from the TPS principles?TMM did deviate from some of the critical focus points of TPS and the details are :

Deviations from JIDOKA - As per JIDOKA, production should be stopped when problems surfaced but , in the case of defective seat problem production was not stopped and car was allowed to passed through assembly line with defective seats in it or without seat. Car was taken to Code 1 clinic area to detect the problem and then to overflow parking area for seat replacement. This is a deviation and this has caused accumulation of defective products at the end of assembly line.

Deviations from JIT principle JIT principle recommends to produce what is needed when it was needed. So it aimed at reduction of waste and inventory. But in this case, for handling of defective seats, cars were moved to overflow parking area where seat replacement was done so it resulted in increase in inventory as well as waste. Secondly seats with no defects were not produced as replacement at a time when they were needed, which resulted in hold up of vehicles for 2-3 days.


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *Were the seat defects handled correctly?It can be observed that the seat defects were NOT handled correctly.

Majority of the problems related to seat were manufacturing defects like missing parts, broken parts, loose back board, material defects, wrinkles, scratches, gap etc which were not highlighted to KFS or TMM.

Though data was available, no evidence was available for action taken on any defects.

Workforce who are directly involved in assembly of seat on the car are not aware of the issues due to which vehicles are held up at the clinic.

Seat re-order form is found to be given not enough importance. If it was used properly, the data collected from the same would give a very clear picture about the trend in defects.

Another observation that can be deduced from the defect trend is that major chunk of defect are related to Rear seat and First Shift. A more specific analysis should have been done taking these two into account.


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *What should Friesen do to resolve the problem?Doug Friesen should first try to establish what the problem is and where it is coming from. Is it a procedural problem on the line, is it an engineering problem in relation to the seats design or is it a defect problem originating from the supplier.

Once he has gathered the initial facts he should consult his counterparts at the Tsutsumi plant and, see if they could help him trouble shoot the issue.

Once facts are gathered, he should take a two pronged approach, first he should go to all his team leaders and share with them his findings to see if what they are experiencing on the line backs up my information,

Secondly he should institute the 5 whys and try to determine a root cause to the issue


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *Did the TPS practices fail to prevent the defects?It is not the TPS practices which has failed, but the inadequate adherence or failure to practice TPS which has resulted in failure to prevent defects .

If TPS was followed with an understanding of the underlying philosophy and concept, it could have definitely prevented increase in defects by timely identification, alerting and preventing defects.

Moreover, it can be seen that design and purchase team involvement is inadequate during new variant development and support during production at the supplier end. In case of hook modification, the cost of $50,000 investment at KFS could have avoided problems during end assembly at TMM.


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *Economics of Line stoppagesNo of employees : 769 (group/team leaders not conswdered)Regular wage: $ 17 / HrOver time wage: $25.5 / Hr

Total production per shift (450 min): 450 x 60 / 57 = 473Loss of cars per shift : 95% - 85% = 10%: 47 Nos

Overtime reqd to make up this loss: 47 x 57 sec =2679 sec: 0.744 Hrs

Cost of over time: $ 14590 / shift

(2 shift/ day & 22 days per month): $ 6,41,936 per month


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *Economics of Line stoppagesThe cost of quality involves two entities.

Cost of additional work to be done to make up for the loss and rectify the problem (Loss due to line overflowing and chocking, loss due to delay in delivery , rework cost).Cost of line stoppage to correct the problem. One has to analyze and calculate in detail the time lost and the corresponding loss in vehicle to understand which factor will contribute more towards total loss to the company.

If the Line is stopped once for a very small issue, which can be rectified offline at a later point, it will be a loss to the company in terms of vehicles produced. But, if the line is stopped for correcting a critical and recurring problem, which is difficult to rectify offline, it will justify the loss of vehicle for the time period. But it will be ensured that the problem will not re-occure.


IIMK : EPGP-07 : E-city, Bangalore TOYOTA Motors Mfg Case Analysis *Conclusion and RecommendationsThe current problems due to defective seat had grown and intensified as a result of the deviations from TPS practices. This can be solved by systematically analyzing the problem through why-why.For preventing recurrence of such problems, the company has to ensure complete adherence to the TPS practices and guidelines.

The company should stick to the proven TPS practices.

Kaizen must be reinforced to the plant employees.

A close relationship is to be fostered between KFS, TMM and TMC. A closer collaboration with the Japanese designers and the American seat manufacturer should be encouraged to help the team overcome any geographical or cultural barriers.

The TPS system should be implemented at KFS and throughout Toyotas supplier network.


toyota motor mfg om

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