Toyota Production System Supply Chain Management Project

Submitted by:

Udit Jain (13DM206)

Sreevatsan Natrajan (13DM196)

Tarun Mangal (13DM204)

Shruti Mittal (13DM180)

Sonakshi Govil (13DM186)

Vanshika Gupta (13DM212)

Table of Contents

TOYOTA PRODUCTION SYSTEM..............................................................................................1

THE ORIGIN OF THE TOYOTA PRODUCTION SYSTEM ..........................................................1

PILLARS OF TPS .........................................................................................................................2

Standardization .........................................................................................................................2

Just-in-Time...............................................................................................................................2

Kanban System ..........................................................................................................................3

Jidoka........................................................................................................................................4

Kaizen .......................................................................................................................................4

TPS OBJECTIVES ........................................................................................................................4

TOYOTA PRODUCTION SYSTEM (TPS) TERMINOLOGY ........................................................5

ADVANTAGES OF TPS............................................................................................................. 10

DISADVANTAGES.................................................................................................................... 10

High Cost of Implementation .................................................................................................... 11

Lack of Acceptance by Employees ............................................................................................. 11

Customer Dissatisfaction Problems ........................................................................................... 12

TPS-REASON OF SUCCESS FOR TOYOTA .............................................................................. 12

CONCLUSION ........................................................................................................................... 13

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TOYOTA PRODUCTION SYSTEM

Toyota Motor Corporation's vehicle production system is a way of "making things" which is

also known as a "lean manufacturing system" or a "Just-in-Time (JIT) system. This

production control system has been established based on many years of continuous

improvements, to achieve the objective of "making the vehicles ordered by customers in the

quickest and most efficient way, and to deliver the vehicles as quickly as possible."It is the

practical expression of Toyota's people and customer-oriented philosophy.

TPS has three desired outcomes:

To provide the customer with the highest quality vehicles, at lowest possible cost, in a timely

manner with the shortest possible lead times.

To provide members with work satisfaction, job security and fair treatment.

It gives the company flexibility to respond to the market, achieve profit through cost

reduction activities and long-term prosperity.

TPS strives for the absolute elimination of waste, overburden and unevenness in all areas to

allow members to work smoothly and efficiently.

THE ORIGIN OF THE TOYOTA PRODUCTION SYSTEM

The TPS has evolved through many years of trial and error to improve efficiency based on the

Just-in-Time concept developed by Kiichiro Toyoda, the founder (and second president) of

Toyota Motor Corporation.

The automatic loom invented by Sakichi Toyoda not only automated work which used to be

performed manually but also built the capability to make judgments into the machine itself.

By eliminating both defective products and the associated wasteful practices, Sakichi

succeeded in tremendously improving both productivity and work efficiency.

Kiichiro Toyoda, who inherited this philosophy, set out to realize his belief that "the ideal

conditions for making things are created when machines, facilities, and people work together

to add value without generating any waste." He conceived methodologies and techniques for

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eliminating waste between operations, between both lines and processes. The result was the

Just-in-Time method.

By practicing the philosophies of "Daily Improvements" and "Good Thinking, Good

Products," the TPS has evolved into a world-renowned production system. Furthermore, all

Toyota production divisions are making improvements to the TPS day and night to ensure its

continued evolution.

Recently, the "Toyota spirit of making things" is referred to as the "Toyota Way." It has been

adopted not only by companies inside Japan and within the automotive industry, but in

production activities worldwide, and continues to evolve globally

PILLARS OF TPS

1. Standardization

2. Just in Time Manufacturing

3. Lean Kaizen

4. Jidoka or Autonomation

5. Total Productive Maintenance

Standardization

The foundations of TPS are built on one of the pillars of TPS- standardisation to ensure a safe

method of operation and a consistent approach to quality. Toyota members seek to

continually improve their standard processes and procedures in order to ensure maximum

quality, improve efficiency and eliminate waste. This is known as kaizen and is applied to

every sphere of the company's activities.

Just-in-Time

"Just-in-Time" means making "only what is needed, when it is needed, and in the amount

needed." For example, to efficiently produce a large number of equipments, which can consist

of around 30,000 parts, it is necessary to create a detailed production plan that includes parts

procurement. Supplying "what is needed, when it is needed, and in the amount needed"

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according to this production plan can eliminate waste, inconsistencies, and unreasonable

requirements, resulting in improved productivity.

Kanban System

In the TPS (Toyota Production System), a unique production control method called the

"kanban system" plays an integral role. The kanban system has also been called the

"Supermarket method" because the idea behind it was borrowed from supermarkets. Such

mass merchandizing stores use product control cards upon which product-related information,

such as a product's name, code and storage location, are entered. Because Toyota employed

kanban signs for use in their production processes, the method came to be called the "kanban

system." At Toyota, when a process refers to a preceding process to retrieve parts, it uses a

kanban to communicate which parts have been used.

Two kinds of kanban (the production instruction kanban and the parts retrieval kanban) are

used for managing parts.

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Jidoka

The term jidoka used in the TPS (Toyota Production System) can be defined as "automation

with a human touch." The word jidoka traces its roots to the invention of the automatic loom

by Sakichi Toyoda..

The Toyota term "jido" is applied to a machine with a built-in device for making judgments,

whereas the regular Japanese term "jido" (automation) is simply applied to a machine that

moves on its own. Jidoka refers to "automation with a human touch," as opposed to a machine

that simply moves under the monitoring and supervision of an operator.

Since the loom stopped when a problem arose, no defective products were produced. This

meant that a single operator could be put in charge of numerous looms, resulting in a

tremendous improvement in productivity.

Kaizen

Muda (non-value added) exist everywhere related to people, material and facilities, or the

production set-up itself. Kaizen refers to the series of activities whereby instances of Muda

are eliminated one by one at minimal cost, by workers pooling their wisdom and increasing

efficiency in a timely manner. Kaizen activities typically emphasize manual work operations

rather than equipment. Also, Kaizen is not an activity to be performed by a specialist, but can

be – in fact should be – performed by all employees at each job site.

TPS OBJECTIVES

Reduce cost by the elimination of waste- good products that are safer and lower in cost.

Make it easier to obtain and guarantee good quality.

Based on teamwork and respect for human life, create a workplace where all can fulfill

their potential.

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Build a lean production system capable of responding immediately to changes in the

market.

TOYOTA PRODUCTION SYSTEM (TPS) TERMINOLOGY

Andon

A type of visual control that displays the current state of work (i.e., abnormal conditions,

work instructions, and job progress information). It is one of the main tools of Jidoka.

Often in the form of an electrical board which lights up to show at a glance the current state

of work operations. Andon boards allow speedy corrective action to be taken by supervisors

when a problem arises.

Continuous Flow Processing

It is one of the three basic requirements of Just-In-Time. This means eliminating the

stagnation of work in and between processes and carrying out one-piece-at-a time production.

Cycle Time

It is the total amount of time required for a worker to complete one cycle of his entire job

process, including manual working time and walking time.

Fill-Up System

A system that modifies preceding production processes to keep a minimum inventory of

finished parts, and produce only enough to replace, or fill-up those parts withdrawn by the

following process.

Five “whys”

The so-called 5Ws and 1 H (who, what, where, when why and how) are used in analyzing

production processes. To search for the true cause of problems, instead of asking “why” once,

it is repeated five times.

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Hoshi Kanri

Goals (with targets) and means for achieving it to address business priorities and to move the

organization to a new level of performance; variable from year-to-year; could also be multi-

year; and is developed by executive management.

Jishuken

Management driven kaizen activity where management members identify areas in need of

continuous improvement and spread information through the organization to stimulate kaizen

activity.

Labor Savings

Partial replacement of manual labor by machines. The savings on labor; however, is not to the

extent of saving one unit of manpower.

Nemawashi

Preliminary work to involve other sections/departments in discussion to seek input,

information and/or support for a proposal or change (policy, etc.) that would affect them.Also

means to “prepare the soil.”

Muda (non-value added)

Muda (non-value added – usually translated as waste) refers to those elements of production

that add no value to the product and only raise costs:

1. Muda of Over-Production

2. Muda of Waiting

3. Muda of Conveyance

4. Muda in Processing

5. Muda in Inventory

6. Muda of Motion

7. Muda of Correction

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Multi-Process Handling

In Multi-Process Handling, one shop worker will move down a row of machines or

equipment arranged in the order of the flow of production processes and will perform all

necessary jobs within the Takt-Time.

Multi-Machine Handling

Multi-Machine Handling means that one shop worker will move along a group of machines

or pieces of equipment and operate them to perform multiple jobs by himself.Those machines

and equipment are grouped together because of the similarity of processes involved or

similarity of the machines used.

Multi-Skill Development

In order to conduct one-piece-at-a-time production and multi-process handling, a shop worker

must be able to perform many different jobs, operating diverse types of machinery and

equipment. To accomplish this

On-Line Set-Up

Of the many operations involved in set-up jobs, this refers to those operations which cannot

be carried out without stopping the line or machines.Such operations include the actual

changing of dies, cutting tools, jigs, etc.

Off-Line Set Up

Those parts of the set-up operation which can be done without stopping the line or machinery.

For example, the work of preparing and putting away dies, cutting tools and jigs.

Operational Availability

The time that a machine operates maintenance free as a percentage of the time during which it

is switched on. This is equivalent to the reliability of equipment and its maintenance.

The ideal condition is to have 100% operational availability during the time the machine is on

to fill a Kanban order.

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Operation Standards

It is the general name for standard procedure and conditions of all jobs. Operation standards

ensure that standardized work is carried out correctly at each jobsite. The information is

available at each jobsite on worksheets, based on diagrams, quality check standards, QC

process charts, safety standards, etc., and is aimed at achieving quality, quantity, cost and

safety targets. Examples include, operation instruction sheets, quality check sheets, work

standards sheets, etc.

Overflow Parts

These are parts that cannot fit on the racks along the production line or in other storage

locations. They end up on the floor or otherwise temporarily stored near by.

Pace Maker

This is a tool that informs the shop worker, foreman or supervisor whether work operations

are ahead of or behind schedule.

Pokayoke

It is also referred to as mistake proofing or error proofing. This refers to the low-cost, highly

reliable devices or innovations that either detect abnormal situations before they occur at a

production process; or once they occur, will stop the machines or equipment and prevent the

production of defective products.

Pull System

It is one of the three basic requirements of Just-In-Time. The pull system refers to the system

of manufacturing in which following production processes withdraw from proceeding

processes the parts they need, when they need them, in the exact needed amount.

Production Lead Time

This refers to the time it takes to provide one product from acceptance of order to shipment. It

is defined as follows: Production lead time = A + B + CA

A: from order reception to beginning of work

B: from beginning of work on raw materials to completing product (processing + non-

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processing time)

C: from completion of first to last piece of one unit of conveyance.

Set-Up Time

Set-Up time is divided into three elements as follows:

1. Off-Line Set-Up: time during which machine is not stopped

2. On-Line Set Up: time during which machine is stopped

3. Adjustment time: time after set-up is finished that machine is stopped to obtain necessary

quality levels or resolve problems.

Set-Up Time is the time it takes to change over from the production of one product to

another, from the instant that the processing of the last component of one type is finished, to

the production of the first good sample of the next type of component. It includes all the time

needed for changeover of the dies, cutting tools, etc..Set-Up Time = On-Line Set Up Time +

Adjustment Time

Takt Time

Takt-Time is the time which should be taken to produce a component or one vehicle. It is

calculated as follows: Takt Time = Total Daily Operating Time/Total Daily Production

Requirement*Daily total operating time is figure on the basis of all machinery operating at

100% efficiency during regular working hours.

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ADVANTAGES OF TPS

The Toyota Production System empowers team members to optimise quality by constantly

improving processes and eliminating unnecessary waste in natural, human and corporate

resources.

Toyota Production System influences every aspect of Toyota’s organisatio n and includes a

common set of values, knowledge and procedures.

It entrusts employees with well-defined responsibilities in each production step and

encourages every team member to strive for overall improvement.

As a result, Toyota Production System delivers the following key benefits:

Quality inherent in Toyota’s products

Costs are kept to a minimum thanks to a good return on investment

Delivery is on time, and to the expected standard, allowing Toyota’s customers to plan and

maintain their operations successfully

Environmental concerns are shared by Toyota and its customers, from manufacturing

through to recycling at end-of-life

Safety is Toyota’s constant concern – both for its employees and for those of its

customers.

DISADVANTAGES

Implementing thorough JIT procedures can involve a major overhaul of business systems -it

may be difficult and expensive to introduce.

JIT manufacturing also opens businesses to a number of risks, notably those associated with

the supply chain. With no stocks to fall back on, a minor disruption in supplies to the business

from just one supplier could force production to cease at very short notice.

A real business example: Toyota

Just-in-time manufacturing system is vulnerable to unexpected disruptions in supply chain. A

production line can quickly come to a halt if essential parts are unavailable. Toyota, the

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developer of JIT, found this out the hard way. One Saturday, a fire at Aisin Seiki Company’s

plant stopped the delivery of all break parts to Toyota. By Tuesday, Toyota had to close down

all of its Japanese assembly line. By the time the supply of break parts had been restored,

Toyota had lost an estimated $15 billion in sales.

Supply Problems

Because only a small amount of inventory is kept on hand, lean manufacturing depends

heavily on suppliers that can provide products for the manufacturing process dependably and

without interruption. Problems like employee strikes, transportation delays and quality errors

on the part of suppliers can create manufacturing holdups that can be fatal. Vendors may be

unable or unwilling to supply parts or products on a tighter schedule or in smaller amounts.

These needs can burden suppliers with unprofitable costs and create tensions that ultimately

affect the manufacturing process and can cause frequent changes of suppliers, or even

difficulties finding suppliers who can provide on the necessary schedule at all.

High Cost of Implementation

Implementing lean manufacturing often means completely dismantling previous physical

plant setups and systems. Training employees can be lengthy and acquiring managers

experienced in lean manufacturing process can add considerably to companies payroll

expenses. The purchase of machinery that increases efficiency, and the setup of smaller work

cells can add to long-term debt. Small and medium-sized businesses, in particular, may find

the cost of changeover to lean manufacturing processes prohibitive.

Lack of Acceptance by Employees

Lean manufacturing processes require a complete overhaul of manufacturing systems that

may cause stress and rejection by employees who prefer old ways of doing things. Moreover,

lean manufacturing requires constant employee input on quality control, which some

employees may feel disinclined or unqualified to do. Older employees may prefer previous

methods and can cause resistance among others in the work group. This is where good

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managers become crucial to the changeover to lean manufacturing. There may also be some

difficulty finding managers with sufficient leadership and persuasion skills to overcome this

resistance.

Customer Dissatisfaction Problems

Because lean manufacturing processes are so dependent on supplier efficiency, any disruption

in the supply chain--and therefore, on production--can be a problem that adversely affects

customers. Delivery delays can cause long-lasting marketing problems that can be difficult

to overcome.

Change in Mind set and style of functioning required

Some companies need to bring about an immense change in their mind set and syle of

functioning. This is sometimes very difficult and the initial problems created can be very bad

for business overall. For instance, companies need to have a very open style of

communication in order to put this into practice. Also, many employees think very

territorially and are unwilling to let go ‘their’ work areas.

TPS-REASON OF SUCCESS FOR TOYOTA

Toyota is known for its reliable cars among the general public, but it has also been known in

management and leadership circles for its unusual use of people. At Toyota, labour strife is

rare and people are an integral part of the quality process. Many credit Toyota’s success to

aspects of the Toyota Production System. It includes aspects of Jidoka, just-in-time

production, and kaizen, reducing both inventories and defects. The system is used worldwide,

and is one of the reasons for Toyota’s success.

Jidoka is not letting a defect go from one machine to the next, it adds the ability to detect

unacceptable quality during the process of production rather than waiting until the end, when

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it may be hidden. Jidoka both reduces costs and increases reliability.

Just-in-time production is the principle of having parts ready just as they are needed.

Engineering changes can take effect much more quickly, since stockpiles of parts do not need

to be cleared out; and problems with individual parts can be detected much more quickly

since they are used closer to the time they are made.

Toyota organized around team development and cellular manufacturing. Using people as

people, rather than ornery machines, also allowed for more flexibility than Ford's more

automated approach would allow. This was to make rapid changes easier, also helping quality

and increasing responsiveness to competitors.

CONCLUSION

Toyota Production system has always been one of the major reasons behind the success of the

company. It has helped the organization in many ways: automatic stoppage of the

manufacturing process in case of defects, Well- structured and effective relations with the

suppliers, good quality products, timely delivery to the customers etc. Though many

companies tried to copy the innovation made by the company but they failed to copy the

success of the system developed by the company. The reason to this is the failure to

understand and comprehend the system. Thus, it has led to an added advantage to the

company.