Toyota Motor Manufacturing

Toyota Motor Manufacturing, USA, Inc.

Group – 2
Anchit Agrawal – 271127
Ankit Mittal – 271128
Arjun Liju Nair – 271129
Avichal Keshari – 271130
Ayush Jain – 271131
Executive Summary
In 1988 Toyota Motor Manufacturing Japan began production in the US. Toyota Motor Manufacturing, U.S.A (TMM) was a 1300 acre site in Georgetown, near Lexington. The Tsutsumi line in Japan was replicated as closely as possible in TMM and Tsutsumi trainers-on-loan coached TMM supervisory personnel one-on-one and reinforced Toyota Production System (TPS) basics. In 1988 the plant had an annual capacity of over 200000 Camry sedans and in 1992 it was expected to supply 240000 units of the new Camry sedan.

In 1992 Toyota Motors Manufacturing (TMM) faced increasing problems with its seat supply.  TMM’s single seat supplier, Kentucky Framed Seat (KFS), was responsible for the majority of the problems with material flaws and missing parts as the major encountered defects.  These problems were increasingly occurring with an increase in varieties of and demand for the seats.  In April 1992, TMM’s run ratio had a 10-point drop (from 95% to 85%), meaning shortfall of 45 cars per shift, which means overtime for the workers and too many cars needed off-line operations before they could go on to shipping. Toyota addressed these problems offline, which was a deviation from the policies and procedures under the Toyota Production System (TPS). 
Situation Analysis
Toyota Production System (TPS) aimed at cost reduction by thoroughly eliminating waste, mainly by cutting down on overproduction. TPS ran on two guiding principles:-
Just-In-Time (JIT) Production
JidokaJIT production aimed at producing only what was needed, only how much was needed and only when it was needed. Jidoka aimed at making any production problems self-evident and stopping production once a problem was detected until it is resolved. To achieve this Toyota instilled the concept of “Good Thinking” through senior management coaching and internal training programmes.

The assembly operation in TMM plant was performed along 353 stations on a conveyor line. Every station in the Assembly line employed Jidoka and Kaizen tools. A standardised work chart was used in each station showing the cycle time, sequence of work tasks and timing to perform them within one cycle. A green line and red line drawn at right angles to the assembly line marked the beginning and end of each work station.

Another system that was being practiced in the assembly process was that of the Andon chord, here as soon as a worker encountered a problem he/she would pull the Andon chord and this turned on a flashing light, triggered loud music and lit up the workstations address number on the Andon board. This attracted the attention of the team leader who would attempt to solve the problem, if the team leader could not solve the problem the line segment stops attracting the attention of the group leader.

The production planning process of TMM utilised JIT principles in two major ways:-
Heijunka: – the practice of evening out the total order in the daily production sequence.

Kanban Cards: – cards containing part code number, batch size and delivery address that triggers part production.

TMM`s quality control department set though quality standards that had to be met. The quality control department provided instant feedback to direct operations including final assembly. Each cars coming of the production line was checks and any problematic were immediately returned to the assembly group. The problematic cars were repaired in a clinic area and if the clinic area gets 8 cars filled then the production is temporarily halted to identify and rectify the problem.

Kentucky Framed Seats (KFS) is a single seat supplier for TMM. KFS was located close to TMM and was capable of keeping up with the sequential pull system adopted by TMM. the problems started arising due to the large number of seat variants that were required to be manufactured for the new Camry models, both sedan and wagon.

TMM usually corrected defects on the production line, but vehicles with seat problems were managed offline after the assembly is completed. This was due to:-
Seats need to match each particular car, therefore stock parts cannot be used
KFS also operates under JIT
So KFS could not readily supply replacements for defective seats. Stopping the line until a replacement seat was available was not an option due to the massive resulting productivity losses. Although KFS delivered seat replacements twice a day, they sometime sent incorrect seat assemblies. Hence the replacement seats were not installed in a timely manner.

On April 27th the run ratio was down from 95% to 85%. Resulting in per-shift decrease in production close to 50 cars. Most of this is due to the seat problem. Producing the missing cars via overtime capacity will cost TMM in excess of $16,000 per shift. Amounting to around $8.4 Million per year considering two shifts and a 5-day workweek.

Problem identification
There were lots of problems mentioned in the case, but the major problem was with the defective seats.
The immediate problem was to make up the lost production because the line utilization rate was below the projected target.
The problem in operations was to train the employees so that they can practice ‘because they want to, rather than because they have to’. Employees working in the assembly line also disliked work. They avoided work if not monitored.
Camry car manufactured by Toyota was ranked third in the initial quality survey with .72 defects per vehicle in 1991. The major problem was seat. From the case it is evident that the problem began in March 1992 when Toyota began increasing the seat varieties from twelve to about thirty-three. The problem further intensified in May when more varieties are introduced with the plans to reach more than fifty. It appeared that employees of KYS employees were not sufficiently trained in JIT to allow them to accommodate the level of modifications introduced with the wagon.

RecommendationsA team from (QC) Department of TMM can be send to KFS manufacturing plant to identify and evaluate the problem. If the problem is analyzed at the KFS factory itself, the number of defective seats coming to TMM will be substantially reduced.

A team from Quality Control (QC) Department of TMM can be assigned at the seat arrival dock or the warehouse where the seats are kept. The team members can access the incoming products there itself for defects and prevent the faulty seats from going into the production line.

The problem of seats is only occurring in the U.S. manufacturing plant and not in the Japanese Plant. Toyota can communicate internally with the Japanese team in an improved way to bridge this gap. They can discuss the ideas from them on how they are managing to maintain to keep a stable manufacturing process without significant reduction in downtime or production time.

The company can also conduct a survey to check the actual need of the consumers and the check the necessity of increased variety of seats. If the variety of seats decrease, then KFC will give a smaller number of defective seats.

Production time can be increased by fixing of defective parts in the assembly line itself
The cost of quality control may further go up impacting the net production cost
Quality of final product may degrade by shifting the tender to other supplier
There would be increase in the construction and maintenance cost while expanding the clinic area
Not following the standard multi-vendor policy, can be a huge risk when followed along JIT, as technical glitches in KFS production or line failure, can make the entire production plan and delivery targets go haywire
If product proliferation happens in near future again, by adding more variations, it may lead to significant reduction in run ratio
The sales company not getting cars on time could lead to reduced goodwill in market and effect customer satisfaction drastically, along with reduced sales