The Planning and Control Processes and Supply Chains of Toyota - Term Paper Example

Report to investigate the planning and control processes, and to evaluate the Supply chains including MRP and JIT systems in relation to Toyota Table of Content Introduction Planning and control processes in Supply chains Emergence of new methodologies to controls supply chain JIT (Just-in-time) MRP (Material Resource Planning) Evaluation of the supply chains, MRP and JIT systems in relation to Toyota Evolution of Toyota Production System Recommendations Conclusion Introduction Major industrial organizations try to make the manufacturing process simple, convenient, viable, effective and productive. For achieving all these objectives scholars and managers have been striving to evolve a comprehensive supply chain methodology. This new system should be capable of competing with changed environmental conditions, and facilitated by the emergence of computer-integrated technologies. The process of controlling all activities of inventory supply etc in an industrial organization is also called as supply chain. It includes all activities and processes to supply a product or service to the final customer. The main purpose of supply chain management is to enhance quality and pace of all activities throughout the supply chain, so that products and services are supplied in the right quantity, to the right location, at the right time. Actually it is the series of links and shared processes between suppliers and customers. The links and processes cover all the activities from the purchasing raw materials to the delivery of final product. The whole process of supply chain as depicted above is controlled by a chain of command to facilitate best and profitable end product. Planning and control processes in Supply chains The importance of planning and control of supply chain can not be denied. It plays a vital role in effective management of mass production factory. The complications allied with manufacturing systems value chains have not been resolved yet. It is because of the fact that the value chain may consist of many suppliers located in various areas. There are certain methods used by supervisor on plant floor to coordinate the processes in supply chain. One person dominated supervision: In this method one person takes direct responsibility of whole floor and control and monitors every move on the floor. This method is not considered very effective as it has its own pitfalls. Interdependent Supervision: In this method many person are involved in supervising and monitoring process by openly communicating and advising each other on a floor of plant. This method is considered more flexible and adaptable. Systemization: In this method a sophisticated system is evolved and every worker is assigned the job individually or in-group. Although this is a good method but it is only useful in automated plants. There are various other methods used to control the day to day performance on the floor of plant. But the methods mentioned above are more common. Emergence of new methodologies to controls supply chain Traditionally most manufacturing control was done using reorder-point/reorder-quantity methods of inventory control. In 1960s, a new system was developed by Joseph Orlicky, called Material Requirements Planning or MRP. It became very popular in Western world and was adopted by many organizations. During its 20 years successful period MRP was further improvised and evolved and was replaced by Manufacturing Resources Planning (MRP II) which combined MRP with other more useful methodlogies When all this was happening in Western World a new history was being written in Japan. Japanees scholars and managers thought that computer was taking longer time to take hold of production control. So they felt the need of a new system for achieving the desired objectives. Several companies, especially Toyota, developed the new methods to a high level. Taiichi Ohno was working on a new system that could compete with Western methodologies. This system became famous as the Toyota Production System. Ohno wanted to adopt the system based on two basic principles. Automation with Just In time Automation using human beings as main operators. This process of automation will be discussed in detail in this report. But before doing this it would be useful to evaluate the theoretical aspects of JIT and MRP JIT (Just-in-time) It is an industrial management methodology that helps to reduce the wastage during the process of manufacturing. The basis philosophy is to produce right part at right place and at right time. JIT calls for reducing wastage by reducing unproductive activities. It discourages the repetition of manufacturing processes. The basic idea is to establish a chain of command and management among workers on various floors of the plant. The JIT initially was developed by Toyota in the 1950’s and it was also know as Toyota Production System. It was very popular in various Japanese companies during 1970’s. Some major factors used in JIT are: Place equivalent stress of work on various floors in day to day manufacturing process. Manage variation in demands by varying end item production. Manage setup time by proper planning and redesigning production methodology Use smaller lot size by properly coordinating with suppliers and buyers Move different floors of plant closer to reduce lead times. Never leave workers idle use their idle time for maintenance. Train workers for multiple jobs so that resources and time can be saved. Make workers responsible for the quality assurance of their bit and thus insure high quality standard just for the sake of high quality reputation of end products. Manage efficiently transfer of various parts in different floors of the plant to save time and resources. Toyota Corporation Japan is considered pioneer in introducing and using this methodology. Toyota engineers worked hard to meet the requirement of this methodology. They redesigned the productions systems and patterns. They also used robotic systems for achieving their objectives. This system proved very successful. It improved the company’s profit margins and reduced uncertainty. Toyota made some extra efforts to implement this system. The company had to train suppliers of parts for getting good coordination and quality from them. As this method proved very successful for Toyota and brought very good results. This success made it very popular in USA as well. In USA this method was adopted by various companies. It was also adopted in other areas other than industrial markets. But scholars of industrial management are a little cautious. They feel that misuse of this technique may bring pseudo dissatisfaction about the technique. Advantages of JIT It reduces the set up times and lot sizes There is minimum chance of defects Worker are more actively involved Reduction in material movement Changeover time is reduced There is great reduction in inventory and labor cost. It reduces the requirement of space and improves the quality by better team work MRP (Material Resource Planning) The automation in industrial organizations required a new methodology to be evolved for further enhancing supply chain processes management. The ERP technique was used for many years it gave rise to a new technique called MRP (Material Resource Planning). The purpose of this technique was to ensure the availability of materials for the fulfillment of demand by reducing the total cost of ownership. It is type of computer software for efficiently managing manufacturing process. It helps in reducing involvement of funds needed for manufacturing process. It enhances the profitability of the organization. Traditionally a lot of funds were required to fulfill the inventory requirements. But MRP plans the process in a sophisticated way to reduces the funds involvement to minimum possible level. The MRP software estimates assembling time of certain product, explore the parts required for assembling that product and thus organize the ordering process of these parts in such a way that minimum funds are required for whole process This software requires certain inputs to formulate a workable plan. These inputs include appraisal sales of each product, invoice of materials of products, time period required for manufacturing a product, expected delays in receiving parts from suppliers and other required data for a specific product. When all the data is given to the software it gives a workable output for achieving the required objectives. Advantages of MRP MRP is very helpful in planning control processes in industrial organizations. It helps to define material requirements by calculating from production plan / sales plan, which are dependent on the expected end product demand. It is very useful for those companies that are assembling end products by using batch-manufacturing process. It also helps in development of detailed plans for parts needed. Disadvantages of MRP Although three are many advantages of MRP but there were some disadvantages as well. Lead times are assumed fixed , related to the capacity of plant or process. All the materials can not be planned with MRP. It was not useful for different lot sizes It also ignored the dependent and independent inventory demands. Evaluation of the supply chains, MRP and JIT systems in relation to Toyota As discussed in the beginning that Ohno wanted to develop a system that may not rely on computers and was easier to modify than the MRP system. They discovered that computer could push defectives into the next floor increasing inventories and complicating quality control. That is why the over all production cost of Toyota is lesser than US companies. Evolution of Toyota Production System As a first step such devices were developed that can check dimensions and other quality attributes and workers were made responsible for their respective portion of job. They would have stopped production if any problems were detected until the problems were corrected. It helped in eliminating the need for rework lines and thus reduce the quantity of scrap. A Japanese term Kanban was used to describe the efficiency of the system that is called JIT. When Ohno visited U.S. in the 1950s he was much impressed by the concept of supermarkets. He liked the idea of having all goods available at all times. He says that from supermarkets he got the idea of an ideal store for mass production company like Toyota. Ohno and his associates also worked hard to develop the methods that may reduce the change over times. They were so successful in their efforts that they reduced the change over time to by 8 times i.e. from two hours to just 15 minutes A research report was published in 1990, this report compared American, European, and Japanese automobile manufacturing techniques with the Japanese and concluded that Toyota is at top. It further increased the interest of the people in the system evolved by Ohno. Toyota Production System in US As Toyota was pioneer of the most admired production system JIT. American companies started adopting their versions of Toyotas famous system. The Major U.S. auto companies have recently announced that they will be implementing their versions of Toyotas system internally and throughout their extensive supply bases with next decade. As Toyota is considered conservative but American companies are more progressive. Many US and Japanese companies are trying to combine JIT with enterprise integration and innovative logistics systems to get most advantages. Major companies involved in this practice are Dell Computer and Miller SQA, Hitachi etc. Recommendations It is quite clear from above discussion that top management must initiate undertaking target setting and implementation of such adjustments strategically, considering overall coordination and communication needs from the start. The different types of business environment did not allow many managers to use these techniques completely. Management of various industries has to modify these techniques according to the environment and specific conditions of their particular units. They need to shake-up their organizations for completely adopting these techniques. So it can safely said that these techniques suit only flexible and adaptable organizations. In rigid and unchanging environments they can produce undesirable results. Another major problem faced by factory management is selection of better equipment. It normally involves the selection of a set of equipment to be used in production based on technical and economical criteria. These methodologies can be further modified and improved to help in tackling this problem in a better way. Conclusion It will be interesting to know that TPM was not the only system used by Japanese companies. The Materials Requirements Planning (MRP) was also used by the Japanese and Western European companies. Many innovative managers also used some other techniques like Total Productive Maintenance. On the whole we can say that a complete factory automation system can reduce the workforce required to run a facility. It can also enhance the quality of work. Risks of loss and damage can also be reduced. References/Bibliography Barrar, P.; Lockett, G.; and Tanner, I. (1989) "Decision Processes in the Design, Implementation and Use of CAPM Systems in Medium Sized Organizations. 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