Operation and Production Management in Toyota - Term Paper Example

Operation and production management in Toyota Executive summary Operation and production management has seen a lot of developmental phases in the recent past few years. Organizations have extensively worked on the topic to optimize their production planning and production, and operation. One of the most prominent names in the list of those organizations is Toyota which has set a benchmark in the automobile industry in context of providing quality product at low cost. This has been accomplished by the extensive research work done by the members of the organization on optimization of their production and operation to reduce the organizational wastage and minimize the errors. After its establishment the organization faced many difficulties and a phase came when the company was at the verge of its bankruptcy. The company then deeply analyzed its business processes and identified the errors for rectification. The organization emphasized on providing good quality product at a low price. They used 5P model in order to optimize their production and reduce the inventory level and the wastage. The work culture developed in Toyota has not developed in a small time frame rather it is a long process which requires a longer duration of time. The organization realized that the environment in which it is operating is very much dynamic and keeps on changing. In order to exist in this dynamic environment one has to adopt themselves according to the change. They tried to identify the changes and adopted themselves accordingly. This act of Toyota drives the organization towards the success. Table of contents Executive summary 2 Current operation of the system 6 Physical layout of the process flow 9 Performance/ Capability of the Process layout CAE system - “TPS-LAS” 10 Recommendations 13 References 14 Toyota is a well known brand in the automobile industry around the world. It is said to be the third largest automobile manufacturing company in the world with an annual sales of six million vehicles in its 170 business locations across the globe. It was during the year of 1980 when people first realized the difference between Toyotas vehicle and other vehicles manufactured by American automobile companies. The vehicles manufactured by Toyota are better in delivering performance with low maintenance compared to other automobile companys vehicle. Researchers estimates that the performance of Toyota is potential enough to overtake its successors which are General Motors and Ford which are the first and second largest automobile manufacturing companies respectively. Toyota always looks for its weaknesses and overcomes it to leave no chance of complain from its valuable customers. The consistency of its performance has been achieved by its operational excellence which is considered as a strategic device towards the business of the organization. Toyota has innovated the way of production by introducing many concepts of production while maintaining the quality of the product. Toyota has succeeded in defining and implementing many of the quality management tools and techniques throughout its organization like Kaizen (poor mans approach), just-in-time, one piece flow, Jidoka and Heijunka. These tools serve as the means for quality improvement but only the implementation is not the solution to achieve the excellence. To achieve the excellence level these tools and techniques are required to be maintained also after their deployment. (Liker. 2004) All of the production plants of Toyota around the world work on the basis of a systematic design developed by Toyota which is termed as Toyota Production System (TPS). This system is based on the 4P model of production where each P indicates different ingredients of the model as Problem solving, People and Partners, Process and Philosophy. Each of the ingredients has its unique and crucial role in the production process of the organization. If any of the ingredients remains absent the system will face problem in operating which will be reflected on the final performance of the production. Toyota emphasizes on the lean process of production which is very much reflected on the system within which the production is carried out. The organization incorporates its various quality management tools and techniques into its TPS at different levels of hierarchy of the model. These quality management tools are not indicated in the system of model but can be generalized by breaking down the structure into more detailed form. For example, the incorporation of Kaizen concept into the production model is overlapping between the Problem solving, People and Partners, and Process levels of the model. Similarly other tools and techniques are also embedded into the system to achieve the excellence in production process. The 5P model of Toyota (Source - The Toyota Production System) Apart from designing and implementing the various tools and techniques Toyota also works on developing the leadership and culture among its employees. The strategies developed by the organization originate from deep understanding of human behavior and motivational factors. The organization applies efforts in developing leadership skills, team building and development of work culture which has the core business philosophy working in the background. These two aspects of the organizations system, i.e. the 4P model which is also referred as the Toyota Way and the TPS serves as two pillars of the organization which makes it unique from other organizations. The strength of the company lies in its culture which it has developed over a period of time. During the year 2001 Toyota released first documented form of its culture which was named as “The Toyota Way” 2001. The document contained all the details regarding the development of work culture and its consistency. The document was produced with an aim of providing guidelines to other organizations in terms of developing the work culture to become a successful organization. The document focused on the Toyota Way model which has two pillars as Continuous improvement and Respect for the people which are supported by challenge, Kaizen, Genchi genbutsu, respect and teamwork. Each of these terms has its own meaning and significance in the model. Respect is one of the pillars of the model which signifies that people at Toyota respects others and always tries to understand others to make a mutual trust among them. Respect is supported by two of its subcategories which are respect for people and teamwork which means the company respects all the individuals who come in contact with the company whether as an employee, a customer, suppliers, investors and the society in which it has its operations. Toyota provides opportunities of personal and professional growth to its employees to maximize the performance level of individual or a team. The other pillar of the model is continuous improvement which is supported by three different sub categories such as Challenge, Kaizen and Genchi Genbutsu. Challenge is used to describe that Toyota meets the different challenges courageously with a creative approach in order to meet its future plans. Kaizen signifies continuous improvement of business process with innovation and evolutionary approach while the practice of Genchi Genbutsu means a belief of viewing the original site of action or source to gather all the available facts to support the effective decision making. (Liker et al. 2007) Current operation of the system The whole production of Toyota is based on the TPS or lean approach towards manufacturing. The TPS model is based on the theme of another quality management tool called PDCA (Plan, Do, Check, and Act) cycle which was given by a great statistician Walter Shewart and hence the cycle is often acknowledged as Shewart cycle. This tool was further refined by other quality management people during 1950 when W. Edward Deming contributed to this model which was also referred to as Demings cycle. (Mazur et al. 2008) The average time consumed to manufacture a complete car by Toyota is 120 working hours of a labor while it is between 175 to 200 hours in case of American automobile manufacturing companies. The difference between the manufacturing times has been achieved by the Toyota employees with the use of efficient systems for handling of materials. The organization has changed its entire production system which was a computer generated push system to another system called as the pull system during 1948.The traditional push system faced many difficulties in identification and removal of defects and errors from the production line. The pull system shifted the control of ordering of parts and required materials to the final assembly which simplified the workers task of identifying the errors since they looked after the part required by them from the previous step of the process. The company introduced the concept of Kanaban system which enabled them to produce variety of automobiles in large volumes at a comparatively low cost of production. The Kanaban system was developed by Ono Taichi after analyzing the production system of US where the production was done in huge amount which resulted into high inventory level and low quality of the product. Ono Taichi conducted researches on time and motion analysis to analyze each production step to remove the unnecessary motion in the production process. Universal machines were given preferences over machines with specific roles to perform different production activities on one machine. Other significant changes were made in flow of information to have low cost of setup and time of maintenance along with the desire level of workers to work on variety of jobs. The new system also changed the suppliers’ schedule of supply from single delivery for 1 -2 months to delivery on daily basis. Toyota mainly focused on small lot size with limited space to provide variety of automobiles at a low cost. The company also implemented the EOQ model to reduce the inventory cost and reduced lot size. The EOQ implementation also helped in reduction of setup time on machines significantly from hours to few minutes. This resulted into reduction of overall production time. (Michael. 1989) The performance delivered by the company is achieved from the steps which are adopted during the production process. Researcher J T Black suggested 10-steps of production process in order to obtain such kind of performance level. The 10-steps of production suggested by J T Black are - Form cells - this enables the sequential execution of operations; it also does not requires presence of the operator all the time in front of the machine. Reduce setup - this feature increases the flexibility of the production along with reduction in down time at the time of changeover. Integrate quality control - quality control checks should be done at various levels of production. The entire quality control activities should be integrated and all levels of production. Poka Yoka should be implemented as a measure of quality control mechanism where Poka Yoka means Zero defect. This helps in inspecting the product and if any defect is found the production is stopped immediately and corrective measures are taken. Integrate preventive maintenance - operators should be provided with training on maintenance of the machine which is handled by them. This reduces the cost of hiring a dedicated mechanic for repairing the machines. Level and balance - the technique of leveling and balancing helps in reducing the lot size. In balancing the process time and assembling time is matched while the production rate is matched with takt time which is referred as the rate of demand. In leveling the production is based on the need of distribution and it has to be more flexible in order to meet the production target. Link cells – KANBAN - this concept helped in reducing the unnecessary motion of the production run. Reduce WIP - this helped the system in proving to be more reliable over the time and it encourages the system to have self-correct mechanism to reduce the WIP. Build vendor programs - the numbers of vendors should be reduced and efforts should be made in order to make the on time performance as a collective part of expectation. Automate - automation of the production process reduces the total production time and machine handling time with less human interventions. Computerize - the production process should be associated with the computers in order to make the process more systematic and structured. Physical layout of the process flow Physical layout of process flow in Toyota (Source - The Toyota Production System) Above given figure describes the layout of the process flow at the shop floor of Toyota. The type of layout is process layout which has involvement of Kanaban techniques which makes the layout more effective in terms of time and cost-effectiveness. In the recent years of development authors have proposed models where computer simulation and digital engineering have been incorporated into the facility layout planning. This has been done as a result of developing a strategic approach towards the manufacturing technology in order to have a lean production. The model thus generated is termed as TPS-LAS (Toyota Production System – Process Layout Analysis Simulation). The TPS-LAS model relates to the process layout CAE system where three core systems are considered which are, Logistics investigation simulation (-LIS) – It is the computer simulation under the actual condition of production to determine the number of buffers or transfer numbers between the processes. The insufficient buffer can have a negative impact on the line production in an automobile industry so it is very important to calculate an optimum amount of buffer to have a smooth line of production. Digital factory simulation (-DFS) – In a production process the interference arises due to space problem between the equipment which are called static interference. Another interference called dynamic interference which arises due to running of any production process for the first time and equipment face difficulty in smooth operation. (-DFS) provides a way of computer simulation to have a control over these kinds of interference. For a production unit it is important to tackle both the types of interference and redesign the production process in advance if any interference is observed. Workability investigation simulation (-WIS) – in a process layout many a times there remains a difference between the physical ability of the workers and the actual demand of work. This difference creates a disruption in the production line of the company. (-WIS) is the computer simulation which is used with an intention of reducing those differences by illustrating the workers about the actual workload and working conditions. Performance/ Capability of the Process layout CAE system - “TPS-LAS” In an automobile production company the process of production has became more complicated and longer with the development of new and innovative products. The number of transfer routes and buffering numbers have been increased over the time which determines the layout of the production unit. The numbers of required buffers are calculated by theoretical simulation during the determination of production line. The theoretical design is not sufficient to explain the actual situation of work which may have defective equipment causing the stoppage at production line. Production process can be determined for the actual working conditions which are dynamic in nature with the help of computer simulation and digital engineering. The solution provided by the system is very much accurate and suitable as per the actual working conditions. There are a huge numbers of trials required to establish a relationship between the theory and actual work. The process layout CAE system performs function such as analysis of buffering number for its optimization and determination measuring the bottle neck process Use of concurrent engineering in the process of production planning in order to reduce the lead time. Above mentioned functions of process layout CAE system has certain requirements for the performance of the functions. These requirements are as per the type of function which is to be performed. To have a deep analysis of buffering number and its optimization knowledge of the actual situation is must, i.e. the current condition of the equipment and their defects. The analysis is done on the basis of practical situation which are faced during the production process. For the analysis of the bottle neck process the logistics situation of the production process is observed. The real time situation of the logistics has to be considered for the accurate analysis of the bottle neck process. To merge the concurrent engineering with the production process the conventional CAD/CAM systems are required to be integrated with the newly developed production process. With the help of the conventional CAD/CAM system and the simulated system the production planning and the line measurement has became more effective and efficient. In the manufacturing system of Toyota the capabilities of production system can be argued on the basis of statements which are Three layers of manufacturing system – the entire production mechanism of the firm can be grouped into three different layers of capabilities which keep son repeating during the process of production. These three capabilities are routinized manufacturing, routinized learning and evolutionary learning capabilities. The routinized manufacturing and learning includes repetitive transmission of information in a systematic manner. This does not changes very frequently and is of repeating nature while the evolutionary learning is non-routinized and are of dynamic nature. This refers to the ability of the firm which keeps on building the competitive set of capabilities with change in the condition and situation. This helps in building the long term strength of the firm. Multi- path emergence system and evolutionary learning capabilities – it is very much difficult to find an effective manufacturing routine than developing a simple and straight competitive decision making. Identification of a firms capabilities can be done by analyzing the entire system of production but many of the elements present in the system may have emerged with a reason other than the competitive advantage. Many elements have their own historical significance or have evolved due to unintentionally transfer of information or knowledge. Sometimes many organizations have unintended trials and practices which gives them a competitive edge over its competitors. This describes the simultaneous existence of system emerged learning and evolutionary learning in performance of production of an organization. Dual-level of problem solving – the capabilities of the organization is explained by a modified form of problem solving which has two core components, one of them is emergent process of solution generation while the second one is refining of the solution obtained from above and its conversion into competitive routines. This behavior of the organization is referred as opportunistic learning capabilities where the organization links the outcome of emergent process with the competitive capabilities building. Routines serves as information systems – whatever routines generated and retained irrespective of their origin and evolution, serves as a source of information for the creation and transfer of the information which are associated with the product and provided to the customers. Purification – the manufacturing system developed over time is a result of emergent process. If this system is adopted by any other organization it has to be purified at first considering the various production mechanism of the adopting organization. If any how the adopting organization fails to transfer the entire process the outcome can be worse for the firm. The adoption of the tacit knowledge behind the process has to be understood and implemented into the manufacturing system of the organization. Overshooting – this is a problem which is faced by organization having high evolutionary learning capabilities. This type of problem is faced due to high level of competition for evolutionary capabilities building. This has an adverse effect on the organization and its production process. Toyota has very high evolutionary learning capabilities which could lead to fat designs so it should be considered as a problem for the organization and proper preventive measures should be adopted accordingly. Internal evolutionary mechanism – Toyota also has an internal evolutionary mechanism which facilitates features such as variety, diffusion and convergence of manufacturing routines. Another very important element of this mechanism is the value which is shared on the basis of TPS by the employees of the organization. The organization manages the complex nature of multi-path system emergence, while diversifying the internal ideas and finally merges them to generate manufacturing routine capabilities. (Fujimoto. 1999). Recommendations The production system followed by Toyota has set a benchmark not only in the automobile production sector but it has influenced many industries which has adopted its system of production and its planning. Though the production system of Toyota is very effective and efficient which has resulted into the incomparable success of the organization but still certain points are there which are required to be taken care of by the organization in order to maintain its success rate and the position in the business world. These points of concern have emerged as a side effect of intense evolutionary learning capabilities benign used by the firm to enhance its learning process for continuous improvement. The major problem is faced due to overshooting which may lead to an ending with fat designs remaining. The company should think upon this issue and a find an appropriate solution to this problem. Another major concern of the company is to keep its pace along with the dynamic environment which keeps on changing with the time. Though the company is capable enough to handle these changes because of the culture it has developed and practiced during its evolution and development to be the best automobile manufacturing company in the world. References Liker, J. The Toyota way: 14 management principles from the worlds greatest manufacturer. McGraw-Hill Professional. 2004. [Online] Available at - < http://books.google.co.in/books?id=9v_sxqERqvMC&printsec=frontcover&dq=Jeffrey+Liker+The+Toyota+Way#v=onepage&q=&f=false > [Accessed on October 19, 2009]. Liker, J., Hoseus, M. & Center for Quality People and Organizations. Toyota Culture: The Heart and Soul of the Toyota Way. McGraw Hill Professional. 2007. [Online] Available at - [Accessed on October 19, 2009] . Mazur, L., Chen, S. & Prescott, B. Pragmatic evaluation of the Toyota Production System (TPS) analysis procedure for problem solving with entry-level nurses . 2008. [Online] Available at - [Accessed on October 19, 2009]. Michael, C. Japanese Automobile Industry. Boston: Harvard University Press. [Online] Available at - [Accessed on October 19, 2009] Anonymous. The Toyota Production System. [Online] Available at - [Accessed on October 19,2009]. Fujimoto, T. The evolution of a manufacturing system at Toyota. Oxford University Press US. 1999. [Online] Available at - [Accessed on October 19, 2009] Read More