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MMZG 538 Toyota Production

System

Rajiv Gupta

BITS PilaniJanuary 2014

Session 1

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Session 1

Module 1

Introduction to Dr. Rajiv Gupta, faculty for MFGO 635

Introduction to the course

Overall course guidelines

Module 2

Current global challenges and trends Competition

Globalization

Customer Preferences

Module 3

Current global challenges and trends Technology Government Regulations

Uncertainty

Environment

What It Means

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Session 1

Begin Module 1

Introduction to Dr. Rajiv Gupta, faculty for

MMZG 538

Introduction to the course and guidelines for

the course

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Session 1

End of module 1

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Session 1

Begin Module 2

Current global challenges and trends

Competition

Globalization

Customer Preferences

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Current Global Challenges

Competition

Globalization

Customer Preferences Technology

Government Regulations

Uncertainty Environment

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Competition

Shrinking market share

Lower margins

Shorter product life cycles

Higher variety

Smaller volumes to depreciate fixed costs

Globalization is an imperative

Competition for customers as well asemployees

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Globalization

Goes beyond imports and exports

Global markets and global sources

Potential for increased markets Increased potential for lower costs, but

increased complexity due to international

regulations and other differences Greater risk due to currency fluctuations

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Customer Preferences

We cannot sell what we manufacture. We

must manufacture what we can sell.

Need to reduce response and lead times

Logistics needs to be better integrated

with the entire supply chain

Need to keep a tight control on costs Need to bring new products to the market

faster

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Session 1

End of module 2

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Session 1

Begin Module 3

Current global challenges and trends

Technology

Government Regulations

Uncertainty

Environment

What It Means

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Technology

Technology has to be harnessed. Dont let

it control you

Dont be seduced by sexy gadgets

Inefficient utilization of technology is

expensive

Technology includes approaches such asTQM, TPS, TPM, Six Sigma etc.

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Government Regulations

Within a country, there may be lawspertaining to inter-state commerce

Environmental responsibilitygreen

production Labor laws

Customs and other duties

Tax laws Currency exchange rates

Other

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Uncertainty

Growing uncertainty in the global market withgreater access to information

Uncertainty has an impact on production anddelivery schedules and on the inventorylevels

Some of the uncertainty is due to increasedclimatic events, tsunamis, earthquakes, etc.

There is also a growing threat due to theincreased incidence of terrorism and piracy

Logistics systems need to be able to respondto changing situations and conditions

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Environmental Concerns

Extended Producer Responsibility (EPR) isbecoming more prevalent

Reverse logistics is assuming greater importanceas part of a companys logistical activities

Fuel emissions and spills and leaks in the oceanare receiving more focus

Companies are assuming a more responsible

position in regard to the environment Better planning, measurement (emissions), controland use of sustainable technologies will have animpact on logistics

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What It Means

Focus on The customer

Value and waste

Doing more with less

The entire purchasing experience Flexibility

Partnerships

Longer term thinking

Move away from Numbers games

Fads

Production focus alone

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Business Formula

Selling price = Cost of manufacturing + cost

of delivery + profit

Profit = Selling pricecost of manufacturing

cost of delivery

The critical factor is how we view the

formula

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Competitive Priorities

Price Ability to profit in price competitive markets

Quality

Ability to offer consistently low defect products Ability to provide high performance products

Ability to provide reliable/durable product

Ability to anticipate customer preferences

Delivery Ability to provide fast deliveries

Ability to make dependable delivery promises

Ability to accommodate customer-generated changes

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Competitive Priorities

Service

Make the purchase experience as effortless

as possible for the customer

Ability to customize the product/service to suit

customer needs

Ability to provide effective and efficient after-

sales service

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Session 1

Begin Module 4

Evolution of lean manufacturing

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What is Lean?

A lot of confusion exists about the term

Term first mentioned in The Machine That

Changed The World in the 1980s

It got further defined in Lean Thinking in

1994

Today it is synonymous with Toyota

Production System

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Evolution of Lean

Craft manufacturing

Mass Manufacturing

Lean Manufacturing

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Craft Manufacturing

Each product unique

Long lead times

Inconsistent quality Close interaction between producer and

the customer

High cost

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Mass Manufacturing

Advent of the moving conveyor

Establishment of standardized, interchangeable parts

Development of standard methods of production

Increased productivity Lower costs

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Mass Production Without

Variety in the 1920s

Schedule

Suppliers

Stamping PaintingSteel

Mill

Foundry Fabrication Sub-assy Fin-assyDealers

CustomersFrom: Profit Beyond Measure, H. Thomas Johnson and

Anders Broms, 2000

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Mass Producing Variety in

Batches by the 1970s

100s

0f

suppliers

Stamping

Foundry

Power Train

Body & Frame

Painting

Rework

Whse

Final

AssyDealers

Customers

Plan

Forecast

Orders

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Mass Production

Downsides:

Due to large expensive equipment that had to

be kept busy to justify the high cost,

production was in large batches, whether, ornot, this was required by the customer

Due to management by numbers, accounting

became a very important discipline. Inventory

was treated as an asset in accounting leading

to high inventories

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Lean Production

People policies

Due to a major economic depression following the

war, Japan faced labor unrest when president Kiichiro

Toyoda tried to fire workers

As part of the negotiations, workers who remained

were promised lifetime employment and were

permitted the use of company facilitiesstill in use

today

Kiichiro Toyoda took responsibility for the situation

and resigned from the presidency of Toyota

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TMMK Production 1990s

Stamping

Engine

Build

Seat

Build Plastics

Dealers

Customers

Body weld Paint shop Final assy

Batched

ordersSingle vehicle

order

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Session 1

End of module 4

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Session 1

Begin Module 5

Summary and wrap up

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Summary

Current business climate poses pressure

on manufacturers to be responsive and

efficient

Manufacturers need to be able to meet

varied demand while controlling costs

Lean grew as a response to meet the

requirements of a demanding customer

Lean manufacturing evolved from craft

and mass manufacturing36

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Summary

Craft manufacturing was close to the customer

but with no standardization and at a high cost

Mass manufacturing brought about

standardization and low product cost, but withdistance from the customer and alienation of the

workers

Lean manufacturing brings some of the benefits

of craft and mass manufacturing together

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Session 1

End Module 5

Summary and wrap up

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