The Secrets to U.S.

Supply Chain Success

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IW Best Plants 2013

Toyota Motor's Vision of Visibiiity

Visibility is a shared experience at Toyota Motor's 10 U.S. plants. By Tom Andel

Crown's vertical model has led the company to reshore some of its work back to the United States, finding that it makes better sense to manufacture its products here and then export them overseas, rather than vice versa. Hany Moser, founder and president of The Reshoring Initiative, certainly agrees with Crown's strategy, as he believes that offshoring negatively impacts innovation. "A lot of offshoring happened in the first place because companies didn't do the math," Moser explains. Even those manufacturers who take landed cost, wage arbitrage and purchase price variance considerations into account when choosing to move offshore are missing as much as 20% of the total cost of ownership (TCO), and hence fail to recognize just how expensive offshoring can be. While there may have once been a sizable cost of labor differential between the United States and China, Moser points to a recent report from Boston Consulting Group that states that net labor costs for manufacturing in China and the U.S. will converge within the next couple of years. "Not only are China's labor costs going up, but so are labor costs in other socalled 'low-cost' countries such as Vietnam, Thailand and Indonesia," Moser says. The Reshoring Initiative offers a free TCO calculator at its website, www.reshorenow.org. As Moser states, "U.S. manufacturers do not have to sacrifice quality, delivery, time-to-market, or employees to be competitive and profitable."

isibility is a key concern for any supply chain executive and it's only as good as his or her worst site. In many cases that's the plant where the things that are supposed to flow through their chain get made. Trever White, information systems (IS) manager for Toyota Motor Engineering and Manufacturing in North America (www.toyotainaction. com), offered a look at his company's approach to supply chain visibility at IndustryWeek's Best Plants conference in Greenville, S.C., last month. White is in the process of addressing operational visibility for 10 plants in the U.S., employing 2,8000 team members across sales, engineering and manufacturing. He also oversees IS for two Canadian facilities and one in Mexico. His success is measured by how well his information technology (IT) team engages with the business and the business managers with whom he works also get graded on how well they participate with IT on business case engagement. He told his overflow audience that such mutual dependence in focusing on visibility is resulting in nice successes. Ultimately, the focus of visibility at Toyota is on getting quality right the first time. "We want to make sure that problems are made very clear and that people understand what we need to do about them," White says. "Our legacy system wasn't doing that so well. Our approach is to use visual controls so no problems are hidden." That was a tall order because Toyota Motor's legacy plants had old visualization systems. Infonnation boards told what was up and down on the lines but didn't indicate top defects, or drill down quickly to help associates understand where problems were so they could befixedquickly. White's IT team partnered with Rockwell Automation (www.rockwellautomation.com) to provide an enhanced reporting capability to unlock manufacturing machine data and collect fault information to support better decision making and prohlem identification, and to provide analytics for historical reporting and training. This was a new role for IT, White explains, be"We want to make sure that cause in the past it was the responsibility of Toyota problems are made very clear Motor's planning engineering group. and that people understand "We're going on a new journey with them to make what we need to do about sure roles and responsibilities are clear," White says. them." What better way to clarify responsibilities than Trever White, using a Rubik's Cube to illustrate it? That's just Toyota Motor Engineering and what White asked his audience visualize, because Manufacturing
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2013

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Editorial Advisory Board
Joel Anderson,
president & CEO of the Tan Miller, ^ 'i'- director of ^ ^ H "WK:-. the Global ^ ^ ^ ^ ^ . Supply Chain Management Program at Rider University, College of Business Administration

Toyota Motor's Vision of Visibiiity

continued from page 8

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a change to any of the "sides" he outlined can indirectly change the others. The first side is business leadership. Toyota Motor's group leaders were complaining about the systems IT was delivering. They wouldn't let them focus on being out on the production line. So IT's focus became providing tools to allow group leaders to be more efficient. The second side is a business architecture that helps managers look at things from an end-to-end perspective. The third side is business intelligence. Toyota Motor has a lot of data tucked away in different systems. IT's opportunity is to unlock that data and provide a single end user reporting tool to visualize data in a more "humanized" way. The fourth side is manufacturing and operation support. IT works with the plants to understand where there may he opportunities to improve the systems supporting the plant floor. The fifth side is a framework to help IT quickly develop local systems unique to the individual plants. Before, these plants were developing their own systems without involving White's IS team. Side six is plant visualization via a centralized enterprise manufacturing tool and process. The focus is to get quality right the first time. White and his team are still on this visibility trek for Toyota, and his presentation was more of a progress report than a done deal. But he did offer the following advice to help the crowd listening to him take some ideas back home to draw a crowd of interested listeners of their own: Start by building strategic partnerships and convincing the corporate powers that this is not just about going to training or even getting on-the-joh training. It's ahout looking at each associate as an individual with their own set of productivity challenges and making sure they're being trained to recognize and deliver needed innovations to their plant. That needs to he followed by business engagement. For Toyota Motor that turned into an "IT Expo" White's team developed for all of its plants. That included posters at all the sites illustrating the technology implementations IT is working on. That leads to good feedback from both the executives and the associates on the plantfloor.White concludes. Results for Toyota? At its Alabama engine plant (which had about 2400 hours of production downtime in one ninemonth period) they're estimadng $500,000 annual savings by having a real-time visualization of operations enabling a more proactive, predictive model. Their goal is to capture 100% of the production downtime and eliminate non-value-adding work.
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