The Toyota Production System

High Quality and Low Cost

COST VS
DEFECTS

Readings;
James Womack, Daniel T. Jones and Daniel Roos,
The Machine that Changed the World, 1990, Ch 3 and 4
Kenneth N. McKay, “The Evolution of Manufacturing Control-
What Has Been, What Will Be” Working Paper 03 –2001
Michael McCoby, “Is There a Best Way to Build a Car?”
HBR Nov-Dec 1997
Consumer Reports
Gains of imports
The Toyota Production System
Historical View
Performance measures
Elements of TPS
Difficulties with Implementation
Six Eras of Manufacturing Practice
 Three Major Mfg Systems
from 1800 to 2000

Machine tools, specialized machine tools, Taylorism, SPC, CNC, CAD/CAM

1800 1900 2000

Interchangeable Mass Toyota

Parts at U.S. Production Production
Armories at Ford System
 Key Elements for New Mfg Systems

Element/ Need of Work Enabling Leader Resources

System Society Force Technology
Motivation
Interchange- Military “Yankee Machine Roswell U.S.
able Parts Ingenuity” Tools, Lee/ Govt
Division of John
Labor Hall
Mass Trans- $5/day Moving Henry Earnings
Production portation Immigrant Assembly Ford
Line,etc
Toyota Post War Jobs, CNC, Taiichi Japanese
Production Security Integration Ohno Banks
System of Labor
Q. By what method did these
new systems come about?
A. Trial and Error
 History of the Development of the Toyota
Production System ref; Taiichi Ohno

1945 1975
The Toyota Production System
Historical View
Performance measures
Elements of TPS
Difficulties with Implementation
Six Eras of Manufacturing Practice
Summary of Assembly Plant Characteristics, Volume Producers,
1989
(Average for Plants in Each Region)
Japanese Japanese in American in All Europe
in Japan North America North America
Performance:
Producvitity (hours/Veh.) 16.8 21.2 25.1 36.2
Quality (assembly
defects/100 vehicles) 60 65 82.3 97

Layout:
Space (sq.ft./vehicle/yr) 5.7 9.1 7.8 7.8
Size of Repair Area (as %
of assembly space) 4.1 4.9 12.9 14.4
Inventories(days for 8
sample parts) 0.2 1.6 2.9 2

Work Force:
% of Work Force in Teams 69.3 71.3 17.3 0.6
Job Rotation (0 = none,
4 = frequent) 3 2.7 0.9 1.9
Suggestions/Employee 61.6 1.4 0.4 0.4
Number of Job Classes 11.9 8.7 67.1 14.8
Training of New Production
Workers (hours) 380.3 370 46.4 173.3
Absenteeism 5 4.8 11.7 12.1

Automation:
Welding (% of direct steps) 86.2 85 76.2 76.6
Painting(% of direct steps) 54.6 40.7 33.6 38.2
Assembly(% of direct steps) 1.7 1.1 1.2 3.1

Source: IMVP World Assembly Plant Survey, 1989, and J. D. Power Initial Quality Survery, 1989
 Cost Vs Defects
Ref. “Machine that Changed the World” Womack, Jones and Roos
 Cost Vs Automation
Ref. “Machine that Changed the World” Womack, Jones and Roos
The Toyota Production System
Historical View
Performance measures
Elements of TPS
Difficulties with Implementation
Six Eras of Manufacturing Practice
 How do you get this kind of
performance?
Womack, Jones and Roos


J T. Black’s 10 Steps

Demand Flow Technology’s 9 Points

 Womack Jones and Roos
• New Technology?
– No silver bullet
• Automation?
– Yes, but integrated with system
• Standardized Production?
– Not in the usual “don’t stop the line” sense
• Lean Characteristics?
– Integration of Tasks (opposite of deskilling)
– Identification and removal of defects (stop the line!)
– kaizen – institutionalizing change
 J T. Black’s 10 Steps
Ref; JT. Black “Factory with a Future” 1991

1. Form cells
2. Reduce setup
3. Integrate quality control
4. Integrate preventive maintenance
5. Level and balance
6. Link cells – KANBAN
7. Reduce WIP
8. Build vendor programs
9. Automate
10. Computerize
 Demand Flow Technology’s
9 Points
1. Product Synchronization
2. Mixed Model Process Maps
3. Sequence of Events
4. Demand at Capacity
5. Operational Cycle Time
6. Total Product Cycle Time
7. Line Balancing
8. Kanbans
9. Operational Method Sheets
Current Value Stream Map
Future Value Stream Map
 J T. Black –1, 2
1. Form Cells 2. Reduce Setup
Sequential Externalize setup to
operations, decouple reduce down-time
operator from during changeover,
machine, parts in increases flexibility
families, single piece
flow within cell
 Toyota Cell, one part is produced
for every trip around the cell
TPS Cell

J T. Black
Standardized Fixtures
 J T. Black – 3, 4
3. Integrate quality 4. Integrate preventive
control maintenance
Check part quality at worker maintains
cell, poke-yoke, stop machine , runs slower
production when
parts are bad
 J T. Black – 5, 6
5. Level and balance 6. Link cells- Kanban
Produce to Takt Create “pull” system
time, reduce batch – “Supermarket”
sizes, smooth System
production flow
 Balancing and Leveling
• Balanced line: each process has the same
cycle time. Match process time to
assemble time, match production rate to
rate of demand (Takt time)
• Leveled Line: each product is produced in
the needed distribution. The process must
be flexible to do this.
 J T. Black – 7, 8
7. Reduce WIP 8. Build Vendor
Make system reliable, program
build in mechanisms Propagate low WIP
to self correct policy to your
vendors, reduce
vendors, make on-
time performance part
of expectation
 Some Basics Concepts of TPS
Smooth Flow and Produce to Takt Time

Produce to Order
Make system “observable” and correct
problems as they occur
Integrate Worker Skills
Institutionalize change
 Two Examples;


Takt Time

Pull Systems

 Takt Time:
demand time interval
Available Time
Takt Time =
Product Demand
Calculate Takt Time per month, day,
year etc. Available time includes all
shifts, and excludes all non-
productive time (e.g. lunch, clean-up
etc). Product demand includes over-
production for low yields etc.
 Takt Time
Automobile Assembly Line; Available time = 7.5 hr X 3
shifts = 22.5 hrs or 1350 minutes per day. Demand =
1600 cars per day. Takt Time = 51 sec

Aircraft Engine Assembly Line; 500 engines per year.

2 shifts X 7 hrs => 14 hrs/day X 250 day/year = 3500hrs.
Takt time = 7 hrs.
Engines shipped over a 3 month period
at aircraft engine factory “B”

12
month 1 month 2 month 3

10
engines shipped per week

0
7-Jun 15-Jun 23-Jun 30-Jun 7-Jul 15-Jul 24-Jul 31-Jul 7-Aug 15-Aug 24-Aug 31-Aug

Weeks

Factory “B”
Engines shipped over a 3 month period
at aircraft engine factory “C”

6
shipped

4
engines

0
may june july august

weeks

Factory “C”
On-time performance of engine
plants

100%

80%
late
delivered

late
60%

on
time
engines

40%
on
time

20% on
time

0%

A B C
 Push and Pull Systems
Machines

1 2 3 4

Parts Orders
 Push Systems –
Order (from centralized decision process) arrives at the front of the
system and is produced in batches of size “B”.
Q. How long does it take to get one part out of the system?

1 2 3 ….. N

Time = 0

Time = T1
Time = T2

Time = T3

Time = TN
 Push Systems –
Comment; Of course, this
1 2 3 ….. N part can come from inventory
in a much shorter time, but the
Time = 0 point is that the push system
is not very responsive.

Time
= TN

If the process time per part is “t” at each of

“N” processes, and the batch size is “B”,
it takes time TN = “NBt” to get
one part through the system.
 Pull Systems-
The order arrives at the end of the line and is “pulled” out of the
system. WIP between the machines allows quick completion.

Q.How long does it take to pull out

one part?

A.The time to finish the last opetration “t”.

 Comparison between
Push and Pull Systems
Push system characteristics: Central
decision making, local optimization of
equipment utilization leads to large
batches, large inventories and a sluggish
system.
Pull system characteristics: Local decision
making, emphasis on smooth flow,
cooperative problem solving.

See HP Video
 HP Video

Dots Tacks Tape Pack

Inventory in the system = L

Time in the system = W

Little’s Law L = λ W
 HP Video Results
Push system (6) Pull (3) Pull (1)

Space 2 Tables 2 Tables 1 Table

WIP = L 30 12 4

“Cycle time” = W 3:17 1:40 0:19

Rework Units ≈
26 10 3
WIP

Quality Problem Hidden Visible Visible

Production Rate
0.15 0.12 0.21
λ=L/W
Graphical Interpretation
250

200
Number or Time [s]

150

100

50

0
0 2 4 6
Inventory, L
Batch Size "B"
Time in System, W

L = λW
L ≈ k1B
λ = L / W = k1 / k2
W ≈ k2B
 So what are the advantages of
the pull systems?
• quick response
• low inventories
• observable problems
(if stopped = problem)
• sensitive to state of the factory
(if no part = problem)
• possible cooperative problem solving
The Toyota Production System
Historical View
Performance measures
Elements of TPS
Difficulties with Implementation
Six Eras of Manufacturing Practice
 TPS Implementation

• Physical part (machine placement,

standard work etc)
• Work practices and people issues
• Supply-chain part
• Corporate Strategy (trust, job security)
 Work practices and people
issues
• Failed TPS attempts; GM Linden NJ,
CAMI, GM-Suzuki, Ontario Canada.
• Successes GM NUMMI, Saturn. Toyota
Georgetown, KY
• See MacCoby article
• Other Ref: “Just Another Car Factory” Rinehart,
Huxley and Robertson, “Farewell to the Factory”,
Milkman
 Work practices and people
issues
• “Innovative” Work Practices Ref; C.
Ichniowski, T. Kochan et al “What
Works at Work: Overview and
Assessment”, Industrial Relations Vol
35 No.3 (July 1996)
 Examples of “Innovative” Work
Practices
• Work Teams
• Gain Sharing
• Flexible Job Assignments
• Employment Security
• Improved Communications
“What Works at Work: Overview
and Assessment”,
• Conclusion 1; “Bundling”
Innovative human resource management
practices can improve business productivity,
primarily through the use of systems of related
work practices designed to enhance worker
participation and flexibility in the design of work
and decentralization of managerial tasks and
responsibilities.
“What Works at Work: Overview
and Assessment”,
• Conclusion 2; “Impact”
New Systems of participatory work
practices have large economically
important effects on the performance of
the businesses that adopt the new
practices.
“What Works at Work: Overview
and Assessment”,
• Conclusion 3; “Partial Implementation”
A majority of contemporary U.S. businesses now
have adopted some forms of innovative work practices
aimed at enhancing employee participation such as work
teams, contingent pay-for-performance compensation, or
flexible assignment of multiskilled employees. Only a
small percentage of businesses, however, have adopted
a full system of innovative work practices composed of
an extensive set of these work practice innovations.
“What Works at Work: Overview
and Assessment”,
• Conclusion 4; “Barriers to Implementation”
The diffusion of new workplace innovations is limited,
especially among older U.S. businesses. Firms face a number of
obstacles when changing from a system of traditional work practices
to a system of innovative practices, including: the abandonment of
organization change initiatives after limited policy changes have little
effect on performance, the costs of other organizational practices
that are needed to make new work practices effective, long histories
of labor-management conflict and mistrust, resistance of supervisors
and other workers who might not fare as well under the newer
practices, and the lack of a supportive institutional and public policy
environment.
 Barriers to Implementation
• Early abandonment
• Costs (training, commitment, benefits..)
• History of conflict and distrust
• Resistance of supervisors
• Lack of supportive infrastructure
The Toyota Production System
Historical View
Performance measures
Elements of TPS
Difficulties with Implementation
Six Eras of Manufacturing Practice
 Six Eras of Manufacturing
Practice, Ken McKay
Pioneering
Systemization
Technology and Process
Internal Efficiency
Customer Service
Systems Level Re-engineering
 Ken McKay – 1, 2
1. Pioneering - sellers 2. Systemization - firm
grows and system gets
market, competition is complex, gross
not by manufacturing, inefficiency becomes
large margins apparent, competition
emphasize begins to make its
presence felt. Need for
throughput not standard operating
efficiency procedures, demand still
high, inventory used to
buffer against instabilities.
 Ken McKay – 3, 4
• 3. Technology and 4. Internal Efficiency -
Process – competition is
increasing, sales are
softening, manufacturing
is still in early maturity
and competition is limited
to firms in similar
situation. Product options
grow. Mfg focus shifts to
efficiency.
competition “cherry pickers”
enter the market they don’t
offer all of the options and
parts service but focus on the
20% which yields 80% of the
revenue stream. Internal plant
is put into order, problems are
pushed outside to suppliers,
best in class, bench marking
identifies the silver bullet. Still
using inventory to cushion
production support variety, and
maintain functional features.
 Ken McKay- 5, 6
5. Customer Service - 6. System Level Re-
talk to the engineering - firms
have addressed the
customer, identify
internal system and
core competency, factory – no more to
outsource, be squeeze out – look to
responsive, reduce improving indirect and
lead time, eliminate overhead, supply chain
feature creep, development.
focused factory etc.
 Toyota Summary
• High quality and low cost
• Relationship to previous systems (see
McKay paper), yet new,………. in fact
revolutionary
• Many elements
– Overall, see ”The Machine that Changed the
World”
– Cells, next time
– People, see Maccoby Article
 Summary …….. continued

• “Autonomation” automation with a human

touch
• Worker as problem solver
• TRUST