The Toyota Production System

The Toyota Production System

A Case Study of Creativity and Innovation in Automotive Engineering

R.Balakrishnan

INTRODUCTION

Automobile Manufacturing

Forty years ago, Peter Drucker dubbed it "the industries of industries." Today, automobile manufacturing is still the world's largest manufacturing activity. After First World War, Henry Ford and General Motors' Alfred Sloan moved world manufacture from centuries of craft production(led by European firms(into the age of mass production. Largely as a result, the United States soon dominated the world economy.

Toyota Production System

After Second World War, Eiji Toyoda and Taiichi Ohno at the Toyota motor company in Japan pioneered the concept of Toyota Production System. The rise of Japan to its current economic pre-eminence quickly followed, as other companies and industries copied this remarkable system. Manufacturers around the world are now trying to embrace this innovative system, but they are finding the going rough. The companies that first mastered this system were all head-quartered in one country-Japan. However, many Western companies now understand Toyota Production System, and at least one is well along the path of introducing it. Superimposing this method on the existing mass-production systems causes great pain and dislocation.

This essay, I believe, is an effort to explain the necessary transition from mass production to revolutionary production called Toyota production System. By focusing on the global auto industry, this essay explains in simple, concrete terms what the Toyota Production System is, where it came from , how it really works, and how it can spread to all corners of the globe for everyone's mutual benefit. The global adaptation, as it inevitably spreads beyond the auto industry, will change everything in almost every industry-choices of customers, the nature of work, the fortune of companies, and, ultimately, the fate of nations.

What is Toyota Production System? Perhaps the best way to describe this innovative production system is to contrast it with craft production and mass production, the two other methods humans have devised to make things.

Production methods

The craft producer uses highly skilled workers and simple but flexible tools to make exactly what the customer asks for--one item at a time. Few exotic sports cars provide current day examples. We all love the idea of craft production, but the problem with it is obvious: Goods produced by the craft method--as automobiles once were exclusively--cost too much for most of us to afford. So mass production was developed at the beginning of the twentieth century as an alternative.

The mass-producer uses narrowly skilled professionals to design products made by unskilled or semiskilled workers tending expensive, single-purpose machines. These churn out standardised products in very high volume. Because the machinery costs so much and is so intolerant of disruption, the mass-producer keeps standard designs in production for as long as possible. The result: The customer gets lower costs but at the expense of variety and by means of work methods that most employees find boring and dispiriting.

The Toyota motor corporation, by contrast, combines the advantages of craft and mass production, while avoiding the high cost of the former and the rigidity of the latter. Toward this end, they employ teams of multi-skilled workers at all levels of the organisation and use highly flexible and increasingly automated machines to produce volumes of products in enormous variety.

The Toyota Production System is also defined as Lean Production because it uses less of everything compared with mass production--half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new product in half the time. Also it requires keeping far less than half the needed inventory on site, results in many fewer defects, and produces a greater and ever growing variety of products.

Perhaps the most striking difference between mass and Toyota production system lies in their ultimate objectives. Mass-producers set a limited goal for themselves-- "good enough," which translates into an acceptable number of defects, a maximum acceptable level of inventories, a narrow range of standardised products. Lean producers on the other hand, set their sights explicitly on perfection.

TOYOTA PRODUCTION SYSTEM

Basic idea and Framework

The Toyota production system is a technology of comprehensive production management the Japanese invented a hundred years after opening up to the modern world. The basic idea of this system is to maintain a continuous flow of products in factories in order to flexibly adapt to demand changes. The realisation of such production flow is called Just-in-time production, which means producing only necessary units in a necessary quantity at a necessary time. As a result, the excess inventories and the excess work-force will be naturally diminished, thereby achieving the purposes of increased productivity and cost reduction.

The basic principle of Just-in-time production is rational; that is, the Toyota production system has been developed by steadily pursuing the orthodox way of production management. With the realisation of this concept, unnecessary intermediate and finished product inventories would be eliminated. However, although cost reduction is the system's most important goal, it must achieve three other sub-goals in order to achieve its primary objective. They include:

1. Quantity control, which enables the system to adapt to daily and monthly fluctuations in demand in terms of quantities and variety;

2. Quality assurance, which assures that each process will supply only good units to the subsequent processes;

3. Respect-for-humanity, which must be cultivated while the system utilises the human resource to attain its cost objectives.

It should be emphasised here that these three goals cannot exist independently or be achieved independently without influencing each other or the primary goal of cost reduction. All goals are output of the same system; with productivity as the ultimate purpose and guiding concept, the Toyota production system strives to realise each of the goals for which it has been designed. Before discussing the contents of the Toyota production system in detail, an overview of this system