TPS Overview

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The Toyota Production System

High Quality and Low Cost

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

COST VS DEFECTS

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Consumer Reports

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September January - September

Units % Share DSR Vol

Current Year-Ago Current Year-Ago % Chg. Current Year-Ago % Chg.

Domestic Cars 431,496 481,318 35.3 37.3 -2.6 4,594,203 4,865,569 -5.6Import Cars 170,554 158,897 13.9 12.3 16.7 1,708,780 1,566,286 9.1Total Cars 602,050 640,215 49.2 49.7 2.2 6,302,983 6,431,855 -2.0Domestic Light Trucks 545,865 573,329 44.6 44.5 3.5 5,769,260 5,621,805 2.6Import Light Trucks 75,999 75,575 6.2 5.9 9.3 798,656 711,178 12.3Total Light Trucks 621,864 648,904 50.8 50.3 4.2 6,567,916 6,332,983 3.7Domestic Light Vehicles 977,361 1,054,647 79.9 81.8 0.7 10,363,463 10,487,374 -1.2Import Light Vehicles 246,553 234,472 20.1 18.2 14.3 2,507,436 2,277,464 10.1Total Light Vehicles 1,223,914 1,289,119 100.0 100.0 3.2 12,870,899 12,764,838 0.8

Ward's U.S. Light Vehicle Sales Summary

Toyota vehicle sales

2002

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1. Historical View 2. Performance measures 3. Elements of TPS4. Six Eras of Manufacturing

Practice5. Difficulties with Implementation

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Three Major Mfg Systems from 1800 to 2000

1800 1900 2000

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

Interchangeable Parts at U.S. Armories

Mass Production at Ford

Toyota Production System

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Key Elements for New Mfg Systems

Element/System

Need of Society

Work Force Motivation

Enabling Technology

Leader Resources

Interchange-able Parts

Military “Yankee Ingenuity”

Machine Tools, Division ofLabor

Roswell Lee/JohnHall

U.S.Govt

MassProduction

Trans-portation

$5/dayImmigrant

MovingAssemblyLine,etc

HenryFord

Earnings

Toyota Production System

Post War

Jobs,Security

CNC, Integration of Labor

TaiichiOhno

JapaneseBanks

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Q. By what method did these new systems come about?

A. Trail and Error

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History of the Development of the Toyota Production System ref; Taiichi Ohno

1945 1975

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Japanese Japanese in American in All Europe

in Japan North America North AmericaPerformance:Producvitity (hours/Veh.) 16.8 21.2 25.1 36.2Quality (assemblydefects/100 vehicles) 60 65 82.3 97

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

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

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

Summary of Assembly Plant Characteristics, Volume Producers, 1989 (Average for Plants in Each Region)

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Cost Vs Defects Ref. “Machine that Changed the World” Womack, Jones and Roos

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How do you get this kind of performance?

1. Womack, Jones and Roos

2. J T. Black’s 10 Steps

3. Demand Flow Technology’s 9

Points

4. MSDD, D. Cochran and Students

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Womack Jones and Roos

Automation? Yes, but….

DFM? Probably

Standardized Production? No!

Lean Characteristics? Integration of Tasks Identification and removal of defects

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Cost Vs AutomationRef. “Machine that Changed the World” Womack, Jones and Roos

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J T. Black’s 10 StepsRef; JT. Black “Factory with a Future” 1991

1. Form cells2. Reduce setup 3. Integrate quality control4. Integrate preventive maintenance5. Level and balance6. Link cells – KANBAN7. Reduce WIP8. Build vendor programs9. Automate

10. Computerize

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Demand Flow Technology’s

9 Points

1. Product Synchronization2. Mixed Model Process Maps3. Sequence of Events4. Demand at Capacity5. Operational Cycle Time6. Total Product Cycle Time7. Line Balancing8. Kanbans9. Operational Method Sheets

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Current Value Stream Map

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Future Value Stream Map

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Manufacturing System Design Decomposition (MSDD)

ROI

Sales Costs Investments

Lower level actions

quality predictable output delay reductionresolving problems

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J T. Black –1, 2

1. Form CellsSequential operations, decouple operator from machine, parts in families, single piece flow within cell

2. Reduce SetupExternalize setup to reduce down-time during changeover, increases flexibility

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TPS Cell

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Standardized Fixtures

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J T. Black – 3, 4

3. Integrate quality controlCheck part quality at cell, poke-yoke, stop production when parts are bad

4. Integrate preventive maintenanceworker maintains machine , runs slower

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J T. Black – 5, 6

5. Level and balanceProduce to Takt time, reduce batch sizes, smooth production flow

6. Link cells- KanbanCreate “pull” system – “Supermarket” System

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J T. Black – 7, 8

7.Reduce WIPMake system reliable, build in mechanisms to self correct

8. Build Vendor programPropagate low WIP policy to your vendors, reduce vendors, make on-time performance part of expectation

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Manufacturing System Design Decomposition (MSDD)

ROI

Sales Costs Investments

Lower level actions

quality predictable output delay reductionresolving problems

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Example from Cochran – Minimize production disruptions

DP - P1 Predictable production resources (people, equipment, info)

FR - P1 Minimize production disruptions

FR - P12 Ensure predictable equipment output

FR - P11 Ensure availability of relevant production information

FR - P14 Ensure material availability

FR - P13 Ensure predictable worker output

DP - P12 Maintenance of equipment reliability

DP - P11 Capable and reliable information system

DP - P14 Standard material replenishment system

DP - P13 Motivated work - force performing standardized work

FR - P133 Do not interrupt production for worker allowances

FR - P131 Reduce variability of task completion time

DP - P133 Mutual Relief System with cross - trained workers

DP - P131 Standard work methods to provide repeatable processing time

FR - P132 Ensure availability of workers

DP - P132 Perfect Attendance Program

DP - P142 Parts moved to downstream operations according to pitch

FR - P142 Ensure proper timing of part arrivals

DP - P141 Standard work in process between sub - systems

FR - P141 Ensure that parts are available to the material handlers

FR - P121 Ensure that equipment is easily serviceable

DP - P121 Machines designed for serviceability

FR - P122 Service equipment regularly

DP - P122 Regular preventative maintenance program

DP - P1 Predictable production resources (people, equipment, info)

FR - P1 Minimize production disruptions

FR - P12 Ensure predictable equipment output

FR - P11 Ensure availability of relevant production information

FR - P14 Ensure material availability

FR - P13 Ensure predictable worker output

DP - P12 Maintenance of equipment reliability

DP - P11 Capable and reliable information system

DP - P14 Standard material replenishment system

DP - P13 Motivated work - force performing standardized work

FR - P133 Do not interrupt production for worker allowances

FR - P131 Reduce variability of task completion time

DP - P133 Mutual Relief System with cross - trained workers

DP - P131 Standard work methods to provide repeatable processing time

FR - P132 Ensure availability of workers

DP - P132 Perfect Attendance Program

DP - P142 Parts moved to downstream operations according to pitch

FR - P142 Ensure proper timing of part arrivals

DP - P141 Standard work in process between sub - systems

FR - P141 Ensure that parts are available to the material handlers

FR - P121 Ensure that equipment is easily serviceable

DP - P121 Machines designed for serviceability

FR - P122 Service equipment regularly

DP - P122 Regular preventative maintenance program

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Some Basics Concepts of TPS

1. Smooth Flow and Produce to Takt

Time

2. Produce to Order

3. Make system “observable” and correct

problems as they occur

4. Integrate Worker Skills

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Two Examples;

1.Takt Time

2.Pull Systems

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Takt Time – to pace

production

DemandProduct

Time AvailableTimeTakt

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.

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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.

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

0

2

4

6

8

10

12

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

en

gin

es s

hip

ped

per

week

month 1 month 2 month 3

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

0

1

2

3

4

5

6

7

may june july august

weeks

en

gin

es

ship

ped

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On-time performance of engine plants

A B C0%

20%

40%

60%

80%

100%

en

gin

es d

elivere

d

A B C

ontime

late

ontime

ontime

late

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Push and Pull Systems

Machines

Parts Orders

1 2 3 4

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Push Systems –Order arrives at the front of the system and is produced in the economical order quantity.Q. How long did it take for the order to go through the system?

Time = 3

Time = 2

Time = 4

Time = 1

Time = 0

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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.

Pros and Cons;

Pull can fill small orders quickly, but must keep inventory for all part types. Design can help here but not in all cases.

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Comparison in delivery times

If the process time per part is “t”, and the batch size is “n”, it takes “Nnt” time to process a batch through “N” steps. To deliver one part it takes;

“Nnt” time from a push system plus setup and transportation delays, and“t” for a pull system.

See HP Video

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HP Video Results Push system (6) Pull (3) Pull (1)

Space 2 Tables 2 Tables 1 Table

WIP 20 12 4

CycleTime 3:17 1:40 19 sec

Rework Units 26 10 3

Quality prob. hidden visible visible

Production Rate L=W

6.1 parts per minute

7.2 12.6

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HP Video Results Revisited

Push system (6) Pull (3) Pull (1)

Space 2 Tables 2 Tables 1 Table

WIP = L 20 6X =24

12 3X =12

4 1X =4

CycleTime = W 3:17 6t(3:20 or 2:00)

1:40 3t(1:40 or 40)

19 sec (say 20) 1t (50 or 20)

Rework Units ~WIP

26 10 3

Quality prob. hidden visible visible

Production Rate L=W

6.1 parts per minute

7.2 12.6 4/50/60=4.8

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So what are the advantages of the pull

systems?

continuous (synchronous) flow single piece flow capabilities observable problems (if stopped = problem)

sensitive to state of the factory(if no part = problem)

possible cooperative problem solving

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Six Eras of Manufacturing Practice, Ken McKay

1. Pioneering2. Systemization3. Technology and Process4. Internal Efficiency5. Customer Service6. Systems Level Re-engineering

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Ken McKay – 1, 2

1. Pioneering - sellers market, competition is not by manufacturing large margins emphasize throughput not efficiency

2. Systemization - firm grows and system gets complex gross inefficiency becomes apparent, competition begins to make its presence felt. Need for standard operating procedures, demand still high, inventory used to buffer against instabilities.

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Ken McKay – 3, 4

3. Technology and Process – competition is increasing, sales are softening, manufacturing is still in early maturity and competition is limited to firms in similar situation. Focus shifts from increasing production rate to increasing the amount of product per unit time.

4. Internal 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.

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Ken McKay- 5, 6

5. Customer Service - talk to the customer, identify core competency, outsource, be responsive, reduce lead time, eliminate feature creep, focused factory etc.

6. System Level Re-engineering -firms have addressed the internal system and factory – no more to squeeze out – look to improving indirect and overhead, era of “mass” customization, supply chain development.

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TPS Implementation

Physical (machine placement,

standard work etc) part

Work practices and people issues

Supply-chain part

Corporate Strategy

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Work practices and people issues

Failed TPS attempts; GM Linden NJ, GM-Suzuki, Ontario Canada. Successes GM NUMMI, Saturn. see MacCoby art“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)

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Examples of “Innovative” Work Practices

Work Teams

Gain Sharing

Flexible Job Assignments

Employment Security

Improved Communications

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“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.

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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.

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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.

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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.

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Barriers to Implementation

Early abandonment

Costs

History of conflict and distrust

Resistance of supervisors

Lack of supportive infrastructure

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Summary

High quality and low cost ( and originally low volumes)Relationship to previous systems (see McKay paper), yet new,………. in fact revolutionaryMany elements Overall, see ”The Machine that Changed the

World” Cells, next time People, see Maccoby Article

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Summary …….. continued

“Autonomation” automation with a

human touch

Worker as problem solver

TRUST

TPS Overview

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