Established in 1937, Toyota Motor Corporation (TM) is currently the 8th largest company in the world. Its annual revenue hovers around US$186 million dollars and it hires a workforce of approximately 290,000 people worldwide.
Besides being a mammoth economic entity, Toyota has also influenced the world in many ways; Toyota is renowned for its amazing cost cutting initiatives as well as highly influencing corporate philosophies which permeates through every layer of TM. Put together, they are known as the Toyota Production System (TPS), and this radical process innovation strategy, though once scoffed upon by many industry insiders, has brought the standard of efficiency to new levels.
Toyotafs Process Innovation
TPS is the essential framework and philosophy organizing Toyotafs manufacturing facilities, and the interaction of these facilities with the suppliers and customers. Its main objective is to eliminate Muda, ³Ê (waste), a term now familiar even with its American subsidiaries. As quoted by Bruce Bremer, facility engineering manager at Toyotafs North America manufacturing system, gWherefs the Muda? Is it overtime? Reduce it. Is it your indirect material costs? Find out why your costs are higher than the benchmark and find ways to reduce them,h he said . An important part of the TPS is the Just-in-Time (JIT) inventory system, which all of Toyotafs manufacturing facilities are required to inculcate into their production lines. The JIT technique was actually first used by Henry Ford back in 1920s. However, it was adopted by Toyota in the 1950s and refined to an elevated level of efficiency, one that made it the worldfs leader in employing the JIT system.
JIT is the principle of having parts ready just as when they are desired, thus eliminating the need and more importantly the cost of holding inventory. Besides having less capital held up in inventory with the JIT system, more flexibility is also given to the facility as engineering improvements can also take place much more quickly, with no stockpile of parts needing to be cleared; problems with specific parts can be also be detected much more efficiently since they are used as soon as they are delivered. Kaizen, üP is the philosophical outworking of continuous improvement in the TPS. When the art of Kaizen is perfected, it goes beyond delivering improvements; it makes the workplace a warmer environment, reduces menial work, and teaches employees to do rapid experiments via scientific methods and to identify and hence eliminate the Muda within the business. It is applicable for anything from bottlenecks to neck soreness to soaring energy costs and everything in between. As put by Taiichi Ohno, TMCfs former executive vice president, gSomething is wrong if workers do not look around each day, find things that are tedious or boring, and then rewrite the procedures. Even last monthfs manual should be out of date.h To date, Kaizen has become a hallmark of the TPS. A specific example in which Toyota operates Kaizen is in its gObeyah methods of improvements. Obeya, which stands for big room, is where workers usually from different departments or even external stakeholders like suppliers meet face to face in a think-tank like meeting to suggest ways to improve efficiencies or pre-empt production problems. Prior to the production of the Avalon model, Toyota brought all of its key suppliers into a common workroom to identify problems and work out solutions. According to Mr. Nakao, executive chief engineer of Toyota Technical Centre (USA), this process has reduced the number of engineering changes that would otherwise emerge later in the project.
Jidoka, ©"» (human automation) is where Toyota combines the elements of the efficiencies of automation with the benefits of human intuition and passion. Within most TM manufacturing facilities, most of the productions take place not within long pathways of assembly lines, but in...