Toyota Motor Company

Topics: Toyota Production System, Toyota Pages: 6 (1725 words) Published: June 30, 2013
Toyota Motor Company, USA

EXECUTIVE SUMMARY

Toyota Motors Manufacturing (TMM) faces increasing problems with its seat supply.  TMM’s single seat supplier, Kentucky Framed Seat (KFS), is responsible for the majority of the problems with material flaws and missing parts as the major encountered defects.  These problems are increasingly occurring with an increase in varieties of and demand for the seats.  Toyota currently addresses these problems offline; however, this is a deviation from the policies and procedures under the Toyota Production System (TPS).  Now, as TMM ramps up for the production of the Camry Wagon, it must address the seat issue before seriously impacting production performance. 

We recommend the following major measures to overcome these problems: Immediate 
* Send TMM Quality Control (QC) people to KFS to identify and correct the source of the problem. * Place a QC person at the seat arrival dock to check for defects before sending seats to the line. * Continue fixing seat defects off line.  It is too expensive to stop the line. * Assign employees to be responsible that correct replacement seats are procured in a timely manner.  Long Term

* Improve internal communication within Toyota, specifically between the Japanese design engineers and US manufacturing. * Decrease seat variety.
* Implement TPS processes at the KFS factory.  Fujio Cho pronounced this to be the next step for TMM.  KFS is a logical first supplier to implement Toyota’s methods of production.

ANALYSIS

Ideally, Toyota corrects defects on the production line.  However, vehicles with seat problems are managed offline after the assembly is complete.  This is caused by three factors; 1) Seats need to match each particular car, therefore stock parts cannot be used; 2) The supplier process operates under Just In Time (JIT); 3) KFS cannot readily supply replacements for defective seats.  Stopping the line until a replacement seat is available is not an option due to the massive resulting productivity losses.  Although KFS delivers seat replacements twice a day, KFS sometimes sends incorrect seat assemblies.  In many cases, the replacement seats are not installed in a timely manner. There are several four-day old vehicles in the overflow parking area.

On April 27th the run ratio was down from 95% to a damaging 85%.  The calculations below demonstrate that the decrease in per-shift production is close to 50 cars. Most of this can be blamed on the seat problem.  Producing the missing cars via overtime capacity will cost TMM in excess of $16,000 per shift. This translates to around $8.4 Million per year considering two shifts and a 5-day workweek. Stations| 353| |

Employees| 769| |
Wage/Hour| $   17.00 | |
Overtime| $   25.50 | |
Cycle Time| 1.05| Cars/Min|
Shift Length| 525| Minutes|
'Productive' Minutes| 450| |
Run Ratio| | |
100%| 473| |
95%| 449| |
85%| 402| |
'Lost' Cars Per Shift (95% to 85%)| 47| |
Cost per Hour of Production Overtime| $ 19,610 | |
Time Required to Produce Add'l Cars| 50| Minutes|
Cost to Produce Additional Cars| $ 16,215 | |

The problems are shifting down from the assembly line to the clinic; Toyota’s philosophy is to deal with the problem where it was found, using their Five Why’s approach.  Most of the seat problems, however, are material flaws or missing parts, which cannot be corrected online because no replacement is immediately available.  One possible option would be to have a larger amount of safety stock, but this is not an efficient solution to the problem because it contradicts the JIT concept.  Furthermore, it would require excessive stock maintenance near the seat station for correct seat-to-car matching.  Another solution to this issue would be to have a smaller number of seat varieties.  This step would increase the chances a good seat is in the pipeline.  Of course these two options do not...
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