Planning & Assessing RX 330 Productions for Toyota North America Team Charlie Oscar Oscar Lima AMBA 640, Section 9044 8/9/2011 Section I II III Executive summary Introduction Exercise 1: Toyota Production System (TPS) today TPS term definitions & practical examples IV Exercise 1: TPS as a total entity Advantages Limitations Evolution TPS use among other companies V Exercise 2: Grid analysis (Weighted scoring model) Exogenous factors & assumptions Endogenous factors & assumptions Constraints VI VII Exercise 2: Location recommendation Exercise 3: Decision tree analysis TMMC production capacity recommendation Limitations Past performance: RX 330/350 VIII Exercise 4: Current regional production strategy Assessment Change recommendations IX Summary Appendix A References Page 2 3 4 4 7 7 8 8 9 10 11 13 16 16 17 17 18 19 19 19 21 21 23 24 1
I. Executive Summary Toyota Motor Corporation is leading the way to future mobility through innovation, productivity, quality and efficiency. Toyota uses a self-developed strategy known as the Toyota Production System (TPS) to guide business process improvements. TPS has been utilized by a variety of industries all over the world, though many organizations tailor system components to their needs rather than embracing TPS as a total management system. The advantages of TPS are savings in time, space and resources resulting in increased efficiency and revenue, however, TPS limits organic production capacity by narrowing supplier relationships and inventory. A grid analysis is used to compare Toyota Motor Manufacturing Canada (TMMC) and USA locations for the Lexus RX 330/350 North American plant. Nine weighted factors are used to compare plant sites. These factors relate to government control, taxes, brand recognition, infrastructure and more. The three critical factors are distance to market, distance to suppliers and government regulation. Grid analysis results favor the TMMC site over USA by a total weighted score of 146 to 140. The TMMC site is recommended based on the grid analysis results. At the TMMC site, a 25,000 unit plant production capacity is recommended for maximum profit based on decision tree analysis. It should be noted that decision tree analysis works best in less complex projects, because the more complex projects become, the greater the sensitivity and margin of error in the analysis. Currently, TMMC is the only plant outside Japan to manufacture Lexus. It has earned JD Power & Associates Segment Awards for 2008, 2007, 2005, and is the first plant outside Japan to ever win a Platinum Award. Toyota’s North American operations are extensive, including 15 production facilities in the U.S. alone Canada and Mexico represent Toyota’s lesser operation sights with strong future growth potential. Our strategic change recommendation for Toyota’s North American operations is to branch out from Texas operations to further expand in Mexico where labor is abundant and relatively inexpensive. 2
II. Introduction The global vision of the Toyota Motor Corporation is to “lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people” with additional emphasis on quality, continuous innovation, corporate social responsibility and harnessing the power of human capital (Toyota Motor Corporation, n.d.). At the heart of operations is the famed Toyota Production System (TPS). Researchers and industry professionals generally agree that eliminating defects and waste improves productivity and efficiency, but Toyota was the first company to pioneer and later codify the activity. After approximately eight decades of application, TPS is as strong a stratagem as ever. Today Toyota produces optimal quality, low-cost vehicles with the shortest relative lead time through the identification and elimination of process resource waste (The Advantages of Lean Manufacturing, n.d.). The Lexus RX 350 sports...
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