TOYOTA MOTOR MANUFACTURING INC. U.S.A

Prepared By Ashwin Mehta 313 Pratik Mehta 314 Ishaan Parekh 315 Ankit shah 317 Dishank Shah 318 Fenil Shah - 319

Agenday Current Scenario y Problems Faced y Analysis y Suggestions and recommendations y Risks and contingencies

Current Scenario Toyota Motors Manufacturing (TMM) faces increasing

problems with its seat supply. Kentucky Framed Seat (KFS), is a single seat supplier

for TMM. KFS is responsible for the material flaws and missing

parts as the major encountered defects. These problems are increasingly occurring with an

increase in varieties and demand for the seats.

Problems Faced Product proliferation problems with defective seats. Companys deviation from its normal production plan and lack of

a recovery system. Run ratio dropped from 95% to 85%. This means 45 less cars were being produced per shift. This translated in overtime of workers. Too many cars needed off-line operations of one type or the

another before they could go on shipping.

Questions Raised Will the sales company get cars on time as promised? What does it mean to implement JIT and Jidoka

principles to this situation? Is TMM handling seat defects correctly on the line? Is the current routine for handling seat-defect cars

really a legitimate exception to TPS, or could it be a dangerous deviation from TPS? Is there a way to kaizen TMMs off-line routine?

Analysis

The Problem

y Rise in number of Camry s with defective seats,

leading to a reduced run ratio at the TMM Georgetown Plant.

y On April 27th the run ratio was down from 95% to a

damaging 85%.y Decrease in per-shift production is close to 50 cars. y Producing the missing cars via overtime capacity

will cost TMM in excess of $16,000 per shift.y This translates to around $8.4 Million per year

considering two shifts and a 5-day workweek.

Stations Employees Wage/Hour Overtime Cycle Time Shift Length 'Productive' Minutes Run Ratio 100% 95% 85% 'Lost' Cars Per Shift (95% to 85%) Cost per Hour of Production Overtime Time Required to Produce Add'l Cars Cost to Produce Additional Cars

353 769 $ 17.00 $ 25.50 1.05 Cars/Min 525 Minutes 450 473 449 402 47 $ 19,610 50 Minutes $ 16,215

The Reasony Product proliferation y From 3 styles x 4 colors, to 36 different seat styles.y Seats need to match each particular car, therefore stock

parts cannot be used.

y Sequential pull with a 57 sec line cycle time means

response time for KFS to come up with the next seat is minimal

y Greater variety of styles and heijunka concept means more

frequent changes in seat line setup

y Suppliers operate under JIT

The Root Causey TMM did not internalize the TPS philosophy. It only

emulated the systems from Toyota, Japan.

y KFS balanced capacity to meet TMM Production. It

did not have the TPS implementation to respond to the product proliferation. not the underlying philosophy.

y It only learnt system from the Japanese seat suppliers,

y Not allowing the seat problem to be solved in real time

but just tagging it for storage in the rework area is a gross violation of the jidoka concept.

The Snowballing Mistakesy Thinking that it is too expensive to stop the line. Andon pulls

don t stop the line at once. 353 workstations would slow down to a halt depending upon time taken for rectification.

y Illegible re-order form instead of a proper kanban system might

be leading to slower turnaround from KFS

y Additional time pressure on KFS would further interrupt their

production line, deteriorating quality further

y KFS is blamed for the seat defects without going for the Five

Whys to determine the root cause of the problem

y KFS being treated as a supplier as opposed to the partnership

model JIT actually professes

Suggestions Given that 88% of seat defects is from KFS, TMM needs to participate in KFS s QC Process, perhaps by placing its own personnel Defective items need to be fixed on assembly line and not postponed Design review needs to be done to see if so many different seat styles are actually necessary Heijunka system may be avoided given the wide variety. This would ensure that a replacement is at hand within 1 minute A drum-buffer-rope model of intimating KFS of replacement stock as soon as it is discovered needs to be installed. A contingency kanban may be designed.

Suggestions (Contd.)Seat spec recvd at KFS Seat setup as per spec on KFS Assy Line Seat inspected by TMM QC person at KFS Seat despatched to TMM Seat recvd at TMM (different dock for replacement)

If seat needs replacement, a kanban sent to KFS

If seat found defective, andon cord pulled

Seat checked for defect during installation

Seat installed in the car

Seat carried above TMM Assy Line

Car continues with other processes

Seat is rechecked.

Seat replaced if replacement is indicated

Car Assy completed

Finished car rolls out of Assy line

Legend

Normal flow

Flow for replacement seats

ImplementationTMM should immediately implement the following measures:y Assign an employee to manage seat correction and replacement

and implement a one-shift requirement. problems.

y Designated area should be available for the vehicles with the seat

y Problems should be resolved by notifying the suppliers of

defective seats.

y Actions should be introduced to revise current procedures in

response to problems.

Recommendationsy TMM should consider the following long-term solutions:y Close relationship should be maintained between KFS,

TMM and TMC to over come barriers.y TPS integration will benefit the Toyotas supplier network. y TMM should recommend a reduction in the variety of

seats with TMC.

Risks and Contingencies TMC might not feel that the variety of seats could be

reduced. KFS might not be able to react to the increased

demand KFS could refuse to adopt TMM and TPS procedures