2009

The Journey of Toyota Product

Quality & Productivity

By Sulaiman D Al Rasheed # 200702650

King Fahd University of
Petroleum and Minerals
Dr. Abdulaziz Bubshait
6/1/2009
Contents

Abstract………………………………………………………………………………………Page 03

History (Success from a single thread.)……………………………………Page 03

Toyota Principles………………………………………………………………..……..Page 04

Toyota TPS………………………………………………………………………………….Page 05

The connection between TQM and learning Organization………. Page 06

Another new Toyota's continuous improvement action..……….…Page09

Toyota is used to the enhance medical……..…………………………….Page 11

Toyota Downtime……………………………………………………………………….Page 11

Toyota Stolen taken by competitors ……………………….……………… Page 11

Conclusion…………………………………………………………………………………Page 13

References………………………………………………………………………………..Page 13

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Abstract

In this article we look at the giant car manufacturer Toyota and

view its development to become one of the best car manufacturers
if not the best. The company has gain a reputation of producing the
top quality cars in addition it is known of inventing one of the
famous productivity systems called just in time. Also, we will show
the principles established behind its Total Production System TPS and
how it responded to its quality problems.

History (Success from a single thread.)

It was a single thread that gave a man a dream, created a little history
and a family with resourcefulness in its genes.

Sakichi Toyoda wasn't all that interested in fast-moving machinery -- just

machines in motion. It's how the Toyota Production System began. Today
it's evident on every production line at Toyota and at other companies
that use the system. And it's how Toyota Motor Co. is what it is, even if
the wheel of progress didn't begin as a wheel.

This family empire was born of thread, not tread as Toyoda was more
interested in perfecting the loom, a machine used to weave textiles. It
was an unusual start for what would become an automotive giant. But,
then, Toyoda always seemed to plant grandiose plans that flowered into
unlikely prosperity.

By age 23 he made his first invention, the wooden hand loom. Less than a
decade later, he created the automatic loom and founded the Toyoda
Group. The invention automatically stopped if any of the threads snapped,
opening the way for automated loomworks where a single operator could
handle dozens of pieces at a time.

In 1929, when the British textile machinery maker Platt Bros. paid Toyoda
$150,000 -- a fortune at the time -- for the rights to his latest loom, he
earmarked the money for a venture that would make automobiles. Ford
and General Motors Corp. were already building cars in Japan. Toyoda
challenged his eldest son, Kiichiro, to "build a Japanese car with Japanese
hands."

Toyoda didn't live to see it happen. He died on the day before Halloween
in 1930 at age 63. But it did happen.

Soon after, Kiichiro set up the automotive department at Toyoda

Automatic Loom Works and within a year had built the first engine ... a
genuine copy of a Chevrolet.

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Kiichiro also took his father's idea of efficiency in production and turn it
into a system of "lean" manufacturing. If parts could be delivered to the
assembly line just in time to be installed, the company could save money.
Tools were grouped according to necessity and flow of production. He then
had suppliers jump on board with the just-in-time system.

By 1950, With Sakichi's nephew, Eiji, involved in the company, Toyota

realized exporting to the United States was the way to go, filling large-
volume orders with another innovative form of production. The kanban
system would call for the ordering of parts and supplies as they were used
and correcting defects when they were discovered. Every Toyota worker
had the power to stop the production line if a defect was found.

It was the same principle that revolved around the family loom. It would
have made Sakichi proud. And so would the Crown, the first full-scale
production model to roll out of the Toyota factory in 1955.

Eiji based his system on the American supermarket, something he viewed

as the ultimate in buyer-supplier relations.

Eiji had gone to the United States to see car plants, but he found the most
ingenuity in the grocery stores, marveling at the self-service and reliance
each section had on the next. Still, success wouldn't come easy. By the
1950s, when Eiji Toyoda went to Detroit, the Japanese company was
making 40 cars a day, one-200th of what Ford was doing. But Toyota
would find its niche in smaller cars such as the 1966 Corolla and the
Corona before that.

Today, Toyota makes cars all over the world. What's more, the way the
company makes cars still reflects Sakichi's ethic. It is the standard, the
blueprint for the auto industry. It is the most efficient car maker in the
world. In fact and from a personal experience, one of the European part
supplier to Japanese firms in general and Toyota specifically indicated to
me that before dispatching any parts to them , they will ensure that it
fully meet the set standard. As they are the most strict client.

Toyota Principles

To be successful Toyota management and laborer had to embraces and

totally believe in fourteen principles. These principles directed their
productivity and quality production. The more I have studied TPS and the
Toyota Way, the more I understand that it is a system designed to
provide the tools for people to continually improve their work. The Toyota
Way means more dependence on people, not less. It is a culture, even
more than a set of efficiency and improvement techniques. You depend
upon the workers to reduce inventory, identify hidden problems, and fix
them. The workers have a sense of urgency, purpose, and teamwork
because if they don’t fix it there will be an inventory outage.

Section I: Long-Term Philosophy

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Principle 1. Base your management decisions on a long-term philosophy,
even at the expense of short-term financial goals.

Section II: The Right Process Will Produce the Right Results

Principle 2. Create a continuous process flow to bring problems to the

surface.

Principle 3. Use “pull” systems to avoid overproduction.

Principle 4. Level out the workload (heijunka). (Work like the tortoise, not
the hare.)

Principle 5. Build a culture of stopping to fix problems, to get quality right

the first time.

Principle 6. Standardized tasks and processes are the foundation for

continuous improvement and employee empowerment.
Principle 7. Use visual control so no problems are hidden.

Principle 8. Use only reliable, thoroughly tested technology that serves

your people and processes.

Section III: Add Value to the Organization by Developing Your People

Principle 9. Grow leaders who thoroughly understand the work, live the
philosophy, and teach it to others.

Principle 10. Develop exceptional people and teams who follow your
company’s philosophy.

Principle 11. Respect your extended network of partners and suppliers by

challenging them and helping them improve.

Section IV: Continuously Solving Root Problems Drives Organizational

Learning

Principle 12. Go and see for yourself to thoroughly understand the

situation (genchi genbutsu).

Principle 13. Make decisions slowly by consensus, thoroughly considering

all options; implement decisions rapidly (nemawashi).

Principle 14. Become a learning organization through relentless reflection

(hansei) and continuous improvement (kaizen).

Toyota TPS

Toyota has long been recognized for its manufacturing excellence, it is the
Toyota product and process development performance that drives the
amazing bottom line success of the company. (and, I offer,
eliminates/minimizes the work life issues described above). Many people

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understand that the shop floor success of the Toyota Production System
(TPS) is greatly enabled by the product and process designs which
originate in the development labs and teams. Some results which the
development teams have delivered are:

1. Rarely/never slipping a product launch date

2. Use of about 1/3 less technical resources to deliver new products to the
shop floor

3. Launching new product lines (eg. Lexus) with quality as good or better
than existing high quality and highly reliable products

Toyota development principles are anchored in keys to the TPS shop floor
success including:

1. Incremental and flexible capacity

2. Build quality and personal accountability into the design

3. Maintain flow of material and information

4. Use of standard work

The connection between TQM and learning Organization

The connection between TQM and the learning organization is evident in

two ways. First, there is a cause and effect relationship, i.e. learning is an
intended outcome of TQM. Second, there is a correlation between two
powerful systems – process improvement and organizational learning,
which are operating in a concurrent and integrated manner.

It is suggested that, to become a learning organization, companies need

to be skilled at the following five activities:

 Systematic problem solving: Relates to the philosophy and methods

of the quality movement, relying on scientific method rather than
guesswork; uses actual data rather than assumptions and simple
statistical tools.
 Experimentation with new approaches: Systematic searching for
and testing new knowledge; motivated by opportunity and new
perspectives and not by current difficulties.
 Learning from their experiences and past history : A review of
successes and failures; reflecting and self-analysis.
 Learning from experiences and best practices of others:
Benchmarking; looking outside the immediate environment;
openness to the outside world; environmental scanning.
 Transferring knowledge quickly and efficiently throughout the
organization: Knowledge transferred quickly and efficiently

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 throughout the organization; mechanisms in place to facilitate the
process; written and oral reports; site visits; tours; rotation
programmers; education and training programmes.

To determine the link between TQM and learning organizations we

examine three organizations which we regard as having successfully
adopted the TQM philosophy. The three organizations are Toyota Motor
Corporation Australia, Ramset Fasteners Limited and W.A. Deutscher
Metal Products Group – all located in Melbourne, Australia. Full details of
the implementation of TQM in the three companies have been described
elsewhere.

The link between TQM and learning organizations

Below we analyse the TQM initiatives of the three companies by using

Garvin’s five building blocks of learning organizations. What this analysis
has shown is a clear link between TQM and organizational learning.

Systematic problem solving

Deutscher has introduced mechanisms to collect data on which decision

making and problem solving can be based. These include – the
introduction of various quality oriented programmes; quality history
sheets; the installation of automatic load monitors to track quality
variations; the tracking of control limits at the cold forge process and a
customer feedback study to determine which of their products were in
demand and why.

Competitive advantage at Ramset Fasteners is clearly focused around

product quality. To this end the company has introduced many initiatives,
which include: the checking of first runs against specifications; check
sheets for measuring rejection rates; logistics analysis and, in an attempt
to eliminate guesswork, it has taken a more scientific approach to
warehousing and distribution.

At TMCA an internal product audit checks 100 motor vehicles per month
for a number of deviations against set targets. Extensive survey activity
has been a vital measure of customer feedback. This data has given
Toyota a much better understanding of the direction in which it should
move to improve its manufacturing competitiveness. Data is also collected
from customer profiles, dealer reports and customer assistance centres.

Experimentation with new approaches

Deutscher needed to address some major strategic issues and

improvements had to be made in quality, customer orientation and
production processes. In an attempt to achieve these improvements, the

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company streamlined its organizational structure and management
reporting relationships, and adopted a number of innovative
manufacturing methods and techniques.

The introduction of TQM at Ramset saw the following initiatives: improved

communication; “bright ideas scheme” to facilitate workers’ ideas and the
installation of a computer system to replace the physical control of
inventory and process control.

At TMCA the Toyota Production System (TPS) was introduced to integrate

plant facilities, materials and labour, which led to the basis for the
achievement of TQM.

Learning from their own experiences and past history

New management reporting procedures at Deutscher enabled effective

review and implementation of corporate strategies. The main benefits of
teamwork and two-way communication were clarity of purpose, clear
accountability and effective measurement of past performance, which in
turn enabled rapid response to changes in internal and external
conditions.

The concentration of the TQM programme in one specific section of the

operation gave Ramset the opportunity to learn from this experience. The
formation of project teams and regular training sessions facilitated a
continuous review of the TQM process.

At Toyota, team leaders meet on a daily basis to discuss company

progress, policy implementation and target achievement. On a weekly
basis this information is then shared and discussed with co-workers at
formal team briefings.

Learning from experiences and the best practices of others

Regular trips to Japan have given Deutscher’s general managers and

manufacturing managers a working example of TQM and encouraged their
own study of the philosophy. Deutscher also learn from others by
continually testing competitors’ products and by focusing on specific
problem areas, they have developed a link between how their business
operates and their external environment.

In order to learn about contractual aspects of purchase, product use and

after-sales service experiences of their customers, Ramset’s branch,
regional and administrative managers, together with sales
representatives, meet regularly with major customers.

To meet the requirements of export customers, Toyota’s Australian plants

must be able to match Japanese quality. This involves benchmarking
against Toyota plants worldwide. The feedback from this benchmarking is
used towards the more effective utilization of resources and the
achievement of an improved Australian ranking.

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Transferring knowledge throughout the organization

The main indicators that appear to facilitate the effective transfer of

knowledge throughout Deutscher are: the organizational climate, which
emphasizes teamwork, two-way communication and shared vision;
regular team briefings; monthly management meetings; use of cross-
functional teams; product demonstrations; new product launches; a TQM
induction programme and company-wide awareness programme.

The catalyst for effective knowledge transfer at Ramset appears to be the

streamlined organizational structure. This restructuring has led to
improved communication, especially between the research and
development and marketing departments. Intensive training programmes
and the introduction of the “bright ideas” scheme have also added to the
knowledge flow.

At Toyota specific training modules have been designed to give employees

specific knowledge to guide them through the different levels of the
production process. Other ways of improving the transfer of knowledge
are: the use of regular team meetings, quality circles, technical work
manuals and employee suggestion schemes.

Another new Toyota's continuous improvement actions

At its Princeton plant, by contrast, Toyota is using the down time to hone
its workers' quality-control and productivity skills. The company has
pledged never to lay off any of its full-time employees, who are nonunion.

Jim Lentz, president of Toyota Motor Sales, the company's U.S. sales unit,
said the company believes keeping employees on the payroll and using
the time to improve their capabilities is the best move in the long run. "It
would have been crazy for us to lose people for 90 days and [then] to
rehire and retrain people and hope that we have a smooth ramp-up
coming back in," Mr. Lentz said. In Princeton, senior plant manager Norm
Bafunno said he can already see the benefits of the training. Mr. Bafunno
cites a Teflon ring designed by an assembly worker during the down time
that helps prevent paint damage when employees install an electrical
switch on the edge of a vehicle's door.

In the past, the drill used to install the switch could slip and damage the
paint, affecting two or three vehicles each shift. These vehicles would fail
quality inspection and have to go through another process to buff the
scratches, hurting the plant's overall efficiency numbers.

Coming up with tweaks like this is known at Japanese companies as

kaizen, meaning continuous improvement. This is what management
hopes to extract from the months of down-time training: better quality
and productivity when production resumes.

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Throughout the factory, workers sit in classrooms, repaint hazard areas
bright yellow, lift weights, complete dexterity drills and get steeped in
Toyota's corporate philosophy.

Near one idle line, assembly worker Bob Mason sat with four others
employees around a table looking at a flip chart with PowerPoint printouts
on it. The employees went through a problem-solving module based on a
technique in Toyota's production system.

Toyota is used to enhance the medical System

Toyota manufacturing methods is used mainly to produce the best cars,

however; day after day people find it to be feasible to enhance their
process. A good example is the application of Toyota system medical
quality and productivity. Up until five months ago, Ted Gachowski's
weekly chemotherapy appointment was one long, tedious slog through the
Virginia Mason Medical Center.

Today, chemotherapy at Virginia Mason is a much shorter trip: The

distance from lab to exam room to treatment is less than 12 feet. Once
Gachowski is hooked up to his IV, he never has to leave the cheery
private room -- flat-screen television, computer, nursing supplies and
bathroom are all right there. And his physician, Henry O. Otero, is so
close, "I can almost shout to get him," said Gachowski, seated in a
reclining chair as the drug dripped into his arm.

The inspiration for Virginia Mason's newfound approach to cancer care

came from a most unlikely source: the assembly line at Toyota Motor
Corp. Like the Japanese automaker's plants, the glistening new cancer
center here was designed around themes of high quality, super-efficiency
and putting the customer first. Errors are embraced as learning
opportunities, and every one of Virginia Mason's 5,000 employees is
encouraged to offer ideas. According to hospital executives and some
industry analysts, the management principles that made Toyota the
world's most successful car company could have similar results at Virginia
Mason.

Another example related to medical is to determine whether the Toyota

production system process improves Papanicolaou test quality and patient
safety. This was an 8-month nonconcurrent cohort study that included
464 case and 639 control women who had a Papanicolaou test was
performed. The Office workflow was then redesigned using Toyota
production system methods by introducing a 1-by-1 continuous flow
process. The frequency of Papanicolaou tests was measured without a
transformation zone component, followup and Bethesda System diagnostic
frequency of atypical squamous cells of undetermined significance, and
diagnostic error frequency.

The Results after the intervention showed that the percentage of

Papanicolaou tests lacking a transformationzone component decreased
from 9.9% to 4.7% (P =.001). The percentage of Papanicolaou tests with

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a diagnosis of atypical squamous cells of undetermined significance
decreased from 7.8% to 3.9% (P =.007). The frequency of error per
correlating cytologic-histologic specimen pair decreased from 9.52% to
7.84%. This means that the introduction of the Toyota production system
process resulted in improved Papanicolaou test quality.

Manufacturing giants such as General Motors Corp. and Dell Computer

Corp. began stealing Toyota's model decades ago, but hospitals took
much longer. Today, about a dozen are experimenting with elements of
the approach, but "nobody has been bolder in what they are trying to do
than Virginia Mason," said Premera Blue Cross president and chief
executive H.R. Brereton "Gubby" Barlow, who is watching the effort as
both an insurance executive and a patient.

In adopting the Toyota mind-set, Kaplan said, the 350-bed hospital has
saved $6 million in planned capital investment, freed 13,000 square feet
of space, cut inventory costs by $360,000, reduced staff walking by 34
miles a day, shortened bill-collection times, slashed infection rates, spun
off a new business and, perhaps most important, improved patient
satisfaction.

Toyota Downtime

After nearly doubling its revenue in the past decade and redefining
competition in key parts of the auto business, Toyota suddenly finds itself
confronting mushrooming quality problems. Torrid growth has spread thin
the company's famed Japanese quality gurus. This means that, in places
like Toyota's Georgetown, Ky., plant, the pressure is on to retrain
American workers to take up more of the slack. At the same time, Toyota
has launched a world-wide campaign to simplify its production systems

To stop the quality slide, Mr. Cho says Toyota has launched multiple
"special task forces" at trouble spots in places such as North America and
China to overhaul shop-floor management. Toyota also has established a
Global Production Center in Toyota City to train midlevel factory managers
so they can more effectively run plants outside Japan. Toyota now is re-
evaluating some of its most fundamental operating strategies.

Toyota Resources stolen by competitors firms

In the late 1980’s Chihiro Nakao left Toyota after nearly 25 years of
learning from Taiichi Ohno, the father of TPS, and his disciples. As he
worked with numerous international companies he soon learned that he
was challenged to explain and implement the use of Toyota development
principles into organizations which did not have the decades-long TPS

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understanding and/or culture. Thus, he developed and taught the
Production Preparation Process (3P) to greatly facilitate the use of
Toyota development principles and standard development work by his
worldwide customer teams.
Overall 3P consists of all the Processes that take place in Preparation for
the smooth start-up of Production. Typical smooth start-up goals from
3P use are:

1. Greatly improved quality and productivity

2. Reduced capital and operating cost

3. Zero rejects and rework

4. Suppliers building and supplying parts within takt time

5. Meeting Health, Safety, Environmental and Ergonomic goals

6. Significant competitive advantage

Use of 3P for over 15 years by Nakao and his master teachers have
brought many refinements and application learnings such as when to best
apply 3P. Some of those times are:

1. When a technological breakthrough is needed

2. When off the shelf equipment provides no competitive advantage

3. When continuous improvements generated by shop floor application of

TPS are inadequate to meet business objectives

4. To assure quality is built into product and process designs

The 3P process itself consists of a series of steps which are thoroughly

executed by a carefully selected, multi-discipline, dedicated team
with the full support and active participation by senior leadership
sponsors. A number of the steps call for team and individual activities
which are often considered “unusual” of development team personal.
These steps can be characterized as helping to uncover alternative
creative approaches/designs which are carried forward in parallel paths.
The alternatives are quickly tried and improved in inexpensive mock-ups
and/or simulations – sometimes called “moon shining”. Key TPS principles
such as one-piece/u-shaped material flow, pull systems, mistake-proof,
auto-eject, people/process flexibility, standard work, etc. are continually
used by the teams to generate total performance results beyond those of
conventionally designed processes. Persons experienced in the use of TPS
product and/or line design principles and methodologies constructively
guide and challenge the teams to break old paradigms and deliver bottom
line results through a “smooth start-up”.
While it is well understood that it may take decades of constancy of
purpose and use of lean principles to transform a company built on more

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traditional foundations, the application of 3P will greatly accelerate the
rate of change.

Conclusion

It is with no doubt the impact Toyota continuously making in the industry

and its continuous effort to stay on the top has made it difficult for many
others to compete with them. I'm sure any downtime in Toyota quality or
productivity will never last and will be taken care of before we know it.
Thus, using Toyota as a benchmark will definitely result in a success.

References:

1. Toyota empire was built on thread, not tread By JASON STEIN

WHEELBASE COMMUNICATIONS
2. Toyota Assembly Line Inspires Improvements at Hospital By Ceci Connolly
Washington Post Staff Writer Friday, June 3, 2005
3. Is there a link between total quality management and learning
organizations? By: Amrik Sohal, Teach at the Faculty of Business
and Economics, Monash University, Melbourne, Australia. Michael
Morrison, Teach at the Faculty of Business and Economic, Monash
University, Melbourne
4. The 14 Principles of the Toyota Way: An Executive Summary of the
Culture Behind TPS
5. As Toyota closes in on GM quality concerns also grows By
NORIHIKO SHIROUZU and SEBASTIAN MOFFETT Staff Reporters of
THE WALL STREET JOURNAL August 4, 2004
6. Toyota Keeps Idled Workers Busy Honing Their Skills By KATE LINEBAUGH
: The wall Street Journal OCTOBER 13, 2008,
7. How Toyota Designs Quality Processes & Products and the
Production Preparation Process (3P) April 2008 Article by John
Althouse -- Lean Leadership and Application Consultant
8. Improving Papanicolaou test quality and reducing medical errors by using
Toyota production system methods by Stephen S. Raab, MD,a,* Carey
Andrew-JaJa, MD,b Jennifer L. Condel, BS,SCT(ASCP)MT,a David J. Dabbs,
MDa Departments of Pathologya and Obstetrics and Gynecology,b
University of Pittsburgh School of Medicine, University of Pittsburgh
Medical Center, Pittsburgh, PAReceived for publication March 10, 2005;
revised May 17, 2005; accepted June 14, 2005

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