A Case Study ON Toyota Production System

A
CASE STUDY
ON
TOYOTA PRODUCTION
SYSTEM
• Company History: Toyota Motor Corporation was Japan’s
largest car company and the world’s third largest by the
year 2000. The company was producing almost five million
units annually in the late 1990s and controlled 9.8 percent
of the global market for automobiles. Although its profits
declined substantially during the global economic
downturn of the early 1990s, Toyota responded by cutting
costs and moving production to overseas markets. The
company represented one of the true success stories in the
history of manufacturing, its growth and success reflective
of Japan’s astonishing resurgence following World War II.
History of Toyota
• 1867 Sakichi Toyoda born
• 1890 Sakichi Toyoda invented the wooden Toyoda handloom.
• 1929 Kichiro toyoda traveled to Europe and U.S to invesigate

automobile
• 1930 Kiichiro Toyoda started research into gasoline-powered engine
• 1933 Automobile Department established in Toyoda Automatic Loom

Works,Ltd
• 1935 Hinode Motors (currently Aichi Toyota) started
operations
• 1936 Toyota's logo established.
• ‘’37 Toyota Motor Co., Ltd. established.
• ‘’38 Koromo Plant (currently Honsha Plant) started

operations.
"Just-in-time" system launched on a full-scale
basis.
Taiichi Ohno
• Taiichi Ohno was born in Manchuria, China in 1912 and
graduated from Nagoya Institute of Technology. He joined
Toyota in 1932 and for about twenty years worked his way up in
the firm.
• In the 1940's and early 1950's, Ohno was the assembly manager
for Toyota and developed many improvements that eventually
became the Toyota Production System. Toyota was verging on
bankruptcy during much of this period and could not afford
major investments in new equipment or massive inventories.
• The 1950's also saw the beginning of a long collaboration
with Shigeo Shingo and the refinement of their earlier
efforts into an integrated Manufacturing Strategy.
• Ohno's career accelerated as a result of his success as
Assembly Shop Manager and he became an executive
Vice President in 1975.
• In the early 1980's, Ohno retired from Toyota and was
president of Toyota Gosei, a Toyota subsidiary and
supplier.
• Taiicho Ohno died in Toyota City in 1990.
Toyota Production System
• The production system developed by Toyota
Motor Corporation to provide best quality,
lowest cost, and shortest lead time through the
elimination of waste.
• TPS is comprised of two pillars, Just-in-Time and
jidoka, and is often illustrated with the "house"
shown below. TPS is maintained and improved
through iterations of standardized work and
kaizen, following PDCA, or the scientific method.
• Beginning in machining operation and spreading from there, Ohno led the
development of TPS at Toyota throughout the 1950's and 1960's and the
dissemination to the supply base through the 1960's and 1970's.
• Outside Japan, dissemination began in ernest with the creation of the Toyota-
General Motors joint venture - NUMMI - in California in 1984.
• The concepts of Just-in-Time (JIT) and jidoka both have their roots in the pre-
war period. Sakichi Toyoda, founder of the Toyota group of companies,
invented the concept of Jidoka in the early 20th Century by incorporating a
device on his automatic looms that would stop the loom from operation
whenever a thread broke.
• This enabled great improvements in quality and freed people up to do more
value creating work than simply monitoring machines for quality. Eventually,
this simple concept found its way into every machine, every production line,
and every Toyota operation.
• Kiichiro Toyoda, son of Sakichi and founder of the Toyota automobile business,
developed the concept of Just-in-Time in the 1930's. He decreed that Toyota
operations would contain no excess inventory and that Toyota would strive to
work in partnership with suppliers to level production.
• Under Ohno's leadership, JIT developed into a unique system of material and
information flows to control overproduction.
• Widespread recognition of TPS as the model production system grew rapidly
with the publication in 1990 of "The machine that changed the world", the result
of five years of research led by the Massachusetts Institute of Technology.
• The MIT researchers found that TPA was so much more effective and efficient
than traditional, mass production that it represented a completely new paradigm
and coined the term "Lean Production" to indicate this radically different
approach to production.

Taiichi Ohno and the Toyota Production System
• At the end of the Second World War, the people of Japan were in terrible
trouble, their morale, productive capacity, and international relations
demolished. An engineer named Taiichi Ohno, in the enterprise today known
as Toyota, began the task of building a new capacity for Japanese production
on top of Henry Ford’s designs, with some important additions. For example,
Ford incorporated everything into one plant; Ohno designed for operation in
a network. The operational heart of Ford’s designs was the way the
engineers designed the coordination of the work on the assembly line (the
employees found the repetition boring and only stayed because of what
Ford called the ‘wage motive.’) Ohno centered his design in processes that
built the capacity of each person on the production floor to take
responsibility for the quality and coordination of their work. His invention
became the foundation of the quality movement that swept the world
starting in the 1970s and 80s.
Seven Wastes
For several years beginning after the Second World War, Taichi Ohno
and Eiji Toyoda studied and eventually developed a deep
understanding of the wastes that occur on a shop floor. After years
of effort, seven categories were identified:
• Labor
• Overproduction
• Space
• Defects
• Unnecessary human motion
• Inventory
• Transportation
JIT
• Just in Time, or JIT is a set of techniques to improve
the return on investment of a business by reducing
in-process inventory, and its associated costs. The
process is driven by a series of signals, or Kanban
that tell production processes to make the next part.
Kanban are usually simple visual signals such as the
presence or absence of a part on a shelf.
• JIT causes dramatic improvements in a
manufacturing organization's return on investment,
quality, and efficiency.
• The technique was first adopted and publicized by Toyota
Motor Corporation of Japan as part of its Toyota
Production System (TPS).
• Japanese corporations cannot afford large amounts of land
to warehouse finished products and parts. Before the
1950s this was thought to be a disadvantage because it
reduced the economic lot size. An economic lot size is the
number of identical products that should be produced,
given the cost of changing the production process over to
another product. The undesirable result would be a poor
return on investment for a factory.
Kaizen in TPS
• The famous TPS cannot be reduced to its

organizational techniques of production such as
“just-in-time” and “Jidôka” (making machine tools
and production lines autonomous, that is, they
stop automatically when an anomaly occurs). Its
essence resides in the method of keeping up and
reducing production costs as well as improving
product quality. This method is called “kaizen”.
The Nature of Traditional Kaizen Activities
• The TPS can be understood as a set of systematized ways to reduce the

cost per vehicle. These cost reduction activities start from the product
design stage. After that, the management sets a reference cost of each
of the parts and a standard time for their production. Then the shop
floor that produces these parts and vehicles firstly endeavors to attain
these costs and standard time, and then reduces them by carrying on
kaizen activities. It is the group leaders, chief leaders and engineers
whose responsibility it is to execute these activities. These activities
and the kaizen gains are supervised and controlled by management.
Thus we call these kaizen activities “organized kaizen activities”.
Effects
• Some surprising things occurred. A huge
amount of cash appeared, apparently from
nowhere, as in-process inventory was built out
and sold. This by itself generated tremendous
enthusiasm in upper management.
• Another surprising effect was that the
response time of the factory fell to about a
day. This improved customer satisfaction by
providing vehicles musually within a day or
two of the minimum economic shipping delay.
Some Key Elements of JIT
• 1. Stabilize and level the MPS with uniform

plant loading
• 2. Reduce or eliminate setup times
• 3. Reduce lot sizes (manufacturing and
purchase
• 4. Reduce lead times (production and
delivery)
• 5. Preventive maintenance
• 6. Flexible work force
• 7. Require supplier quality assurance and
implement a zero defects quality program
• 8. Small‑lot (single unit) conveyance
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A

• 1890 Sakichi Toyoda invented the wooden Toyoda handloom.

• 1929 Kichiro toyoda traveled to Europe and U.S to invesigate

• 1930 Kiichiro Toyoda started research into gasoline-powered engine

• 1933 Automobile Department established in Toyoda Automatic Loom

• 1936 Toyota's logo established.

• ‘’37 Toyota Motor Co., Ltd. established.

• ‘’38 Koromo Plant (currently Honsha Plant) started

• The famous TPS cannot be reduced to its

• The TPS can be understood as a set of systematized ways to reduce the

• 1. Stabilize and level the MPS with uniform

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