TOYOTA MOTOR

MANUFACTURING, U.S.A., INC.

CASE ANALYSIS

PRESENTED BY:
Akash Lohi (181304)
Atul Beniwal (181313)
Devdatt Kulkarni (181316)
Mohit Pathak (181334)
Sunny Harsoda (171356)
 CASE FACTS
Toyota Motors Manufacturing (TMM) were facing problems of seat supply due to large number of
models, more and more cars were sitting with damaged or with no seats at all

Kentucky Framed Seat (KFS) was the only supplier which was working on the Sequential pull system

The seats were most expensive purchased part: costing $740

Run ratio decreased from 95% to 85% leading to a shortfall of 45 cars per shift

Increasing off-line vehicle inventory

Shortfall led to overtime of workers

 OVERVIEW
1980: Japan was facing trade imbalance and political pressure, and Japanese
automakers were considering moving some products to North America

Challenges: Maintaining a high quality reputation at a low cost

1985: Toyota Motor Corporation (TMC) planed to open a $800M factory in

Kentucky

1988: Toyota Motor Manufacturing Company (TMM) begins production in

1300acre site at Georgetown near Lexington
 TMM PLANT DETAILS
Annual capacity : 200,000 Toyota Camry sedans

Competitive Advantage: Replacing the Japanese imports of this model also took over 1/3rd of total American

car market.

Expected supply: In 1992 supply was expected to be of 240,000 sedans due to Sales increase by 20% in

1991

Return: pretax profit was 17% on average sticker price of $18,500

Production of wagon versions started in March, 1992.

 TOYOTA PRODUCTION SYSTEM
Reasons for evolution of TPS:

Customized production depending on consumer preferences

Delivering at affordable price

Considering timely delivery

Cost cutting to compensate for low labor productivity

Cost cutting was done by waste elimination such as overproduction which led to
higher inventory levels and blocked storage space
2 principle: JIT and jidoka
1. Just-in-time: Producing only what was needed, how much was needed and only
when it was needed. Here, any deviation from production needs was
considered as a waste

Use of JIT: Keeping flow of information very close to the physical flow of parts.
Parts were pulled based on actual usage and not a pre-planned schedule

2. Jidoka: Making production problems self-evident and stop producing whenever

problems were detected. It considered any deviation from value addition as a
waste

Use of Jidoka: To aid problem detection and facilitate visual control

3. Human infrastructure: TPS required people capable of solving problems

promptly and systematically. For this there were initiatives like senior

management coaching an internal training programs

4. Finding the root cause of problem using “Five Whys” exercise.

5. Kaizen: Change for the better

GEORGETOWN CASE
Developing Human infrastructure was TMC’s foremost priority in transplanting TPS to
Georgetown
Begins Hiring and Training programme
TMC sent Tsutsumi people to Georgetown
In early 1992, Georgetown’s huge complex employed over 4000 people,
representing $150 million in annual payroll
In plant’s backyard, construction was underway to double TMM’s capacity
OPERATIONS
Assembly

Performed along 353 stations on a conveyor, over 5 miles in length and consisting of
several connected line segments: trim lines, chassis lines and final assembly line
Line currently operated on a line cycle time of 57 seconds, down from 60 at the startup
Every station on assembly line embodied jidoka and kaizen tools
Standardized work chart was posted adjacent to each work station on the line, showing
the cycle time of that station, the sequence of work tasks and the timing to perform them
within one cycle
Production Control

The mission of production control department was to feed necessary parts into TMM
operations so that the right number of cars in the right mix could be delivered to the sales
company just in time
The planning process reflected JIT principles in two major ways. First, the practice of
heijunka called for evening out (balancing) the total order in the daily production sequence
The second JIT principle was reflected in the use of Kanban cards. The PC department
monitored the circulation of kanbans closely both to determine the appropriate Kanban
range and to feed information back to parts ordering for even better inventory control
Quality Control

Mandatory routine of checking tough quality standards, inspections

Assembly group members solve quality problems with help of QC engineers and supplier
24 patrol inspectors to observe problematic items
Unique services by QC department:
1)Providing instant feedback to direct operations
2)preventing problems from occurring

Purchasing
Main task is managing the cost
Estimating the supplier’s manufacturing cost and help them improve
SEAT : MANUFACTURING AND INSTALLATION
A Camry Seat-Specifications that must be considered:
To final assembly: Bulkiest of all installed part and prone to damage
To QC: Safety item to stand for car crash performance
To Customer: Sensory item because of the feel
To Purchasing: most expensive part
Manufacturing and Installation:
Kentucky Framed Seat (KFS): The only supplier of seat for TMM
Operated on System Sequential Pull
Every 57 seconds exact match of the seat with the car is popped up on final assembly line
SEAT : MANUFACTURING AND INSTALLATION
System Sequential Pull:
The atomization is achieved with transmitter sending information from paint line, to both TMM
and KFS
Real time information of exact sequence of cars in first of assembly line, final entire assembly
sequence for TMM and KFS is achieved
KFS Working Line:
All matching pieces are merged at the end of KFS lines and strapped together
100% inspection is done
58 seats= sets arrive at TMM in half hour from KFS factory
Unloaded at receiving dock and hoisted on overhead conveyer as required in sequence
SEAT : MANUFACTURING AND INSTALLATION
Installation Process
Final 1: Rear seat loading work station
A team member unstraps seat set and places all rear seat pieces
Final 2: Rear seat pieces are bolted
Front Seats : Assembled few work stations downstream the final assembly line
THE SUPPLIER
TMM’S sole seat supplier was KFS( Kentucky Framed Seat).
They were the rare exception to Toyota’s multi vendor policy.
Relationship with KFS meant a departure from the traditional industry practice whereby
automakers assembled seats themselves from purchased components like foam ,metal frames,
fabric covers, etc.
KFS’s ability to keep up with sequential pull system was marveled and appreciated at
TMM.
FACTORS TO SUCCESS
Learning and applications from TMC’ Japanese seat suppliers.
Efforts by the managers in TMM like Kevin Smith to spread TPS and thus maintain good
relations with KFS.
Help from TMC’s kaizen expert to install visual controls, slash WIP inventory, reduce labor
content and many more.
TMM’s slow ramp up schedule enabled KFS and TMM to send Quality control troubleshooters
back and forth which helped up in substantial progress .
Proximity of TMM and KFS helped them to pull off sequential pull system.
CHALLENGES AT KFS
Model change in 1991,which lead to many challenges.
They had to run the sequential pull system until the last day of old model
production.
They had only 10 days to change over its process and 10 weeks to build up
to full capacity for the new model.
SIGNS OF PROBLEMS
The old model had only three styles and four colors, while the new model had three seat colors
but had five styles.
TMM’s launch of Camry Wagons, and becoming the sole source of these cars for the first time in
Toyota worldwide.
Wagons models added eight seat variations while wagons destined for Europe added 10
variations while for Japan, Middle East it added another 18 variations.
Drop of run ration from 95% to 85 % in a month.
High level of off-line inventory. Leading to delay in delivery.
TMM’S SOLUTION TO SEAT PROBLEM:
A team member should pull the andon cord to report the problem to team leader
before installing the defective seat.
Tagging of car to alert the Quality control inspectors of the seat problem.
Passing of the car through the assembly line as usual with the defective seat in it.
At line off , taking the car to the code 1 clinic to see if the problem was correctable
there.
If not taking the car to the overflow parking area and wait for the special delivery
of seat from KFS.
PROBLEMS DISCUSSED ON MEETING HELD ON
MAY 1,1992
Late deliveries of car.
Wrong seat assemblies by KFS that didn’t matched with any of the cars in waiting
area.
At initial stages the problem arising from the seat were very trivial and could be
solved by the team leader in 30 seconds.
Unfixed problem of the hook which was changed from metal to plastic and
sometimes broke off.
This problem was not reported by Tsutsumi with identical engineering drawings for
the part.
 RECOMMENDATIONS
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.