"Reducing Production Cost Whilst Increasing Efficiency with TPS

PReducing Production Cost Whilst Increasing Efficiency with Toyota Production System
Tariq Ahmad Khan
Head, Marketing Planning Dept, Toyota, Pakistan
PTariq.ahmad@toyota.indus.com

What is lean Manufacturing………….?

(1) INTRODUCTION

With the opening of world market, the Pakistani industries cannot afford the luxury of producing
products not compatible with that of the foreign products. The presence of globally competitive
firms and the continuous innovations in the market has given a new impetus to the competition
and the quality standards. The Pakistani manufacturing industries operating in areas not having
good infrastructure and uncertain environments, are suffering on account of high cost of
production, due to high inventory levels, high cycle times and the enormous wastage. It is high
time that the manufacturers should try some innovative and new manufacturing
strategies/techniques.
Lean manufacturing can be one of the answers thus enabling them to cut down the cost of
product by reducing the ‘waste’ as the waste has been the bane of manufacturing sector both
inside and between the companies. However, intensive training, high motivational levels, strong
commitment and, perhaps, some organizational changes will be required for implementing the
lean manufacturing concepts.
This chapter, which culminates our sincere efforts in having attempted to understand some
aspects of lean manufacturing/TOYOTA Production System spotlights few basic techniques
businesses can carry out to grow and be competitive in the future. And that is really the name of
the game, growth and competitiveness in a dramatically changing market place.
(2) RISE OF TOYOTA AS LEAN MANUFACTURING
Today TOYOTA is the most efficient and highest quality producer of motor vehicles in the world.
In the late 1930`s the company entered the motor vehicle industry, specializing in trucks for
military. Before the war it had barely gone to few prototype cars with crafts method. After the
war, TOYOTA was determined to go to full-scale car and commercial trucks manufacturing, but it
faced a host of problem particularly the problem in out side the world there was a huge motor
vehicle producers who were ready to define their established market against Japanese export.
TOYOTA chief production engineer, Tiichi Ohno (1912-1990) quickly realized that employing old
(European) tools and method of mass production was not suited to this strategy. He knew he
needed a new approach, and he found it when he visited a U.S. auto plant to Learn American
production method just after the world war-2.
Ohno soon discovered during his visit in U.S. that their whole system was filled with muda (the
Japanese term use for waste) that encompasses wasted effort, material, and time.
Ohno begin to experiment when he came to his country the first step was to group workers into
team with a team leader (who would do assembly task as well as coordinate the team and would
fill in for any absent worker) rather than a fore man, who would not perform assembly task him
self but insured that the line workers followed order.
The team were given a set of assembly steps, their piece of line, and told to work together on
how best to perform the necessary operation, and next he gave the job of house keeping, minor
"Reducing Production Cost Whilst Increasing Efficiency with TPS

tools, and quality checking and finally at last after the team running smoothly, he set time aside
periodically for the team to suggest ways collectively to improve the process i.e. Kaizen,
Japanese word for continuous improvement.
In contrast to the mass production, where stopping the line was the responsibility of senior line
manager, Ohno placed a card above every work station and instructed workers to stop the whole
assembly line immediately if a problem emerged that hey couldn’t fix then the whole team would
come over to work on the problem this logic eliminates the rework area.
The greatest testament to Ohno ideas lies in the quality of the cars actually delivered to the
consumer. American buyers report that Toyota `s vehicles have among the lowest number of
defects of any in the world , comparable to the very best of German luxury car producers, who
devote many hours of assembly plant effort to rectification.
(3) DIFFUSING LEAN MANUFACTURING

Revolutions in manufacturing are useful only if they are available to everyone.

It was clear that by the end of 1986 that Toyota had truly achieved a revolution in manufacturing,
that old mass production plants could not compete, and that the new way Lean manufacturing
transplanted successfully to new environments, such as NUMMI.
Table 1. Survey of GM, TOYOTA and NUMMI

GM Framingham Toyota NUMMI Fremont

Assembly Hours per car 31 16 19

Assembly defects per

100 cars 135 45 45

Assembly space per car 8.1 4.8 7.0

Inventories of Parts(average) 2 weeks 2 hours 2 days

Source: IMVP World Assembly Plant Survey

The table 2 summarizes world wide performance of the volume producers at the assembly plant
level in addition to productivity and quality. In particular, it is striking to note the difference
between average Japanese performance and the average in North America and Europe in terms
of the size of repair area needed, the fraction of workers organized into teams, the number of
suggestions received and the amount of training given new assembly workers.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Summary of assembly plant characteristics, volume producer, 1989

(Average for Plant in Each Region)

Table 2 Survey of volume producer’s assembly plant

Japanese Japanese American In All

In Japan In North North America Europe

America

Performance

Productivity(Hrs/veh) 16.8 21.2 25.1 36.2

Quality(assemblydefects/100veh) 60.0 65.0 82.3 97.0

Layout

Space (sq.ft./veh/yr) 5.7 9.1 7.8 7.8

Size of repair area (as % of 4.1 4.9 12.9 14.4

assembly space)

Inventories(days for 8 sample parts) 0.2 1.6 2.9 2.0

Work Force

% of Work Force in Teams 69.3 71.3 17.3 .6

Job Rotation 3.0 2.7 .9 1.9

Suggestions/Employee 61.6 1.4 .4 .4

Number of job Classes 11.9 8.7 67.1 14.8

Training of New Production Workers

380.3 370.0 46.4 173.3
(hours)

Absenteeism 5.0 4.8 11.7 12.1

Automation

Welding(% of direct steps) 86.2 85.0 76.2 76.6

"Reducing Production Cost Whilst Increasing Efficiency with TPS

Painting(% of direct steps) 54.6 40.7 33.6 38.2

Assembly(% of direct steps) 1.7 1.1 1.2 3.1

* IMVP = International Motor Vehicle Performance

(4) BACKGROUND TO LEAN MANUFACTURING

Lean Manufacturing is a manufacturing system and philosophy that was originally developed by
Toyota and is now used by many manufacturers throughout the world.
The term “Lean” manufacturing was popularized by Womack and Jones in their book “The
Machine that changed the world”. This book benchmarked manufacturing companies around the
world and found, at that time, that Japanese manufacturing companies were typically much more
productive and efficient than their Western counterparts
Many companies are turning to lean manufacturing in an effort to become more profitable.
Implementing "Lean" can create superior financial and operational results. Lean manufacturing
comes from the Toyota Production System. Practiced by Toyota for many years the ultimate goal
of the system is to produce quality products by cost reduction activities and a cultural focus on
employee involvement through empowerment. Lean manufacturing uses concepts pioneered by
Toyota Motor Company’s former vice president Taiichi Ohno. This "new" manufacturing culture is
based on working in every facet of the value stream, to include instilling the discipline to reduce
cost, to generate capital, to make the money, to bring in more sales, and to remain competitive
in a growing global market.
(5) PHILOSOPHY OF LEAN MANUFACTURING

The philosophy of Lean manufacturing can be neatly stated as

“Never ending search for the elimination of waste and reduction of time through out
the entire business process”
Lean manufacturing is an approach that quickly defects problem and inefficiencies. It eliminates
waste by reducing costs in manufacturing process, in operations with in that process and
utilization of man power associated with production. The implementation of lean manufacturing
system is an organization transforms the existing system into a vibrant and agile one by
identifying and eliminating waste, thus increasing the productivity to a significant level.
Lean manufacturing is the process of analyzing the flow of materials and information in a
manufacturing environment and continuously improving the process to delight the customer.
(6) OBJECTIVE OF LEAN MANUFACTURING

• The main objective of a lean manufacturing system are as follows:

• To produce the highest possible quality product.
• At the lowest possible cost of manufacturing.
• And with in the shortest possible delivery time.
• With the aim of just not satisfying the customer but delighting the customer.

(7) LEAN PRINCIPLES

In a nutshell lean principles may be summarized as follows:

"Reducing Production Cost Whilst Increasing Efficiency with TPS

• Clearly identify the areas which add and do not add value to the product from the
customer’s point of view and not from the prospective of individual firms, functions and
departments.
• Identify all the steps necessary to design order and produce the product across the
whole value stream to highlight non-value adding waste.
• Listing of those action that create value flow without interpretation, detours, back flows,
waiting or scrap.
• Only make what is pulled by the customer.
• Strive for perfection by continually removing successive layers of waste, as they are
uncovered.
The term Lean is very apt because in Lean Manufacturing the emphasis is to cut out the
"fat" or waste in the manufacturing process.
“Waste is defined as anything that does not add value to the customer. It could also be
defined as anything the customer is unwilling to pay for”.

Lean identifies seven types of waste:

1. O ve r-P ro d uc t io n

Obviously a product that cannot be sold or has to be dumped at a reduced price is wasteful. Also
producing product before the customer needs it requires the part to be stored and ties up money
in inventory.
2. I nv e n t ory

Excess Inventory ties up a great deal of cash, which is wasteful. Stockpiling inventory between
processes is wasteful.
3. C o nv e ya nc e

Unnecessarily moving a part during the production process is wasteful. It can also cause damage
to the part, which creates wasteful rework.
4. C o rr ec t i on

Having to re-work parts because of manufacturing errors is a large source of waste. Additionally,
sorting and inspecting parts is wasteful and can be eliminated by error proofing (design
processes so that the product can only be produced one way, which is the correct way, every
time).

5. M o t io n

Unnecessary or awkward operator motions put undue stress on the body and cause waste.
Improvement in this area should result in reduced injury and workman's compensation claims.
6. P r oc ess i ng

Unclear customer requirements cause the manufacturer to add unnecessary processes, which
add cost to the product.
7. Wa i t in g
"Reducing Production Cost Whilst Increasing Efficiency with TPS

The operator being idle between operations is wasteful. It is acceptable for the machine to wait
on the operator, but it is unacceptable for the operator to wait on the machine.
By eliminating waste one can do more with less.
The importance of Lean Manufacturing System is better comprehended when its impact of
change on economics is thoroughly understood. The manufacturing engineering philosophy is
pivoted on designing a manufacturing system that perfectly blends together the fundamentals of
minimizing cost and maximizing profit. These fundamentals are Man (Labor), Material and
Machines (Equipment) - called the 3Ms of manufacturing.
8. How does Lean Manufacturing differ from Traditional Manufacturing?
Traditional manufacturing is often called mass production or batch-and-queue (waiting in line)
production. In traditional manufacturing, similar processes are grouped together (paint, welding,
fabrication, etc.) and a large batch of parts is processed and then held in a queue waiting for the
next process. In this system a batch of parts is put through Process A and set aside. They are
then moved to the next area where Process B is done to the batch. The parts then wait in a pile
for the next process. After a while they are shifted to another area where Process C is completed
on the batch. This batch-and-queue process is continued until the part is completed and shipped.

Fig 6.3. Batch and queue Traditional Manufacturing

At any given time there may be hundreds or even thousands of parts in various stages of
production. If we were to track a given part through its production, we would see that the part
was in production for possibly 48 hours from start to finish, but that the actual time that it was
being processed, or value was being added to it, was only 8 minutes. The rest of the time was
spent waiting for the next process or moving the part from Process A to Process B.
Another problem with the batch-and-queue system is when a defect occurs in Process B, but is
not discovered until Process C or later. If there are 500 parts in the batch affected by the defect,
then they all must be scrapped or reworked. This can add up to a great deal of waste.
Therefore the term Lean Manufacturing is a more generic term and refers to the general
principals and further developments of Lean.

B- TOYOTA PRODUCTION SYSTEM

(1) INTRODUCTION
"Reducing Production Cost Whilst Increasing Efficiency with TPS

he Toyota Production System (TPS) is a framework of concepts and methods for

T enhancing corporate vitality. It enables companies to achieve continual gains in

productivity while satisfying customer expectations for quality and prompt delivery. TPS is
well known throughout the world, it has been widely imitated in Japan for many years and has
been a topic of intense research worldwide.
Quite simply, Toyota attempts to provide to society
1. The highest quality automobile
2. At the lowest possible cost
3. In a timely manner with the shortest possible lead-time.

(2) PRINCIPLES OF TPS

• The concept of Cost
• The concept of MUDA
• The concept of Efficiency

a- The Concept of Cost

The concept is to first fix sales price according to market and then make effort to reduce cost to
get profit. First, we reject what we call the “ principle of cost “. The principle of cost “cost-plus”
means essentially that sale price equal’s profit plus costs.
If this concept is accepted, when cost goes up, sales price must also rise in order to ensure a
profit, regardless of whether or not the market can bear the price increase.
This, then, places one at the mercy of forces outside the company.
Here Toyota embraces the principle of “cost reduction”. If the principle of cost is
“sales price = cost + profit” then cost reduction is “ profit = sales price – costs”. The actual
mathematical relationship in these formulas is the same, but the concept of what constitutes a
variable changes completely. In other words, sales price is decided according to market condition.
Profit is then assured only if costs are kept under that amount. Cost reduction, something that
can be controlled internally, then becomes the key to profitability and, therefore, company
stability and job security.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

b- The Concept of MUDA

Any element of the manufacturing process whether an actual “thing” or an action that does not
add value to the finished product is considered at Toyota to be MUDA, non-value added. The
effort to eliminate MUDA has led to the system of methods and processes that have won a claim
as the “Toyota Production System”.
The First step toward eliminating MUDA is to learn to recognize it, which steps of the production
process are truly necessary, which steps add value to the product and which steps do not?
If we look closely at the process of doing production work we can see that there are three main
types of activities that are involved.

c- Type of MUDA
The first is simple waste or obvious MUDA. This obvious MUDA is any step that is logically
unnecessary to carrying out the job, such things as waiting around rearranging materials, or
handling parts that are not needed right away. Such activities add no value at all to the final
product, or to the materials that go into it.
Next is the MUDA of incidental operations, work that must be done under present job conditions
but adds no value.
Leaving the workspace to get parts or tools, or taking time to unpack parts are examples of
incidental-operation MUDA.
The last type of activity consists of the truly necessary operations, which add to the value of the
materials. These are processing operations - changing the shape of something, changing its
quality or assembling it.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

The higher the proportion of value-adding operations in the total work performed, the higher is
the level of production efficiency.
In fact, when we inspect actual job sites we find that MUDA is extremely prevailed and value-
adding operations are surprisingly small. MUDA is everywhere, and the effort to identify and
eliminate it, has led to the classification of MUDA into seven categories:

1. MUDA of over-Production Producing too much or too soon

2. MUDA of Waiting Waiting for parts to arrive or for a machine to finish a cycle, etc.
3. MUDA of Conveyance Any conveyance is essentially MUDA, so should be kept to a
minimum
4. MUDA in Processing Over Processing
5. MUDA of Inventory Any more than the minimum to get the job done
6. MUDA of Motion Any motion that does not contribute directly to adding value
7. MUDA of Correction Any repair is MUDA.

d- MUDA of Over Production

The Toyota Production system attempts to eliminate all forms of MUDA, but pays special
attention to MUDA of over-production.
There are two types of over-production: producing a larger amount than is necessary and
producing at a faster rate than necessary. Both produce excess inventory and both are type of
MUDA to be eliminated. However, it is attention to the MUDA of producing too soon that
separates the Toyota production system from conventional systems.
Producing anything sooner than absolutely necessary causes all kinds of waste.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Producing sooner than necessary means parts must be stored, requiring storage space, someone
to handle them, and money to be tied up in carrying costs. This is considered bad even if the
item produced is needed later, because if items are produced too soon, we cannot know for sure
if they will truly be needed later or not.
Production should take with as little inventory as possible, preferable only the one component
that is to be processed or assembled next.
This involves a concept that runs contrary to traditional production management thinking: the
concept that it can be desirable to let machinery and people be idle from production duties if the
parts they produce or assemble are not needed right away as determined by the necessary
production volume which is based on sales.

e- Concept of Efficiency
Conventional approach
Traditional thinking has dictated that machinery and labor are expensive and should therefore be
utilized as close to 100% as possible. Also traditional thinking says that the more you produce,
the cheaper it is to produce. This may be true on a strictly cost-per-item basis, but fails to
account for fixed costs and materials cost adequately..
There are three variables to consider in approaching the problem of improving production
efficiency: manpower, equipment and materials. The traditional approach is to attempt to attain
maximum utilization of these three variables in the following order to descending priority:
1) machinery, 2) manpower and 3) materials. Attention to manpower and materials is given
under the traditional system only when maximum utilization of machinery has been attained.
Thus attention is finally turned to manpower after maximum machine use is reached. And
materials utilization is a poor third at best.

f-Toyota approach
Of course, Toyota also wants to achieve maximum machine utilization, and line capacities are
painstakingly designed to minimize excess capacity. However, machinery is only one of three
elements to consider when coordinating production runs and line capacities. At Toyota more
emphasis is placed on development of human resource and maximum materials utilization than in
a conventional system.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

All the materials that go into manufacturing an automobile tie up huge amounts of money from
the time the material is purchased until the finished product is sold. In the automobile industry,
with thousands of expensive parts in each car, the interest that could be earned with this money,
were it not tied up in inventory, is tremendous.
Reducing the amount of lost earnings through cutting in-process inventory is a source of great
potential saving. This is a major aim of the Toyota Production System.

3- PILLARS OF T.P.S.
Two Pillars of the Toyota Production System are Just in Time and Jidoka. The entire system is
maintained by Kaizen and Standardized Work.

a- Just In Time
Just In Time refers to producing and conveying what is needed, when it is needed, in exactly the
amount needed. It attempts to manufacture with either no or an absolute minimum of in-process
inventory, resulting in shortened lead-time and tremendous savings in carrying costs.
Consider the case of a conventional production system. The 10,000 or so parts that go into an
automobile must be scheduled to be at the correct production process among hundreds of
processes in time for processing or attachment to the correct model. Months in advance a
detailed schedule is drawn up, distributed to suppliers, and production proceeds accordingly.
However, realistically speaking, it is virtually impossible for activities to always proceed according
to plan. The conditions underlying the plan between the time first conceived and when it actually
goes into production, are bound to change.

b- The Operating Principles

Just-In-Time production avoids all of this by the following operating principles:
"Reducing Production Cost Whilst Increasing Efficiency with TPS

The Pull System

The first major component of Just-In-Time is the “Pull system”. This is perhaps the most
revolutionary operating concept of the Toyota Production system.
In essence, in a traditional system you assemble whatever is sent to you from preceding,
upstream processes. With Kanban, preceding processes produce to replace whatever you used at
your down stream job. This simple reversal accomplishes a great deal:
• Excess inventory is eliminated
• Production is tied to processes closest to the consumer
• Production is synchronized
• Communication becomes frequent therefore teamwork is fostered
• Good quality becomes must

The pull system as accomplished by Kanban is the controlling mechanism that prevents over
production and assures prompt and accurate dissemination of information. The pull system with
continuous flow processing and Takt Time, shortens production lead-time and guarantees
synchronized processing throughout the entire automobile manufacturing process.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Kanban means “Signboard” in Japanese; at Toyota, it refers specifically to small cards which
carry production and delivery instructions from following to preceding production processes.

Continuous Flow Processing

Continuous flow processing attempts to eliminate the stops and starts that typify ordinary
production systems, shortening production lead time through reducing non-processing time.
To accomplish continuous flow processing, it is necessary to produce an item, only one item, and
immediately pass it on to the next process. No production of batches is allowed, even though at
times batch production and conveyance may seem to increase conveyance efficiency. Instead, all
processes produce and convey only one piece at a time, corresponding to the single unit that is
coming off at the end of the final assembly line.

Takt time
Takt time is the time necessary to finish a given amount of work – doing a single operation,
making one component, or assembling an entire car. This time is determined on the basis of the
"Reducing Production Cost Whilst Increasing Efficiency with TPS

monthly production requirements, and the amount of operating time during the

month.
For example, let’s say that product “A” is selling at a rate of 10,000 a month. Based on twenty
operating days a month, then 500 pieces must be produced each day in order to meet this
demand. Eight operating hours each day amounts to 480 minutes; since we must make 500
pieces per day, this means that one product “A” must be produced every 58 seconds.
Setting exact Takt Times for each process is the key for making many different parts that go into
an automobile on schedule – and bringing them together at all stages of assembly, all down the
line, at exactly the right time for keeping the pace of production in balance with the pace of sales.
Producing by Takt Time ensures that all production will be matched to the final assembly process.
If a finished product is rolling off the assembly line every 60 seconds, the interval at which every
part of the entire car is produced should also be exactly 60 seconds.

Leveled Production (HEIJUNKA)

In Just in Time Production a single production line is capable of producing many varieties of
product each day in response for changing Customer Demand.
Just-in-time Production is impossible unless we distribute different specifications evenly over the
day.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Flexible workforce (SHOJINGA)Responding flexibly to REAL DEMAND Flexible

Workforce or Shojinka means to alter (decrease or increase) the number of operators within a
Shop, to equal with Demand change. It is possible because: People master a broad range of skills
in Toyota Production System. People are trained to employee “Multi Function Handling” instead
of “Single Function Handling”.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

4. JIDOKA
a. Basic Concept
The second key concept at Toyota, after Just-in-time is “Jidoka”. Jidoka in Japanese is usually
translated to English as “automation”.
But at Toyota, Jidoka refers to the ability of production lines to be stopped in the event of such
problems as equipment malfunctions, quality problems or work being late, either by machines,
which have the ability to sense abnormalities or by employees.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

b. Four Benefits of Jidoka

Jidoka has the following significant benefits:

First: The passing on of defects is prevented

Second: Equipment breakdown is prevented
Third: Management is simplified. Since defects are stopped automatically, full
time inspectors become unnecessary. Multi-machine handling and
dramatic productivity increases are made possible.
Fourth: Problems become clearly identifiable so that Kaizen can be
accomplished; for example, malfunction recurrence can be easily
prevented, contributing directly to stable equipment operation and
consistent quality.
At Toyota, the basic attitude is that the next process is your customer and likewise should be
satisfied just as much as the customer who actually buys the finished product.
To this end, every team member is an inspector and every automated process contains an
automated inspection.

c. Fixed Position Stop System

An example of Jidoka is the “fixed-position stop system”. For instance, whenever a team member,
on the assembly line, encounters any kind of abnormality, he/ she pulls a rope located overhead.
This lights up an ANDON, a large electrical signboard, which notifies the supervisor that there is a
problem. The line keeps moving until it reaches a “fixed position”, a point marking the end of one
complete job, at which point it will come to a halt.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

The supervisor, having rushed to the scene of the trouble after seeing the ANDON assists in
correcting the problem and pulls another overhead rope preventing the line from stopping or
setting it back in motion if it had already come to a halt.

d. Pakayoke (Fail Safe Devices)

Another example is the use of fail-safe or foolproof devices. “Pakayoke”, that helps employees
prevent them from making mistakes.
Fail-safe devices serve also as safety devices, preventing not only defects from passing through,
but injuries as well. Pakayoke devices are used especially on processes where it is easy for the
team member to make a simple error, such as choosing the wrong part or assembling a part
incorrectly.

Important to all these activities is the concept of visual control. The status of work operations
should be apparent at a quick glance to anyone at the worksite. ANDON and other defect
notification devices that can be seen and heard are means of making simple visual control
possible.

5- Toyota Standardized Work

a. Basic Concept
Standardized work, the foundation of everyday operation of Toyota Production system, can be
defined as standardized procedures that regulate every single work step in the entire process of
producing an automobile. Concentrating on human movements, standardized work sets up the
best work sequence for each manufacturing and assembly process.
Once the most efficient sequence has been determined, it is always repeated in exactly the same
way, thereby avoiding unnecessary motion and wasted effort, maintaining quality, assuring
safety and preventing equipment damage.
b. Basic Elements of Standardized Work
Standardized work establishes guidelines for three central elements of a manned work process:
1. Takt Time
"Reducing Production Cost Whilst Increasing Efficiency with TPS

2. Working Sequence
3. Standard In-Process Stock
Takt Times tells the amount of time allotted for producing 1 part or completing a given job.
The working sequence defines the step-by-step order in which each processing or assembly
operation is to be performed
And standard in-process stock specifies the number of parts that should be in process at any
given time.

c. Making Standardized Work

The most significant aspect of Toyota Standardized Work is that it is established on-site; at the
worksite by the very people who follow the rules after they themselves set them.
Each worksite Group Leader is in charge of Standardized work for his group. It is the Group
Leader’s job to make work assignments based on the monthly production schedule and his
group’s capacity.
Since production changes monthly and standardized work is changed to adjust accordingly,
employee flexibility is a necessity.
Multi function team member development is important – every team member must know at least
how to do the jobs directly before and after his/her own.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

6- Kaizen
Kaizen is continual improvement, the constant search for a better way, or never ending
improvement.
At Toyota, all jobs are being continually improved. The company realizes that the people who do
their jobs know them better than anyone else, and each Team Member with his/her team
leader’s guidance is given the right to take part in the design of the job.

Standardized work is the foundation upon which those improvements are built. If the movements
of team members are slightly different each time a process is performed, then neither the
supervisor nor the team member can clearly identify problems or potential areas of improvement.
Without standardized work, it is impossible to grasp what the current state of efficiency is and
furthermore impossible to measure the effect of any change that may be implemented.
With standardized work there is a base in line from which to identify problems more easily and
to see precisely how any change in equipment or manpower helps or hinders the efficiency of the
work process. Standardization is the first step for Kaizen.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

B. CASE STUDY
REDUCING PRODUCTION COST WHILST INCREASING
EFFICIENCY WITH TOYOTA PRODUCTION SYSTEM AT INDUS
MOTOR CO. LTD
a- Productivity Enhancement
The Need
A Pakistani company practicing Japanese management, had plant capacity of producing 10,000
vehicles/ year in single shift. With the signing of Technical Assistance Agreement with Daihatsu
Motor Co. Japan, for production of 850CC Daihatsu Cuore 3,000 Units in the first year, increase in
production capacity by 30% became inevitable. One obvious conventional method was to
increase the number of work stations which would have resulted in capital investment for
providing additional equipment / tools & utilities on one hand and consequent increase of
manpower on the other hand. However, it was decided to increase the capacity by improving
productivity.
In simple terms, the requirement was to increase daily production from 38 vehicle/ days to 50
vehicles/ day thus reducing Takt time from 10.5 minutes/ vehicle to 8.5 minutes / vehicle.

b. The Strategy- Reducing Man Hours Through Reduction In 3Ms.

Understanding of 3Ms
3Ms is an abbreviation of 3 Japanese letters which start with English Alphabet ‘M’ namely:
MURI = Over Burden
MUDA = Waste
MURA = Unevenness
The concept can be best understood from the following diagram:

Here 12 boxes of 1 ton each need to be transported from one station to other with the help of a
pickup of 4 ton capacity. If the operator chooses to load 6 boxes at a time and makes only 2 trips,
he is overburdening the pickup and also himself. The short-term gain of making only two trips,
will be nullified by excessive maintenance of the pick up resulting from over burdening, this is
“MURI”. The operator has another choice to make 6 trips by carrying only 2 boxes at a time. This
"Reducing Production Cost Whilst Increasing Efficiency with TPS

is sheer” waste” which is “MUDA” as the cost of transportation will escalate. He may also choose
to make 3 trips, but the loading in each trip may vary, e.g. 1st trip only 2 boxes, 2nd trip 6 boxes
and 3rd trip 4 boxes. This is unevenness of operation and is called “MURA”
If one takes a close look at the operations, identification of MURA & MURI in production
processes is somehow easier. However, the identification of ‘MUDA” is somewhat overlooked.
MUDA can be in anyone of the following forms:

• MUDA of Any motion that does not contribute directly to adding

Motion value.
• MUDA of Any Repair is MUDA.
Correction
• MUDA of Any more than the minimum to get the job done.
inventory
• MUDA of Any conveyance is essentially MUDA. Should be kept to a
conveyance minimum
• MUDA of Waiting for parts to arrive or for a machine to finish a
waiting cycle.
• MUDA in Over processing
processing
• MUDA of over Production too much or too soon
Production

c. Commitment & Challenging the existing

The prevailing Manhour/ Vehicle for each process were as follows:

Each department / Section of a Pakistani company practicing Japanese management, was asked
to examine critically each work activity at every station and eliminate / reduce 3Ms specially the
MUDA. As MUDA will reduce, the time spent for doing a process will reduce, which will in turn
reduce Man-hour/ Vehicle.
The basic philosophy adopted was to challenge every current activity on the workstation and
pose fundamental questions like, why the activity is necessary? Can it be eliminated altogether?
"Reducing Production Cost Whilst Increasing Efficiency with TPS

If not, can the time be reduced for doing the same activity? Is this the best method of doing it?
Can we merge this activity with some other activity for better result? Can this activity be brought
forward? Or can it be done at a later station? etc..
All shop in-charges and supervisors of each and every section were clear and committed for their
goals and made their activity plans for achieving the same.

d. Yamazumi chart - The Tool

Yamazumi is a Japanese word comprising Yama (Mountain) & Zumi (Building up) meaning
‘Building up of Mountain”. It is a measurement of total time taken in Minutes/ Seconds for
completing all activities resulting in a finished product. The time spent for doing any process can
be divided into two broad categories:
a) Time spent in doing Standard Job Element
b) Time spent in MUDA (walking, picking, unpacking etc)
A standard job element is a value added activity e.g. tightening of bolt for fixing a part, which
may take 6 seconds. However the time spent in walking to a rack & picking the bolt and bringing
to work station which may be taking 4 seconds is a non-value added activity and hence a waste,
MUDA.
e. Making of Yamazumi Chart
The first step is to carry out a time study of all process elements involved and record the time for
standard job element and MUDA. For example, a finished product may require processes A to G,
which may have time study as shown below:

Value

MUDA
"Reducing Production Cost Whilst Increasing Efficiency with TPS

The next step is to put these time elements one on top of the other to get the total time for the
finished product. This is what is called a Yamazumi Chart.
Once this chart is made the value added activities & the non-value added activities are clearly
visible for the entire process and concerted efforts can be made for reducing MUDA and

24 23 Minutes
23
Value Added
22 2.0 Min
G MUDA
21
0.5 Min
20

19 3.0 Min
F
18
Time (Min)

17 0.5 Min

16 2.0 Min
E
15
0.5 Min
14

13 3.0 Min
D
12

11 0.5 Min

10
3.5 Min
9
C
8

7 1.0 Min

5 3.5 Min
B
4

3
0.5 Min
2
2.0 Min
1 A

0.5 Min

A. Yamazumi Chart
rearranging processes so as to achieve required Takt Time say 8.5 Min/product.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

D- Typical Case Study of Trim Line in Assembly Shop

The Trim line in assembly shop has 10 stations and the team member work on both left hand
and right hand of the vehicle on conveyor making a total of 14 work stations as shown below:

Taking a typical example of station No. 2 Left Hand (designated as T2, LH) there are 49 process
elements done on this station. A careful Time Study of each process on this station revealed the
following Graph showing time spent on Value added and non-value added activities:

1. Recording of Activities at T2 LH
Only 7 process element/ activities are shown above and one can easily add up the time spent in
non-value added activities for the 7 processes. When the total effect of 49 processes performed
on this particular station is taken into consideration the picture emerges as shown below:

12.0 Total 10.5 Min

Walking 2.0
10.0
Non-Value
Picking 1.0
8.0 added 3.8
Minutes

6.0 Unpacking 0.8

4.0
Value Added
2.0 6.7
0.0
Trim Station T2 LH

Thus out of 10.5 Min working on this station, 3.8 minutes (36%) is spent on non-value added
activities of walking, unpacking & picking of parts. A further breakup of non-value added
activities indicate that 53% time is spent in walking, 21% in unpacking & 26% in picking the
parts as shown below:
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Time (Min)

Unpacking
21% (0.8Min)

Walking
53%
(2.0 Min) Picking
26%
(1.0 Min)
Total Non Value added 3.8 Min
at T2 LH

By conducting similar time study for all the 14 stations of Trim Line, the following picture
emerged:
12 N O N - V A L U E A DD ED
A v e r a g e . T a k t T i m e (1 0 . 5 M i n )
V A L UE A D ED 11 11
1 0 .5
10 10 10 10 10 10 10
10
3 9 3 9 9 9
2 2
3 3.8 1 1 3 3 3 1 3
8
3
Time (Min) .

4 8 8 8 8 8 8 8
7 7 7 7 7
6.7
6

0
T -1 T -1 T -2 T -2 T -3 T -3 T -4 T -4 T -5 T -5 T -6 T -6 T -7 T -7 T -8 T -8 T -9 T -9 T -1 0 T -1 0
RH LH RH LH RH LH RH LH RH LH RH LH RH LH RH LH RH LH RH LH

T rim L in e W o rk S ta tio n s

Thus out of a total 147 minutes of Trim line operation at 14 stations, 41 minutes were spent on
non-value added activities, which was further analyzed as follows:
Value Added
160
Non-V alu Added
140
Unpackin
120 g 9 Min
100 22%
Tim e (M in

106
80 Walking
60 21 Min
P icking 51%
40
11 Min
20 41 27%
0 44 Minutes Muda
Trim Line (Total of 14 S tations )
"Reducing Production Cost Whilst Increasing Efficiency with TPS

2. Steps Taken to Reduce MUDA

a. Reduction in Walking Time
51% of non-value added activity consists of walking by Team member for going to part rack for
picking the part, bringing it to the vehicle, installing it and then going back to part rack for the
next part. This movement was reduced by:
1. Reducing Picking frequency of parts from racks
2. Introduction of Movable Rack
b. Reduction in Picking Frequency/ Extra movement
It was observed that team members were in the habit of picking one part at a time from part
rack, and after installing it in the vehicle would go to part rack for the next part. Thus if he is to
pick up 7 parts A to G as shown in the sketch below, he will go and come back from the rack 7
times.
The team member was advised and trained to pick up as many parts as he conveniently can from

the racks and put these in the vehicle and install the parts one after the other. Then for next
picking, again pick up 2 or 3 parts and bring these to vehicle for installation. This way as can be
seen from the sketch below, the extra movement got reduced as the picking frequency got
reduced from 7 to 3

By adopting this method a total saving of 7 minutes in walking time was observed
c. Introduction of Moveable Rack
"Reducing Production Cost Whilst Increasing Efficiency with TPS

For small parts like grommet, washer, screws, etc., small trolleys were introduced which can be
attached with the moving vehicle on conveyor as the vehicle approaches a work station. The
simultaneous movement of trolley with vehicle enables team member to access the small parts
without walking.

The above resulted the saving of one minute in Walking time

3. Standardization of Walking
Standardization of walking was also done and each team member was given enough training to
take 2 steps in 1.4 Sec. A saving of 4 minutes in walking time was observed as a result of this
standardization in Trim Line.
Reduction in Picking Time
The following counter measure were taken to reduce the non-value added time spent in picking
of parts :
Introduction of Flow Racks
A close observation of the motions/ actions of team member revealed that the parts rack
available on line side had fixed shelves and often, if the size of the box containing the part is
larger than the distance between the two shelves, the team members had difficulty in taking the
part out of the part rack.
To reduce this problem, roller type racks were introduced in which the shelf height could be
adjusted according to size of parts/ box. Because of the slight inclined angle and presence of
roller, the next part becomes easily available due to gravitational flow to the team member after
he picks up the first part as shown in the picture:

The Team members can make & modify easily these racks according to the part size and
accessibility.
After introduction of Flow Racks, 5 minutes saving in pickup time was observed.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Introduction of Hardware & small part (Grommets, clips etc.) Racks

The non- availability of a quick means for identifying model wise hard wares and small parts
(like grommet, clips etc.) was observed to be one of the major contributing factor for increasing
MUDA in picking operation. Hence, hardware and small part racks were introduced with color-
coded plastic boxes identifying respective models. As hardware grommets unpacked from
polyethylene bags are poured in each color coded plastic box, having tag for part name & part
numbers, the team members do nothave to waste their precious time in identifying
&segregating the appropriate hardware etc for the requisite model. The countermeasure brought
saving of 2 minutes in pickup time.

Minomi (Unpacked) Supplies

Team member’s production time which was being wasted in opening of boxes/ polyethylene bags
for unpacking of parts, was saved by asking PPMC department (Production Planning & Material
Control department) to supply parts to line side racks in unpacked condition as shown below:

Before After
The introduction of Minomi supplies brought a saving of 5 minutes in unpacking time.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Summary of Improvement At Trim Line

The net effect of making Yamazumi Chart for Trim line and taking the above mentioned steps for
reducing 3Ms, can be summarized as under:
The non-value added time reduced from 41 Minutes to 17 Minutes (a reduction of 58%).
The Takt time for each station reduced from 10.5-min/ vehicle to 8.5 min/ vehicle (a reduction
of 23%)
As a result of above and by rearranging process elements, two working stations were eliminated
from the trim line (Namely T9LH& T-5 RH) as shown below:
The consequent increase in production of Trim line was 30% with the same manpower there by
reducing man-hours per vehicle.

TRIM LINE LH
1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

TRIM LINE RH
TOTAL WORKING STATION = 12

YAMAZUMI Charts for Other Processes

The same exercise was conducted for each and every station of Weld shop, Paint shop, Engine
shop, PPMC and Quality Assurance and everywhere there was identification and recognition of
3M’s and everywhere when countermeasures were taken, the result was reduction in man-hours,
and consequent decrease of Takt Time. As Toyota Production System is based on ‘Pull’ the Takt
Time of the preceding station has to be the same as that of the following station. Consequently
the entire plant got operated at 8.5 min. Takt time, increasing productivity by 26%.

Space Saving
The side effect of focusing on 3Ms’ reduction resulted in space saving on shop floor. It appeared
from a time study of each workstation that part racks should be as close to the vehicle as
practically possible to reduce walking time. The introduction of adjustable flow racks resulted in
space saving on shop floor. Elimination of workstations resulting from careful study of 3Ms also
reduced the workspace, which can be used for further expansion. It may be noted that TPS is
also called lean production system i.e. lean in manpower, lean in equipment, and also lean in
space on shop floor. One technique adapted to save space on assembly line side was ‘Jundate’
(Sequential supply). Taking example of a bulky part like seat set or Fuel tank which requires a
larger storage area on Shop floor, and if, for example, 3 models of vehicle are being produced,
then a minimum quantity of these bulky parts will have to be present on line side, requiring lot of
space. The solution was found in supplying the part of requisite model as is needed on the
station. Thus the sequential supply system for bulky parts has reduced the required storage
space on line.
Another glaring example of space saving done during this exercise was to rearrange CKD boxes
in CKD warehouse such that the storage capacity increased to 44%. The previous arrangement
of placing CD boxes could store 111 Lots (lot consists of 10 Units), but by making Yamazumi
chart and doing Kaizen (continuous search for improvement), the same CKD warehouse can now
store 160 lots. This is in fact 57% saving in space in CKD warehouse. Consequently, construction
of a new CKD warehouse was avoided at the time of introduction of Daihatsu Cuore.
"Reducing Production Cost Whilst Increasing Efficiency with TPS

Result of Reducing 3Ms

The net result of focusing on reduction of 3Ms, at a Pakistani company practicing Japanese
management, is shown below:

K EY AREA N ET R ESU LTS S T AT U S B EF O R E & AFT E R

P ro d u c tio n C a p a c ity In c re a s e 1 5 ,0 0 0
w ith B u ilt-in -Q u a lity
1 3 ,0 0 0

Vehicle/ Year
as per TPS by
1 1 ,0 0 0

13,000
30%
9 ,0 0 0

10,000
(3 ,0 0 0 V e h ic le s/ 7 ,0 0 0
Year )
5 ,0 0 0
B e fo re A fte r

P ro d u c tiv ity In c re a s e 50 4 5 .1 3 2 .1 E n g in e
5 QA
3 3 .3 6
40
(M a n -H o u r/ V e h ic le ) by Man Hour 1 .6
8 .3 P P M C
30 3 .7
7 .8 A s s y 7 .1
26% 20 5 .1
1 2 P a in t
10 8
(R e d u c tio n o f 1 0 W e ld 7 .9
1 2 M -h rs/V e h ic le ) 0
B e fo re A fte r

30000
W o rk S p a c e S a vin g 2 3 ,4 6 8
25000
1 9 ,5 9 6
(M e te r S q .) 5898 P P M C
in s p a c e b y
Meter Sq.

20000 2515

15000 4800 A ssy 4396

20%
10000 1 1 4 0 0 P a in t
2 10685
(4 ,7 8 2 M s p a c e
5000
re d u c e d ) 2 2 8 0 W e ld 2000
0
B e fo re A fte r

CONCLUSION
The strategies & techniques adapted at a Pakistani company practicing Japanese management,
are based on Toyota Production System (TPS) and can be applied to other industries/ companies
specially those involved in continuous assembly line. Preparation of a Yamazumi Chart is the first
step towards elimination/ reduction of ‘3Ms’. The purpose of sharing this experience with others
is to encourage them that with participative management, clarity of objectives, motivation and
techniques of Toyota Production system, others can also achieve