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2012

Case Report Group 7 Nihal Shrestha st112885 Arpita Shahi st 112740 Nitesh Joshi st112736 Prasamsha Dhugana st112853 Situ Pradhan st112882

[LEAN PRODUCTION: TOYOTA PRODUCTION SYSTEM]


This is a Case Report on the concept of Lean Production with linkage with the Toyota Production System.

Case Report 2 Lean production: Toyota Production system

Case Report
Lean Production Process: Toyota Production System, August Semester 2011
This case report is prepared by Ms. Arpita Shahi, Mr. Nihal Shrestha, Mr. Nitesh Joshi, Ms. Prasamsha Dhungana, and Ms. Situ Pradhan under the supervision of Dr. Yuosre Badir, Assistant Professor at School of Management, Asian Institute of Management (AIT). The case has been prepared with an objective to familiarize the concept of lean production and describe how Toyota pioneered in the implementation of this innovation and created a dominant production process.

Case Report 3 Lean production: Toyota Production system

Contents
Case Report ................................................................................................................................................... 2 Lean Production Process: Toyota Production System, August Semester 2011 ........................................ 2 Introduction .................................................................................................................................................. 4 About Lean Production Process ................................................................................................................ 4 What is lean production? .......................................................................................................................... 4 Some of the techniques which can be used in line of lean production are as follows: ............................ 5 Companys Profile: ........................................................................................................................................ 6 Global Market of Toyota: .......................................................................................................................... 6 Diversification: .......................................................................................................................................... 7 Innovation: ................................................................................................................................................ 7 Vision:........................................................................................................................................................ 8 Mission: ..................................................................................................................................................... 8 The Toyota Way: ....................................................................................................................................... 8 The origin of the Toyota Production System ................................................................................................ 9 Roots of the Toyota Production System ................................................................................................... 9 Toyota Production system ...................................................................................................................... 11 Just-in-Time Philosophy of complete elimination of waste ............................................................... 12 Companies using lean production system .................................................................................................. 15 General Motors (GM).............................................................................................................................. 15 Lean Production in Wipro ....................................................................................................................... 15 Canon Production System (CPS) (Lean Production in Canon)................................................................. 15 Benefits of Lean Production ........................................................................................................................ 16 Limitation: ................................................................................................................................................... 17 Case Question ............................................................................................................................................. 18 References .................................................................................................................................................. 19

Case Report 4 Lean production: Toyota Production system

Introduction
About Lean Production Process
History is an important event to understand and conceptualize the idea of lean production. When we think of lean production we believe that it began with Toyota and some go as far as Ford and its production lines for the Model T ford development, but it all depends on how we define lean. Likewise, the work of Fredrick Taylors scientific management and the concept of division of labor in the manufacturing process existed in Henry Fords manufacturing plant, also used by Eli Whitney to manufacture muskets during 18th Century and used well in 1574 for the production of Galley ships in England. This concept of conveyor belt production process is the base for the development of lean productioni. Lean principles, or the tenets of the Toyota Production System (TPS), continued to be of great interest to the operations community. Many credit Toyotas sustained success to the tireless application of these ideas to their manufacturing and management systems. This has provided an incentive for many manufacturing companies to imitate, either wholesale or in part, lean principles in their improvement programs. The application of lean production in the services is a more recent manifestation of the use of these principles. However, the utility and impact of such ideas in non-manufacturing contexts remains a contentious issue, leaving many managers to wonder if they are merely applying inappropriate, faddish, ideas with others arguing that lean principles have universal applicability. In manufacturing itself, lean production has led to improved performance in many cases yet failed implementations are not uncommon, so we can say that the general understanding of lean production is mixedii. However, we cannot deny that lean production is by far the most ambitious process innovation desired by the business community and is so challenging in its outlook that the achievement of lean system means being the most powerful player in the market.

What is lean production?


The concept of lean production should be an interesting topic for any business student since it wraps up every concept of efficiency, effectiveness in one. In fact, one logical way to understand the concept of lean process is to describe it as the common-sense management of business. Every single thing that

Case Report 5 Lean production: Toyota Production system make of lean production process or lean system is common sense management. If you have waste in your production process reduce them, if your employee has new solution to problem implement them, if your inventory is piling up set a system to only purchase inventory when needed, if you want to create value of the customer find a way to maximize customer value. Lean production is a broad concept; it should not be used as a tool in doing business. In fact, it is a philosophy of how a business should run. The degree to which a company applies the concept of lean production depends upon different techniques a company uses to achieve this philosophy.

Some of the techniques which can be used in line of lean production are as follows:
Just-in-time stock management (JIT): This is a technique to achieve zero waste by eliminating all the cost involved in stocking piling inventories. In JIT the company uses a very sophisticated computerized system which tracks each item as it passes by the production process. This system is connected to all the suppliers and customers of the company. So as the work in progress reaches a particular stage in the production process the system signal the suppliers with the information about the timing and quantity of product required. The suppliers then complete the delivery just in time when they are required. Kaizen (Continuous Improvement): This is a philosophy which empowers employee to develop a way of thinking which direct them toward improving processes, imitation of customer relationships, fast product development and manufacturing, and collaboration with suppliers to develop key strategies of lean company. In other word, Kaizen is a philosophy that inspires and empowers employees to continuously improve the organization. Total Quality Management: This is another philosophy of lean production. This philosophy is developed on the front of empowering employee in achieving maximum quality. This concept leads to elimination of inefficiency and all the waste involved in quality control and quality assurance.iii Learning Organization: This concept goes in line with Kaizen or continuous improvement. However, learning organization means creating an environment where the organization learns and share their knowledge all around the organization. That means other can learn what you know and avoid mistakes or problem you faced.

Case Report 6 Lean production: Toyota Production system

Companys Profile:
iv

Toyota Motors, largest automobile manufacturer company, was founded by Sakichi Toyoda in 1937. It

is situated in Japan, focused mainly on efficient production of automobiles of highest quality through timely innovations. As they are leader in automobile industry, Toyota integrates technologies and design into people-centric solutions, based on fundamental customer needs and the brand promise of You asked for it, you got it. Today, Toyota has changed its slogan to moving forward as it is always striving to develop automobiles with the innovative technologies. Toyota Motor Corporation employed 317,734 people worldwide and is selling its vehicles in all continents. It had sales of 9,678,49million yen in the first half of the 2011 and it is expected to have sales of 8,015,92million yen in the first half of 2012.

Global Market of Toyota:


Toyota Motors is a worldwide leader in automobile industry: 1. It sells its vehicles in North America,Latin America,Europe,Africa,Asia,Ocenia and Middle East regions.
Middle East 9% Oceania 4%

Sales region
North America 33% Latin America Europe 13% 6%

Asia 32% Africa 3%

Fig: Sales of Toyota as a % of units around the world

2. According to the statistics of 2010 sales data, they stand leader in North America and Asia by capturing huge market share.

Case Report 7 Lean production: Toyota Production system

Diversification:
Toyota Motors, not only automobile manufacturer, but also has established itself as a diversified company and its diversified fields are: 1. Housing 2. E-Toyota business 3. Financial services 4. Marine 5. Biotechnology & Afforestation 6. New Business Enterprises

Innovation:
Today, Toyota motor is moving forward through innovation. Day by day, Toyota is looking to develop new technology whether it is alternative energy sources, interconnected traffic & safety systems, human assisting robots or new modes of personal transport. Some of its innovations are: 1. Environmental technology vehicles 2. Safety technology &quality 3. Intelligent transport systems 4. Smart Grid Technology 5. Personal mobility 6. Partner robot 7. Concept cars

Case Report 8 Lean production: Toyota Production system

Fig: Advertisement of Toyota

Vision:
Toyota Motors has a vision to continue developing cars of highest quality regarding safety, comfort ability, eco-friendly by the help of current and new technologies. Also, they are always striving for making continuous improvement of conventional technology toward timely production and delivery vehicles to customers.

Mission:
Toyota Motors has a mission to attract and attain customers with high valued products and services. They want to satisfy and meet customers expectations by giving them the vehicles of the highest quality.

The Toyota Way:


The Toyota way is the five core values which express the beliefs and values shared by Toyota group. All Toyota team members, at every level, are expected to use these values in their daily work and relation with others. 1. Challenge 2. Kaizen 3. Genchi Genbutsu

Case Report 9 Lean production: Toyota Production system 4. Respect 5. Teamwork

Fig: Toyota Business Practice

The origin of the Toyota Production System


Roots of the Toyota Production System
The Toyota Production System (TPS), which is steeped in the philosophy of "the complete elimination of all waste, imbues all aspects of production in pursuit of the most efficient methods, tracing back its roots to Sakichi Toyoda's automatic loom. The TPS has evolved through many years of trial and error to improve efficiency based on the Just-in-Time concept developed by Kiichiro Toyoda, the founder (and second president) of Toyota Motor Corporation.

Case Report 10 Lean production: Toyota Production system Waste can manifest as excess inventory in some cases, extraneous processing steps in other cases, and defective products in yet other cases. All these "waste" elements intertwine with each other to create more waste, eventually impacting the management of the corporation itself. The automatic loom invented by Sakichi Toyoda not only automated work which used to be performed manually but also built the capability to make judgments into the machine itself. By eliminating both defective products and the associated wasteful practices, Sakichi succeeded in tremendously improving both productivity and work efficiency. Kiichiro Toyoda, who inherited this philosophy, set out to realize his belief that "the ideal conditions for making things are created when machines, facilities, and people work together to add value without generating any waste." He conceived methodologies and techniques for eliminating waste between operations, between both lines and processes. The result was the Just-in-Time method. By practicing the philosophies of "Daily Improvements" and "Good Thinking, Good Products, the TPS has evolved into a world-renowned production system. Furthermore, all Toyota production divisions are making improvements to the TPS day and night to ensure its continued evolution. Recently, the "Toyota spirit of making things" is referred to as the "Toyota Way." It has been adopted not only by companies inside Japan and within the automotive industry, but in production activities worldwide, and continues to evolve globally. Toyota's spirit of "making things" is being spread throughout the world as The Toyota Way.vi

Case Report 11 Lean production: Toyota Production system

Fig: Global practice of Toyota System

Toyota Production system


This is a production system which is based in the philosophy of the complete elimination of all waste including all aspects of production in pursuit of the most efficient methods. Toyota Motor Corporation's vehicle production system is a way of making things that is sometimes referred to as a "lean manufacturing system" or a "Just-in-Time (JIT) system," and has become very popular and is studied worldwide. This production control system has been established based on many years of continuous improvements, with the objective of making the vehicles ordered by customers in the fastest and most efficient way, to deliver the vehicles as fast as possible.

The Toyota Production System (TPS) was mainly established based on two concepts: The first is called "jidoka" (which can be loosely translated as "automation with a human touch") which means that when a problem occurs, the equipment stops immediately, preventing defective products from being produced, and the second is the concept of "Just-in-Time," in which each process produces only what is needed by the next process in a continuous flow. Based on the basic philosophies of jidoka and Just-in-Time, the TPS can efficiently and quickly produce vehicles of sound quality as well as satisfy the customer requirements simultaneously, one at a time, that fully satisfy customer requirements.

Case Report 12 Lean production: Toyota Production system

Fig: Toyotas Total Production System

Just-in-Time Philosophy of complete elimination of waste


Just-in-Time "Just-in-Time" means making only what is needed, when it is needed, and in the amount needed." Supplying "what is needed, when it is needed, and in the amount needed" according to this production plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved productivity and efficiency. Kanban System In the TPS (Toyota Production System), a unique production control method called the "kanban system" plays a very important role. The kanban system has also been called the "Supermarket method" because the idea behind it was borrowed from supermarkets. Such mass merchandizing stores use product control cards upon which product-related information, such as a product's name, code and storage location, are entered. Because Toyota employed kanban signs for use in their production processes, the

Case Report 13 Lean production: Toyota Production system method came to be called the "kanban system." At Toyota, when a process refers to a preceding process to retrieve parts, it uses a kanban to communicate which parts have been used. Why use a supermarket concept? A supermarket stocks the items needed by its customers when they are needed in the quantity needed, and has all of these items available for sale at any given time. Taiichi Ohno (a former Toyota vice president), who promoted the idea of Just-in-Time, applied this concept, equating the supermarket and the customer with the preceding process and the next process, respectively. By having the next process (the customer) go to the preceding process (the supermarket) to retrieve the necessary parts when they are needed and in the amount needed, it was possible to improve upon the existing inefficient production system. No longer were the preceding processes making excess parts and delivering them to the next process.

Fig: Toyotas Super market System Two kinds of kanban (the production instruction kanban and the parts retrieval kanban) are used for managing parts. Jidoka Manufacturing high-quality products

Case Report 14 Lean production: Toyota Production system Automation with a human touch The term jidoka used in the TPS (Toyota Production System) can be defined as "automation with a human touch." The word jidoka brings its roots to the invention of the automatic loom by Sakichi Toyoda, Founder of the Toyota Group. The automatic loom is a machine that spins thread for cloth and weaves textiles automatically. Before automated devices were commonplace, back-strap looms, ground looms, and high-warp looms were used to manually weave cloth. In 1896, Sakichi Toyoda invented Japan's first self-powered loom called the "Toyoda Power Loom." Subsequently, he incorporated numerous revolutionary inventions into his looms, including the weft-breakage automatic stopping device (which automatically stopped the loom when a thread breakage was detected), the warp supply device and the automatic shuttle changer. Then, in 1924, Sakichi invented the world's first automatic loom, called the "Type-G Toyoda Automatic Loom (with non-stop shuttle-change motion)" which could change shuttles without stopping operation. The Toyota term "jido" is applied to a machine with a built-in device for making judgments, whereas the regular Japanese term "jido" (automation) is simply applied to a machine that moves on its own. Jidoka refers to "automation with a human touch," as opposed to a machine that simply moves under the monitoring and supervision of an operator. Since the loom stopped when a problem arose, no defective products were produced. This meant that a single operator could be put in charge of numerous looms, resulting in a tremendous improvement in productivity. Type-G Toyoda Automatic Loom, the origin of jidoka

Fig: The Type-G Toyoda Automatic Loom, the world's first automatic loom with a non-stop shuttlechange motion, was invented by Sakichi Toyoda in 1924. This loom automatically stopped when it detected a problem such as thread breakage.

Case Report 15 Lean production: Toyota Production system Concept of jidoka

Companies using lean production system


General Motors (GM)
In 1998, it took Ford and GM 50% more hours to make a car than Toyota - and the difference was so great that GM did not make a profit on any of its cars. Therefore GM attempted to emulate Toyota by introducing a global manufacturing system of its own and has been closing the productivity gap. In 2006, Toyota could build an average car with just 29 hours' labor, while it took GM workers 33 hours - a big improvement from 1998. GM's new manufacturing system is part of a fundamental reorganization of the giant company, introduced in 2004, which is already paying dividends in its North American manufacturing operations.vii

Lean Production in Wipro


In 2005 as a 10-projects pilot to apply the automaker's legendary system invented for eliminating all wasted material and labor is now helping India's third biggest software exporter make savings of up to 60% in outsourcing projects, and even win new consulting contracts from customers such as Nationwide Insurance. Of nearly 4000-5000 projects being delivered by Wipro, over 1600 projects are now Lean, bringing a minimum of 20% savings on an average. viii

Canon Production System (CPS) (Lean Production in Canon)


The objectives of Canon Production System (CPS) are to manufacture better quality products at lower cost and deliver them faster. Canon invited all their employees to suggest ideas for improvement and

Case Report 16 Lean production: Toyota Production system developed 6 Guidelines for the Suggestion System to make it most effective. The company developed also a list of 9 wastes to help their employees become problem-conscious, move from operational improvement to systems improvement, and recognize the need for self-development. Canon has an ongoing workplace improvement program called the Five Ss. the Five Ss refer to the five dimensions of workplace optimization: Seiri (Sort), Seiton (Set in order), Seiso (Shine), Seiketsu (Standardize), and Shitsuke (Sustain). The Five-S movement helped change attitudes. Employees started readily follow workplace rules (keeping parts and tools in the right place, etc.), that previously had been difficult to employ. As a result, performance measures such as defect rates, equipment breakdowns, and number of accidents have all been improved.ix

Benefits of Lean Production


Establishment and mastering of a lean production system would allow companies to achieve the following benefits: Waste reduction Production cost reduction Lower manufacturing cycle times Labor reduction while maintaining or increasing output Inventory reduction while increasing customer service levels Increase in capacity in current facilities Higher quality Higher profits Higher system flexibility in reacting to changes in requirements More strategic focus Improved cash flow through increasing shipping and billing frequencies

However, by continually focusing on waste reduction, there are more potential benefits that can be achieved.

Case Report 17 Lean production: Toyota Production system Lean techniques are applicable not only in manufacturing, but also in service-oriented industry. Every system contains waste, whether it is producing a product or providing a service, there are some elements which are considered waste. Lean thinking may also be applied for getting rid of bureaucracy in office. To run office more effectively and faster the company might just need executives who have a direct involvement with finding, keeping, or dealing with customers as well as key support staff like accountants, lawyers for legal issues and human resources.
x

Limitation:
Like many companies in U.S. and Europe many Japanese companies were not willing or able to follow the full standards of lean production system a benchmark set by Toyota manufacturing unit. Unlike other companies Toyota has unique history and geographical settings that has facilitated the practices of JIT and Kanban system very effectively. There are many reasons why other companies are not willing or able to follow the lean production system to their fullest extent. The table below summarizes some of the major problems encountered by lean production taken to the extreme and their possible solutions are also listed alongside. Problems Production Urban Congestion Long geographic distances Overseas locations Stress on suppliers Too much product variety Solutions Less frequent parts delivery More electronic data transfers More computerized control systems More attention to supplier need More part standardization

Shortage of blue collar workers

More automation More overseas production

Product Development

High cost of frequent model replacement

Less frequent model development

High cost of frequent model line expansion

Fewer model lines and variations Less frequent auto purchases by

Environmental and recycling cost

customers

Case Report 18 Lean production: Toyota Production system More parts and materials recycling More sharing of parts across products Too much product variety
xi

Less heavyweight project management.

Case Question
1. How was Toyota able to implement lean system into its production system? 2. To what extend lean production be applied in reality?

Case Report 19 Lean production: Toyota Production system

References
i

History of Lean Manufacturing, accessed on 30th December, 2011, http://leanmanufacturingtools.org/49/history-of-lean-manufacturing/


ii

Lean Principles, Learning, and Software Production: Evidence from Indian Software Services, accessed on 30th December, 2011, http://www.hbs.edu/research/pdf/08-001.pdf
iii

Lean Production , accessed on 30th December, 2011, http://www.1000ventures.com/business_guide/lean_production_main.html


iv

Toyota Official website, accessed 31 December, 2011, http://www.toyota-global.com

st

TBP: Toyota Business Practice, accessed on 31st December, 2011, http://www.gembapantarei.com/2009/02/tbp_toyota_business_practice.html


vi

The origin of Toyota Production System, Assesed on 30th December 2010.

http://www.toyotaglobal.com/company/vision_philosophy/toyota_production_system/origin_of_the_toyota_production_ system.html
vii

Steve Schifferes,Globalization reporter,BBC News,Georgetown,Kentucky,The triumph of lean production, http://news.bbc.co.uk/2/hi/business/6346315.stm

viii

Wipro's gains from applying Toyotas methods a lesson for software export biz,accessed on 31 December 2011, http://articles.economictimes.indiatimes.com/2011-04-15/news/29417976_1_third-biggest-softwareexporter-new-project-sambuddha-deb

st

ix

Canon Production System(CPS),Five Ss at Canon, http://www.1000advices.com/guru/processes_kaizen_canon_5s.html


x

Lean Production, accessed on 12/30/11, http://www.1000ventures.com/business_guide/lean_production_main.html

xi

The Limits of lean accessed on 12/30/11, http://www.personal.psu.edu/faculty/g/i/gis1/LimitsLean.pdf