ANALYSIS OF PRODUCTION PRINCIPLES IN TOYOTA MOTOR CORPORATION case OM

ANALYSIS OF PRODUCTION PRINCIPLES IN TOYOTA MOTOR CORPORATION case OM ANALYSIS OF PRODUCTION PRINCIPLES IN TOYOTA MOTOR CORPORATION case OM ANALYSIS OF PRODUCTION PRINCIPLES IN TOYOTA MOTOR CORPORATION case OM ANALYSIS OF PRODUCTION PRINCIPLES IN TOYOTA MOTOR CORPORATION case OM ANALYSIS OF PRODUCTION PRINCIPLES IN TOYOTA MOTOR CORPORATION case OM

TPS PROJECT.docx UNIVERSITY OF MUMBAI

NCRD’S

STERLING COLLEGE OF ARTS, COMMERCE & SCIENCE

NERUL, NAVI MUMAI

IN PARTIAL FULFILLMENT FOR THE COURSE OF BACHELOR OF MANAGEMENT STUDIES (B.M.S)

T.Y.B.M.S (SEMESTER V) ACADEMIC YEAR 2015 - 2016

I TUHL GOSWAMI OF NCRD’S STERLING COLLEGE OF ARTS, COMMERCE

& SCIENCE, studying in B.M.S (Semester V) hereby declare that I have complete thisproject report on “TOYOTA PRODUCTION SYSTEM – ANALYSIS OF PRODUCTIONPRINCIPLES AND PROCESSES IN TOYOTA MOTOR CORPORATION”

And has not been submitted to any other University of Institute for the award of anydegree, diploma etc The information is submitted by me is true and original to the best of myknowledge

Date:

Place: Nerul Navi Mumbai (TUHIL GOSWAMI)

I am thankful to STERLING INSTITUTE OF ARTS, COMMERCE AND SCIENCE for giving me an opportunity to work on the project I am highly thankful to my esteemed guide PROF MANASI KILEDAR for her support throughout the completion of this project

STERLING COLLEGE OF ARTS, COMMERCE & SCIENCE

NERUL, NAVI MUMAI

This is a bonafide project work and the information presented is true and original to the best of our knowledge and belief.

PROJECT GUIDE COURSE CO-ORDINATOR

1 SUMMARY - TOYOTA MANAGEMENT PRACTICES

3 INTRODUCTION – TOYOTA PRODUCTION SYSTEM

5 TOYOTA WAY

6 TOYOTA BUILDING BLOCKS

 JIT

8 ELIMINATION OF WASTES IN LEAN MANUFACTURING

10 ILLUSTRATION OF TOYOTA PRODUCTION SYSTEM

12 FACTS ABOUT TOYOTA MOTOR CORPORATION

13 HISTORY OF KIRLOSKAR GROUP

14 INTRRODUCTION – TOYOTA KIRKLOSKAR MOTORS

15 TOYOTA PRODUCT LINE IN INDIA

16 IMPLEMENTATION OF TOYOTA PRODUCTION SYSTEM

17 SOCIAL CONTRIBUTION

18 TMMK PLANT TOUR

19 TOYOTA AND ENVIRONMENT

20 DISTINGUISHING FEATURES ( REASONS TO BUY)

EXECUTIVE SUMMARY

Toyota’s Management Practices

Toyota's management philosophy has evolved from the company's origins and has beenreflected in the terms "Lean Manufacturing" and Just in Time Production, which it wasinstrumental in developing Toyota's managerial values and business methods are knowncollectively as the Toyota Way

In April 2001, Toyota adopted the "Toyota Way 2001", an expression of values and conductguidelines that all Toyota employees should embrace

Under the two headings of Respect for People and Continuous Improvement, Toyotasummarizes its values and conduct guidelines with the following five principles:

According to external observers, the Toyota Way has four components:

 Long-term thinking as a basis for management decisions

 A process for problem-solving

 Adding value to the organization by developing its people

 Recognizing that continuously solving root problems drives organizational learning

LEAN MANUFACTURING

Lean principles are derived from Japanese Manufacturing Industry

Lean manufacturing or lean production, often simply "lean", is a systematic method for theelimination of waste ("Muda") within a manufacturing system Lean also takes into accountwaste created through overburden ("Muri") and waste created through unevenness inworkloads ("Mura") Working from the perspective of the client who consumes a product orservice, "value" is any action or process that a customer would be willing to pay for

Essentially, lean is centred on making obvious what adds value by reducing everything else.For many, lean is the set of "tools" that assist in the identification and steady elimination of

waste (muda) As waste is eliminated quality improves while production time and cost are

reduced A non exhaustive list of such tools would include: SMED, value stream

mapping, Five S, Kanban (pull systems), poka-yoke (error-proofing), total productive

maintenance, elimination of time batching, mixed model processing, rank order clustering,single point scheduling, redesigning working cells, multi-process handling and controlcharts (for checking mura)

Lean manufacturing is a management philosophy derived mostly from the Toyota ProductionSystem (TPS) (hence the term Toyotism is also prevalent) and identified as "lean" only in the1990s TPS is renowned for its focus on reduction of the original Toyota seven wastes toimprove overall customer value, but there are varying perspectives on how this is bestachieved The steady growth of Toyota, from a small company to the world's largestautomaker, has focused attention on how it has achieved this success

There is a second approach to lean manufacturing, which is promoted by Toyota, called TheToyota Way, in which the focus is upon improving the "flow" or smoothness of work,

thereby steadily eliminating mura ("unevenness") through the system and not upon 'waste

reduction' per se Techniques to improve flow include production levelling, "pull" production

(by means of kanban) and the Heijunka box This is a fundamentally different approach from

most improvement methodologies, and requires considerably more persistence than basicapplication of the tools, which may partially account for its lack of popularity

TOYOTA PRODUCTION SYSTEM

The Toyota Production System (TPS) is an integrated socio-technical system, developed

by Toyota,that comprises its management philosophy and practices The TPS organizesmanufacturing and logistics for the automobile manufacturer, including interaction withsuppliers and customers The system is a major precursor of the more generic "leanmanufacturing." Ohno, and Eiji Toyoda developed the system between 1948 and 1975

Originally called "just-in-time production," it builds on the approach created by the founder

of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno

A Brief History of Toyota Production System

Toyota developed the Toyota Production System after World War II While Ford and GMused mass production, economies of scale, and big equipment to produce as many parts aspossible, as cheaply as possible, Toyota's market in post-war Japan was small Toyota alsohad to make a variety of vehicles on the same assembly line to satisfy its customers Bymaking lead times short and focusing on keeping production lines flexible, Toyota realized itcould actually get higher quality, better customer responsiveness, better productivity, andbetter utilization of equipment and space

A basic premise of mass production is that machine downtime is obvious waste A machineshut down for repair is not making parts that could make money But TPS has challenged thisnotion

Often the best thing you can do is to idle a machine and stop producing parts Overproduction, is a fundamental waste in TPS

Often it is best to build up an inventory of finished goods in order to level out the productionschedule, rather than produce according to the actual fluctuating demand of customer orders.Levelling out the schedule (heijunka) is a foundation for flow and pull systems and forminimizing inventory in the supply chain Levelling production smoothes out the volume andmix of items produced so there is little variation in production from day to days

Often it is best to selectively add and substitute overhead for direct labour When waste isstripped away from value-adding workers, high-quality support has to be provided for them

It may not be a top priority to keep your workers busy making parts as fast as possible.Companies should produce at the rate of customer demand

Working faster just for the sake of getting the most out of workers may be counterproductive

It is best to selectively use information technology and often better to use manual processeseven when automation is available and would seem to justify its cost in reducing yourheadcount People are the most flexible resource

The manual process must be streamlined before it is automated TPS starts with the customer,

by asking, "What value are we adding from the customer's perspective?" Because the onlything that adds value in any type of process- be it in manufacturing, marketing, or adevelopment process-is the physical or information transformation of that product, service, oractivity into something the customer wants

TPS is all about commitment to continuously investing in its people and promoting a culture

of continuous improvement When Toyota sets up assembly lines, it selects only the best andbrightest workers, and challenges them to grow in their jobs by constantly solving problems.Similarly, Toyota staffs sales, engineering, service parts, accounting, human resources, andevery aspect of the business with carefully selected individuals and empowers them toimprove their processes and find innovative ways to satisfy their customers

Toyota is a true learning organization that has been evolving and learning for most part of acentury Many U.S companies have embraced lean tools but do not understand what makesthem work together in a system They do not understand the power behind true TPS That lies

in Toyota’s continuous improvement culture

After World War II, the Americans realized the need for trucks in order to rebuild Japan andeven helped Toyota to start building trucks again As the economy gained momentum,Toyota had little difficulty getting orders for automobiles But rampant inflation made moneyworthless and collections became very difficult As the cash crunch worsened, Toyotaadopted strict cost-cutting policies, including voluntary pay cuts by managers and a 10percent cut in pay for all employees.

Even before the Second World War, Toyota had realized that the Japanese market was toosmall and demand too fragmented to support the high production volumes in the U.S Toyotarealized that to survive in the long run, it would have to adapt the mass production approachfor the Japanese market Bigger rivals like Ford had tons of cash and a large U.S andinternational market Toyota had no cash and operated in a small country With few resourcesand capital, Toyota needed to turn cash around quickly Ford had a complete supply system,Toyota did not Toyota didn't have the luxury of taking cover under high volume andeconomies of scale afforded by Ford's mass production system It needed to adapt Ford'smanufacturing process to achieve simultaneously high quality, low cost, short lead times, andflexibility Toyota needed to churn out low volumes of different models using the sameassembly line, because consumer demand in Japan was too low to support dedicatedassembly lines for one vehicle

Most businesses use processes that are filled with waste, because work in Step 1 is performed

in large batches before it is needed by Step 2 This "work in process" must then be stored andtracked and maintained until needed by step 2 TPS is a "pull system", in which every step ofevery manufacturing process has the equivalent of a "gas gauge" built in, (called kanban), tosignal to the previous step when its parts need to be replenished This creates "pull" whichcontinues cascading backwards to the beginning of the manufacturing cycle

The Toyota Way is a set of principles and behaviours that underlie the Toyota Motor

Corporation's managerial approach and production system Toyota first summed up itsphilosophy, values and manufacturing ideals in 2001, calling it "The Toyota Way 2001" Itconsists of principles in two key areas: continuous improvement, and respect for people.The two focal points of the principles are continuous improvement and respect for people.The principles for a continuous improvement include establishing a long-term vision,working on challenges, continual innovation, and going to the source of the issue or problem.The principles relating to respect for people include ways of building respect and teamwork

Toyota’s Building Blocks

The 14 principles of The Toyota Way are organized in four sections: (1) long-termphilosophy, (2) the right process will produce the right results, (3) add value to theorganization by developing your people, and (4) continuously solving root problems drivesorganizational learning

Principle 1 Base your management decisions on a long-term philosophy, even at the expense

of short-term financial goals

Principle 2 Create continuous process flow to bring problems to the surface

Principle 3 Use “pull" systems to avoid overproduction

Principle 4 Level out the workload (heijunka).

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

Principle 6 Standardized tasks are the foundation for continuous improvement andemployee empowerment

Principle 7 Use visual control so no problems are hidden

Principle 8 Use only reliable, thoroughly tested technology that serves your people andprocesses

Principle 9 Grow leaders who thoroughly understand the work, live the philosophy, andteach it to others

Principle 10 Develop exceptional people and teams who follow your company's philosophy.Principle 11 Respect your extended network of partners and suppliers by challenging themand helping them improve

Principle 12 Go and see for yourself to thoroughly understand the situation (genchi

Long-term philosophy

The first principle involves managing with a long-view rather than for short-term gain Itreflects a belief that people need purpose to find motivation and establish goals

Right process will produce right results

The next seven principles are focused on process with an eye towards quality outcome.Following these principles, work processes are redesigned to eliminate waste (muda) throughthe process of continuous improvement — kaizen The seven types of muda are (1)overproduction; (2) waiting, time on hand; (3) unnecessary transport or conveyance; (4) overprocessing or incorrect processing; (5) excess inventory; (6) motion; and (7) defects

The principles in this section empower employees in spite of the bureaucratic processes ofToyota, as any employee in the Toyota has the authority to stop production to signal a qualityissue, emphasizing that quality takes precedence (Jidoka) The way the Toyota bureaucraticsystem is implemented to allow for continuous improvement (kaizen) from the peopleaffected by that system so that any employee may aid in the growth and improvement of thecompany

Recognition of the value of employees is also part of the principle of measured productionrate (heijunka), as a level workload helps avoid overburdening people and equipment (muri),but this is also intended to minimize waste (muda) and avoid uneven production levels(mura)

These principles are also designed to ensure that only essential materials are employed (toavoid overproduction), that the work environment is maintained efficiently (the 5S Program)

to help people share work stations and to reduce time looking for needed tools, and that thetechnology used is reliable and thoroughly tested

Value to organization by developing people

Human development is the focus of principles 9 through 11 Principle 9 emphasizes the need

to ensure that leaders embrace and promote the corporate philosophy This reflects, according

to Liker, a belief that the principles have to be ingrained in employees to survive The 10thprinciple emphasizes the need of individuals and work teams to embrace the company'sphilosophy, with teams of 4-5 people who are judged in success by their team achievements,rather than their individual efforts Principle 11 looks to business partners, who are treated byToyota much like they treat their employees Toyota challenges them to do better and helpsthem to achieve it, providing cross functional teams to help suppliers discover and fixproblems so that they can become a stronger, better supplier

Solving root problems drives organizational learning

The final principles embrace a philosophy of problem solving that emphasizes thoroughunderstanding, consensus-based solutions swiftly implemented and continual reflection(hansei) and improvement (kaizen) The 12th principle (Genchi Genbutsu) sets out theexpectation that managers will personally evaluate operations so that they have a firsthandunderstanding of situations and problems Principle 13 encourages thorough consideration ofpossible solutions through a consensus process, with rapid implementation of decisions oncereached (nemawashi) The final principle requires that Toyota be a "learning organization",continually reflecting on its practices and striving for improvement According to Liker, theprocess of becoming a learning organization involves criticizing every aspect of what onedoes

Towards one piece flow

To become lean, companies have to create continuous flow wherever applicable Flow alsotends to force the implementation of a lot of the other lean tools and philosophies such as

preventive maintenance Creating flow exposes inefficiencies that demand immediate

solutions Everyone concerned is motivated to fix the problems and inefficiencies because theplant will shut down if they don't Traditional business processes, in contrast, have thecapacity to hide vast inefficiencies without anyone noticing Flow means that a customerorder triggers the process of obtaining the raw materials needed just for that customer's order.The raw materials then flow immediately to supplier plants, where workers immediately fillthe order with components, which flow immediately to a plant, where workers assemble theorder, and then the completed order flows immediately to the customer The whole processshould take a few hours or days, rather than a few weeks or months In a large batchoperation, there are probably weeks of work in process between operations and it can takeweeks or even months from the time a defect is caused until it is discovered By then it isnearly impossible to track down and identify why the defect occurred By making a product

flow, we can set in motion numerous activities to eliminate all muda (wastes) In lean thinking, the ideal batch size is one Creating flow means linking together operations that

otherwise are disjointed There is more teamwork, rapid feedback on earlier quality problems,control over the process, and direct pressure for people to solve problems and think and grow.Ultimately, the main benefit of one-piece flow is that it challenges people to think andimprove

Quality - It is much easier to build in quality in one-piece flow Every operator is aninspector and works to fix any problems in station before passing them on But if defects doget missed and passed on, they will be detected very quickly and the problem can beimmediately diagnosed and corrected

Pull Systems (Kanban)

Kanban is a system to control the logistical chain from a production point of view, and is aninventory control system Kanban was developed by Taiichi Ohno, an industrialengineer at Toyota, as a system to improve and maintain a high level of production Kanban

is one method to achieve JIT

Kanban became an effective tool to support running a production system as a whole, and anexcellent way to promote improvement Problem areas are highlighted by reducing thenumber of kanban in circulation

One of the main benefits of kanban is to establish an upper limit to the work in progress

inventory, avoiding overloading of the manufacturing system Kanban aligns inventory levelswith actual consumption A signal tells a supplier to produce and deliver a new shipmentwhen material is consumed These signals are tracked through the replenishment cycle,bringing visibility to the supplier, consumer, and buyer

Kanban uses the rate of demand to control the rate of production, passing demand from theend customer up through the chain of customer-store processes In 1953, Toyota applied thislogic in their main plant machine shop

Kanban is part of an approach where the "pull" comes from demand Re-supply or production

is determined according to the actual demand of the customer In contexts where supply time

is lengthy and demand is difficult to forecast, often, the best one can do is to respond quickly

to observed demand This situation is exactly what a kanban system accomplishes, in that it isused as a demand signal that immediately travels through the supply chain This ensures thatintermediate stock held in the supply chain is better managed, and are usually smaller Wherethe supply response is not quick enough to meet actual demand fluctuations, thereby causingpotential lost sales, stock building may be deemed more appropriate, and is achieved byplacing more kanban in the system

Taiichi Ohno stated that, to be effective, kanban must follow strict rules of use Toyota, forexample, has six simple rules, and close monitoring of these rules is a never-ending task,thereby ensuring that the kanban does what is required

Toyota's Six Rules

 Later process picks up the number of items indicated by the kanban at the earlierprocess

 Earlier process produces items in the quantity and sequence indicated by the kanban

 No items are made or transported without a kanban

 Always attach a kanban to the goods

 Defective products are not sent on to the subsequent process The result is 100%defect-free goods

 Reducing the number of kanban increases the sensitivity.

Kanban cards are a key component of kanban and they signal the need to move materials

within a production facility or to move materials from an outside supplier into the productionfacility The kanban card is, in effect, a message that signals depletion of product, parts, orinventory When received, the kanban triggers replenishment of that product, part, orinventory Consumption, therefore, drives demand for more production, and the kanban cardsignals demand for more products—so kanban cards help create a demand-driven system

Heijunka

Production levelling is also known as production smoothing or – by its Japanese original

term – heijunka is a technique for reducing the Mura (Unevenness) which in turn

reduces muda (waste) It was vital to the development of production efficiency in the ToyotaProduction System and lean manufacturing The goal is to produce intermediate goods at aconstant rate so that further processing may also be carried out at a constant and predictablerate

On a production line, as in any process, fluctuations in performance increase waste This isbecause equipment, workers, inventory and all other elements required for production mustalways be prepared for peak production This is a cost of flexibility If a later process variesits withdrawal of parts in terms of timing and quality, the range of these fluctuations willincrease as they move up the line towards the earlier processes This is known as demandamplification

Toyota's final assembly line never assembles the same automobile model in a batch Instead,they level production by assembling a mix of models in each batch and the batches are made

as small as possible This is in contrast to traditional mass production, where long changeovertimes meant that it was more economical to punch out as many parts in each batch aspossible When the final assembly batches are small, then earlier process batches, such as thepress operations, must also be small and changeover times must be short

1. Implement green stream/red stream or fixed sequence, fixed volume to establishthe entry and exit criteria for products from these streams and establish the supportingdisciplines in the support services The cycle established will produce Every ProductEvery Cycle (EPEC) This is a specific form of Fixed Repeating Schedule Greenstream products are those with predictable demand, Red stream products are highvalue unpredictable demand products

2 Faster fixed sequence with fixed volume keep the streams the same but use the now

established familiarity with the streams to maximise learning and improve speed ofproduction (economies of repetition) This will allow the shortening of the EPECcycle so that the plant is now producing every product every 2 weeks instead of monthand then later on repeating every week This may require support services to speed up

as well

3. Fixed sequence with unfixed volume keep the stream sequences the same but now

phase in allowing actual sales to influence volumes within those sequences Thisaffects inbound componentry as well as support services This is a more generalisedform of Fixed Repeating Schedule

4 Unfixed sequence with fixed volume the stream sequences, and EPEC, can now be

gradually flexed but move to small fixed batch sizes to make this more manageable

5 Unfixed sequence with unfixed volume finally move to true single piece flow and

pull by reducing batch sizes until they reach one

Quality

Toyota’s philosophy is to identify defects when they occur and automatically stop

production so that the problem can be fixed before the defect continues downstream Jidoka

is also referred to as autonomation – equipment endowed with human intelligence to stop

itself when it has a problem In-station quality (preventing problems from being passed downthe line) is much more effective and less costly than inspecting and repairing qualityproblems after the fact The last thing management in traditional mass manufacturing allows

is a halt in production Bad parts are simply labelled and set aside to be repaired at anothertime and by another department The mantra is to produce large quantities at all costs and fixproblems later Lean manufacturing dramatically increases the importance of building thingsright the first time With very low levels of inventory, there is no buffer to fall back on incase there is a quality problem Problems in operation A will quickly shut down operation B.When equipment shuts down, flags or lights, usually with accompanying music or an alarm,are used to signal that help is needed to solve a quality problem

Andon refers to the light signal for help

Toyota follows a different approach Toyota keeps things simple and uses very few complexstatistical tools The quality specialists and team members have just four key tools:

Go and see

 Go and see

Analyze the situation

 Go and see

Use one-piece flow and

 Go and see andon to surface problems

Ask "Why?" five times

 Go and see

Andon works only when employees know the importance of bringing problems to the surface.

Unless there is a problem-solving process already in place and people are following it, there's

no point in spending money on fancy technology Toyota prefers to first use people andprocesses to solve problems, then supplement and support its people with technology Acommon Toyota quality tactic is to anticipate problems as early as possible and put in placecountermeasures before the problems even occur Occasionally a time-out is required toreflect on the purpose and direction of the project before moving on The Toyota Wayemphasises stopping or slowing down to get quality right the first time to enhanceproductivity in the long run

Standardisation

Toyota believes standardized work is the basis for empowering workers and innovation in thework place If the process is shifting, then any improvement will just be one more variationthat is occasionally used and mostly ignored One must standardize, and thus stabilize theprocess, before continuous improvements can be made Workers follow very detailedstandardized procedures that touch every aspect of the organization In the workplace,everything must be in its place There is strict discipline about time, cost, quality andsafety-virtually every minute of the day is structured But Toyota also values many of thecharacteristics associated with flexible organizations referred to as "organic": extensiveemployee involvement, a lot of communication, innovation, flexibility, high morale, and astrong customer focus Standardisation does not necessarily imply a bureaucratic approach Acoercive bureaucracy uses standards to control people, catch them breaking the rules, andpunish them to get them back in line Unlike Taylorism, the Toyota Way preaches that theworker is the most valuable resource-not just a pair of hands taking orders, but an analyst andproblem solver Toyota’s enabling systems are simply the best practice methods, designedand improved upon with the participation of the work force The standards actually helppeople control their own work

The critical task when implementing standardization is to find that balance between providingemployees with rigid procedures to follow and providing the freedom to innovate and becreative to meet challenging targets consistently for cost, quality, and delivery The key toachieving this balance lies in the way people write standards as well as who contributes tothem First, the standards have to be specific enough to be useful guides, yet general enough

to allow for some flexibility Second, the people doing the work have to improve thestandards Nobody likes rules and procedures when they are imposed on them Imposed rulesthat are strictly policed become coercive and a source of friction and resistance betweenmanagement and workers

The 5S

The five Ss (seiri, seiton, seiso, seiketsu, and shitsuke) are:

1 Sort-Sort through items and keep only what is needed while disposing of what is not

2 Straighten (orderliness}- A place for everything and everything in its place

3 Shine (cleanliness)- The cleaning process often acts as a form of inspection that exposesabnormal and pre-failure conditions that could hurt quality or cause machine failure

4 Standardize (create rules}-Develop systems and procedures to maintain and monitor thefirst three S's

5 Sustain (self-discipline}-Maintaining a stabilized workplace is an ongoing process ofcontinuous improvement

CONTIUOUS IMPROVEMENT PROCESS

1 Set ground rules

2 Identify customer requirements

3 Define success

4 Process Mapping

5 Map current state process

6 Debrief (Plus / Delta)

7 Check-in meeting

8 Review agenda, ground rules, and check-in report

9 Complete current state map

10 Assign task and wait time and characterize process

11 Identify value added steps, wastes, & pain points

CONTIUOUS IMPROVEMENT PROCESS (CONTD )

12 Identify root causes of problems

13Brainstorm ideas to improve the process

14 Debrief (Plus / Delta)

15 Check-in meeting

16 Review agenda, ground rules, and check-in report

17 Evaluate and select improvements

18 Take Team photo

19 Map the future state process

20 Assign task and wait time and characterize process

21 Identify performance measures

22 Prepare an Action Plan

23 Debrief (Plus / Delta)

24 Check-in meeting

25 Review agenda, ground rules, and check-in report

26 Finish up work from the prior day

27 If there is time:

 Identify project risks and prepare mitigation steps

 Revise forms/templates

 Prepare communication plan

 Implement Quick Hits

28 Prepare report out presentation

29 Deliver report out presentation

30 Celebrate!

Toyota’s leaders are home grown Leaders must live and thoroughly understand the

company’s culture day by day A critical element of the culture is genchi genbutsu, which is interpreted within Toyota to mean going to the place to see the actual situation for

understanding Gemba, the more popular term, refers to "the actual place" and means about

the same thing as genchi genbutsu The first step of any problem-solving process,

development of a new product, or evaluation of an associate's performance is grasping the

actual situation, which requires "going to gemba."

Toyota promotes and expects creative thinking, but it should be grounded in a thoroughunderstanding of all aspects of the actual situation Leaders must demonstrate this ability andunderstand how work gets done at a shop floor level Toyota believes that, a superficialimpression of a situation will lead to ineffective decision-making and leadership Someonetrained in the Toyota Way, takes nothing for granted and knows what he is talking about,because it comes from firsthand knowledge

Toyota leaders are passionate about involving people who are doing the value-added work inimproving the process Yet encouraging employee involvement by itself is not enough todefine a Toyota leader In-depth understanding of the work in addition to generalmanagement expertise is also needed So Toyota leaders are respected for their technicalknowledge as well as followed for their leadership abilities Instead of giving orders, theylead and mentor through questioning They will raise questions about the situation and theperson’s strategy for action, but they will not give answers to these questions even thoughthey may have the knowledge

Toyota believes in making decisions slowly by consensus by thoroughly considering alloptions and then implementing them rapidly Nemawashi is the process by which juniorpeople build consensus by developing a proposal and circulating it broadly for managementapproval In the nemawashi process, many people give their input and this generatesconsensus By the time the formal proposal comes up for a high-level approval, the decision

is already made Agreements have been reached and the final meeting is a formality

Managing people

Stage 1: Orientation The group needs strong direction from the leader and must understand

the basic mission, rules of engagement, and tools the members will use

Stage 2: Dissatisfaction After going to work, the members discover it is harder than they

thought to work as a team In this stage, they continue to need strong direction (structure)from the leader but also need a lot of social support to get through the tough social dynamicsthey do not understand

Stage 3: Integration The group starts to develop a clearer picture of the roles of various team

members and begins to exert control over team processes The leader does not have toprovide much task direction, but the team still needs a lot of social support

Stage 4: Production The group becomes a high-performing team, no longer dependent on the

leader

Toyota has attempted to enrich jobs in various ways Some of the features that make the jobmore enriching include job rotation, various kinds of feedback on how workers are doing at

their jobs, the andon system and significant work group autonomy over the tasks Toyota

became interested in job enrichment in the 1990s and redesigned its assembly lines so that theparts that make up a subsystem of the vehicle are installed in one specific area on theassembly line Rather than a work group assembling electrical systems and then putting infloor mats and then door handles, a work group might focus almost exclusively on theelectrical system under the hood For white collar workers, Toyota organizes teams aroundcomplete projects from start to finish For example, the design of the interior of the vehicle isthe responsibility of one team from the design phase through production Participation in theproject from beginning to end enriches and empowers the employee People are motivated bychallenging but attainable goals and measurement of progress toward those goals Toyota'svisual management systems plus policy deployment means that teams always know how theyare doing and are always working towards stretch improvement targets Policy deploymentsets challenging, stretch goals from the top to the bottom of the company Carefulmeasurements every day let work teams know how they are performing

Vendor management

Toyota is a tough customer Toyota has very high standards of excellence and expectspartners to rise to those standards But Toyota will also help partners to improve theirstandards Toyota has made serious investment in building a network of highly capablesuppliers who are tightly integrated into Toyota's extended lean enterprise Toyota’s highquality 12 standards result from the excellence in innovation, engineering, manufacture, andoverall reliability of Toyota's suppliers Without dependable suppliers, JIT cannot work There is much hype about "streamlining" the supply chain through advanced informationtechnology What is not adequately emphasized is the enormous complexity of coordinatingdetailed, daily activities to deliver value to the customer One is not likely to hear aboutrelationships across firms-about how partners must work together toward common goals Yet,this is one of Toyota's key strengths

Toyota gives new suppliers very small orders to start with They must prove their sincerityand commitment to Toyota's high performance standards for quality, cost, and delivery Ifthey demonstrate this for early orders, they will get increasingly larger orders Toyota willteach them the Toyota Way and adopt them into the family Once inside, a supplier is notremoved except in extraordinary circumstances

Toyota keeps challenging its suppliers with aggressive targets Toyota believes in havinghigh expectations for their suppliers and then treating them fairly and teaching them Treatingthem softly or beating them up without teaching them would be very disrespectful Andsimply switching supplier sources because another supplier is a few percentage pointscheaper is unthinkable Suppliers want to work for Toyota both for the prestige involved andbecause they know they will get several opportunities to learn and improve

Toyota is very careful when deciding what to outsource and what to do in house Like otherJapanese automakers, Toyota outsources a lot, about 70% of the components of the vehicle.But is still tries to develop internal competency even in case of components it outsources

A learning Organization

When processes are stable and waste and inefficiencies become publicly visible, there is an

opportunity to learn continually from improvements To be a learning organization, it is necessary to have stability of personnel, slow promotion, and very careful succession systems

to protect the organizational knowledge base To "learn" means having the capacity to build

on the past and move forward incrementally, rather than starting over and reinventing the wheel with new personnel with each new project

The Toyota philosophy emphasises that true problem solving requires identifying the root cause which often lies hidden beyond the source." The answer lies in digging deeper by asking why the problem occurred The most difficult part to learn is grasping the situation

thoroughly before proceeding with five-why analysis Grasping the situation starts with

observing the situation with an open mind and comparing the actual situation to the standard

To clarify the problem, one must start by going to where the problem is (genchi genbutsu)

For Toyota, problem solving is 20% tools and 80% thinking For most other companies, it seems to be 80% tools and 20% thinking

A key to learning and growing, not only within Toyota but in Japanese culture, is hansei, which roughly means "reflection." Hansei means reflection on the process of developing the vehicle Hansei is the check stage of PDCA It is used most often at the end of a vehicle program, but is being now moved further upstream so there are several hansei events at key junctures in the program

Toyota has judiciously used stability and standardization to transfer individual and team innovation into organization-wide learning It is one thing for individual employees to come

up with innovative ways to do things But to become organization - wide learning, the new way must be standardized and practiced across the organization until a better way is

discovered This is the foundation for the Toyota Way of learning-standardization punctuated

by innovation, which gets translated into new standards

Performance measurement

Toyota is not particularly strong at developing sophisticated metrics across the company.Toyota measures processes everywhere on the factory floor, but prefers simple metrics anddoes not use many of them at the company or plant level

There are at least three types of measures at Toyota:

Global performance measures-how is the company doing? At this level, Toyota uses

financial, quality, and safety measures very similar to those used by other companies

Operational performance measures-how is the plant or department doing? Toyota's

measurements are timelier and better maintained than at other companies The people at thework group level or the project manager's level painstakingly track progress on key metricsand compare them with aggressive targets The metrics tend to be specific to a process

Stretch improvement metrics-how is the business unit or work group doing? Toyota sets

stretch goals for the corporation, which are translated into stretch goals for every businessunit and ultimately every work group Tracking progress toward these goals is central toToyota's learning process

Creating flow

There are five steps to creating flow:

1 Identify who the customer is for the processes and the added value they want delivered

2 Separate out the repetitive processes from the unique, one-of-a-kind processes and learnhow you can apply TPS to the repetitive processes

3 Map the flow to determine value added and non-value added

4 Think creatively about applying the broad principles of the Toyota Way to these processesusing a-future-state value stream map

5 Start doing it and learn by doing using a PDCA cycle and then expand it to the lessrepetitive processes'

Culture

The Toyota Way goes to the level of basic assumptions of the most effective way to

"perceive, think, and feel" in relation to problems Things like genchi genbutsu, recognizing

waste, thorough consideration in decision making, and the focus of Toyota on long-termsurvival are the DNA of Toyota

The Toyota Way is explicitly taught to new members Toyota conducts seminars on theToyota Way The Toyota Way also gets transmitted through action in day-to-day work whereleaders demonstrate by their actions

Toyota has also attempted to spread the culture to global operations The most intensiveeffort has been in North America All U.S senior managers were assigned Japanesecoordinators The coordinators had two jobs: coordinating with Japan, where there arecontinuous technical developments, and teaching U.S employees the Toyota Way throughdaily mentorship Every day is a training day, with immediate feedback shaping the thinkingand behaviour of the U.S employees

Toyota has used trips to Japan, to influence the cultural awareness of U.S employees Toyotahas also sent over senior executives to instill the culture in new American leaders Thisstarted with managers from Japan and has evolved to homegrown managers in NorthAmerica Toyota has used the TPS technical systems, or "process" layer of the Toyota Way,

to help reinforce the culture Toyota sought to build By creating flow across operations usingTPS and lean product development in its overseas operations, Toyota is helping change thisbehaviour and shape the culture it seeks to nurture

TPS Concepts

1.) Jidoka

— Highlighting/visualization of problems —

-Quality must be built in during the manufacturing

process!-If equipment malfunction or a defective part is discovered, the affected machineautomatically stops, and operators cease production and correct the problem

For the Just-in-Time system to function, all of the parts that are made and supplied must meetpredetermined quality standards This is achieved through jidoka

Jidoka means that a machine safely stops when the normal processing is completed It alsomeans that, should a quality / equipment problem arise, the machine detects the problem onits own and stops, preventing defective products from being produced As a result, onlyproducts satisfying quality standards will be passed on to the following processes on theproduction line

Since a machine automatically stops when processing is completed or when a problem arisesand is communicated via the "andon" (problem display board), operators can confidentlycontinue performing work at another machine, as well as easily identify the problem's cause

to prevent its recurrence This means that each operator can be in charge of many machines,resulting in higher productivity, while continuous improvements lead to greater processingcapacity

2.)

Just-in-Time

- Making only "what is needed, when it is needed, and in the amount needed!"

Producing quality products efficiently through the complete elimination of waste,

inconsistencies, and unreasonable requirements on the production line

In order to deliver a vehicle ordered by a customer as quickly as possible, the vehicle is efficiently built within the shortest possible period of time by adhering to the following:When a vehicle order is received, a production instruction must be issued to the beginning of the vehicle production line as soon as possible

The assembly line must be stocked with required number of all needed parts so that any type

of ordered vehicle can be assembled

The assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process (the preceding process)

The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process

3.) Poka-Yoke

 Poka-yoke (means "fail-safing" or "mistake-proofing")

 Avoiding (yokeru) inadvertent errors (poka)) is a behavior-shaping constraint.

 A method of preventing errors by putting limits on how an operation can beperformed in order to force the correct completion of the operation

4.) Mura, Muri

 Mura is a Japanese term for unevenness

 It is also a key concept in the Toyota Production System and is one of the three types

of waste (Muda, Mura, Muri) it identifies Waste reduction is an effective way to increase profitability

 Muri is a Japanese term for overburden or unreasonableness.

 It is also a key concept in the Toyota Production System and is one of the three types

of waste (Muda, Mura, Muri) it identifies Waste reduction is an effective way to increase profitability

 Muri can be avoided through standardised work

5.) Andon (Signboard)

 Andon is a manufacturing term referring to a signboard incorporating signal lights,

audio alarms, and text or other displays installed at a workstation to notify

management and other workers of a quality or process problem

 It gives the worker the ability to stop production when a defect is found, and

immediately call for assistance

 Work is stopped until a solution has been found out The alerts may be logged to a database so that they can be studied as part of a continuous-improvement program

 The system will typically indicate where the alert was generated, and may also

provide a description of the trouble

7 WASTES

TPS concepts focus on elimination of the seven wastes in lean manufacturing

 Overproduction Waste - This is usually because of working with oversizebatches, long lead times, poor supplier relations and a host of other reasons Overproductionleads to high levels of inventory which mask many of the problems within your organisation.The aim should be to make only what is required when it is required by the customer

 Inventory Waste - Inventory costs you money, every piece of product tied up inraw material, work in progress or finished goods has a cost and until it is actually sold thatcost is yours In addition to the pure cost of your inventory it adds many other costs;inventory feeds many other wastes Inventory has to be stored, it needs space, it needspackaging and it has to be transported around It has the chance of being damaged duringtransport and becoming obsolete The waste of Inventory hides many of the other wastes inyour systems

 Waste Of Waiting - The Waste of Waiting disrupts flow, one of the mainprinciples of Lean Manufacturing, as such it is one of the more serious of the seven wastes

7 WASTES (Contd…)

 Waste Of Motion - Unnecessary motions are those movements of man ormachine which are not as small or as easy to achieve as possible, by this I mean bendingdown to retrieve heavy objects at floor level when they could be fed at waist level to reducestress and time to retrieve Excessive travel between work stations, excessive machinemovements from start point to work start point are all examples of the Motion All of thesewasteful motions cost you time (money) and cause stress on your employees and machines

 Waste Of Transportation - Transport adds no value to the product, you as abusiness are paying people to move material from one location to another, a process that onlycosts you money and makes nothing for you The waste of Transport can be a very high cost

to your business; you need people to operate it and equipment such as trucks or fork trucks toundertake this expensive movement of materials

 Waste Of Rework (Defects) - The most obvious of the seven wastes, althoughnot always the easiest to detect before they reach your customers Quality errors that causedefects invariably cost you far more than you expect Every defective item requires rework orreplacement, it wastes resources and materials, it creates paperwork, and it can lead to lostcustomers The Waste of Defects should be prevented where possible, better to prevent than

to try to detect them, implementation of poka yoke systems and autonomation can help toprevent defects from occurring

 Waste Of Overprocessing - The waste of Overprocessing is where we useinappropriate techniques, oversize equipment, working to tolerances that are too tight,perform processes that are not required by the customer and so forth All of these things cost

us time and money

TOYOTA GLOBAL VISION

Toyota will lead the way to the future of mobility, enriching lives around the world with thesafest and most responsible ways of moving people

Through our commitment to quality, constant innovation and respect for the planet, we aim toexceed expectations and be rewarded with a smile

We will meet our challenging goals by engaging the talent and passion of people, whobelieve there is always a better way

TMC GLOBAL MISSION

Toyota will lead the way to the future of mobility, enriching lives around the world with thesafest and most responsible ways of moving people

“Through our commitment to quality, constant innovation and respect for the planet, we aim

to exceed expectations and be rewarded with a smile”

“We will meet our challenging goals by engaging the talent and passion of people whobelieve there is a always a better way”

When Toyota Motor Corporation (TMC) President Katsuaki Watanabe announced "ToyotaGlobal Vision 2020" to worldwide Toyota associates in November 2007, it was acontinuation of a series of Visions that began 12 years ago

Throughout the '80s, Toyota never allowed itself to be blinded by the good times of thebubble economy, but instead it worked hard to maintain steady growth and make sure all ofits business functions (sales, technology, manufacturing, procurement, human resources,logistics, etc.) kept the same pace However, upon entering the '90s, the company was facedwith tougher circumstances, such as the appreciation of the Japanese yen, a shrinking market