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Toyota Production Management

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How Toyota manages an excellent production system?

Toyota is a global brand of vehicles whose products sell across 170 countries. The brand is among the leading vehicle makers of the world with very few able to compete with it directly. It enjoys high level brand equity and customer loyalty. Toyota is known as a technologically innovative brand. It has a rich legacy of innovation and is known for the use of innovative production methods. The company has always focused on production of better cars and invested in best in class technology. Its focus is to win customers’ trust and Toyota never tries to compromise it. High level of customer loyalty comes from focus on great quality and user convenience. Toyota invests a lot in research and innovation to make its products better and better. However, the real secret behind its success is its excellently managed production system. Toyota’s production system is old but has been refined continuously through generations.

Continuous refinement has led to a near perfect production management system. Toyota has adopted some excellent processes, most of which have been hailed widely for their ability to maximize efficiency. Production management for large vehicle brands is important for many reasons. First of all synchronization across processes is necessary for a smooth workflow. Apart from that leaving space for wastage can increase operational costs. It will be disastrous for a vehicle brand in the long term. Toyota’s production system is based on a leak proof strategy where its focus has remained on filling the gaps that may lead to wastage. The Toyota Production System or TPS is also known as Just in Time or Lean Production System.

How did the TPS (Toyota Production System) come into being?

The TPS or Toyota Production system was not as efficient and perfect since its birth. It has been through a long series of trial and errors and experiments to become as perfect. Its roots lie in the philosophy of eliminating all wastage. Kiichiro Toyoda, the founder (and second president) of Toyota Motor Corporation gave the concept of Just in Time. TPS has evolved with the help of JIT. Waste can be of several kinds. Sometimes it can be due to the use of unnecessary extra steps in processing and sometimes it can be in the form of defective products. Whatever kind of wastage it be, if allowed to continue, it gives rise to more wastage and then it impacts the entire business and management of the organization. The foundation of the TPS also lies in the automatic loom developed by Sakichi Toyoda. He had been able to improve production efficiency multiple times by eliminating defective products and wasteful practices. Kiichiro Toyoda inherited the philosophy from Sakichi Toyoda. Kiichiro believed that ideal conditions for creating things is that where men, machines and facilities work together to add value and that too without generating waste. The methodologies he conceived for eliminating wastage resulted in the Just in Time concept. However, TPS does not end there because Toyota believes that things can be made more perfect. Today, TPS is a renowned production system globally and is being widely imitated. However, all the functional divisions at Toyota have continued to make improvements to their processes to ensure TPS continues to evolve.

What is Toyota Production System (TPS)?

The TOYOTA Production System or TPS in the simplest terms is a manufacturing philosophy that believes in the elimination of waste for achieving highest possible efficiency. This is also known as lean or Just in Time System. TPS is based on mainly two concepts – Jidoka and Just in Time. Jidoka is a Japanese term meaning Automation with a human touch. It is a method of identifying and solving issues quickly before it could cause faulty production. Just in time is about refining and coordinating each of the processes so each produces only what is needed by the next. The Toyota Production System or the TPS came into being during the second half of the twentieth century and since then it has evolved a lot through continuous improvement. This system has been studied worldwide and adopted by others too. Not just in the automotive industry, but in other industries too this system has been adopted by a wide variety of businesses.

What is Jidoka?

Jidoka is the process of highlighting or visualization of problems. Toyota has always focused on high quality standards which is achieved through Jidoka. If a defective part is discovered or any equipment malfunctions then the affected machine stops automatically and the operators stop production. Production begins again only when the issue has been sorted out. For JIT to function, all the parts must meet predetermined quality standards and Jidoka helps achieve these standards. A machine stops when the normal processing is completed. In case any issue arises, then too the machine can detect it on its own and stops. This stops faulty production. So the result of Jidoka is that only the parts that meet the quality standards can pass on to the next stage in the process. Since a machine can identify the problem by itself and stop, the operators can continue to work on another machine. Moreover, the problem is easily visible on the machine’s display board. This helps identify the problem’s cause easily and solve it. So, each of the operators can be in charge of several machines which means productivity can be multiple times higher. Apart from that continuous improvement also leads to higher processing capacity.

What is Just in Time?

The focus of Just in Time is to improve productivity. It means only making what is needed, when it is needed and only in the right amount. JIT aims to eliminate wastage, inconsistencies and any form of unreasonable requirements on the production line and thus improve the efficiency of production processes. So, if Toyota has to produce a vehicle ordered by a customer in the shortest time, it uses the following procedure:

  • After Toyota receives a vehicle order, first step is to issue a production instruction at the soonest possible.
  • The assembly line should remain stocked with the required number of all the needed parts so that any vehicle can be assembled within the shortest possible time.
  • The assembly line should retrieve the parts it has used from its preceding process.
  • The preceding process should remain stocked with small number of all kinds of parts and must produce only the number of parts that have been used by the next process (assembly process).

What is Kaizen?

Kaizen is a Japanese term meaning continuous improvement. One of the core principles of Toyota’s Production System, the term implies the company’s quest for continuous improvement. Kaizen is a philosophy focused at continuous improvement in efficiency in terms of work processes as well as equipment. It implies following standardised work processes at every work site. This ensures that employees follow the procedures consistently and that problems can be identified promptly. An important focus of Kaizen is to empower the people and humanize the workplace. It allows the employees to bring practical suggestions for improvement by identifying areas where there is scope. Kaizen starts during the early stages of the production process and continues till the end supported by a process that Toyota calls Nemawashi.

What are the other pillars of TPS?

Toyota Production system has twelve pillars. Apart from Kaizen, Jidoko and JIT, there are other nine pillars too. You can read about these pillars on Toyota’s blog. Nemawashi, Kanban and Hendan are also important pillars of its production management system. Kanban means the signboard system. This system conveys information between processes to place orders automatically for the parts that are used up. Kanban is also a quick information system essential for achieving Just In Time. Each part that passes through the process of manufacturing carries its own Kanban or signboard and as these parts are used up, the Kanban returns as order for additional parts. Toyota has framed six rules for effective application of the Kanban. They are:

  • 1) Never let defective products pass on;
  • 2) Take only what is needed;
  • 3) Make only the exact quantity required;
  • 4) Level the production;
  • 5) Fine-tune production;
  • and 6) Stabilise and rationalise the process.

Nemawashi refers to cooperation or building consensus. It is the foundational block of the decision making process. It can be literally translated in English as going around the roots. As a part of Nemawashi the information necessary for making decisions is shared with everyone. This is done to invite participation of all the employees. During Nemawashi, Toyota seeks opinion from all the employees. By applying it successfully, changes can be carried out with the consent of all parties. Similarly, Andon plays an important role in the application of Jedoka. Andon means a sign or signal which is used to highlight where there is a fault or action is required. The Andon cable is a system Toyota uses to immediately highlight any kind of fault that can pose a threat to vehicle quality. In this way, these several pillars are essential blocks of Toyota’s production process and have helped it continuously improve the efficiency of its manufacturing. TPS has been studied widely and imitated across the automotive as well as other industries. However, the reason behind the success of TPS is Toyota’s attention to details.

Manufacturing Process at Toyota

The first step in the manufacturing process at Toyota is the product order provided by the dealer. There is a there phased production plan to quickly incorporate the order information into the production line. The three phased plan includes the monthly, detailed and daily production plan. Once a month Toyota determines the number of vehicles to be produced and details of production are decided four times a month based upon orders given by the dealer. Final order changes are incorporated into the daily production plan.

Toyota has adopted various innovative measures to produce individual vehicles of various specifications, one at a time. Its facilities can immediately accommodate vehicles with various specifications. the operators at Toyota are capable of assembling vehicles with varying work details and body parts. The use of Just In Time system allows for accurate production. After the production phase comes the replacement phase when used parts are replaced like already explained above about the use of Kanban. the last phase is to produce the retrieve parts using production instruction Kanban. Toyota follows some innovative steps to reduce finished product inventory.

  • Use of a flow system for production of parts that eliminates delays.
  • Producing parts at a speed commensurate with the required production volume.
  • Producing small lots of parts in only the required quantity.

This is how Toyota has been able to perfect the art of manufacturing. Production management can be a source of competitive advantage. Eliminating wastage does not just help at reducing operational cost and bring higher efficiency, it helps bring consistency across processes that eliminates delays and wastage of productivity. In this way, it is important for automotive and other brands to manage the finest parts of their production system. Fine tuning the production system helps bring higher efficiency by ensuring a better work flow. However, the best part is the human centred production design that incorporates opinions of employees. By incorporating their opinions, Toyota is able to use its employees’ feedback for continuous improvement of its production system.

  • Other Sources:
  • https://www.toyota-global.com/company/vision_philosophy/toyota_production_system/
  • https://www.toyota-global.com/company/vision_philosophy/toyota_production_system/illustration_of_the_toyota_production_system.html
  • https://www.toyota-global.com/company/vision_philosophy/toyota_production_system/origin_of_the_toyota_production_system.html
  • https://www.toyota-europe.com/world-of-toyota/this-is-toyota/toyota-production-system