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Toyota Production System

From Wikipedia, the free encyclopedia The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic "Lean manufacturing." Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.[1] 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. The founders of Toyota drew heavily on the work of W. Edwards Deming and the writings of Henry Ford. When these men came to the United States to observe the assembly line and mass production that had made Ford rich, they were unimpressed. While shopping in a supermarket they observed the simple idea of an automatic drink resupplier; when the customer wants a drink, he takes one, and another replaces it. The principles underlying the TPS are embodied in The Toyota Way.

[edit] Goals
The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out "mura" (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or "muri" (overburden) since this generates "muda" (waste). Finally the tactical improvements of waste reduction or the elimination of muda are very valuable. There are seven kinds of muda that are addressed in the TPS[2]: 1. 2. 3. 4. 5. 6. 7. Waste of overproduction (largest waste) Waste of time on hand (waiting) Waste of transportation Waste of processing itself Waste of stock at hand Waste of movement Waste of making defective products

The elimination of waste has come to dominate the thinking of many when they look at the effects of the TPS because it is the most familiar of the three to implement. In the TPS many initiatives are triggered by inconsistency or overburden reduction which drives out waste without specific focus on its reduction.

[edit] Origins
This system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota has long been recognized as a leader in the automotive manufacturing and production industry.[3] Toyota received their inspiration for the system, not from the American automotive industry (at that time the world's largest by far), but from visiting a supermarket. This occurred when a delegation from Toyota (led by Ohno) visited the United States in the 1950s. The delegation first visited several Ford Motor Company automotive plants in Michigan but, despite Ford being the industry leader at that time, found many of the methods in use to be not very effective. They were mainly appalled by the large amounts of inventory on site, by how the amount of work being performed in various departments within the factory was uneven on most days, and the large amount of rework at the end of the process.[2] However, on a subsequent visit to a Piggly Wiggly,[4] the delegation was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory they would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous Just-in-Time (JIT) inventory system.[2] While low inventory levels are a key outcome of the Toyota Production System, an important element of the philosophy behind its system is to work intelligently and eliminate waste so that inventory is no longer needed. Many American businesses, having observed Toyota's factories, set out to attack high inventory levels directly without understanding what made these reductions possible.[5] The act of imitating without understanding the underlying concept or motivation may have led to the failure of those projects.

[edit] Principles
Main article: The Toyota Way The underlying principles, called the Toyota Way, have been outlined by Toyota as follows:[6][7]

[edit] Continuous Improvement


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Challenge (We form a long-term vision, meeting challenges with courage and creativity to realize our dreams.) Kaizen (We improve our business operations continuously, always driving for innovation and evolution.) Genchi Genbutsu (Go to the source to find the facts to make correct decisions.)

[edit] Respect for People

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Respect (We respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust.) Teamwork (We stimulate personal and professional growth, share the opportunities of development and maximize individual and team performance.)

External observers have summarized the principles of the Toyota Way as:[8]

[edit] Long-term philosophy


1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

[edit] The right process will produce the right results


1. 2. 3. 4. 5. Create continuous process flow to bring problems to the surface. Use the "pull" system to avoid overproduction. Level out the workload (heijunka). (Work like the tortoise, not the hare.) Build a culture of stopping to fix problems, to get quality right from the first. Standardized tasks are the foundation for continuous improvement and employee empowerment. 6. Use visual control so no problems are hidden. 7. Use only reliable, thoroughly tested technology that serves your people and processes.

[edit] Add value to the organization by developing your people and partners
1. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. 2. Develop exceptional people and teams who follow your company's philosophy. 3. Respect your extended network of partners and suppliers by challenging them and helping them improve.

[edit] Continuously solving root problems drives organizational learning


1. Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu, ); 2. Make decisions slowly by consensus, thoroughly considering all options (Nemawashi, ); implement decisions rapidly; 3. Become a learning organization through relentless reflection (Hansei, ) and continuous improvement (Kaizen, ). The Toyota production system has been compared to squeezing water from a dry towel. What this means is that it is a system for thorough waste elimination. Here, waste refers to anything which does not advance the process, everything that does not increase added value. Many people settle for eliminating the waste that everyone recognizes as waste. But much remains that simply has not yet been recognized as waste or that people are willing to tolerate.

People had resigned themselves to certain problems, had become hostage to routine and abandoned the practice of problem-solving. This going back to basics, exposing the real significance of problems and then making fundamental improvements, can be witnessed throughout the Toyota Production System.[9]

[edit] Results
Toyota was able to greatly reduce leadtime and cost using the TPS, while improving quality. This enabled it to become one of the ten largest companies in the world. It is currently as profitable as all the other car companies combined and became the largest car manufacturer in 2007. It has been proposed[10] that the TPS is the most prominent example of the 'correlation', or middle, stage in a science, with material requirements planning and other data gathering systems representing the 'classification' or first stage. A science in this stage can see correlations between events and can propose some procedures that allow some predictions of the future. Due to the success of the production philosophy's predictions many of these methods have been copied by other manufacturing companies, although mostly unsuccessfully. Also, many companies in different sectors of work (other than manufacturing) have attempted to adapt some or all of the principles of the Toyota Production System to their company. These sectors include construction and health care.

[edit] Parties accused of involvement


The selling of the licenses brought attention to three groups of entities - politicians and bureaucrats who had the authority to sell licenses, corporations who were buying the licenses and media professionals who mediated between the politicians and the corporations.

[edit] Politicians involved


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A. Raja - the Minister of Communications and Information Technology who sold the licenses M. K. Kanimozhi - Rajya Sabha MP P. Chidambaram - The Then Minister of Finance and current Minister of Home Affairs alleged to be involved with A. Raja in spectrum pricing and equity dilution by telecom operators that received spectrum [3] [4]

[edit] Bureaucrats involved


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Siddharth Behura - Former Telecom Secretary RK Chandolia - Raja's private secretary

[edit] Corporate Executives involved


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Gautam Doshi - Managing Director of Reliance Anil Dhirubhai Ambani Group

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Surendra Pipara - senior vice- President of Anil Dhirubhai Ambani Group and Reliance Telecom Hari Nair - senior vice-president of Anil Dhirubhai Ambani Group Sanjay Chandra - Managing Director of Unitech Wireless (Tamil Nadu) Ltd Shahid Balwa - DB Realty promoter Vinod Goenka - DB Realty promoter Sharath Kumar - Managing Director of Kalaignar TV Rajiv Agarwal and Asif Balwa (younger brother of Shahid Balwa) - chief executives of Kusegaon Fruits and Vegetables

[edit] Film and Entertainment persons involved


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Karim Morani - Cineyug Media and Entertainment Ltds Director

[edit] Corporations accused


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Unitech Group a real estate company entering the telecom industry with its 2G bid; sold 60% of its company stake at huge profit to Telenor after buying licensing[5] Swan Telecom sold 45% of its company stake at huge profit to Emirates Telecommunications Corporation (Etisalat) after buying licensing[5] Loop Mobile Videocon Telecommunications Limited S Tel Reliance Communications

[edit] Media persons accused


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Nira Radia, a corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government and leaked creating the Nira Radia tapes controversy Barkha Dutt, an NDTV journalist alleged to have lobbied for A. Raja's appointment as minister Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to reduce blame in the Nira Radia tapes

[edit] Shortfall of money


A. Raja arranged the sale of the 2G spectrum licenses below their market value. Swan Telecom, a new company with few assets, bought a license for Rs. 1537 crore.[6] Shortly thereafter, the board sold 45% of the company to Etisalat for Rs. 4200 crore. Similarly, a company formerly invested in real estate and not telecom, the Unitech Group, purchased a license for Rs. 1661 crore and the company board soon after sold a 60% stake in their wireless division for Rs. 6200 crore to Telenor.[6] The nature of the selling of the licenses was that licenses were to be sold at market value, and the fact that the licenses were quickly resold at a huge profit indicates that the selling agents issued the licenses below market value.

Nine companies purchased licenses and collectively they paid the Ministry of Communications and Information Technology's telecommunications division Rs. 10,772 crore.[6] The amount of money expected for this licensing by the Comptroller and Auditor General of India was 1,76,700 crore.[7] The report on the details of the financials involved framed by CAG could be found at the website of Comptroller and auditor general of India (Supreme audit institution of Government of India).[8]

[edit] Relationship between media and government


Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of A. Raja.[9] The critics alleged that Dutt and Sanghvi knew about corruption between the government and the media industry, supported this corrupt activity, and suppressed news reporting the discovery of the corruption.[9]

[edit] Ratan Tata petitions over leak


The tapes leaked to the public include conversations between Nira Radia and Ratan Tata. Tata petitioned the government to acknowledge his right to privacy and demanded accountability for the leak, with the Minister for Home Affairs, CBI, Indian Income Tax Department, the Department of Telecommunication, and the Department of Information Technology as respondents in the petition.[10]

[edit] Chronology of Events and Investigation


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May, 2007: A Raja takes over as Telecom Minister. [11] Aug, 2007: Process of allotment of 2G spectrum for telecom along with Universal Access Service (UAS) Licences initiated by the Department of Telecommunications (DoT). Sept 25, 2007: Telecom Ministry issues press note fixing deadline for application as October 1, 2007. Oct 1, 2007: DoT receives 575 applications for UAS licences of 46 companies. [12] Nov 2, 2007: The Prime Minister writes to Raja directing him to ensure allotment of 2G spectrum in a fair and transparent manner and to ensure that licence fee was properly revised. Raja writes back to the Prime Minister rejecting many of his recommendations. Nov 22, 2007: Finance Ministry writes to DoT raising concerns over the procedure adopted by it. Demand for review rejected. Jan 10, 2008: DoT decides to issue licences on first-come-first-serve basis, preponing the cut-off date to September 25, from October 1, 2007. Later on the same day, DoT posted an announcement on its website saying those who apply between 3.30 pm and 4.30 pm would be issued licences in accordance with the said policy. [13][14] 2008: Swan Telecom, Unitech and Tata Teleservices sell off a part of their stakes at much higher rates to Etisalat, Telenor and DoCoMo, respectively.[15][16][17] May 4, 2009: An NGO Telecom Watchdog files complaint to the Central Vigilance Commission (CVC) on the illegalities in the spectrum allocation to Loop Telecom. May 19, 2009: Another complaint was filed to the CVC by Arun Agarwal, highlighting grant of spectrum to Swan Telecom at throwaway prices.

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2009: CVC directs CBI to investigate thes irregularities in allocation of 2G spectrum. July 1, 2009: Delhi HC holds advancing of cut-off date as illegal on a petition of telecom company S-Tel. [18] Oct 21, 2009: CBI registers a case and files an FIR against unknown officers of DoT and unknown private persons/companies under various provisions of IPC and Prevention of Corruption Act. Oct 22, 2009: CBI raids DoT offices. [19][20] [21] Nov 16, 2009: CBI seeks details of tapped conversation of corporate lobbyist Niira Radia to find out involvement of middlemen in the grant of spectrum to telecom companies. Mar 13, 2010: SC upholds Delhi HC verdict on cut off date advancement as illegal [22][23] Mar 31, 2010: CAG says that there was large scale irregularities in the spectrum allocation. Apr 2, 2010: CBI DIG (Investigations) Vineet Agarwal and DG I-T (Investigations) Milap Jain, who were investigating the case, transferred. [24] May 6, 2010: Telephonic conversation between Raja and Niira Radia made public by the media. [25] May, 2010: NGO Centre for Public Interest litigation moves the Delhi High Court seeking investigation into the scam by SIT or CBI. May 25, 2010: Delhi HC dismisses the petition. Aug, 2010: Appeal filed in the Supreme Court against the High Courts order. Aug 18, 2010: HC refuses to direct the Prime Minister to decide on a complaint by Janata Party chief Swamy seeking sanction to prosecute Raja for his involvement in 2G scam. Sept 13, 2010: SC asks government, Raja to reply within 10 days to three petitions filed by CPIL and others alleging there was a Rs 70,000 crore scam in the grant of telecom licences in 2008. Sept 24, 2010: Swamy moves SC seeking direction to the PM to sanction prosecution of Raja. Sept 27, 2010: Enforcement Directorate informs SC of probe against firms suspected to have violated FEMA. Says cant deny or confirm now Rajas involvement in the scam. Oct 8, 2010: SC asks government to respond to CAG report about the scam.[26] Oct 21, 2010: Draft reports of CAG placed before the Supreme Court. Oct 29, 2010: SC pulls up CBI for its tardy progress in the investigations into the scam.[27][28] Nov 10, 2010: CAG submits report on 2G spectrum to government stating loss of Rs 1.76 lakh crore to exchequer. Nov 11, 2010: DoT files affidavit in SC saying CAG did not have the authority to question the policy decision as per which licence were issued to new players in 2008. Nov 14, 2010: A Raja resigns as Telecom Minister [29] [30] Nov 15, 2010: Kapil Sibal given additional charge of Telecom Ministry. [31][32] Nov 20, 2010: Affidavit on behalf of PM filed in Supreme Court. Rejects charge of inaction on Swamys complaint.[33][34][35] Nov 22, 2010: CBI tells SC it will file charge sheet in the case within three months. Nov 22, 2010: CBI tells SC role of corporate lobbyist Niira Radia would be questioned by it. Nov 24, 2010: SC reserves verdict on Swamys plea seeking direction to PM for grant of sanction to prosecute Raja.

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Nov 25, 2010: SC ticks off CBI for not questioning Raja. Nov 29, 2010: CBI files status report on 2G spectrum scam probe. Nov 30, 2010: SC questions CVC P J Thomass moral right to supervise CBIs probe into 2G spectrum scam as he himself was Telecom Secretary at that point of time. [36] Dec 1, 2010: SC directs original tapes containing conversation between corporate lobbyist Niira Radia and others be handed over to it. Dec 1, 2010: Raja questions CAG findings in the SC. Dec 2, 2010: Government places recorded tapes in the SC. Dec 2, 2010: SC comes down heavily on Raja for bypassing and overruling PMs advice to defer allocation of 2G spectrum by a few days. Dec 8, 2010: SC favours including in the probe period since 2001 when first-come-firstserve was the norm for spectrum allocation. Dec 8, 2010: SC asks Centre to consider setting up of a special court to try 2G spectrum scam case. Dec 8, 2010: ED submits report. Says money trail covers 10 countries, including Mauritius. Dec 14, 2010: Another PIL in SC seeking cancellation of new telecom licences and 2G spectrum allocated during Rajas tenure. Dec 15, 2010: Swamy files petition in a Delhi court seeking his inclusion as a public prosecutor in 2G spectrum case. Dec 15, 2010: Swamy mentions in complaint that Raja favoured ineligible private companies Swan Telecom Pvt Ltd and Unitech Wireless Ltd in allocating the spectrum. Dec 16, 2010: SC decides to monitor the CBI inquiry [37][38][39] Jan 4, 2011: Swamy moves SC seeking cancellation of 2G spectrum licences. Jan 10, 2011: Supreme Court issues notice to Centre on the plea seeking cancellation of 2G licenses. Also issues notices to 11 companies which allegedly did not fulfill the rollout obligations or were ineligible. Jan 30, 2011: Governments decision to regularise licences of the companies which failed to meet the deadline for roll-out obligation challenged in the Supreme Court. Feb 2, 2011: Raja, former Telecom Secretary Siddartha Behura and Rajas former Personal Secretary R K Chandolia arrested and next day they were remanded in CBI custody. Feb 8, 2011: Raja remanded to two more days of CBI custody. Behura and Chandolia sent to judicial custody. Feb 8, 2011: Shahid Usman Balwa, promoter of Swan Telecom, arrested by CBI. Feb 10, 2011: SC asks the CBI to bring under its scanner corporate houses which were beneficiaries of the 2G spectrum. Raja remanded to CBI custody for four more days by a special CBI court along with Balwa. Feb 14, 2011: Rajas CBI custody extended for three more days. Balwas custody extended for four days. Feb 17, 2011: Raja sent to Tihar Jail under judicial custody. Feb 18, 2011: Balwa sent to judicial custody. Feb 24, 2011: CBI tells a Delhi court that Balwa facilitated transaction to Kalaignar TV. Feb 28, 2011: Raja seeks judicial proceedings through video conferencing stating that he faces threat to life from fellow prisoners.

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Mar 1, 2011: CBI tells SC that 63 persons are under scanner. Raja allowed by CBI court to appear before it via video-conferencing. Mar 14, 2011: The Delhi High Court sets up special court to deal exclusively with 2G cases. Balwa also allowed to appear via video-conferencing. Mar 29, 2011: SC permits CBI to file charge sheet on April 2 instead of March 31. Two more persons Asif Balwa and Rajeev Agarwal arrested. Apr 2, 2011: The CBI files its first charge sheet in the 2G spectrum allocation scam.[40][41][42] Apr 25, 2011: CBI files second charge sheet and court issues summons to Kanimozhi, Sharad Kumar and Karim Morani taking cognizance of the charge sheet.[43][44][45] May 6, 2011: Kanimozhi and Sharad Kumar appear before court and file bail pleas while Morani sought exemption from appearance on medical ground.[46][47][48] May 6, 2011: SC issues contempt notice to Sahara India managing director Subroto Roy and two others for alleged interference in the ongoing ED investigation into the 2G spectrum case. [49] [50] May 7, 2011: Special CBI Court reserves order on Kanimozhi and Sharad Kumars bail applications. May 14, 2011: Special CBI Court defers order on their bail pleas for May 20. May 20, 2011: Special CBI Court rejects bail pleas of Kanimozhi and Sharad Kumar and orders their forthwith arrest saying that there was a possibility of witnesses being influenced considering the magnitude of the crime. [51] [52] June 8, 2011: Delhi HC rejects bail pleas of Kanimozhi and Sharad Kumar citing that there are certain prima facie evidences against the accused and they may be in a position to influence the 2G probe [53] [54] June 20, 2011: SC rejects Kanimozhis bail plea [55] [56] [57] July 25, 2011: Arguments on Charge begins. Raja seeks to make Prime Minister and former finance minister P Chidambaram as witness. Aug 26, 2011: Special CBI court allows Subramanian Swamy to argue his own case (mainly to address the possible loop holes in CBI investigation of the case) [58] [59] Aug 30, 2011: ED orders freezing of accounts, attachment of properties worth Rs 223 crore of five companies mainly related to DB Realty under the provisions of Prevention of Money Laundering Act (PMLA) [60] [61] Sept 15, 2011: Swamy pleads before special CBI court that P Chidambaram should be made co-accused [62] [63] Sept 22, 2011: CBI defends Chidambaram in SC, blames DoT for all wrongs. Sept 26, 2011: CBI moves plea for framing fresh charge for criminal breach of trust against Raja, Chandolia and Behura. [64][65] Sept 29, 2011: CBI says role of Anil Ambani being probed, gives a virtual clean chit to Tata and Videocon group.[66][67] Oct 9, 2011: CBI files FIR against Maran and his brother in Aircel-Maxis deal. [68][69][70] Oct 10, 2011: The Supreme Court reserves order against Subramanian Swamys plea for a probe into Home Minister Chidambarams role in the 2G scam.[71][72] Oct 22, 2011: Special CBI Court finds prima facie evidence to put on trial all 17 accused including Raja on various counts like criminal conspiracy, breach of trust, cheating and forgery. [73][74]

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Nov 3, 2011: Special CBI court dismisses bail pleas of all the 8 applicants (including Kanimozhi) [75] Nov 8, 2011: Special CBI court orders CBI to give copy of file on sale of equity by telecom companies (for investigating P Chidambaram's involvement) to Swamy [76] [77] Nov 9, 2011: Delhi HC refuses to grant interim bail to Karim Morani on health grounds wondering Why everybody falls sick once he is in custody? HC issues notice to the CBI on its reply on the bail pleas of the five accused by December 1. [78] [79] Nov 11, 2011: Trial of the 17 accused begins in Patiala House special CBI court. [80][81] Nov 14, 2011: UPA govt moves SC seeking to restrain Dr Subramanian Swamy from making public allegations against the UPA leadership (especially Home Minister P Chidambaram and UPA Chairperson Sonia Gandhi) in the 2G scam case [82] [83] Nov 22, 2011: The Special CBI court shifts the trial to the Tihar Jail complex following a Delhi high court order [84] [85] Nov 23, 2011: SC grants bail to 5 corporate executives - Sanjay Chandra of Unitech Wireless, Vinod Goenka of DB Realty as well as Reliance Group's Gautam Doshi, Surendra Pipara and Hari Nayar. [86]

Response to scam
In early November 2010 Jayalalithaa accused the state chief minister M Karunanidhi of protecting A. Raja from corruption charges and called for A. Raja's resignation.[87] By mid November A. Raja resigned.[88] In mid November the comptroller Vinod Rai issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal.[89] Some media sources have speculated that these companies will receive large fines but not have their licenses revoked, as they are currently providing some consumer service.[89]

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