The Toyota Production System

High Quality and Low Cost

COST VS
DEFECTS

Readings;
James Womack, Daniel T. Jones and Daniel Roos,
The Machine that Changed the World, 1990, Ch 3 and 4
Kenneth N. McKay, “The Evolution of Manufacturing Control-
What Has Been, What Will Be” Working Paper 03 –2001
Michael McCoby, “Is There a Best Way to Build a Car?”
HBR Nov-Dec 1997

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Consumer Reports

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 Toyota vehicle sales

Ward's U.S. Light Vehicle Sales Summary 2002

Septem ber January - Septem ber
Units % Share DSR Vol
Current Year-Ago Current Year-Ago % Chg. Current Year-Ago % Chg.

Domestic Cars 431,496 481,318 35.3 37.3 -2.6 4,594,203 4,865,569 -5.6
Import Cars 170,554 158,897 13.9 12.3 16.7 1,708,780 1,566,286 9.1
Total Cars 602,050 640,215 49.2 49.7 2.2 6,302,983 6,431,855 -2.0
Domestic Light Trucks 545,865 573,329 44.6 44.5 3.5 5,769,260 5,621,805 2.6
Import Light Trucks 75,999 75,575 6.2 5.9 9.3 798,656 711,178 12.3
Total Light Trucks 621,864 648,904 50.8 50.3 4.2 6,567,916 6,332,983 3.7
Domestic Light Vehicles 977,361 1,054,647 79.9 81.8 0.7 10,363,463 10,487,374 -1.2
Import Light Vehicles 246,553 234,472 20.1 18.2 14.3 2,507,436 2,277,464 10.1
Total Light Vehicles 1,223,914 1,289,119 100.0 100.0 3.2 12,870,899 12,764,838 0.8

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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Three Major Mfg Systems
from 1800 to 2000

Machine tools, specialized machine tools, Taylorism, SPC, CNC, CAD/CAM

1800 1900 2000

Interchangeable Mass Toyota

Parts at U.S. Production Production
Armories at Ford System

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 Key Elements for New Mfg Systems
Element/ Need of Work Enabling Leader Resources
System Society Force Technology
Motivation
Interchange- Military “Yankee Machine Roswell U.S.
able Parts Ingenuity” Tools, Lee/ Govt
Division of John
Labor Hall
Mass Trans- $5/day Moving Henry Earnings
Production portation Immigrant Assembly Ford
Line,etc
Toyota Post War Jobs, CNC, Taiichi Japanese
Production Security Integration Ohno Banks
System of Labor
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 Q. By what method did these
new systems come about?

A. Trail and Error

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 History of the Development of the Toyota
Production System ref; Taiichi Ohno
1945 1975

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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Summary of Assembly Plant Characteristics, Volume Producers,
1989
(Average for Plants in Each Region)
Ja pane se Ja pane se in Ame rican in All Europe
in Japan North Americ a North Americ a
Performan ce:
Prod ucvitity (ho urs/Veh.) 16 .8 21 .2 25 .1 36 .2
Qual ity (as semb ly
de fects/1 00 veh icl es) 60 65 82 .3 97

La yo ut:
Spa ce (sq.ft./veh icl e/yr) 5.7 9.1 7.8 7.8
Size of Rep air Area (a s %
of ass embl y space) 4.1 4.9 12 .9 14 .4
In ve ntori es(da ys for 8
sa mple parts) 0.2 1.6 2.9 2

Wo rk Force :
% of Work Force in Tea ms 69 .3 71 .3 17 .3 0.6
Job Rotatio n (0 = no ne,
4 = fre quen t) 3 2.7 0.9 1.9
Sug gestions /Empl oyee 61 .6 1.4 0.4 0.4
Numb er of Jo b Clas ses 11 .9 8.7 67 .1 14 .8
Tra inin g of New Produ cti on
Wo rkers (hou rs) 38 0.3 37 0 46 .4 17 3.3
Ab senteeis m 5 4.8 11 .7 12 .1

Au toma tion :
We ldin g (% of d irect steps) 86 .2 85 76 .2 76 .6
Pai ntin g(% o f di rect ste ps) 54 .6 40 .7 33 .6 38 .2
As semb ly(% of dire ct step s) 1.7 1.1 1.2 3.1

Sou rce: IMVP World Ass embl y Plant Survey, 1 989, and J. D. Power Initial Qu ality Survery, 19 89
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Cost Vs Defects
Ref. “Machine that Changed the World” Womack, Jones and Roos

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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How do you get this kind of
performance?

1. Womack, Jones and Roos

2. J T. Black’s 10 Steps
3. Demand Flow Technology’s 9 Points
4. MSDD, D. Cochran and Students

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Womack Jones and Roos
Automation?
 Yes, but….
DFM?
 Probably
Standardized Production?
 No!
Lean Characteristics?
 Integration of Tasks
 Identification and removal of defects

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Cost Vs Automation
Ref. “Machine that Changed the World” Womack, Jones and Roos

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J T. Black’s 10 Steps
Ref; JT. Black “Factory with a Future” 1991

1. Form cells
2. Reduce setup
3. Integrate quality control
4. Integrate preventive maintenance
5. Level and balance
6. Link cells – KANBAN
7. Reduce WIP
8. Build vendor programs
9. Automate
10. Computerize

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Demand Flow Technology’s
9 Points
1. Product Synchronization
2. Mixed Model Process Maps
3. Sequence of Events
4. Demand at Capacity
5. Operational Cycle Time
6. Total Product Cycle Time
7. Line Balancing
8. Kanbans
9. Operational Method Sheets

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Current Value Stream Map

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Future Value Stream Map

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 Manufacturing System Design
Decomposition (MSDD)
ROI

Sales Costs Investments

- s resolving problems s m
quality predictable output delay reduction
Lower level actions
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J T. Black –1, 2
1. Form Cells 2. Reduce Setup
Sequential Externalize setup
operations, to reduce down-
decouple operator time during
from machine, changeover,
parts in families, increases flexibility
single piece flow
within cell

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TPS Cell

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Standardized Fixtures

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J T. Black – 3, 4
3. Integrate quality 4. Integrate preventive
control maintenance
Check part quality worker maintains
at cell, poke-yoke, machine , runs
stop production slower
when parts are bad

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J T. Black – 5, 6
5. Level and balance 6. Link cells- Kanban
Produce to Takt Create “pull”
time, reduce batch system –
sizes, smooth “Supermarket”
production flow System

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J T. Black – 7, 8
7. Reduce WIP 8. Build Vendor
Make system program
reliable, build in Propagate low WIP
mechanisms to self policy to your
correct vendors, reduce
vendors, make on-
time performance
part of expectation

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 Manufacturing System Design
Decomposition (MSDD)
ROI

Sales Costs Investments

- s resolving problems s m
quality predictable output delay reduction
Lower level actions
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 Example from Cochran –
Minimize production disruptions
FR-P1
Minimize production disruptions

DP-P1
Predictable production resources (people, equipment, info)

FR-P11 FR-P12 FR-P13 FR-P14

Ensure Ensure Ensure Ensure
availability of predictable predictable material
relevant equipment worker output availability
production output
information

DP-P11 DP-P12 DP-P13 DP-P14

Capable and Maintenance of Motivated Standard
reliable equipment work -force material
information reliability performing replenishment
system standardized system
work

FR-P121 FR-P122 FR-P131 FR-P132 FR-P133 FR-P141 FR-P142

Ensure that Service Reduce Ensure Do not interrupt Ensure that Ensure proper
equipment is equipment variability of availability of production for parts are timing of part
easily regularly task completion workers worker available to the arrivals
serviceable time allowances material
handlers

DP-P121 DP-P122 DP-P131 DP-P132 DP-P133 DP-P141 DP-P142

Machines Regular Standard work Perfect Mutual Relief Standard work Parts moved to
designed for preventative methods to Attendance System with in process downstream
serviceability provide
maintenance Program cross-trained between sub - operations
repeatable
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workers systems according to
pitch
28
Some Basics Concepts of TPS
1. Smooth Flow and Produce to Takt Time
2. Produce to Order
3. Make system “observable” and correct
problems as they occur
4. Integrate Worker Skills

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Two Examples;

1. Takt Time
2. Pull Systems

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Takt Time
– to pace production

Available Time
Takt Time 
Product Demand
Calculate Takt Time per month, day,
year etc. Available time includes all
shifts, and excludes all non-
productive time (e.g. lunch, clean-up
etc). Product demand includes over-
production for low yields etc.
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Takt Time
Automobile Assembly Line; Available time = 7.5 hr
X 3 shifts = 22.5 hrs or 1350 minutes per day.
Demand = 1600 cars per day. Takt Time = 51 sec

Aircraft Engine Assembly Line; 500 engines per

year. 2 shifts X 7 hrs => 14 hrs/day X 250 day/year
= 3500hrs.
Takt time = 7 hrs.

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Engines shipped over a 3 month
period at aircraft engine factory “B”

12
month 1 month 2 month 3

10
engines shipped per week

0
7-Jun 15-Jun 23-Jun 30-Jun 7-Jul 15-Jul 24-Jul 31-Jul 7-Aug 15-Aug 24-Aug 31-Aug

Weeks

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Engines shipped over a 3 month
period at aircraft engine factory “C”

5
engines shipped

0
m ay j une j uly august
weeks

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On-time performance of
engine plants

10 0%

80 %
late

late
engines delivered

60 %

on
time
40 %
on
time

20 % on
time

0%

A B C

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Push and Pull Systems
Machines

1 2 3 4

Parts Orders

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 Push Systems –
Order arrives at the front of the system and is produced in the
economical order quantity.
Q. How long did it take for the order to go through the system?

Time = 0

Time = 1
Time = 2

Time = 3

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Time =37 4
Pull Systems-
The order arrives at the end of the line and is “pulled” out of the
system. WIP between the machines allows quick completion.

Pros and Cons;

Pull can fill small orders quickly, but
must keep inventory for all part
types. Design can help here but not
in all cases.

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Comparison in delivery times
If the process time per part is “t”, and the
batch size is “n”, it takes “Nnt” time to
process a batch through “N” steps. To
deliver one part it takes;
“Nnt” time from a push system plus
setup and transportation delays, and
“t” for a pull system.
See HP Video
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 HP Video Results
Push system (6) Pull (3) Pull (1)

Space 2 Tables 2 Tables 1 Table

WIP 20 12 4

CycleTime 3:17 1:40 19 sec

Rework Units 26 10 3

Quality prob. hidden visible visible

Production Rate 6.1 parts per 7.2 12.6

L=W minute
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 HP Video Results Revisited
Push system (6) Pull (3) Pull (1)

Space 2 Tables 2 Tables 1 Table

WIP = L 20 12 4
6X =24 3X =12 1X =4
CycleTime = W 3:17 1:40 19 sec (say 20)
6t(3:20 or 2:00) 3t(1:40 or 40) 1t (50 or 20)
Rework Units 26 10 3
~WIP
Quality prob. hidden visible visible

Production Rate 6.1 parts per 7.2 12.6

L=W minute 4/50/60=4.8

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So what are the advantages of
the pull systems?
continuous (synchronous) flow
single piece flow capabilities
observable problems
(if stopped = problem)
sensitive to state of the factory
(if no part = problem)
possible cooperative problem solving

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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Six Eras of Manufacturing
Practice, Ken McKay
1. Pioneering
2. Systemization
3. Technology and Process
4. Internal Efficiency
5. Customer Service
6. Systems Level Re-engineering

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Ken McKay – 1, 2
1. Pioneering - 2. Systemization - firm
grows and system gets
sellers market, complex gross
competition is not inefficiency becomes
by manufacturing apparent, competition
large margins begins to make its
presence felt. Need for
emphasize standard operating
throughput not procedures, demand
efficiency still high, inventory
used to buffer against
instabilities.

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Ken McKay – 3, 4
3. Technology and
Process – competition
is increasing, sales are
softening,
manufacturing is still in
early maturity and
competition is limited
to firms in similar
situation. Focus shifts
from increasing
production rate to
increasing the amount
of product per unit
time.
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4. Internal Efficiency -
competition “cherry
pickers” enter the market
they don’t offer all of the
options and parts service but
focus on the 20% which
yields 80% of the revenue
stream. Internal plant is put
into order, problems are
pushed outside to suppliers,
best in class, bench marking
identifies the silver bullet.
Still using inventory to
cushion production support
variety, and maintain
functional features.
46
Ken McKay- 5, 6
5. Customer Service - 6. System Level Re-
talk to the
customer, identify
core competency,
outsource, be
responsive, reduce
lead time, eliminate
feature creep,
focused factory etc.
engineering - firms
have addressed the
internal system and
factory – no more to
squeeze out – look to
improving indirect and
overhead, era of “mass”
customization, supply
chain development.

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The Toyota Production System
1. Historical View
2. Performance measures
3. Elements of TPS
4. Six Eras of Manufacturing Practice
5. Difficulties with Implementation

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TPS Implementation

Physical (machine placement, standard

work etc) part
Work practices and people issues
Supply-chain part
Corporate Strategy

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Work practices and people
issues
Failed TPS attempts; GM Linden NJ,
GM-Suzuki, Ontario Canada. Successes
GM NUMMI, Saturn. see MacCoby art
“Innovative” Work Practices Ref; C.
Ichniowski, T. Kochan et al “What Works
at Work: Overview and Assessment”,
Industrial Relations Vol 35 No.3 (July
1996)
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Examples of “Innovative”
Work Practices

Work Teams
Gain Sharing
Flexible Job Assignments
Employment Security
Improved Communications

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“What Works at Work:
Overview and Assessment”,
Conclusion 1; “Bundling”
Innovative human resource management
practices can improve business productivity,
primarily through the use of systems of
related work practices designed to enhance
worker participation and flexibility in the
design of work and decentralization of
managerial tasks and responsibilities.

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“What Works at Work:
Overview and Assessment”,
Conclusion 2; “Impact”
New Systems of participatory work
practices have large economically
important effects on the performance of
the businesses that adopt the new
practices.

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“What Works at Work:
Overview and Assessment”,
Conclusion 3; “Partial Implementation”
A majority of contemporary U.S. businesses now
have adopted some forms of innovative work
practices aimed at enhancing employee participation
such as work teams, contingent pay-for-performance
compensation, or flexible assignment of multiskilled
employees. Only a small percentage of businesses,
however, have adopted a full system of innovative
work practices composed of an extensive set of these
work practice innovations.

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“What Works at Work:
Overview and Assessment”,
Conclusion 4; “Barriers to Implementation”
The diffusion of new workplace innovations is limited,
especially among older U.S. businesses. Firms face a number of
obstacles when changing from a system of traditional work
practices to a system of innovative practices, including: the
abandonment of organization change initiatives after limited
policy changes have little effect on performance, the costs of
other organizational practices that are needed to make new
work practices effective, long histories of labor-management
conflict and mistrust, resistance of supervisors and other
workers who might not fare as well under the newer practices,
and the lack of a supportive institutional and public policy
environment.

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Barriers to Implementation
Early abandonment
Costs
History of conflict and distrust
Resistance of supervisors
Lack of supportive infrastructure

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Summary
High quality and low cost ( and originally low
volumes)
Relationship to previous systems (see McKay
paper), yet new,………. in fact revolutionary
Many elements
 Overall, see ”The Machine that Changed the
World”
 Cells, next time
 People, see Maccoby Article

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Summary …….. continued

“Autonomation” automation with a

human touch
Worker as problem solver
TRUST

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