Toyota Case Analysis

As Doug Friesen, what would you do to address the seat problem? In particular, where would you focus your attention and solution efforts?

I would focus on the problems caused by cross-threading, breaking of the hook, and the delivery of the wrong seat by KFS. As a result, TMM needs to get involved in KFS’s QC process, maybe send people there to train or supervise or focus on incoming inspection. Also, find out why cars were sitting in the overflow lot for so long. Maybe fix the defective items on the assembly line instead of postponed. Moreover, I think Design reevaluation and market research need to be done to see if so many different seat styles are actually necessary for the business. Furthermore, I would explore the reason for the difference in defect rates between the shifts. Finally, I would put efforts on figuring out the root of the problem and determining the solution.

Where, if at all, does the routine for handling defective seats deviate from the principles of the Toyota Production System? *

The current routine for handling defective seats deviates from JIT, jidoka and kaizen. The correct seat should be arriving at the exact time needed, which is not happening.

When ordering new seats the JIT method is being ignored. Cars should not be sitting in the clinic area for days on end. Although employees pull the Andon cord to signal the defective seat, they let the production line run with the defective seats in the cars until the clinic. Instead of fixing the issue as it occurs, the routine goes against the principle of jidoka. Toyota had TMC’c kaizen experts helping KFS in its startup phase; however, they are not following the kaizen methodology in their off-line routine that is currently being used to deal with the defective seats.

Do you think the line should be stopped when the seat assembly station identifies a defective seat? *

No.

Please justify your answer to the above question. *

If they just stop the line when defective seats are identified, it is just the symptom got treated, not the underlying problem. Instead, the company needs to identify the root cause of the exceptionally high volume of defects and implement appropriate remedial measures to resolve the issue fundamentally. Also, because the Georgetown plant has a capacity for only 200,000 and market demand is 240,000, thus every foregone unit of production costs Toyota the margin they would have made on that car. According to the case, a Camry sells for $18,500 with Toyota making a 17% margin. Thus, every foregone unit of production costs Toyota $3,145. It is simply not wise to stop the line.

What options exist to address the problem? What would you recommend? Why? *

Option 1: Retain KFS as a supplier, while increasing inter-organizational communication and innovating sections of the seat production and installation process. First, improve the accurate delivery rate of KFS. In consultation with KFS, the establishment of incentive measures to effectively prevent KFS distribution mismatched seat accessories is needed. For example, if an accessory problem occurs once a month, KFS should be penalized for the impact on extra production costs. If there is no problem in three months consecutively, TMM can give a reward to KFS. Second, TMM could require KFS to be more flexible and determine the frequency of special replacement deliveries based on the number of orders placed on the day. If the number of reorders is large, it will respond three or four times a day to improve the repair efficiency of the seat problem and the total output. Besides, the hook problem needs to be solved. TMM can provide funds to the KFS to improve the hook process, thereby greatly reducing the damage rate of the hook. Regarding cross-threading, group leaders and group members should work together to supervise team leaders to quickly solve problems on the assembly line and avoid the accumulation of problems. Finally, it is important to reduce the error rate during the seat assembly process and improve the team's efficiency. For example, establish incentive measures. Also, assign employees to manage seat correction and replacement and implement a one-shift requirement. Placement of a permanent KFS team at TMM to repair the defective seats on the assembly line can be an option.