Toyota Motor Manufacturing, U.S.A., Inc

Problem Identification

Doug Friesen, Toyota Motor Manufacturing, U.S.A. (TMM)’s manager of assembly, has an urgent issue on hand. His focus on current production and on manufacturing the needed quota for suppliers has led to deviation from Toyota Production System (TPS)’s core competency of lean manufacturing. Because Friesen holds an important position as manager of assembly, this deviation has trickled down to his employees and possibly even their suppliers. He must now work to quickly resolve the issues “The Toyota Way” before the very culture that gives TMM their competitive advantage is compromised.

Analysis

Friesen’s decision to make an exception to the rule of stopping the production line when 8 cars were in the clinic was made based on an emphasis to achieve immediate goals needed to meet customer demands. Had TPS principles been followed, a “Code 1” would have stopped the line while countermeasures were discussed. Fraizen’s decision was contrary to TMM’s jidoka principle requiring any production problems to be visible and corrected immediately.

The principle of jidoka is implemented via human capital. This is apparent in TMM’s culture of problem solving and focus on the philosophy of TPS (emphasizing long-term decisions and de-emphasizing short-term consequences). Leaders who live out this philosophy of problem solving are key to its success. Without the commitment of top management and leadership to total quality management practices such as jidoka, they will fail.

This is already beginning to happen at TMM. The assembly line workers are not viewing the defective seats as a problem. Thus, they are not asking, “why?” and are not motivated to determine the true cause of the problem or to fix it. Moving the cars to the overflow lot has eliminated the involvement and teamwork of the assembly line. Furthermore, time has been allowed to pass, compounding the problem. The cause of the problem is still undetected.

Although the time taken to get the replacement seats seemed like a good reason not to shut down the production line, they are now paying the price. Because the problem was not corrected on the spot, more andon cords were pulled, which slowed production. TMM’s run ratio was down to 85% from 95%, due to these increased stoppages. Additionally, an inventory of cars piling up in the overflow lot is creating scrap and rework costs and unnecessary waste (waiting, unnecessary transport, unnecessary movement, defects, unused employee creativity) вЂ" contrary to the lean TPS way.

Friezen must fix this problem immediately in order to avoid losing market share. The competition in the automotive industry is intense, and TMM must fight for its market share. As assembly manager, Friezen needs to figure out how to address these issues as quickly as possible and minimize the impact on TMM’s long-term operations.

Friezen could try to improve the flow of the defective cars from the assembly line to the clinic, and then on to the final customer. This would avoid having to stop the line and lose valuable production time. Another advantage of addressing this problem off the assembly line is that applying kaizen, or continuous improvement in the clinic will help to shorten the amount of time cars spend there when future problems are detected.

However, the main disadvantage of this approach is a large one: it goes against TPS’ key principals of problem solving, people and partners, processes and philosophy. This decision would go against the key concept of basing decisions on long-term philosophy, even at the expense of short-term financial goals. The flow would also be compromised due to the large number of vehicles still going into the clinic and overflow parking areas, the problems would not be visibly solved on the line, and the teams would not be involved in the problem solving. Also, inventory, bottlenecks, and scrap and rework costs would need to be addressed.

Friezen could also opt to fix the problem on the assembly line. The assembly line workers are the closest to the problem, and would have the best information as to figure out the root cause of the problem. The problems arising from the defective seats would be visible. Additional advantages of this option include a reduction in inventory in the clinic and overflow lot, the flow of the production process would be maintained, the problems would be fixed immediately, and above all, the TPS philosophy would not be compromised.

However, this option means delays on the assembly line. Stopping the assembly line will set back production even further. Overtime was already required to catch up, and shutting down the line would likely mean that TMM would get too far behind to catch up without some negative effects on their customers. Hurting customer relationships could have an adverse affect on demand and TMM’s ability to generate profits.