Toyota Motor Manufacturing U.S.A
Essay by Faltu App • November 17, 2015 • Case Study • 654 Words (3 Pages) • 1,398 Views
Toyota Motor Manufacturing, U.S.A. (TMM)
TMM was facing trouble with coping up with the run ratio being low. As TMM followed Just-In-Time production method, it required specific parts as per the model in exact number and just in time during the production. Its seat supplier, Kentucky Framed Seat (KFS), caused the increase in off-line inventory cars due to the supply of defective seats. This was due to Product Proliferation, KFS was not able to supply the increase in variations, while following Just-In-Time production. As the TMM’s domain increased to World-wide supply, the number of cars required to be build added to the discomfort.
TMM followed Toyota Production System, it followed certain principles like:
- Just in Time: producing only what was needed, only how much was needed and only when it was needed.
- Jidoka: make any production problems instantly self-evident and stop producing whenever problems were detected.
- Heijunka: evening out (balancing) the total order in the daily production sequence.
- Kanban: which insisted the manufacturers to start producing the parts only after receiving the Kanban Card.
This lead to troubles for TMM when the seat problem started. Because of
- JIT, the supplier could not replace the defective seat in lesser time, as the process of Kanban card creation and receive after which the product would be replaced took a lot of time.
- The Jidoka principle lead to stoppage of entire line due to defective seats, causing considerable loss of productive time.
- The Heijunka principle lead to lot of variations of seats to be produced by the supplier leading to increase in defects as the supplier couldn’t cope up with it.
Operational effectiveness was of prime focus at Toyota, as they believed in producing cars meeting diverse preferences of customers, delivering quality products on time at affordable cost. To achieve this, they had to strive very hard, as without operational effectiveness, they couldn’t meet anything, like time, price and quality. Please see the below table for reference
Stations | 353 |
Total Employees | 769 |
Labor rate | $17 / hr. |
Premium for overtime | 50% - $25.5 / hr. |
Station cycle time | 57 Sec. |
Regular shift | 525 mins |
Productive time per shift (45+15+15 min breaks) | 450 mins |
Cost per shift | $104,584. |
Cars produced in productive time | 473 cars at 100% |
For 95% | 450 cars |
For 85% | 402 cars |
Due to 10% drop in run ratio, the workers had to work overtime to produce 48 remaining cars. This cost the company additional hour to produce. Amount in $ for overtime of shift | 769 employees *$25.5 = $19609 |
Thus the above economics made Toyota focus more on operational effectiveness.
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