MUDA
Inventory
Motion
Over-production
wating
Conveyance
Rework
Process
Suppliers
Raw materials, Component part& Capital
Toyota
First-Tier of Customers
-Dealers & country agent
Second-Tier of Customers
-Final Customer
Production
Development
Production Technology
TOYOTA
Toyota Motor Corporation is a Japanese automobile manufacturer. The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's company Toyota Industries to create automobiles. The Toyota Company represents more than just a car company. Their Motto: "Moving Forward." Their vision: "To enrich society through building cars." Their mission: "To attract and attain customers with high-valued products and services and the most satisfying ownership experience," and they are very busy doing just that. According to the Center for Automotive Research (2005), Toyota has created more than 386,000 jobs here in the U.S. They have contributed over $340 million to U.S. community and not-profit groups. They also lead the market with their environmental friendly technology, recognized with awards from groups including the Sierra Club, the EPA, The National Wildlife Federation, and the U.S. Department of Energy.
Toyota is a name associated with quality products; is considered by many to be one of the world's greatest manufacturers. Toyota is the twelfth-largest company in the world by revenue. Toyota is the world's first automobile manufacturer to produce more than 10 million vehicles per year.
Toyota's history
Toyota history is, like that of most companies, fairly glossy and bare- bones. An article by Konrad Schreier, printed in the Complete Book of Toyota (a bit of a misnomer since the book is mainly a bunch of reprints of gushing, "no criticism allowed" car reviews), brings up a large number of missing pieces - as does The Standard Catalog of Imported Cars.
Sakichi Toyoda, a prolific inventor, created the Toyoda Automatic Loom company based on his groundbreaking designs, one of which was licensed to a British concern for 1 million yen; this money was used to help found Toyota Motor Company, which was supported by the Japanese government partly because of the military applications.
The first engine was produced in 1934 (the Type A), the first car and truck in 1935 (the Model A1 and G1, respectively), and its second car design in 1936 (the model AA). In 1937, Toyota Motor Company was split off.
From 1936 to 1943, only 1,7,57 cars were made – 1,404 sedans and 353 phaetons (model AB), but Toyoda found more success building trucks and busses. The Toyota KB, a 4x4 produced starting in 1941, was a two-ton truck similar to the prewar KC; it had a loading capacity of 1.5 tons and could run up to about 43 mph. The GB was based on the peacetime, 1.5 ton G1 truck, which in turn was based on the Model A1 cars
An era of rapid expansion: Post-war Toyota history
In December 1945, Toyota was given permission by the United States military to startup up peacetime production. Toyota Motor Corporation had learned from the American War Department's industrial training program, which worked on process improvement and employee development; the program, abandoned in 1945 by the United States, lived on in Japan as Taiichi Ohno built kaizen and lean manufacturing around it.
After World War II, Toyota was kept busy making trucks, but by 1947 it began making the Model SA, called the Toyopet, a name to stay with Toyota for decades, albeit attached to different cars. The Toyopet was not powerful and had a low top speed – 55 mph from a 27 horsepower engine – but it was designed to be cheap, and to handle the rough roads of postwar Japan. In the five years the SA Toyopet was made, 215 were made. The SD may have been more successful; this taxi version saw 194 copies in just two years. By 1955, Toyota was making 8,400 cars per year; by 1965, 600,000 cars per year. In addition to all these cars, Toyota started producing a civilian truck named the Land Cruiser.
Very unusual Toyota's Sales hit 6,400 in1965, and reached 71,000 by 1968, nearly doubling each year until by 1971 Toyota was selling over 300,000 vehicles per year, a far cry from 1964's 2,000. Toyota's global net income jumped 19.2 percent during the 2015 fiscal year that ended March 31, 2015.
Consolidated net revenues rose to 27.23 trillion yen (*$248.0 billion), up 6.0 percent
Operating income increased to 2.7505 trillion yen ($25.1 billion), up 20.0 percent
Net income jumped to 2.1733 trillion yen ($19.8 billion), a 19.2 percent increase.
Fiscal Year Global Forecast (April 1, 2015 – March 31, 2016):
Global consolidated vehicle sales is 8.9 million
Consolidated net revenue is 27.5 trillion yen (*$239.1 billion)
Operating income is 2.8 trillion yen ($ 24.3billion)
and net income is 2.25 trillion yen ($19.6 billion)
Toyota Mission, Strategy & Products of Toyota
Vision:
"To be the most respected and successful enterprise, delight customers with a wide range of products and solutions in the automobile industry with the best people and best technology."
The most respected.
The most successful.
Delighting customers.
Wide range of products.
The best people.
The best technology.
Mission:
Mission of Toyota is to provide safe & sound journey. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.
Slogan:
ACT#1: Actions, Commitment and Teamwork to become No.1.
Toyota's mission statement is really a global vision about how to move people around the planet in a better way.
The Mission Statement, Global Vision, and Values of Toyota Motor Corporation
The Toyota Motor Corporation mission statement is referred to as a "Global Vision" on the Toyota.com website. Toyota has become one of the best automobile companies and one of the most popular car brands in the U.S. automobile industry largely because it is able to live up to its own lofty mission statement:
"Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.
Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile.
We will meet our challenging goals by engaging the talent and passion of people, who believe there is always a better way."
Products and Services
No matter if you are a consumer, company, state-owned or non-profit organization, the solution for your financial needs will always be at hand with Toyota Financial Services products. Therefore it does not matter if you have to consider your household budget or control a financial plan of a large corporation when contemplating the purchase of a car.
The common feature of all products includes heterogeneity and flexibility, as well as simplicity and transparency. You are always given the opportunity to make yourself familiar with all prices, fees and conditions so as to be able to think your choice over.
Choose from a wide range of leasing and credit products for the financing of new and used Toyota and Lexus cars, as well as Toyota and BT handling technology.
Toyota Production System
The practical expression of Toyota's people and customer-oriented philosophy is known as the Toyota Production System (TPS). This is not a rigid company-imposed procedure but a set of principles that have been proven in day-to-day practice over many years. Many of these ideas have been adopted and imitated all over the world.
TPS has three desired outcomes:
To provide the customer with the highest quality vehicles, at lowest possible cost, in a timely manner with the shortest possible lead times.
To provide members with work satisfaction, job security and fair treatment.
It gives the company flexibility to respond to the market, achieve profit through cost reduction activities and long-term prosperity.
TPS strives for the absolute elimination of waste, overburden and unevenness in all areas to allow members to work smoothly and efficiently. The foundations of TPS are built on standardization to ensure a safe method of operation and a consistent approach to quality. Toyota members seek to continually improve their standard processes and procedures in order to ensure maximum quality, improve efficiency and eliminate waste. This is known as kaizen and is applied to every sphere of the company's activities.
Kaizen - Continuous Improvement
Kaizen is the heart of the Toyota Production System. Like all mass-production systems, the Toyota process requires that all tasks, both human and mechanical, be very precisely defined and standardized to ensure maximum quality, eliminate waste and improve efficiency. Toyota Members have a responsibility not only to follow closely these standardized work guidelines but also to seek their continual improvement. This is simply common sense - since it is clear that inherent inefficiencies or problems in any procedure will always be most apparent to those closest to the process. The day-to-day improvements that Members and their Team Leaders make to their working practices and equipment are known as kaizen. But the term also has a wider meeting: it means a continual striving for improvement in every sphere of the Company's activities - from the most basic manufacturing process to serving the customer and the wider community beyond.
Just In Time- Inventory
The Just-in-Time (JIT) philosophy advocates:
Producing and/or delivering only the necessary parts, within the necessary time in the necessary quantity using the minimum necessary resources.
Ideally, the appropriate number of parts are produced and immediately shipped when the customer order is received. Upstream processes and suppliers deliver exactly the appropriate quantity of components when the downstream process needs them. In this situation there is no need for inventory. Eliminating all inventory and work-in-process (WIP) is impossible in the practical sense. The key to manufacturing efficiency is continuously decreasing the quantity of each in the system. There is a general tendency to react to problems by accumulating a reserve of stock based on an estimate of quality defects, equipment breakdown and team member absenteeism. Toyota, however, is opposed to using stock build-up to counter these problems. Keeping excess stock means the various production problems are hidden or glossed over. This makes it impossible to establish a work site with a strong constitution.
Stock used to compensate for production halts due to defects or machine and equipment breakdowns hides the fact that these are problems. This hides the need to forestall problems, prevent their recurrence, or improve the operational rate when defects or breakdowns occur. JIT manufacturing helps identify opportunities for perfecting processes rather than creating space for inventories.
Jidoka
In Japanese 'jidoka' simply means automation. At Toyota it means 'automation with a human touch'.In 1902 Sakichi Toyoda invented the world's first automatic loom that would stop automatically if any of the threads snapped. Jidoka (Build in quality) is the second pillar of the system. There are two parts to Jidoka:
1) Building in quality at the process and
2) Enabling separation of man from machine in work
Jidoka refers simply to the ability of humans or machines to detect an abnormal condition in materials, machines, or methods, and to prevent the abnormality from being passed on to the next process. The objectives of In Station Process Control (ISPC) are to (1) build in quality by preventing the mass production of defective products, (2) prevent injury to employees or damage to tools, equipment, and machinery when an abnormal condition occurs, and (3) separate human work from machine work. To achieve these objectives, ISPC relies upon an organizational structure that will promote and support the systems and tools that must work in tandem to ensure prompt action is taken when abnormal conditions occur.
Suppliers & TPS
Just-in-time manufacturing and other elements of the Toyota Production System work best when they are a common basis for synchronising activity throughout the production sequence. This is an egalitarian arrangement in which each process in the production flow becomes the customer for the preceding process and each process becomes a supermarket to the following process.
Independent suppliers participate on an equal footing with Toyota operations in the production flow, each fulfilling their own role in that flow. The only participant in the entire sequence who does not answer to anyone is the customer who selects a vehicle in the marketplace.
Suppliers who participate in the Toyota Production System enjoy the same benefits that Toyota does from the system.
Just-in-time manufacturing can dissolve inventories at parts suppliers just as readily and effectively as it does at Toyota's assembly plants. Product quality improves, too. That's because the Toyota Production System includes measures for illuminating defects whenever and wherever they occur.
Suppliers who adopt the Toyota Production System also report improvements in employee-management relations. That is mainly because the system provides for an expanded role for employees in designing and managing their own work. It brings together employees and management in the joint pursuit of improvements in productivity, quality, and working conditions.
Finally the Toyota Production System identifies the four main areas where the production team members can participate in achieving company goals:
setting and maintaining work standards (standards)
solving daily performance problems (problem solving)
participating in the continuous improvement process (improvement)s
organizing teamwork efficiently (teamwork)
The car manufacturing process can be divided into three main Stages.
The car manufacturing process can be divided into three main Stages.
Development
Developing refines products through innovation, progress and teamwork focuses on the future.
The Development Division constantly seeks to manufacture new cars by developing next-generation technology and responding sensitively to ever-changing environment and lifestyle trends. The division pursues concept, styling and design in a quest to realize the ideal car. This persistent spirit of development is the source which gives birth to next-generation cars. The Development Division is responsible for planning and visual design which brings satisfaction to customers, as well as the technical design, testing and evaluation process which support the product appeal. These various functions are made possible by the teamwork of the division. We are conducting uncompromising research and development in order to realize a "car of your dreams" which will create mobility for the future.
2.Productio technology
Support technology which creates products within manufaturing process. Seek quality and efficiency.
High-level production technology is essential to realizing high-quality car manufacturing. In order to create the beautiful style envisioned by the Design Division, the production line is equipped with press dies, assembly jigs which precisely create the body framework and welding and painting robots. Installation of such equipment makes it possible to realize a high-quality, low-cost production line which is capable of high-mix low-volume production and can be easily operated by workers. Our production lines evolve together with cars every day. We possess the production technology capability to create such a production line. Our company gives total consideration to the production of highly-refined cars, and we conduct facilities planning and line configuration planning in order to construct an efficient production line
3. Production
Our technology capability or "craftsmanship" is highly recognized by expert international institutions.
We possess 4 finishing plants in our production bases of Miyagi, Iwate and Higashi-Fuji. Each of these plants contains an efficient and easily-operated production line. Each process is equipped with robots and automatic conveyance machinery, realizing a configuration that reduces the load on operators and ensures safe manufacturing of cars. As the result of these quality control efforts, our plants were recognized in the U.S. Automotive Initial Quality Survey held by J.D. Power and Associates, an expert international institution which conducts customer satisfaction surveys. Our plants (Iwate Plant in 2006, Higashi-Fuji Plant in 2009) were presented with the Platinum Award, the highest honor conferred to plants which produced cars with the highest degree of satisfaction. Furthermore, all of our plants have acquired ISO14001 certification and are working proactively in regional environmental issues.
Eliminating Waste
It requires constant effort at cost reduction to maintain continuous profits in manufacturing. The prime way to reduce costs is to produce, in a timely fashion, only those products which have been sold and to eliminate all waste in manufacturing them. There are various ways to analyze and implement cost reduction, from the start of designing all the way through to manufacturing and sales. One of the goals of the Toyota Production System, however, is to locate waste and eliminate it. It is possible to uncover a very large amount of waste by observing team members, equipment, materials and organization in the actual production line. In every case, waste never improves value; it only increases cost.
Continuous improvement focuses on the elimination of seven major types of waste.
1. Correction / Scrap
The waste of correction is a result of poor internal quality. Producing defective products or products requiring repairs adds the cost of extra manpower, materials, facilities and conveyance measures.
Some examples are: The waste of extra handling, the waste of additional labor, the risk of further defects caused by additional handling, the risk giving our customer an inferior product.
When an item is scrapped, the impact is evident in several areas.
1. The obvious financial loss related to the part.
2. The waste associated with holding extra parts in inventory.
3. The labor wasted producing the defective part.
4. The waste of handling, moving and discarding the scrap item.
Improving internal quality has a significant impact on the business.
2. Over-production
TPS pays particular attention to the waste of overproduction. There are two types of overproduction—producing too much and producing too early. Over production invites more waste because it hides problems beneath a veil of inventory.
The following are examples of the waste caused by overproduction:
1. Necessity for extra material and parts
2. Increase in containers such as pallets and skids
3. Increase in conveyance vehicles (forklifts, trucks)
4. The growth of stock and increase in labor-hours for stock control
5. Increase in storage and warehouse space
The following factors are causes of overproduction:
1. A sense of security against machine breakdowns, defects and absenteeism
2. Mistaken increases of operational rate and apparent efficiency
3. The notion that line stoppages are 'sinful'
4. Variations in load
3. Waiting
Time is a limited resource. In the manufacturing world, time is money. Customer requirements are calculated to the second. Any waiting due to breakdowns, changeovers, delays, poor layout or work sequence needs to be eliminated. Thorough preventative maintenance and rapid changeovers are essential to global competitiveness. Reducing cycle time by eliminating waiting within the work sequence can also have a profound effect on productivity.
4. Conveyance
Inefficient layouts and facility design results in conveying parts, materials and people more than is necessary. Material should progress from one cell or position to the next as quickly as possible without stopping at any intermediate storage place. Shipping areas should be close to the end of the process. Work teams and support units should be located close together.
5. Processing
Over processing is as wasteful as insufficient processing. A team member, for example, is wasting time and energy if he or she trims 1 mm of flash from a class C area of a PVC window when 6 mm of flash is acceptable. Likewise, a process set to polish a prism for 5.5 minutes when only 4.5 minutes is needed to achieve the required prism finish is wasteful activity. Employees must learn to identify over processing waste, and perform the appropriate amount of processing on parts without spending more time or effort than is necessary.
6. Inventory
Preventing unnecessary inventory is critical to the success of the Toyota Production System. The smooth, continuous flow of work through each process ensures that excess amounts of inventory are minimized. If work-in-process develops because of unequal capabilities within the process, efforts need to be made to balance the flow of work through the system. Inventory ties up assets such as cash and real estate. Inventory often requires additional handling which requires additional labor and equipment.
7. Motion
Wasted motion occupies time and energy. Ideally all unnecessary movements or actions are eliminated from the work process. Much of this wasted motion is often overlooked because it has become such a part of the process. Work processes should be designed so that items are positioned close to each other. Unnecessary amounts of turning, lifting and reaching are eliminated. The same improvements that eliminate wasted motion often have ergonomic benefits as well.
DEFINITION of 'Supply Chain Management - SCM'
Supply chain management is the streamlining of a business' supply-side activities to maximize customer value and to gain a competitive advantage in the marketplace. Supply chain management (SCM) represents an effort by suppliers to develop and implement supply chains that are as efficient and economical as possible. Supply chains cover everything from production, to product development, to the information systems needed to direct these undertakings.
Origin of SCM
The term "supply chain management" entered the public domain when Keith Oliver, a consultant at Booz Allen Hamilton (now Strategy&), used it in an interview for the Financial Times in 1982. The term was slow to take hold. It gained currency in the mid-1990s, when a flurry of articles and books came out on the subject. In the late 1990s it rose to prominence as a management buzzword, and operations managers began to use it in their titles with increasing regularity.
Supply Chain Management Features that Give You a Competitive Edge
Today's popular supply chain management can help companies achieve and maintain a competitive edge by empowering them to streamline and enhance their most important supply chain operations from start to finish. With supply chain management in place, organizations can maximize cost-efficiency, increase productivity, and give their bottom line a big boost.
By offering a broad range of robust features, delivered through a comprehensive suite of tightly integrated modules and applications. This functionality is designed to fully automate and support supply chain processes from end-to-end, and includes:
Inventory Management
With supply chain management, companies can significantly improve the way they track and manage their supplies of raw materials and components needed for production, finished goods to satisfy open sales orders, and spare parts required for field service and support. This eliminates excess and waste, frees up valuable real estate for other important purposes, and minimizes related storage costs.
Order Management
Supply chain management software can dramatically accelerate the execution of the entire order-to-delivery cycle by helping companies to more productively generate and track sales orders. Supply chain management also enables the dynamic scheduling of supplier deliveries to more effectively meet demand, as well as more rapid creation of pricing and product configurations.
Procurement
All activities and tasks associated with sourcing, purchasing, and payables can be fully automated and streamlined across a company's entire supplier network with supply chain management software. As a result, businesses can build stronger relationships with vendors, better access and manage their performance, and improve negotiations to leverage volume or bulk discounts and other cost-cutting measures.
Logistics
As companies expand globally, their supply chains become more and more complex. This makes the coordination of the numerous warehouses and transportation channels involved quite a challenging endeavor without supply chain software in place. With supply chain management, businesses can improve on-time delivery performance and boost customer satisfaction by achieving complete visibility into how finished goods are stored and distributed, regardless of the number of facilities or partners that participate.
Forecasting and Planning
With supply chain management, organizations can more accurately anticipate customer demand and plan their procurement and production processes accordingly. As a result, they can avoid unnecessary purchases of raw-materials, eliminate manufacturing over-runs, and prevent the need to store excess finished goods, or slash prices to move products off of warehouse shelves.
Return Management
Supply chain software can simplify and accelerate the inspection and handling of defective or broken goods – on both the buy and sell side of the business – and automate the processing of claims with suppliers and distributors, as well as insurance companies.
Many supply chain offerings also include add-on options or modules designed to enhance related activities. Through these features, support is provided for a variety of important processes such as contract management, product lifecycle management, capital asset management, and more.
Supply Chain Management Success Stories
1. Apple
For the seventh year in a row, Apple captured the top slot, and by a comfortable margin over # 2 McDonald's. The high-tech pace-setter has proven adept both at selling traditional electronic products (such as the iPhone and iPad) as well as digital products (through its iTunes store). To remain so dominantly at the top for so long, Apple obviously cannot afford to rest on its supply chain laurels, and as Gartner's analysts point, the company is investing $10 billion in manufacturing tooling and equipment to automate production of its popular devices, while bringing component sourcing for some of its products back in-house
2. Amazon
Warehouse robots by the thousands. Delivery drones. A fleet of same-day grocery delivery trucks. Amazon has certainly outgrown its reputation as the nation's biggest online bookseller (although recent reports of Amazon strong-arming some publishers suggests the e-retailer is still heavily invested in keeping as big a piece of the bookseller pie as possible). Gartner's analysts compare Amazon's supply chain to the well-known razor-and-blade model, with the Kindle and upcoming phone and set-top TV models serving as the razor, and its vast inventory of digital content as the constantly-in-need-of-replenishment blades.
3. Unilever
Sustainability is clearly paying off for Unilever, which again ranks ahead of its principal rivals P&G and Colgate-Palmolive on the Top 25 (although peer voters still prefer P&G, though by a slim margin). The company continues to shift its supply chain to emerging markets, guided by CEO Paul Polman's insistence that "sustainable growth is the only acceptable model of growth in the future." Gartner's analysts point out that Unilever is optimizing its distribution network using cost-to-serve insights from its customers and suppliers.
4. Intel
Chipmaker Intel relies heavily on its IT department to create solutions aimed at improving the company's supply chain performance, and those efforts have paid off. Intel points to such accomplishments as a 65% reduction in order fulfillment lead time, 50% reduction in order-to-delivery time, and a 3x increase in responsiveness to customers. Current supply chain initiatives are focused on such areas as transportation optimization, vendor-managed inventory and improved warranty management. Intel has also championed industry efforts to eliminate the use of conflict minerals via a smelter validation process.
5. Walmart
Retail giant Walmart has made the Top 25 every year in the list's 10-year existence, and in the past year the company's online sales growth (30%) actually topped Amazon's. In addition to pioneering distribution network optimization in various facets, Walmart continues to push for the latest and greatest technology to track and trace products throughout the supply chain. Other areas of supply chain focus for the retailer include omni-channel distribution, sustainability scorecards and the Walmart Advanced Vehicle Experience, a hybrid, aerodynamic tractor-trailer prototype developed with Peterbilt and other vendors.
6. Coca-Cola
Every daily, people consume 1.8 billion beverages produced and distributed through Coca-Cola's supply chain, a consumption rate equal to the entire global population drinking a Coke product every four days. To ensure its supply chain is up to the demands of such a wide ranging customer base, in an era when consumers are increasingly turning away from carbonated drinks in favor of healthier alternatives—Coke leverages analytics for supply network and inventory optimization. The company also is investing heavily in talent development within its supply chain organization.
Supply-chain management (SCM) at Toyota is an element of company's operations strategy which is thoroughly based on the Toyota Production System (TPS). It was developed in the 1940's by Shigeo Shingo and Taiichi Ohno. As Toyota's success gained world- wide coverage by strong SCM, TPS & lean manufacturing.
Strong Supply-Chain Management Model of Toyota
Supply Chain Management (SCM) "is the management of relations and integrated business processes across the supply chain that produces products, services and information that add value for the end customer". Effective SCM has become increasingly important, because it enables companies to respond faster to changes in the external environment than competitors.
Toyota spends much time on evaluating potential suppliers in order to choose the right suppliers, agree on long-term contracts and establish long-term relationships based on mutual trust. Likewise, Toyota continuously assesses each supplier's performance with regard to quality, reliability, creative proposal and costs. In the years to come Toyota intends to reduce 30% of costs throughout the whole supply chain and share half of the profits with its suppliers.
In order to sell its cars to end customers Toyota has established a network of dealers across the world. All of them operate according to different distribution strategies to cater for local needs. It goes unquestioned that this requires high quality customer service and effective communication. As such, a service company's supply chain is not totally different. Similar to manufacturers, service companies focus on the management and coordination of all activities in the supply chain, yet place emphasis on aspects such as service capacity, waiting time, distribution channels and quality of service.
Eight positive effects in production of Toyota. These are:
Overproduction,
Waiting,
Unnecessary transport or conveyance,
Over-processing or incorrect processing,
Excess inventory,
Unnecessary movement,
Defects
Unused employee creativity.
In today's highly competitive global marketplace companies are forced to seek opportunities to create competitive edge for them not only to broaden their share of market, but also to survive at all. Supply chain management is an aspect for any business to be looked at properly in order to identify ways to improve it.
Improvement in supply chain management can reduce costs for a company and increase the efficiency and requires a strategic approach to be implemented towards it. Toyota Motor Corporation is currently one of the model companies worldwide in many aspects of conducting a successful business practice, including supply chain management. Therefore, some of the principles practiced by Toyota can be adopted by other companies with some adjustments.
Reference:
1. http://www.investopedia.com/terms/s/scm.asp
2. http://en.wikipedia.org/wiki/Supply_chain_management#Origin_of_the_term_and_definitions
3. http://www.industryweek.com/top-25-supply-chains#slide-11-field_images-119891
