The Toyota Way Philosophy

Japanese quality movement was a miracle and created world-class products. All these methodologies and concepts developed these quality gurus for internal process and quality improvement crisis are still practiced in various companies. These have become universal approach to improve the quality and manage performance crisis.  Quality gurus created work culture and dedicated teams, which developed Japanese production systems through group activities. Toyota Corporation developed a new philosophy to create major change in manufacturing systems and delivered world-class products with internal benchmark for quality of vehicles. In reality, Toyota changed external business environment for competitors and created a long-lasting impact on automobile industry.

The Toyota Way is a set of principles and behaviors that underlie the Toyota Motor Corporation’s managerial approach and production system. It consists of principles in two key areas: continuous improvement, and respect for people. Toyota use operational excellence as a strategic weapon. Company places the highest value on actual implementation and taking action. By constant improvement based upon the actions, one can rise to the higher levels of practice and knowledge. Toyota success story can be summed up by using three models, which are used by Toyota Corporation. These models are explained below;

1. 4P Model

Toyota has developed 14 principles for performance improvement. These principles are guiding thumb rules in Toyota. These 14 principles are divided into four sections and a unique 4P model is developed. Major thrust is given on teamwork and a systematic approach is developed by using these principles. These 4Ps are Problem Solving, Process and Partners, Process, Philosophy.… Read the rest

Role of the Warehouse in Postponement Strategies

The rapid changes occurring in customer-supplier relationship has resulted in shortening the product life cycle along with the product variations, which could meet the complex customer satisfaction demands. As the customer requirements changes rapidly, it increases the complexity of planning and demand forecasting to suit the changing demands. Hence, postponement strategies are able to help in solving such complex issues. The strategy involves delay in the production process to the maximum possible time, while delaying the point of product differentiation. As the whole strategy is related to the value of information, it can be maximized with delay in production decision time, giving more time to receive and analyze the customer requirement and demand. Hence, the postponement strategies help in improving the quality of decision, while also optimizing the quality of product planning and demand forecast. The relevant strategy also allows for the flexibility in the production scheduling, where the actual demand, in real terms, can play an effective role in the complete supply chain network.

While Alderson introduced the concept of postponement strategy in marketing, for the first time in 1950, the postponement applications have been extended to areas like manufacturing and distribution, as well as, process re-design. Later on, the delayed product differentiation enabled the postponing the product design and manufacturing process, to improve the relevant product quality. Similarly, the concepts involved would include the point of differentiation and the level of postponement, which would refer to the warehousing facilities needed at different locations for storing the products.

However, the motivation for implementing postponement policy in Supply Chain Management confined mainly to the provision of incentives for reducing cost and improving the level of service, while increasing product variety to suit the changing demands of the customers.… Read the rest

Flexible Manufacturing Technology

It seems that the best way to reduce costs in a production system is to produce high volumes of a standard product. However, this view has been challenged by the rise of flexible manufacturing technologies, also called lean productionFlexible manufacturing technologies allow firms to produce a wider variety of product while still achieving the efficiencies of high volume production. Cost efficiencies are achieved by reducing setup times for complex equipment, increasing the utilization of individual machines through better scheduling, and improving quality control at all stages of the manufacturing process.

Mass customization refers to the use of flexible manufacturing technologies to achieve low cost and differentiation through product customization.

One type of flexible manufacturing technology is flexible machine cells, which are groupings of four to six various machines, a materials handler, and a central computer. The machines are computer controlled, allowing each cell to switch quickly between the production of different products. Flexible machine cells allow for improved capacity utilization due to a reduction in setup times and better coordination of production flow between machines. This system reduce work in progress and waste because of the tight coordination between machines and the ability of computer-controlled machinery to identify how to transform inputs into outputs while producing a minimum of unusable waste material.

Case Study: Toyota’s Lean Production System

Toyota is the most efficient auto company in the global industry, thanks to its lean production system, developed in response to problems Toyota’s engineers saw with the long production runs of a mass production system.… Read the rest

Kaizen – The Philosophy of Continuous Improvement

What is Kaizen?

Japan’s management philosophy has introduced a new creative strategy for competitive success in business, or the so-called “Kaizen” model. The term Kaizen began to receive attention from management experts and scholars around the world when Masaaki Imai published his first book in 1986, “The Key to Japan’s Competitive Success”.

Kaizen is a Japanese word with literally mean improvement, taken from words ‘Kai’, which means continuous and ‘zen’ which means improvement. Some translate ‘Kai’ to mean change and ‘zen’ to mean good, or for the better. In the context of Lean manufacturing, kaizen is understood to signify small, incremental, and frequent improvements to a process. Lean philosophy states that the large improvement which just require small amounts of investment and risk. The kaizen main mindset is making process improvements without adding people and space to the process. The more important one is implement the change without spending the money.

“Kaizen (Japanese for “improvement” or “change for the better”) refers to a philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, supporting business processes, and management.”

In their book The Toyota Way Fieldbook, Jeffrey Liker and David Meier discuss the kaizen blitz and kaizen burst (or kaizen event) approaches to continuous improvement. A kaizen blitz, or rapid improvement, is a focused activity on a particular process or activity. The basic concept is to identify and quickly remove waste. Another approach is that of the kaizen burst, a specific kaizen activity on a particular process in the value stream.… Read the rest

Locational Decisions and Factors Governing Plant Locations

Plant location may be understood as the function of determining where the plant should be located for maximum operating economy and effectiveness. The selection of location for a plant is one of the problems, perhaps the most important, which is faced by an entrepreneur while launching a new enterprise. A selection on pure economic considerations will ensure an easy and regular supply of raw materials, labour force, efficient plant layout, proper utilization of production capacity and reduced cost of production. An ideal location may not, by itself, guarantee success; but it certainly contributes to the smooth and efficient working of an organization. A bad location, on the other hand, is a severe handicap for any enterprise and it finally bankrupts it.

Locational decisions generally arise when:

  • A new manufacturing (or servicing) unit is to be set up.
  • Existing plant operations are difficult to expand due to poor selection of site earlier.
  • The growth of the business makes it advisable to establish additional facilities in new territories.
  • The product development has over weighted the advantages of the existing plant.
  • There is emergence of new social (chronic labor problems) political (political instability) or economic conditions that suggest a change in the location of the existing plant.
  • The changes in the industrial Policy of the Government, favoring decentralizing and dispersal of industries to achieve overall development of the country, do not permit expansion of the existing plant.
Factors Governing Plant Locations

Proximity to market: Every company is in business to market and it can survive only if their product reaches the consumers on time and at the competitive price.… Read the rest

Operations Management and It’s Objectives

An operation may be defined as the process of changing inputs into outputs thereby adding value to some entity. Right quality, right quantity, right time and right price are the four basic requirements of the customers and as such they determine the extent of customer satisfaction.  And if these can be provided at a minimum cost, then the value of goods produced or services rendered increases.

Operations management is concerned with managing the resources that directly produce the organisation service and products. The resources are generally consist of people, material, technology and information but may go wider than this. These resources are brought together by a series of processes so that they are utilized to deliver the primary service or product of the organization. Thus operation management is concerned with managing inputs (resources) through transformation processes to deliver outputs (service or products). The objectives of production management are “to produce goods and services of the right quality, in the right quantities, according to the time schedule and a minimum cost”.

Objectives of production management may be amplified as under:

  • Producing the right kind of goods and services that satisfy customers’ needs (effectiveness objective).
  • Maximizing output of goods and services with minimum resource inputs (efficiency objective).
  • Ensuring that goods and services produced conform to pre-set quality specifications (quality objective).
  • Minimizing throughput-time- the time that elapses in the conversion process- by reducing delays, waiting time and idle time (lead time objective).
  • Maximizing utilization of manpower, machines, etc. (Capacity utilization objective).
  • Minimizing cost of producing goods or rendering a service (Cost objective).
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