tps & lean

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  • Operations Management

    Toyota Production System (TPS), Just-in-Time (JIT), and Lean ManufacturingHandout

    Dr. Ahmad Syamil, CFPIM, CIRM, CSCP AT yahoo DOT com

  • APICSwww.apics.orgOld Name: The American Production and Inventory Control SocietyNew Name: The Associationfor Operations Management - Advancing Productivity, Innovation, andCompetitive Success.APICS offers four internationally recognized professional certification programs:CPIM: Certified in Production and Inventory ManagementCFPIM: Certified Fellow in Production and Inventory Management = CPIM + extensive knowledge sharing with others through presenting, teaching, publishing, and other APICS educational activities.CIRM: Certified in Integrated Resource ManagementBeginning 2006: Certified Supply Chain Professional (CSCP) designation is designed for professionals interested in increasing their knowledge of supply chain management, those currently working in the field of supply chain management (SCM), and for those individuals working with enterprise resources planning (ERP) systems.

  • Why Toyota?

  • Toyota is now the world's largest carmakerToyota sold 2.348 million vehicles in the first three months of 2007.

    General Motors (GM) is estimated to have sold 2.26 million cars and small trucks during the same period.

  • Why Toyota?

  • Why Toyota?

  • Why not Toyota?GM lost $10.6 billion in 2005.GM's pension obligations under funded by about $31 billion GM will eliminate 30,000 jobs and close 12 North American factories by 2008 Ford earned $2 billion worldwide, but lost $1.6 billion in its North American operations.Ford is shutting 10 plants and laying off 25,000 hourly workers.Daimler paid $36 billion for Chrysler in 1998.Chrysler reported a $1.5 billion loss for the third quarter of 2006 and a $2 billion loss for the first quarter of 2007.DaimlerChysler finally sold 80.1% of Chrysler to Cerberus Capital for $7.4 billion in May of 2007.

  • Why Toyota?

  • History of Manufacturing Management

  • HistorySakichi Toyoda, the founder of the Toyota group of companies, started Toyota as a textile machine company.

    Kiichiro Toyoda, son of Sakichi and founder of the Toyota automobile business, developed the concept of Just-in-Time in the 1930s. He decreed that Toyota operations would contain no excess inventory and that Toyota would strive to work in partnership with suppliers to level production.

    Taiichi Ohno, Toyota's chief of production in the post-WWII period. He was THE main developer of Toyota Production System (TPS).

    Dr. Shigeo Shingo: A consultant to Toyota.

    PS: Shingo Prize is the highest manufacturing excellence award in the U.S. The prize is given both to companies and individuals who contribute to the development of manufacturing excellence.

  • History (cont.)Toyota Production System (TPS) drew wide attention from the industrial community because Toyota was a profitable car company in Japan during and after the oil embargo in 1970s.

    Outside Japan, dissemination began in earnest with the creation of the Toyota-General Motors joint venture-NUMMI (New United Motor Manufacturing Inc.) in California in 1984.

    Widespread recognition of TPS as the model production system grew rapidly with the publication in 1990 of The Machine That Changed the World: The Story of Lean Production, the result of five years of research led by the Massachusetts Institute of Technology.

    The MIT researchers found that TPS was so much more effective and efficient than traditional, mass production that it represented a completely new paradigm and coined the term lean production to indicate this radically different approach to production.

    The term was coined by John Krafcik, a research assistant at MIT with the International Motor Vehicle Program in the late 1980s. He then worked for General Motors and now is a Vice President of Hyundai, U.S.

  • Toyota Production System (TPS)Definition: The production system developed by Toyota Motor Corporation to provide best quality, lowest cost, and shortest lead time through the elimination of waste. TPS is comprised of two pillars, Just-in-Time and Jidoka (autonomation) , and is often illustrated with the "house" shown on the next slide. TPS is maintained and improved through iterations of standardized work and kaizen (continuous improvement), following PlanDo-Check-Act (PDCA Cycle from Dr. Deming), or the scientific method.

  • House of Toyota

  • Toyota Production System (TPS):Related Terms

    Ohno System MAN (Material as Needed) - Harley DavidsonMIPS (Minimum Inventory Production Systems) - WestinghouseStockless production - Hewlett PackardZero inventory production systemLean Manufacturing/Production - MIT

  • How to make money?Profit equation: Sales Cost = Profit

    Traditional pricing strategy: Cost + Profit = Selling price


    When the cost goes up, the product selling price is raised to reflect the higher costs and maintain the desired level of profit.Some even argues that the profit added should be large enough to cover potential losses if the product does not sell well.

    Toyota accepts neither this formula nor these arguments!

  • Toyotas philosophySelling price Cost = Profit Customers decide the selling price.Profit is what remains after subtracting the cost from it.The main way to increase profit is to reduce cost.Consequently, cost reduction through waste elimination should have the highest priority.Toyotas paradox: Reducing cost (waste), will reduce lead time while increasing quality and customer satisfaction.How? We will discuss it soon.

  • House of Toyota

  • Attacks wasteAnything not adding value to the productFrom the customers perspectiveExposes problems and bottlenecks caused by variabilityDeviation from optimumAchieves streamlined productionBy reducing inventoryWhat Does Just-in-Time Do?

  • Waste (muda in Japanese) is anything other than the minimum amount of equipment, materials, parts, space, and workers time, which are absolutely essential to add value to the product. Shoichiro Toyoda Founder, Toyota 1995 Corel Corp.Introductory Quotation

  • Variability Occurs BecauseEmployees, machines, and suppliers produce units that do not conform to standards, are late, or are not the proper quantityEngineering drawings or specifications are inaccurateProduction personnel try to produce before drawings or specifications are completeCustomer demands are unknown

  • Continuous FlowProducing and moving one item at a time (or a small and consistent batch of items) through a series of processing steps as continuously as possible, with each step making just what is requested by the next step. It is also called the one-piece flow, single-piece flow, and make one, move one.

  • Continuous Flow Production

  • Push versus PullPush system: material is pushed into downstream workstations regardless of whether resources are available

    Pull system: material is pulled to a workstation just as it is needed

  • Traditional U.S. Manufacturing Firm:Push (old style MRP / Material Requirements Planning System)The production of items at times required by a given schedule planned in advance

    Material Information (Production Schedule)Work Station 1WS 2WS 3

  • Pull (JIT) SystemThe production of items only as demanded for use or to replace those taken for use.

    Material Information (via Kanban/Card)Work Station 1WS 2WS 3

  • Japanese word for cardPronounced kahn-bahn (not can-ban)Authorizes production from downstream operationsPulls material through plantMay be a card, flag, verbal signal etc.Used often with fixed-size containersAdd or remove containers to change production rateKanban

  • Triangular Kanban

  • Kanban

  • Figure S12.5

  • Basic Fixed-Order Quantity Model and Reorder Point Behavior

  • KanbanThe function of Kanban

    The function of Inventory Reorder Point (ROP)

  • Kanban SystemSingle cardMove only containers with C (Conveyance)-kanban)e.g.: KawasakiDual cardMove only container with C- kanbanProduce only when authorized by P (Production)- kanbane.g.: ToyotaTransparency 17.5

  • Traditional: inventory exists in case problems ariseJIT objective: Eliminate inventoryJIT requiresSmall lot sizesLow setup timeContainers for fixed number of partsJIT inventory: Minimum inventory to keep system runningInventory

  • Reduce ripple effect of small variations in schedules (e.g., final assembly) Production quantities evenly distributed over time (e.g., 7/day)Build same mix of products every dayResults in many small lots1 month = 20 working daysItemMonthly QuantityDaily Quantity A402 B603Heijunka = Leveling (Smoothing) Production Schedule using Mixed Model Sequencing

  • AAABBBCJIT Small LotsLarge-Lot ApproachTimeTimeAABBBCAAABBBBBBCCJIT produces same amount in same time if setup times are loweredSmall versus Large LotsSmall lots also increase flexibility to meet customer demands

  • Photo S12.4

  • Heijunka = Leveling (Smoothing) Production Schedule using Mixed Model Sequencing = Uniform Plant LoadingProduct Demand RequirementsMonthly DailyABCLargest integer that divides into all daily requirements evenly is 10Product Daily Requirements Divided by 10ABCMixed-model sequenceA-B-A-B-A-B-A-B-C Repeat 10 times per dayTransparency 17.7Determining Production Sequence

  • Cycle TimesWorking time per day = 480 minutesDaily requirements: A = 40 units


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