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 Plan–Do-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 Davidson
• MIPS (Minimum Inventory Production Systems) -
Westinghouse
• Stockless production - Hewlett Packard
• Zero inventory production system
• Lean Manufacturing/Production - MIT
How to make money?
Profit equation: Sales – Cost = Profit

Traditional pricing strategy: Cost + Profit = Selling price

Example:

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!

Toyota’s philosophy
• Selling 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.
• Toyota’s paradox: Reducing cost (waste), will reduce lead time while
increasing quality and customer satisfaction.
• How? We will discuss it soon.
House of Toyota
What Does Just-in-Time Do?
• Attacks waste
• Anything not adding value to the product
• From the customer’s perspective
• Exposes problems and bottlenecks caused by
variability
• Deviation from optimum
• Achieves streamlined production
• By reducing inventory
Introductory Quotation

Waste (“muda” in Japanese) is

‘anything other than the minimum
amount of equipment, materials,
parts, space, and worker’s time,
which are absolutely essential to
add value to the product.’
— Shoichiro Toyoda
Founder, Toyota

© 1995 Corel Corp.

Variability Occurs Because

• Employees, machines, and suppliers produce

units that do not conform to standards, are late,
or are not the proper quantity
• Engineering drawings or specifications are
inaccurate
• Production personnel try to produce before
drawings or specifications are complete
• Customer demands are unknown
Continuous Flow
• Producing 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

Traditional Flow Production Process

(stream of water)

Suppliers
Customers
Inventory (stagnant
Flow with JIT ponds) Material
(water in
stream)
Suppliers

Customers
Push versus Pull

• Push 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

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

The production of items only as demanded for use or to replace

those taken for use.

Work WS 2 WS 3
Station 1
Material
Information (via Kanban/Card)
Kanban
• Japanese word for card
• Pronounced ‘kahn-bahn’ (not ‘can-ban’)
• Authorizes production from downstream
operations
• ‘Pulls’ material through plant
• May be a card, flag, verbal signal etc.
• Used often with fixed-size containers
• Add or remove containers to change production rate
Triangular Kanban

Part # Part Description Location

Date Triggered Lot Size

Trigger (Reorder) Point

Tool #

Machine #
Kanban
Figure S12.5
 Basic Fixed-Order Quantity Model and
Reorder Point Behavior
1. You receive an order quantity Q. 4. The cycle then repeats.

Number
of units
on hand Q Q Q

R
L L
2. Your start using
them up over time. 3. When you reach down to
Time a level of inventory of R,
R = Reorder point
Q = Economic order quantity you place your next Q
L = Lead time sized order.
Kanban
The function of Kanban ≈

The function of Inventory Reorder Point (ROP)

Kanban System
• Dual card
• Single card
• Move only container with C-
• Move only containers
kanban
with C (Conveyance)-
kanban) • Produce only when authorized
by P (Production)- kanban
• e.g.: Kawasaki
• e.g.: Toyota

Transparency 17.5
Inventory
• Traditional: inventory exists in case problems
arise
• JIT objective: Eliminate inventory
• JIT requires
• Small lot sizes
• Low setup time
• Containers for fixed number of parts
• JIT inventory: Minimum inventory to keep system
running
Heijunka = Leveling (Smoothing) Production
Schedule using Mixed Model Sequencing
• 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 day
• Results in many small lots
• 1 month = 20 working days
• Item Monthly Quantity Daily Quantity
A 40 2
B 60 3
Small versus Large Lots
JIT produces same amount
in same time if setup times
JIT Small Lots are lowered

A A B B B C A A B B B C

Time
Small lots also increase flexibility to meet
customer demands
Large-Lot Approach

A A A A B B B B B B C C

Time
Photo S12.4
 Heijunka = Leveling (Smoothing) Production Schedule using Mixed
Model Sequencing = Uniform Plant Loading
Determining Production Sequence
Monthly Daily
Product Demand Requirements
A 800  20 = 40
B 800  20 = 40
C 200  20 = 10
Largest integer that divides into all daily requirements evenly is 10
Product Daily Requirements Divided by 10
A 4010= 4
B 4010= 4
C 1010= 1
Mixed-model sequence
A-B-A-B-A-B-A-B-C Repeat 10 times per day
Transparency 17.7
Cycle Times
Working time per day = 480 minutes
Daily requirements: A = 40 units; B = 40 units; C = 10 units
The system cycle time = 480/(40+40+10) = 5.33 min/unit

Product Requirements Cycle Time

A 40 480 40=12
B 40 480 40=12
C 10 48010= 48

Transparency 17.8
Lowering Inventory
Reduces Waste

Work in process inventory level

(hides problems)

Unreliable Vendors Capacity Imbalances

Scrap
Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved.

WIP
Unreliable Vendors Capacity Imbalances
Scrap
Lowering Inventory
Reduces Waste
Reducing inventory reveals
problems so they can be solved.

Unreliable Vendors WIP Capacity Imbalances

Scrap
Reducing Lot Sizes Increases the Number of
Lots
Customer Lot size = 5
orders 10 Lot 1 Lot 2

Lot size = 2
Lot 1 Lot 2 Lot 3 Lot 4 Lot 5
…Which Increases
Inventory Costs
Cost

Setup Cost

Smaller Optimal Lot Size

Lot Size Lot Size
Unless Setup Costs are Reduced
Cost

Setup Cost
New optimal lotOriginal
size optimal
Lot Size
lot size
Quick setup = Quick changeover
• Reducing setup cost ≈ reducing setup time
• Setup reduction time is a prerequisite to lot size reduction
• SMED (Single Minute Exchange of Dies) method
• The method has been developed by Toyota and then expanded
by Dr. Shigeo Shingo (a consultant to Toyota), and has proven
its effectiveness in many companies by reducing changeover
times (non-value added times) from hours to a less than 10
minutes
Setup Components
• Internal Setup: consists of setup activities that must be performed
while the machine is stopped.
• External Setup: consists of setup activities that can be carried out
while the machine is still operating.
It is desirable to:
1. Convert as much internal setup to external setup
2. Improve the setup procedure
Systematic Setup Reduction
Setup Reduction
Setup Reduction:
Standardizing die holder heights reduces the need to exchange fastening bolts
Setup Reduction Techniques
Quality At The Source
• Doing it right at the first time.
• Jidoka allows workers to stop production line
• Andon lights signal quality problems
• Under capacity scheduling allows for planning, problem solving
& maintenance
• Visual control makes problems visible
• Poka-yoke prevents defects
House of Toyota
Jidoka
• Toyota Production System (TPS) is supported by two pillars: Just-in-Time and
Jidoka

• Jidoka = Autonomation = Automation with “human” intelligence.

• Sakichi Toyoda, founder of the Toyota group of companies, invented the

concept of Jidoka in the early 20th Century by incorporating a device on his
automatic looms that would stop the loom from operating whenever a thread
broke. Dr. Shigeo Shingo then developed his idea further.

• This enabled great improvements in quality and freed people up to do more

value creating work than simply monitoring machines for quality (separating
people’s work and machine’s work).

• Eventually, this simple concept found its way into every machine, every
production line, and every Toyota operation.
Jidoka Techniques
• Poka-yoke (mistake or error proofing)

• A form of device for building-in quality at each production process.

• This device may take many shapes and designs.

• Typical types of Pokayoke are sensors, proximity switches, stencils,

light guards and alignment pins. Simple circuitry is usually used to
operate these electrical error proof devices as they should be of low
cost and simple design.

• Goal: Finding defects before they occur = Zero Defects

• Statistical Quality Control (SQC): Finding defects after they occur

• Visual management including using Andon Lamp

 Exhibit 7.10

Poka-Yoke Example
Visual Management
Andon Lamp
• Red - line stoppage
• Yellow - call for help
• Green - normal operation
Kaizen
• Change for better = continuous improvement
• Kaizen workshop or Kaizen event:
A group of Kaizen activity, commonly lasting five days, in which a
team identifies and implements a significant improvement in a
process, e.g., creating a manufacturing cell.
GEMBA
• GEMBA" is a Japanese word meaning "real place", where
the real action takes place. In business, GEMBA is where
the value-adding activities to satisfy the client are
carried out.
• Manufacturing companies have three main activities in
relation to creating money: developing (designing),
producing and selling products. In a broad sense,
GEMBA means the sites of these three major activities.
• In a narrower context, however, GEMBA means the
place where the products are made.
• The term is often used to stress the that real
improvement can only take place when there is a shop-
floor focus on direct observation of current conditions
where work is done, e.g., not only in the engineering
office.
Five Golden Rules of Gemba
• Masaaki Imai promoted Kaizen to people outside Japan through his two highly acclaimed
books:

1. Kaizen: The Key To Japan's Competitive Success.

2. Gemba Kaizen: A Commonsense, Low-Cost Approach to Management

• He preaches the Five Golden Rules of Gemba, the first of which is 'When a problem
(abnormality) arises, go to gemba first'. So what's gemba? It's the shop floor, or equivalent.
Once there, you apply
Golden Rule Two: check with gembutsu (relevant objects).
Three: take temporary counter-measures on the spot.
Four: find the root cause.
Five: standardize to prevent recurrence.
Standardization is the managing part of getting good gemba. You also need good
housekeeping (Imai is very keen on cleaning machines) and muda, the elimination of
waste. But all hinges on getting away from your desk. Obey the master Imai. GO TO
GEMBA!
5Whys: Finding the root cause of a problem.
• 5 Whys analysis as an effective problem-solving technique. It is also used in Six Sigma. Example:

• Why is our client, Hinson Corp., unhappy? Because we did not deliver our services when we said we would.

• Why were we unable to meet the agreed-upon timeline or schedule for delivery? The job took much longer than we
thought it would.

• Why did it take so much longer? Because we underestimated the complexity of the job.

• Why did we underestimate the complexity of the job? Because we made a quick estimate of the time needed to
complete it, and did not list the individual stages needed to complete the project.

• Why didn't we do this? Because we were running behind on other projects. We clearly need to review our time
estimation and specification procedures.
Plan-Do-Check-Act
(PDCA/Shewart /Deming Cycle)
• Plan: Go to the real place/factory flow (gemba), obverse the real
thing/product (gembutsu), get the real fact (genjitsu). Focus on reducing
response time, lead times, exposing wastes in your process
• Do: Conduct Kaizen. Create models of excellence so others can aspire to.
Flow everything: product, information material replenishment, services.
• Check for direction by aligning activities with long-term business direction
• Act: Take actions to sustain and accelerate improvement activities

Source: [Link]
Similarity between 3 Gs and MBWA
• The 3 G's (Gemba, Gembutsu, and Genjitsu, which translate into “actual
place”, “actual thing”, and “actual situation”).
• In the early days of Hewlett-Packard (H-P), Dave Packard and Bill Hewlett
devised an active management style that they called Management By
Walking Around (MBWA). Senior H-P managers were seldom at their desks.
They spent most of their days visiting employees, customers, and suppliers.
This direct contact with key people provided them with a solid grounding from
which viable strategies could be crafted.
5S: Workplace organization/Housekeeping
• 5s: Important part of Kaizen/Lean Manufacturing
• The S's stand for:

• Seiri - keep only what is absolutely necessary, get rid of things that
you don't need, i.e. simplify or sort.
• Seiton - create a location for everything, i.e. organize
or straighten.
• Seiso - clean everything and keep it clean, i.e. cleanliness or
sweep.
• Seiketsu - implement Seiri, Seiton and Seiso plant wide, i.e.
standardize.
• Shitsuke - assure that everyone continues to follow the rules of 5S,
i.e. stick to it or self discipline.

• 5S in the US: Sort, Straighten, Sweep, Standardize, Self Disciple

• 5S + 1S (Safety) = 6S (Hytrol, etc)

• 5S + 2S (Safety and Security) = 7 S (Agilent Technology that was part of
Hewlett Packard)
5S
• 5S is simple to begin and gives good benefits.

• Each individual in an organization is asked to get

rid of overburdening items.

• Red tag attack: A red tag attack is the strategy of a

group of people going through the plant and
putting red tags on everything that has not been
used within the last 30 days. The items that people
feel are necessary to "hold on to" must be
justified to their superior, or the item is taken out
of the plant!
5S in a Factory

Factory tour: Toyota vs.

others.
5S in Office
• Before 5 S

• After 5 S
 Standard Work

When manpower, equipment, and materials are used in the most efficient
combination, this is called Standard Work.
There are three elements to Standard Work:
1) Takt Time
2) Work Sequence
3) Standard Work-in-Process

Once a Standard Work is set, performance is measured and continuously

improved.
 Standard Work Sheet
Scope of From Raw mat er i al Date Reviewed:
Operations To Heat Tr eat ment Janary 7, 2000

FG

RM

Quality Safety Standard Work Standard WIP TAKT Cycle Crew

Check Precaution in Process Quantity Time Time Size

10 12.1 min 23.4 min 2

The Importance of Standardized Work:

Without it, all improvement efforts using Kaizen to eliminate

waste (muda) are not sustainable. You will go back to the
original position before Kaizen.
Manufacturing Cell
Worker Routes Lengthened as Volume
Decreases
Cell 1 Cell 2

Worker Worker
1 2

Worker
3

Cell 3 Cell 4 Cell 5

Figure 11.4
Workload balancing

• Aims at maximizing operator utilization based on the given takt

time.
• Is the key to adjust JIT lines to demand fluctuations
• Requires flexible operators
Production Line Balancing
Improving Lead Time:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Current Situation
Percent of Lead Time
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

VA NVA (Non Value Added)

Approach # 1: Reducing Value Added (VA) Time by 50%

VA NVA

Approach # 2: Reducing Non Value Added (VA) Time by 50%

VA NVA
 Value Stream Mapping SM

• A visual tool for identifying all activities of the planning,

What? and manufacturing process to identify waste.

• Provides a tool to visualize what is otherwise usually

Why? invisible.

• The leaders of each product family need to have a

Who? primary role in developing the maps for their own area.

•
When? Develop a current-state map before improvements are
made so that the efforts and benefits can be quantified.

Where? • On the shop floor, not from your office. You need the real
information, not opinion or old data.

How? • Next page

Value Stream Map Symbols
3,000 units
Spot weld
C/T = 30 sec

ABC C/O = 10 min

plating 3 shifts Finished

2% scrap rate = 1 day goods
Process Vendor Data box Inventory

C/T = Cycle Time

Mon
C/O = Change over or setup time and
Wed

Push Supermarket: Physical pull Shipment

the location of a
predetermined
standard inventory
Current Value Stream Map
Future Value Stream Map
Attributes of Lean Producers - they
• use JIT to eliminate inventory
• build systems to help employees product a perfect part
every time
• reduce space requirements
• develop close relationships with suppliers
• educate suppliers
• eliminate all but value-added activities
• develop the workforce
• make jobs more challenging
• reduce the number of job classes and build worker
flexibility
• apply Total Productive Maintenance (TPM)
The Five Steps of Lean Production/Toyota Production
System Implementation
• Step 1: Specify Value
Define value from the perspective of the final customer. Express value in terms of a specific product, which meets
the customer's needs at a specific price and at a specific time.
• Step 2: Value Stream Mapping.
Identify the value stream, the set of all specific actions required to bring a specific product through the three critical
management tasks of any business: the problem-solving task, the information management task, and the physical
transformation task. Create a map of the Current State and the Future State of the value stream. Identify and
categorize waste in the Current State, and eliminate it!
• Step 3: Create Continuous Flow
Make the remaining steps in the value stream flow. Eliminate functional barriers and develop a product-focused
organization that dramatically improves lead-time.
• Step 4: Create Pull Production
Let the customer pull products as needed.
• Step 5: Perfection
There is no end to the process of reducing effort, time, space, cost, and mistakes. Return to the first step and begin
the next lean transformation, offering a product which is ever more nearly what the customer wants.
Comparison of
MRP (Material Requirements Planning),
JIT, and TOC (Theory of Constraints)
MRP JIT TOC
Loading of operations Checked by capacity Controlled by kanban Controlled by
requirements system bottleneck operation
Planning afterward
Batch sizes One week or more Small as possible Variable to exploit
constraint
Critical for bottleneck
Importance of data Critical Unnecessary and feeder operations
accuracy
Speed of scheduled Slow Very fast Fast
development
Flexibility Lowest Highest Moderate
Cost Highest Lowest Moderate
Goals Meet demand Meet demand Meet demand
Have doable plan Eliminate waste Maximize profits
Planning focus Master schedule Final assembly schedule Bottleneck
Production basis Plan Need Need and plan