Throughout this course, and especially in this quality module, we talked a lot about the Toyota production system. We talked about Heijunka and Muda. We talked about jidoka and the Andon Cord. We talked about Kanban Cards and the Ishikawa Diagram. Now, I apologize as my Japanese pronunciation is even worse than my English one, But I think these words, these words are very important. Let me also be clear that I'm not trying to sell you a Toyota Camry, nor do I have any shares invested in Toyota. I'm not endorsing Toyota as a company, I'm endorsing the Toyota Production System as a great way of dealing with operations. The Toyota Production System is closely related to the idea of lean operation, which we discussed early on in this course. In this last session, I want to talk about the Toyota Production System and how it was developed by Toyota and I want to use this as a capstone for this overall course. To try and get a sense of information of the Toyota Production System, we have to go back in automotive history. The first car was built by a German, Gottlieb Daimler, For his daughter Mercedes. This was in the late nineteenth century. Soon, other car builders followed. However, Vehicles were produced in job shops at very, very small scale. This made the production very inefficient and vehicles were very expensive. Thus, they were only affordable to the upper class. Ford was influenced by the idea of Frederick Winslow Taylor. We talked about some of Taylor's idea in the productivity module. Ford also came up with the idea of an assembly line, A moving line, Rather than the workers moving, the vehicles of flow unit should be moving. Allegedly, he was exposed to this idea on a visit to a slaughterhouse that were operated by French immigrants. Remember the quote, you can have any car as long as it is black. Ford favored huge ventures, Avoiding setups, and emphasizing low variety to keep his big machines highly-utilized. Ford grew very rapidly. Ford was producing already in the millions of vehicles well before World War II. The model of Ford was built around the economies of scale. This drove down the learning, learning curve, and soon the vehicles became affordable to the middle class. This allowed Ford to flood the market with his cars, further lowering his marginal cost. The company, Toyota, started out as a maker of automated looms. They moved into vehicle production just prior to World War II. The tragic events of World War [inaudible] left Japanese economy deeply depressed. The United States, following the war, tried to help the Japanese economy. Just like they were involved with the Marshall Plan in Europe, they tried to reindustrialize Japan including having an automotive industry. As part of this, they moved some of their machines, knowledge, management from Detroit to Japan. The goal was to replicate the highly successful Ford model in Japan. The problem was, however, it did not work. Japanese economy around that time, in the late 40's early 50's, had a total market demand that was just in the thousands of vehicles. Remember the production numbers of Ford or GM. Similarly, at that time in the US, they were in the millions. So, as the production volume in the US was about a hundred times bigger. This lack of scale made the Ford production system fail bitterly. Around 1950, the Toyota managers started to realize that they had to come up with their own production model. It's not the Toyota Production System was born in a weekend retreat in some nice conference hotel, It was an outcome of over 30 years of work of organic problem solving. The Toyota Production System was built around the systemic elimination of waste. The scarcity of resources forced the Toyota folks to think smart about how they use them. They also emphasized the role of serving demand. This lack of having a domestic demand in Japan at that time, really forced them to avoid the scale economy's model of the Fords, but instead, of building a model of flexibility that would allow them to serve much smaller markets profitably. I would like you to think about the Toyota Production System in the form of a big house. You will notice that this house includes many of the concepts that we discussed in this course. So take a look at this slide, really, as a capstone of the six week's course not just for the Japanese vocabulary. The top priority of the Toyota Production System is the reduction of waste, Muda. Remember, the teachings of Ono? There are seven sources of waste. The most evil source of waste was inventory. Now, what does the Toyota Production System do about inventory? Inventory gets avoided by synchronizing production flow with market demand. We talked about the idea of Heijunka mixed model production when we talked about customer choice and variety. By shorting down setups using the Smear tool, I can afford to set up for every unit. And thus, I can produce exactly to the rate of demand. Another form of inventory reduction is by adjusting the production rate to market demand. Market demand drives the takt time, The takt time drives the staffing level. And that sets the capacity, and thus avoids building up inventory. We also talked in this module about pull as instead of push. Pull systems get implemented using Kanban cards or made to order production as we discussed in the context of Dell. This flow piece is a central module of the product, Toyota Production System. It gets complemented with a quality module that we saw in the last week. The quality module is built around the idea of Jidoka. Detect, stop and alert. We can apply Jidoka to machines, or we can use the Andon cord to empower assembly line workers to stop the line. Notice this tights, coupling between the inventory and the quality module. As we discussed, Inventory covers up defects and often times gets this in way of process and improvement. This is due to the long information, turn around time that you have, if you buffer. The Toyota Production System is built on a foundation of flexibility, standardization, and worker involvement. Flexibility is implemented again through takt time. Takt time drive is a staffing level by computing the currently required manpower and then lets us avoid to use too much inventory. Standardization of work, We first impose an internal standardization of the task to keep the variability of processing time low and thus keeping the need of buffers low, As well as the idea of quarter analysis avoiding large operator to operator variance and performance. And finally, and maybe most importantly, the Toyota Production System is built on the people part. A part of the foundation of the Toyota Production System is Kaizan, And the problem solving of full time workers using tools such as Pareto analysis and the Ishikawa diagram. So, how do you apply the Toyota Production System and the lessons of this course to your own work? Over the last six weeks, we've encountered three enemies that messed up our operations. These three enemies were waste, variability and inflexibility. We talked about the seven sources of waste and the OEE framework. The OEE framework showed us that from the available time of a machine or for a human worker, a lot of the time is wasted and only relatively little time is spent value at. That means, by reducing the waste, I can get a lot more done with less of an expensive input. Variability showed us that we often have to hold excess capacity because customers don't come up like in the office of Dr. Toyota. Access capacity, unfortunately, often means idle time. This reminded us of the tension between buffering and suffering. Oftentimes, variability also reflects quality. And so, whenever you see variability, we have a problem in the operation. We saw this earlier in our discussion of Six Sigma. And then, finally, there's inflexibility. Matching supply with demand is always hard. We either have patients wait for doctors, or doctors waiting for patients. The more we can do to adjust supply to demand, the better of an operation are we going to run. Waste, variability and inflexibility. These are the three enemies of any successful operation. The Toyota Production System provides a powerful framework of tapping all three of these enemies. This is why I've chosen the Toyota production as the theme of this closing
