Syed Mustafa Hasan

TOYOTA MOTOR
MANUFACTURING, USA,
INCORPORATION
WRITTEN ANALYSIS OF CASE
SYED MUSTAFA HASAN

18386
Contents
COMPANY BACKGROUND................................................................................................................2
CURRENT SCENARIO........................................................................................................................2
PROBLEM STATEMENT....................................................................................................................2
TOYOTA PRODUCTION SYSTEMS.....................................................................................................2
ANALYSIS..........................................................................................................................................3
REASON FOR FAILURE......................................................................................................................3
ROOT CAUSE....................................................................................................................................4
MISTAKES.........................................................................................................................................4
EVALUATING OPTIONS....................................................................................................................4
IMPLEMENTATION...........................................................................................................................4
RECOMMENDATIONS......................................................................................................................5
COMPANY BACKGROUND
Toyota automobiles was founded by Kiichiro Toyoda in 1937, as a spinoff from its parent
company which was Toyota Industries. In 1934 Toyota launched its engine and by 1936 it
launches its first car but that was under the name of Toyota Industries. Toyota automobiles
were created to solely focus on automobiles only. Toyota Motor Corporation is one of the
largest conglomerates in Japan and Toyota is considered to the eight biggest company of the
world in terms of car productions.
Toyota Motor Manufacturing (TMM) is a subsidiary of Toyota Motor Corporation and it was
established in 1985 with an initial investment of $800 Million.
CURRENT SCENARIO
TMM is currently facing issues with its seat supply. Kentucky Framed Seat (KFS) is the only seat
supplier for TMM and is responsible for the material flaws and missing important components
of the seat.
PROBLEM STATEMENT
Doug Friesen was the manager of assembly line at TMM and the problem for him was to solve
the cars seat problem without deviating from the TPS principles and Underutilizing the line. The
following events were taking place simultaneously and were creating problems for the
production flow of TMM.
1. Run ratio dropped from 95% to 85% which resulted in a reduction of producing 45 less
cars per shift.
2. Too many cars needed off-line operations of some type before they could be transferred
to shipping. A significant amount of cars were waiting in the assembly line with either
defected or no seats while company were waiting for KFS to provide them new and non-
defective seats.
3. Utilization rate of assembly line was below projected target.
TOYOTA PRODUCTION SYSTEMS

After World War 2, Japan’s economic condition were really bad and their per capita income fell
significantly. People could not afford to purchase a vehicle and during these times TMM
introduced a new system which was called Toyota Production System (TPS). The system focused
on reducing the extra cost by reducing the waste that were produced due to over production,
optimizing storage space in warehouse, accurate recording and tracking of inventory, efficient
handling of material and having skilled labor to operate their system. All these mentioned
purposes were managed by TPS and their two core modules were Just in time and Jidoka.
Just in time system minimizes inventory and increases efficiency. It tells what, how and when to
produce as this systems reduces waste. Jidoka’s principle insisted on focusing on quality only.
ANALYSIS
Following description analyses the whole approach as a manager of assembly line:
1. Run ratio decreased from 95% to 85%
2. This lead to a decrease in per shift production of cars
3. Low utilizing rate of assembly line
4. Production of missing cars through overtime capacity will cost TMM around $19610 as
calculated below.
REASON FOR FAILURE

The reason for the failure of product proliferation were:
1. Stock parts could not be used as each seat was supposed to match each particular car
which had mutipe styles, colors etc.
2. Suppliers were operating under JIT.
3. The response time for KFS to come up with next seat was minimal.
ROOT CAUSE
The root cause was the failure of TMM to not internalize TPS philosophy. KFS balanced capacity
to meet TMM production but it did not have the TPS implementation to respond to the product
proliferation.
MISTAKES
Time pressure on KFS interrupted their production line which had a negative impact on their
quality. KFS were blamed for the seat defects without going for the five why’s to determine the
main cause of the problem. The five whys include:
1. Why is this happening
Product Proliferation
2. Why KFS is allowing defective products to reach TMM
they have a poor quality control system which can be solved by having a quality control
team train KFS employees.
3. Why is TMM being so slow to handle cars with seat problem?
KFS is consistently sending wrong seats to TMM
4. Why are they sending the wrong seats?
Poor communication methods as KFS employees might not understand TMM’S
handwritten orders.
5. Why is TPS failing?
Seats are not being fixed in the production line.
EVALUATING OPTIONS
1. Retain KFS as its supplier as increase inter organizational communication. They should
have a permanent KFS team at TMM to repair any seat related fault that can arise on
the assembly line.
2. Change or increase its suppliers that TMM uses to outsource its seat production. If there
are more vendors then the power given to KFS will reduce and an increased competition
may end up increasing the quality.
3. Insource production of seats. TMM can start manufacturing its own seats. It will be time
consuming and would increase capital but may end up decreasing cost in the long run. A
lengthy cost analysis should be done on this.
IMPLEMENTATION
TMM should immediately implement the following measures:
1. Have a designated area for vehicles with seat problems.
2. Problems should be resolved by notifying KFS.
RECOMMENDATIONS
The following Recommendations should be considered:
1. They should modify their approach to outsource seat production by increasing the
number of suppliers.
2. Modify all vendors continuously.
3. Integrate TPS training to all its vendors so that they can identify problems within the line
so solutions can be done quickly.
4. Implement TPS throughout their vendors supply chain.
5. TMM should reduce variety of seats with TMC.

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