Rise of Lean Production

1
Rise of Lean Production

• By,
• Nikethan

2
Introduction.

• In the spring of 1950, a young Japanese engineer,
  Eiji Toyoda, set out on a three-month pilgrimage
  to Ford's Rouge plant in Detroit.
• The trip marked a second pilgrimage for the
  family, since Eiji's uncle, Kiichiro, had visited
  Ford in 1929.
• The Toyota Motor Company was founded by the
  Toyoda family in 1937.
• In 1936, the company held a public contest,
  which drew 27,000 suggestions. "Toyota," which
  has no meaning in Japanese, was the winner.

3
Introduction.

• They had been thwarted by the military government
  in their effort to build passenger cars in the
  1930s, and had instead made trucks, largely with
  craft methods, in the ill-fated war effort.
• And, at the end of 1949, a collapse in sales
  forced Toyota to terminate a large part of the
  work force.
• Kiichiro resigned from the company to accept
  responsibility for management failures.
• In thirteen years of effort, the Toyota Motor
  Company had, by 1950, produced 2,685 automobiles,
  compared with the 7,000 the Rouge was pouring out
  in a single day.'

4
Introduction.

• After carefully studying every inch of the vast
  Rouge, Eiji wrote back to headquarters that he
  thought there were some possibilities to improve
  the production system.
• Back at home in Nagoya, Eiji Toyoda and his
  production genius, Taiichi Ohno, soon concluded
  that mass production could never work in Japan.
• From this tentative beginning were born what
  Toyota came to call the Toyota Production System
  and, ultimately, lean production.

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The birth place of lean production.

• Toyota is often called the most Japanese of the
  Japanese auto companies.
• For many years its work force was composed
  largely of former agricultural workers.
• Toyota is regarded by most industry observers as
  the most efficient and highest-quality producer
  of motor vehicles in the world.

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The birth place of lean production.

• After the war, Toyota was determined to go into
  full-scale car and commercial truck
  manufacturing, but it faced a host of problems.
• The domestic market was tiny and demanded a wide
  range of vehicles.
• The native Japanese work force, as Toyota and
  other firms soon learned, was no longer willing
  to be treated as a variable cost or as
  inter-changeable parts.
• In Japan, there were no guest worker, also the
  new American laws strengthen the position of
  workers against the management.

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The birth place of lean production.

• After the war, Toyota was determined to go into
  full-scale car and commercial truck
  manufacturing, but it faced a host of problems.
• The war ravaged Japanese economy was starved and
  foreign exchange.
• The outside world was full of huge motor vehicle
  producers who were anxious to establish
  operations in Japan and ready to defend their
  established markets against Japanese exports.

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Lean Production A concrete example.

• Ohno's perspective, was the minimum scale
  required for economical operation.
• Dies The dies could be changed so that the same
  press line could make many parts, but doing so
  presented major difficulties.
• Ohnos idea was to develop simple die-change
  techniques and to change dies frequently-every
  two to three hours versus two to three months.
• Ohno hit upon the idea of letting the production
  workers perform the die changes as well.

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Lean Production A concrete example.

• By purchasing a few used American presses and
  endlessly experimenting from the late 1940s
  onward, Ohno eventually perfected his technique
  for quick changes.
• By the late 19.5Os, he had reduced the time
  required to change dies from a day to an
  astonishing three minutes and eliminated the need
  for die-change specialists.
• In the process, he made an unexpected
  discovery-it actually cost less per part to make
  small batches of stampings than to run off
  enormous lots.

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Lean Production A concrete example.

• There were two reasons for this phenomenon.
• Making small batches eliminated the carrying cost
  of the huge inventories of finished parts.
• Making only a few parts before assembling them
  into a car caused stamping mistakes to show up
  almost instantly.
• To make this system a success Ohno needed both an
  extremely skilled and a highly motivated work
  force.

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Lean Production Company as Community.

• Toyota found its nascent car business in a deep
  slump and was rapidly exhausting loans from its
  bankers.
• Toyoda fired a quarter of the work force.
• After the intervention of Japanese government,
  aided by the Americans The balance of power had
  shifted to the employees.
• Kiichiro Toyoda resigned as president to take
  responsibility for the companys failure arid the
  remaining employees received two guarantees

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Lean Production Company as Community.

• Kiichiro Toyoda resigned as president to take
  responsibility for the companys failure arid the
  remaining employees received two guarantees .
• One was for lifetime employment
• Pay steeply graded by seniority rather than by
  specific job function.
• But the workers were convinced to do multiple
  jobs.

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Lean Production Final Assembly Plant.

• Ohno, who visited Detroit after war thought the
  whole system was rife with muda, the Japanese
  term for waste.
• Back at Toyota, he began to experiment and he
  divided the system into team.
• Ohno, next gave the team the job of housekeeping,
  minor tool repair and quality checking.
• And in final step, he stressed for the team to
  suggest ways collectively to improve process.

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Lean Production Final Assembly Plant.

• The concept of rework.
• Stopping of whole assembly line, in Toyota and
  Mass-production system.
• And most importantly, the concept of why

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Lean Production Final Assembly Plant.

• The concept of rework.
• Stopping of whole assembly line, in Toyota and
  Mass-production system.
• And most importantly, the concept of why

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Lean Production The Supply Chain.

• Assembly of a car constitutes only 15 of total
  manufacturing process.
• The bulk of the process involves engineering and
  fabricating more than 10,000 discrete parts and
  assembling these into 100 major components
  engines, transmissions, steering gears,
  suspensions, and so forth.

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Lean Production The Supply Chain.

• Ohno and others saw many problems in the system
  that Mass production followed
• Supplier Organizations had little opportunity or
  incentive to suggest improvements in the
  production design based.
• Alternatively, suppliers offering standardized
  designs of their own, modified to specific
  vehicles, had no practica1 way of optimizing
  these parts.
• There was compromise in quality as price was
  deciding factor.

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Lean Production The Supply Chain.

• Toyota began to establish a new, lean-production
  approach to components supply.
• The first step was to organize suppliers into
  functional tiers.
• Different responsibilities were assigned to
  firms in each tier.
• First-tier suppliers were responsible for
  working as an integral part of the
  product-development team in developing a new
  product.

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Lean Production The Supply Chain.

• Finally, Toyota shared personnel with its
  supplier-group firms in two ways.
• It would lend them personnel to deal with
  workload surges.
• It would transfer senior managers not in line for
  top positions at Toyota to senior positions in
  supplier firms.

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Lean Production The Supply Chain.

• And, Toyota developed a new way to coordinate the
  flow of parts within the supply chain, the famous
  just in time system, the kanban.
• It took Ejji Toyoda and Ohno more than twenty
  years of relentless effort to fully implement
  this full set of ideas.

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Lean Production The Supply Chain.

• And, Toyota developed a new way to coordinate the
  flow of parts within the supply chain, the famous
  just in time system, the kanban.
• It took Ejji Toyoda and Ohno more than twenty
  years of relentless effort to fully implement
  this full set of ideas.

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Lean Production Product Development and
Engineering.

• Ohno and Toyoda decided early that product
  engineering inherently encompassed both the
  process and industrial engineering.
• They form teams with strong leaders that
  contained all relevant expertise .
• They tried to avoid the mismanagement or the
  ambiguities that existed in mass production.

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Lean Production Dealing with customer.

• The new Toyota production system was especially
  well suited to capitalize upon the changing
  demands that consumers were placing on their
  cars and upon changing vehicle technology.
• Changes in the requirement of customers were all
  blessing to Toyota.

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Lean Production Dealing with customer.

• Consumers began to report that the most important
  feature of their car or truck was reliability.
• Because the Toyota system could deliver superior
  reliability, soon Toyota found that it no
  longer had to match exactly the price of
  competing mass-production products.
• Furthermore, Toyota's flexible production system
  and its ability to reduce production-engineering
  costs let the company supply the product variety
  that buyers wanted with little cost penalty.

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Lean Production Dealing with customer.

• To change production and model specifications in
  mass-production firms takes many years and costs
  a fortune.
• By contrast, a preeminent lean producer, such as
  Toyota, needs half the time.
• Ironically, most Western companies concluded that
  the Japanese succeeded because they produced
  standardized products in ultra-high volume.

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Lean Production The future of Lean Production.

• Toyota had fully worked out the principles of
  lean production by the early 1960s.
• By the 1960s the Japanese firms on average had
  gained all enormous advantage over mass-producers
  elsewhere and were able for a period of twenty
  years to boost their share of world motor vehicle
  production steadily by exporting from their
  highly focused production complexes in Japan,

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Lean Production Dealing with customer.