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Rise of Lean Production

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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. – PowerPoint PPT presentation

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Title: 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.

5
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.

6
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.

7
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.

8
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.

9
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.

10
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.

11
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

12
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.

13
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.

14
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

15
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

16
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.

17
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.

18
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.

19
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.

20
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.

21
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.

22
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.

23
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.

24
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.

25
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.

26
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,

27
Lean Production Dealing with customer.
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