Tuesday, February 19, 2013

Toyota & Lean Manufacturing: For Good and Worse

In 2011, Toyota is looking for new ways to increase efficiency from its production system. Toyota built Miyagi factory as its first new plant in Japan in 18 years. There are several redesign ideas that Toyota implement in this factory to achieve its lean manufacturing concept.
  
 Its side by side assembly line gives benefit by shrinking the assembly line by 35% and requiring fewer steps by workers. 
  
Toyota used elevated platform instead of conventional car chassis dangling from overhead conveyor belts. It makes Toyota reduce 50% cost in equipment investment and 40% cost in cooling system because of lower ceiling.

Finally, Toyota replaces typical chain-pulled conveyor belts with quiet friction rollers on its assembly line to move the cars along. The rollers use fewer moving parts in order to reduce noise.

Because its design, this factory enable Toyota to produce car with 1/2 the workers and 1/2 the square footage of usual factory.

In contrast with the benefit that Toyota has got from lean manufacturing, there was also some news about problems with Toyota product. In 2009 and 2010, Toyota recalled more than 10 million vehicles due to defects associated with unintended acceleration linked by U.S. regulators to 51 deaths. In 2012, Toyota recalled 7.43 million vehicles for a possible flaw that could lead the power- window switch to melt or catch fire. In the same year, Toyota also recalled 2.77 million vehicles worldwide after detecting faults in the steering and water-pump systems of some of its gasoline and hybrid vehicles.

Toyota’s recent problems become debates about how Toyota can get certain risks with its lean manufacturing concept. It is interesting to analyze how could these problems happen to the car company that was famous in quality? It is the company that many companies around the world wanted to copy its quality system. Right now, the company's status as the model for lean manufacturing has come into question. Many analysts try to answer this question.

One opinion is from David Meier, co-author of "The Toyota Way Fieldbook" and founder of a consulting company on lean manufacturing. He highlights how Toyota approach with intention to eliminate waste becomes too risky.  Toyota is trying to reduce cost by using common parts and designs across multiple product lines, and reducing the number of suppliers to procure parts in greater scale. There is a lot of cost reduction from this effort, but still something can happen and have a big impact.

Another different opinion is from Paul Ingrassia, author of "Crash Course: The American Automobile Industry's Road from Glory to Disaster" and writer for Wall Street Journal. He said “Toyota is suffering from trying to get too big, too fast”. In doing this, Toyota abandoned one of its conservative cultures. Lean is not cutting costs. Lean is eliminating waste and a tremendous waste is a recall. Much of the focus on Toyota is to cut cost and forget about the quality. Randy Goodden, president and founder of the International Product Safety and Liability Prevention Association, said “What happens in this scenario is quality is doing nothing more than assuring all customers that a product is built in compliance to the specification. The specification itself ends up being defective. That means customers are almost assured to receive a defective product."

This condition reminds me when I studied about Total Quality Management. The concept promises standardization of product in quality but it doesn’t mean you get the best quality of product. The concept still needs continuous improvement culture to drive the best quality. May be, this culture has been missing or miss direction when Toyota expands its operational. It’s is difficult to keep your standard when you have global operation with several factories around the world. I think the second opinion sounds more reasonable.

So what is your opinion regarding this case? Do you think Toyota can recover its reputation in the future? Is it lean manufacturing responsible for Toyota’s problem, or on the contrary because Toyota didn’t apply lean manufacturing well enough these days? According to Consumer Reports, the bible of the car-buying public, now rates Ford's quality higher than Toyota's because of these problems.

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