Looking beyond the obvious: Unraveling the Toyota production system
Introduction
The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota that comprises its management philosophy and practices. The Toyota Production System TPS has attracted the attention of many firms, but few have been able to achieve success to the level enjoyed by Toyota. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The main objectives of the TPS are to design out overburden and inconsistency and to eliminate waste. The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out inconsistency. It is also crucial to ensure that the process is as flexible as necessary without stress or overburden since this generates waste. Finally the tactical improvements of waste reduction or the elimination of waste are very valuable. Toyota was able to greatly reduce leadtime and cost using the TPS, while improving quality. This enabled it to become one of the ten largest companies in the world. It is currently as profitable as all the other car companies combined and became the largest car manufacturer in 2007. Due to the success of the production philosophy's predictions many of these methods have been copied by other manufacturing companies, although mostly unsuccessfully.
Objective:
(1) To study the main effects of TPS as a set of practices on cycle time, quality, cost, and delivery dimensions of manufacturing performance
(2) To study the main effects of TPS as a set of rules underlying problem solving techniques on cycle time, quality, cost, and delivery dimensions of manufacturing performance and
(3) To study the interaction effects of TPS as a set of practices and as a set of rules on cycle time, quality, cost, and delivery dimensions of manufacturing performance.
Major Themes in TPS rules and TPS practices
In TPS both internal and external links are connected to understand the entire system Specifically the objective is to detect, assess and eliminate sources of variation in the entire system. The design of sequential relationship among internal and external links involves three types of integration: upstream integration, i.e. between the external suppliers and the internal suppliers within the firm ;internal integration, between actors within the firm that own successive process stages as either internal supplier so both internal suppliers and internal customers; and downstream integration, between the internal suppliers that own the very last process stage and the firm’s external customers.
Hypotheses
Hypotheses (H1). TPS practices have a direct and positive effect on manufacturing cycle time, quality, cost, and deli very performance.
Hypotheses (H2). TPS rules have a direct and positive effect on manufacturing cycle time, quality, cost, and delivery performance.
Hypotheses (H3). TPS practices and TPS rules have an interactive and positive effect on manufacturing cycle time, quality, cost, and delivery performance.
Sampling
Belonging to industries classified in SIC34-Fabricated Metal Products (except Machinery and Transportation Equipment);SIC 35—Industrial and Commercial Machinery and Computing Equipment; SIC36—Electronic another Electrical Equipment and Components; SIC37—Transportation Machinery and Items; and SIC 38—Measuring, Analyzing and Controlling Instruments, Photographic, Medical and Optical Goods. Firm sin these SICs (together with SIC39) account for over 40% of U.S. manufacturing sales, and are establish users of advanced manufacturing systems in discrete product manufacturing (U.S. Department of Commerce, 1988; Snell and Dean, 1992). Since it measures are related to both purchasing and manufacturing, a multiple respondent approach for the entire sampling frame would have been ideal. However, this approaches as well-known empirical constraints, including prohibitive time, cost, and response rate constraints (Kumar etal., 1993). ). The respondent in their study was the director of materials, materials manager or equivalent senior executive at the plant or SBU level. High-ranking respondents tend to be more reliable sources of information than their subordinate ranks
Measurement
The Toyota Production System has well recognized practices, such as Kanban, preventive maintenance, set-up time reduction, group technology, in-plant communication systems, and JIT supplies. TPSrules,The responses of most respondents were benchmarked against the use of practices and rules over the past three years, ranging from a very low to a very high extent of actual use on a 1–5 Likert scale. Manufacturing performance was operationalized to include the conventional dimensions of manufacturingcycle time reduction, quality improvement (conformance), cost reduction, and delivery speed. For each item, respondents were asked to provide a rating of their plant’s manufacturing performance relative to internal goals and relative to the performance of key competitors.
Data Analysis and Results
Hierarchical regression analysis was used to examine the hypotheses. They conducted a series of separate regression runs for each of the four dimensions of manufacturing performance. Product life cycle stage, firm size (as measured by number of employees), and cost of delay in meeting customer orders (market velocity) were included as control variables.
Main TPS practices and TPS rules effects
The First hypothesis (H1) Proposes that TPS practices have a direct effect on manufacturing cycle time, quality, cost, and delivery performance. The results provide some support for H1, as several TPS practices including production schedule information sharing with supplier, Kanban, in-plant EDI, use of set-up reduction techniques, and JIT supplier delivery, showed significant main effects on multiple aspects of manufacturing performance.
The Second hypothesis (H2) Proposes that TPS rules have a direct effect on manufacturing cycle time, quality, cost, and delivery performance. The findings were mixed. For instance, joint problem solving with suppliers and the use of cross trained employees had strong significant positive effects on cost reduction performance. Worker cross training and the use of manufacturer operator teams had positive effects on cost reduction and manufacturing cycle time reduction, respectively. Unanticipated relationships were also observed. Direct communication between buyer and supplier production schedulers had significant negative effects on both quality performance and cost reduction.
The Third hypothesis (H3) Proposes that TPS practices and TPS rules have interactive effects on manufacturing cycle time, quality, cost, and delivery performance. The interactions modeled between TPS practices and TPS rules revealed several joint effects on the various performance measures.
Preventive maintenance, another TPS practice, had mixed effects. Its inter-action with the TPS rule of using operator teams had significant negative effects on quality performance and cost reduction. However, the same practice significantly improved manufacturing cycle reduction, quality, cost reduction, and delivery speed performance when combined with the TPS rule of using decentralized decision making for micro production scheduling. The use of set-up time reduction techniques, another TPS practice, had a strong positive impact on quality performance and cost reduction, when combined with the TPS rule of using operator teams. Yet, the same practice had a strong negative effect on cost reduction performance. JIT supplier deliveries significantly improved delivery speed performance in the presence of the rule of joint problem solving with suppliers (weak significance for manufacturing cycle time). Interestingly, JIT supplier deliveries significantly impaired manufacturing cycle time reduction and delivery speed performance in the presence of direct communication between production schedulers at buyer and supplier plants.
Discussion and Implication
Effects of TPS practices and TPS rules:
The results for four TPS practices conformed to expectations, i.e. use of in-plant EDI, Kanban, use of set-up time reduction techniques, and JIT supplier delivery were associated with positive changes in manufacturing cycle time reduction, quality, cost reduction and delivery speed performance. Surprisingly, the TPS practice of production schedule information sharing with suppliers had a significant and negative impact on manufacturing cycle time, cost reduction, and delivery speed performance. Another TPS rule, the use of decentralized decision making for micro production scheduling, also indicated negative direct effects on plant delivery speed performance. They conjecture that workers making local decisions about what and when to produce may not have full access to, or a complete understanding of plant level requirements and constraints, possibly leading to conflicts in scheduling rules and priorities at the level of the plant. Although it might seem that in some contexts the decentralization of decision making for micro production is a necessary evil, this pattern might not hold true in other contexts
Interaction effects between TPS practices and TPS rules:
The interactions provide interesting insights. Using suppliers with volume flexibility capabilities did not combine well with the use of joint problem solving with such suppliers. They speculate that volume flexibility may well increase supplier production costs, if activated too frequently or for extreme swings in volume.
The use of set-up time reduction techniques, a TPS practice with positive direct effects on plant performance, appears counter-productive in the presence of worker cross training or decentralized decision making for operator daily task distribution. Set-up time reduction initiatives are typically equipment centered team kaizen events, with inputs from different experts. Worker cross training, an independently beneficial rule, may actually deter the development of such machine level expertise. Cross training may have the disadvantage of diluting or preventing the acquisition of deep knowledge and expertise in a specific production machine. set-up time reduction events demand team work, focusing multiple sources of specific expertise, to a particular work objective. The positive effects of using set-up time reduction techniques in combination with manufacturer operator teams corroborate this perspective.
Implication
TPS should be approached with caution piece meal or indiscriminate adoption of TPS practices or rules may be dangerous. Indeed, certain combinations of rules and practices may be detrimental to performance. Carefully calibrated, TPS would seem to potentially impact plant performance across the board, including cost, quality, manufacturing cycle time, and delivery performance.
Conclusion and Future Scope
They adopted an integrated perspective to include the rules underlying TPS; They proposed and found some support for the combinatorial power of TPS practices and TPS rules with regards to several manufacturing performance outcomes. In order to minimize explanatory complexities, they did not explore three-way interactions, providing thus an opportunity for future research that could look at such higher order interactions. Contrary to their expectations, the results indicated a few negative relationships which might need further clarification to confirm their pattern consistency. However, They also posit a caveat about the above discussed results
Reference:
Looking beyond the obvious: Unraveling the Toyota production system by: Jayanth Jayaram, Ajay Das and Mariana Nicolae, Int. J. Production Economics 128 (2010), 280-291