@ Supply Chain Management


Toyota ventures into the unknown.

A recent article in the trade rag – Tooling & Production highlights why I think that Toyota is a company worthy of emulation. The article titled – Makeover will transform Japanese plant into model of innovation, highlights the recent steps that Toyota has taken in order to venture into the unknown.

In an earlier post, I had highlighted the call issued from the chief executive of Toyota – to embark on radical changes. This article highlights how far along they’ve come in taking bold steps in order to sharpen (not regain) its competitive edge.

When Takaoka’s makeover is completed in 2009, it will build more models, faster, on shorter assembly lines than any other Toyota factory. It will use innovative approaches in virtually every step of the manufacturing process, from stamping and welding to painting and final assembly. It will become a fount of ideas for the Toyota manufacturing empire.

In the general sense, Toyota is setting up its Takaoka plant to be a flexible manufacturing site – thus, what you cannot gain with manufacturing efficiencies, Toyota must make up for with speed. One can imagine that this is really a two step approach. As the models that roll out from the Takaoka plant garner praise/rejection, Toyota’s other plants around the world (which are now dedicated to producing a stable portfolio of cars) will offer the production capacity to quickly capitalize on cars that consumers want. Buried in this story is a delicious irony – that of outsourcing. Toyota is actually outsourcing to the US and Europe.

Toyota’s plants in North America, Europe and elsewhere will continue to be dedicated to high volumes of a few nameplates, or what Watanabe calls "stable production." The elite plants in Japan, in contrast, will produce many models flexibly.

But what are the goals that Toyota has placed in front of its engineering and production teams? Above, you have a preview of the allocation of resources, the way the field has been set up so that the marathon can ensue but what are the milestones on the way?

Watanabe also wants to save money. Toyota’s current cost- cutting program is generating annual savings of $2.5 billion. Not enough. Give me more, Watanabe said. What’s the new target? Toyota won’t say.

Some of the other innovations that executives at Toyota have been talking about include:

– A welding system that slashes the cost of jigs and other tooling. The tools that hold steel in place to be welded into the shape of a car do so from the inside, rather than from the outside. It was invented at Toyota’s small plant in Vietnam, where low production volumes forced the factory to cut costs.
– A "set parts system" that delivers a basket of parts to each vehicle. The basket rides down the line with the car that gets the parts. Workers no longer have to rummage through numerous bins along the assembly line to find the right part.
– Stamping presses that use servo-motors rather than hydraulics, combined with high-speed delivery robots.
– A paint process that eliminates the need to let the base coat dry.
– Sensors that monitor quality during each process. For example, one sensor might verify that a part is being attached at the correct angle.

A component of the need to remain competitive is paranoia and there’s quite a bit being reported in this article.

On the one hand, Toyota likes to brag that the quality of, say, Corollas built in California or Canada is equal to that of those built in Japan. On the other hand, it is not completely comfortable with what that says about its Japanese plants.

However, the above doesn’t happen in a vacuum.

Watanabe also is deeply concerned about cracks in Toyota’s quality standards. The number of Toyota recalls has surged in the United States and Japan over the past two years. Toyota expects the revamped Takaoka to reassert its quality leadership.

There is an emerging aspect to the new direction that Toyota is taking. They call it kakushin i.e. radical change. Kaizen (continuous improvement) has been the watchword at Toyota for a long time and I’d think that they would consider it as the cornerstone of their success to date. However, gutting one of your plants,

Toyota isn’t just installing new equipment. The factory itself will be gutted. Takaoka’s output will drop in half during the complete revamp.

doesn’t count for Kaizen in any sense of the word. Thus, a shift is probably in the air as they try to set for themselves radical targets and consequent changes – Kakushin and get back into Kaizen mode as the effects ripple through their systems. What it also means is the need for an adaptation of their corporate culture to making bold steps and then improving the resultant through a series of small steps. Whatever the model of accommodation between these two techniques, the resultant is choosing to compete on speed – being able to respond to the consumer’s demand faster than any of your competitors:

For example, the length of Takaoka’s assembly lines will be cut in half. The lead time needed to add a new model at the plant also will be cut in half. But "simple" doesn’t mean "simplistic." Indeed, Takaoka will become one of Toyota’s most flexible plants, able to build eight high-volume models on the same assembly line.

You will know if they have succeeded if in about 2-3 years time, a host of consultants are talking about Kakushin and Kaizen while putting you into a corner and telling you why you are likely to be a miserable failure if you didn’t get with the program.

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Category: Strategy, Supply Chain Management, Supply Chain News


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July 2007