Stacy Mitchell TOYOTA MOTORS MANUFACTURING, USA The problem is the rise in Toyota Camry s with defective seats

which leads to a reduce run ratio at the Georgetown plant. Here are some of the techniques used for Toyota Motors. Just In Time-JIT is a manufacturing process aimed at getting the right quantity of quality parts to the assembly line at the exact time they are needed for production. Another technique is Kaizen, the Japanese word for improvement , kaizen techniques target and eliminate waste in production processes. Kanban, the Japanese term for sign , uses standard lot sizes and often, returnable containers with a card attached. Poke-Yoke is translated from Japanese as mistake-proof and this process involves establishing standardized work procedures, such as assembly activities to prevent errors from occurring. The Five Why s is another technique Toyota utilizes in order to sort, stabilize, shine and sustain the five why s aim to bring order and conformity to the plant floor.

y y y

Preferably, Toyota fixes flaws on the production line. The only problem is that all of vehicles with seat problems are managed off line after the assembly has already been completed. This can be caused by different factors: Seats need to match each particular car, therefore stock parts cannot be used The supplier process operates under the Just In Time system. KFS can t supply replacements for any of the defective seats. Stopping the line until a replacement seat is available is not a good decision because of productivity losses. KFS occasionally sends improper seat assemblies. Most of the time, replacement seats are not installed on time. There are about several four-day old vehicles in the overflow parking area. The run ratio was down from 95% to a damaging 85%. The calculations below demonstrate that the decrease in per-shift production is close to 50 cars. Most of this can be blamed on the seat problem. Producing the missing cars by overtime capacity will cost TMM in excess of $16,000 per shift. This comes to around $8.4 Million per year since two shifts and a 5-day workweek.

y y y y

Stations Employees Wage/Hour Overtime Cycle Time Shift Length 'Productive' Minutes Run Ratio

353 769 $ 17.00 $ 25.50 1.05 Cars/Min 525 Minutes 450

100% 473 95% 449 85% 402 'Lost' Cars Per Shift (95% to 85%) 47 Cost per Hour of Production Overtime $ 19,610 Time Required to Produce Add. Cars 50 Minutes Cost to Produce Additional Cars $ 16,215

Toyota s strategy is to deal with the problem where it was found, using their Five Why s approach. Most of the seat problems are material flaws or missing parts which is impossible to fix online because the replacement isn t immediately available. A larger amount of safety stock is one option to use but this is not an efficient solution to the problem because it reverses the JIT concept. Also, it would need extreme maintenance near the seat station for the correct seat matching. Another solution to this issue would be to have a smaller number of seat assortments. Product proliferation should be fixed since there are 3 different styles, 4 colors to 36 different seating styles. This would increase the chances of a good seat in the pipeline. I m not trying to address how to solve this, only stating possibilities for increasing the ratio of vehicles fixed on line. The workers at Toyota occasionally install a seat-belt at the wrong angle, but this problem is easily fixed within 30 seconds, even though it accounts for 11% of all seat problems between April 14 and April 30, 1992. The two most significant problems are material flaws and missing parts, which account for almost 60% of all defects. It is clear that the problem should first be analyzed on the supplier side. From the case information, it is evident that the problem began in March 1992 when Toyota began increasing the seat varieties from about twelve to about thirty-three. These problems

will intensify in May when varieties increase again. It seems KFS employees are not adequately trained in JIT to allow them to accommodate the level of alterations presented with the wagon. This will result in even more defects in the near future. A $50,000 investment will resolve TMM s problem with the hook and may justify the expense. Presently, the hook breaks down once per shift. If there are two shifts per day and a five-day workweek, there will be approximately 500 breaks per year. If we assume, that the internal rate of return is 15%, each replacement would have to exceed $15 to justify avoiding the $50,000. TMM could also change the seat supplier or get an additional supplier. Toyota generally prefers to resolve issues with its suppliers rather than just replacing them. Additionally, it would be challenging to find a supplier that is geographically closer than KFS. From my analysis, I conclude that TMM should develop a much closer relationship with KFS. Also, more collaboration with Japanese designers should be encouraged the help geographical barriers. Also, The TPS system should be conducted at KFS throughout Toyota s supplier network. KFS employees should be trained to identify problems in the line so that proper solutions can be found. TMM should also recommend a reduction involving the variety of seats with TMC. The variety of seats should be minimized to avoid problems. Some problems could occur though, for instance, TMC might feel that the variety of seats could be reduced. Also, KFS could refuse to adopt TMM and TPS procedures but this is highly unlikely since TMM and KFS are so dependent on each other. We assume that Toyota is KFS s largest customer. KFS is Toyota s only local seat supplier so they have a common dependence. I recommend that TMM designate an employee to manage seat correction and replacement and implement a one-shift requirement. Then have an employee check the seats at the arrival dock so those problems can be identified early. Also, a designated area for vehicles with seat problems should be available in the overflow parking area to imagine the fluctuation in defects. The supplier

should be notified of defective seats as soon as they are discovered. Employees on the assembly line and in quality control should immediately inform KFS. Actions should be introduced to revise current procedures in response to problems. QC personnel should be placed with KFS to analyze why so many defective seats are getting to TMM. In addition, an effective IT solution should be implemented to improve information flow and prevent problems and mitigate costs. IT should also be used to reorder seats that are defective or incorrect.