Toyota Production System - Case Study Example

ASSIGNMENT ONE By Name Course Instructor Institution City/State Date Company Description Company ‘X’ is an Australian-based company involved in production and distribution of cars as well as automobile parts. Besides that, the company engages in the production of machine tools, distribution of special purpose vehicles, in addition to bodywork business and delivery inspection of automobiles. Given that the company is new, it does not have associated companies or subsidiaries. At the global level, the company faces competition from giant automakers such as Toyota, general Motors, and Volkswagen. At the domestic level, the company faces competition from Australian automobile companies such as Holden, Ford Australia, Toyota Australia, Iveco and many others. Currently, the company is specialising in smaller cars as well as trucks. Besides that, the company is relying on its product line-up in order to grow and has made a huge investment in styling and technology to meet the domestic and international requirements and needs of its customers. Imperatively, the company has tailored most of its models with the objective of fitting the domestic and global audience, with the expectation that it will gain some market share. Using manufacturing simulation software, the company is planning to introduce two fuel-efficient engine options and sports compact automobile to its customers. To succeed and survive in the competitive automotive industry, the company seeks to achieve as well as sustain competitive differentiation, which relies on differentiating timeliness, cost/value, and quality attributes. The competitiveness foundation for the company is investing in consumer‐driven products that are attractive, affordable and fresh. Logistics & Supply In the automotive sector, managing logistics and supply efficiently has turned out to be a survival factor. Owing to the increasing competitive in both domestic and international market, the flexibility in managing information flow and materials in the assembly plants of the company is a main requirement for future growth. Presently, the supply chain practice in the automotive industry is in the transition period, and all supply chains have been tied to projections. Therefore, the automotive industry depends heavily on build-to-delivery as well as build-to-forecast (see appendix one). As suggested by Suthikarnnarunai (2008, p.1), automobile companies should ensure that the supplies have been matched with the demands from the first chain to the last chain. For this reason, the company needs a global insight of the demand so as to efficiently make decisions with regard to sourcing and capacity management. The insight should be structured according to the company’s financial plan so as to find the existing gaps and ways of addressed them. More importantly, the company should optimise its outbound logistics operations by means of collaboration and consolidation amongst original equipment manufacturers (OEMs), which as a result could lower the transportation cost, transportation time, -house inventory as well as facility costs. As mentioned by Hassan (2012, p.2), collaborating the inter- and intra-OEM outbound logistics operations is very crucial because it can lead to cost reduction. Toyota Production System Toyota production system (TPS) has been used successfully in the Toyota Company for many years and has been improving Toyota in distribution pattern, supplier management production processes, as well as research innovation. Thanks to TPS, Toyota has successfully cut costs. Manufacturing industry according to La et al. (2015, p.2) was built by Taiichi Ohn and Henry Ford, wherein the former improved the method of mass production by introducing Toyota production system while the latter reformed method of mass production using the flow lines. Importantly, the underlying principles of Toyota production system are valuable to emulate. The company can learn numerous lessons from the TPS today as compared to three decades ago. The first lesson is that there are no substitutes for direct observation: Specifically, the company cannot improve its business processes without directly observing how business processes are performed today. Therefore, the company should learn how business processes are performed in order to discover the possibilities of process improvement. Another lesson learned is that suggested changes should all the time be structured as experiments. For the company to improve its business process, it must invest in employee training, manufacturing systems and accelerate value adding steps. The third lesson that can be learned from TPS is that workers and managers should always experiment: that is to say, the company’s focus should be on process improvement. The last notable lesson is that managers should act as coaches: therefore, the activities of process improvement should be conducted and organised by both employees and management, and not just the managers. Mass Customisation Mass customisation can be defined as a concept of hybrid manufacturing whose objective is to offer highly value added products. It focuses on offering the desired product after the individual customer needs have been expressed. Although mass producers manufacture products/services cheaply that can be afforded by many people, the objective of mass customisation is producing products/services that have adequate customisation and variety in order for the customers to find what they desire (Stojanova et al., 2013, p.228). Given that the company is operating in a demanding and competitive environment, it must respond by adopting flexible manufacturing systems. Flexibility and modularity according to Brabazon et al. (2010, p.489) are important principles for companies seeking to operationally achieve mass customisation. Importantly, the company should understand that customer integration plays a crucial role when formulating the strategy of mass customisation. Basically, customer integration denotes involving customers in configuring or designing the product, which is fundamentally an essential component of mass customisation. When the company integrates the customers into the configuration or design process, the confrontational relationship that normally exists between the company and the customers will be changed into a synergy. Furthermore, the positive customer experience attributed to the co-creation can result in additional gains for the automaker, like attraction of new customers through word-of-mouth. The company’s ability to absorb product variety at higher levels as well as maintain satisfactory delivery lead times can enable it to realise the objective of mass customisation. Manufacturing Simulation Software Manufacturing Simulation Software is very important for the company because it results in improved throughput and logistics, allows for the identification of bottlenecks in the manufacturing process, and assess possible changes in the manufacturing process.  With Manufacturing Simulation Software, the company can model as well as evaluate job routing, packaging systems, process flow, inventory control, and so forth. The increasing competition in the automotive industry creates the need for adopting the automated manufacturing systems with the objective of reducing costs and improving productivity. Owing to the dynamic behaviour and complexity of these systems, Gupta et al. (2010, p.109) argue that simulation modelling has turned out to be the most widespread techniques of improving the company’s design as well as evaluating the strategies of operation. Some of the manufacturing simulation software utilised in the automotive industry include Simio, FlexSim, Siemens PLM, and Tecnomatix. They are utilised by manufacturers to develop factory models more rapidly and ensure operation efficiency. The simulation software enables engineers to picture the factory plans’ outcome in virtual plants. For instance, Tecnomatix is utilised by automakers to accelerate line digitalisation and ensure high accuracy. The ideal manufacturing simulation software for the company is Siemens PLM Software, which offers an integrated solution, which could enable the company to implement its global programs effectively and efficiently. The software would enable the company to realise its organisational goals and would also increase the production volume by ensuring that the quality targets are met by the assembly lines. The software is suitable because it comes with a product lifecycle management tool, which would enable the company to cut cost overruns associated with manufacturing. This could be achieved by integrating the manufacturing systems for body-in-white, powertrain, as well as processes in the final assembly. Lean Manufacturing Lean manufacturing can be described as the systematic approach to getting rid of waste b means of continuous improvement. According to Mohanty et al. (2007, p.28), lean practices result in improved productivity, reduced inventory, low material cost, reduced customer lead time and cycle time as well as improved dealer and supplier networking . Implementing the lean manufacturing successfully will enable the company to efficiently eliminate waste in its manufacturing processes. More importantly, lean manufacturing would result in the improvement of quality performance, fewer rework and defects, reduced process and machine breakdowns, improved stock turnover, enhanced delivery performance, and improved employee involvement and morale. More importantly, lean manufacturing would enable the company to eliminate the non-value adding activities continuously and systematically. Given that the automotive industry is very competitive, lean manufacturing has become an important solution for both success and survival. Lean manufacturing will enable the company to achieve the required productivity, and the company would probably be turned into a profit centre. Evidently, many automakers such as Toyota have realised increased return on investments (ROI) and productivity through the implementation of lean techniques and practices. Still, the company management should understand that implementing tools merely devoid of establishing an integrative system, which serves as a precursor to the implementation of lean manufacturing can deter the transformation of the company into a learning organisation (Chaple et al., 2014, p.5674). References Brabazon, P.G., MacCarthy, B., Woodcock, A. & Hawkins, R.W., 2010. Mass Customization in the Automotive Industry: Comparing Interdealer Trading and Reconfiguration Flexibilities in Order Fulfillment. Production and Operations Management, vol. 19, no. 5, pp.489–502. Chaple, A.P., Narkhede, B.E. & Akarte, M.M., 2014. Status of implementation of Lean manufacturing principles in the context of Indian industry: A Literature Review. In 5th International & 26th All India Manufacturing Technology, Design and Research Conference. Guwahati, Assam, 2014. Gupta, A., Singh, K. & Verma, R., 2010. A critical study and comparison of manufacturing simulation softwares using analytic hierarchy process. Journal of Engineering Science and Technology, vol. 5, no. 1, pp.108 - 129. Hassan, N., 2012. A collaborative framework in outbound logistics for the us automakers. Ph.D. Dissertation. Detroit, MI : Wayne State University. La, S.-Y. et al., 2015. The Dilemma of Toyota Production System Implementation: A Case Study of Taiwan Machine Tool Industries. International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5, no. 1, pp.1-12. Mohanty, R.P., Yadav, O.P. & Jain, R., 2007. Implementation of Lean Manufacturing Principles in Auto Industry. Vilakshan: The XIMB Journal of Management, pp.1-32. Available at: http://www.ximb.ac.in/ximb_journal/Publications/Article-01.pdf. Stojanova, T., Gecevska, V., Anisic, Z. & Manchev, D., 2013. Implementation Of Mass Customization Strategy For Indvidualized Products. International Journal Of Engineering, vol. 11, no. 1, pp.227-32. Suthikarnnarunai, N., 2008. Automotive Supply Chain and Logistics Management. In Proceedings of the International MultiConference of Engineers and Computer Scientists. Hong Kong, 2008. IMECS. Appendix Build-to-delivery and build-to-forecast Read More