The manufacturing system of Toyota The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that

comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic "Lean manufacturing." Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.[1] Originally called "Just In Time Production," it builds on the approach created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno. The founders of Toyota drew heavily on the work of W. Edwards Deming and the writings of Henry Ford. When these men came to the United States to observe the assembly line and mass production that had made Ford rich, they were unimpressed. While shopping in a supermarket they observed the simple idea of an automatic drink resupplier; when the customer wants a drink, he takes one, and another replaces it. The principles underlying the TPS are embodied in The Toyota Way. The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out "mura" (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or "muri" (overburden) since this generates "muda" (waste). Finally the tactical improvements of waste reduction or the elimination of muda are very valuable. There are seven kinds of muda that are addressed in the TPS: 1. 2. 3. 4. 5. 6. 7. over-production motion (of operator or machine) waiting (of operator or machine) conveyance processing itself inventory (raw material) correction (rework and scrap)

The elimination of waste has come to dominate the thinking of many when they look at the effects of the TPS because it is the most familiar of the three to implement. In the TPS many initiatives are triggered by inconsistency or overburden reduction which drives out waste without specific focus on its reduction. 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. It has been proposed[10] that the TPS is the most prominent example of the 'correlation', or middle, stage in a science, with material requirements planning and other data gathering systems representing the 'classification' or first stage. A

science in this stage can see correlations between events and can propose some procedures that allow some predictions of the future. Due to the success of the production philosophy's predictions many of these methods have been copied by other manufacturing companies, although mostly unsuccessfully. Also, many companies in different sectors of work (other than manufacturing) have attempted to adapt some or all of the principles of the Toyota Production System to their company. Lean manufacturing or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. Basically, lean is centered on preserving value with less work. Lean manufacturing is a management philosophy derived mostly from the Toyota Production System (TPS) (hence the term Toyotism is also prevalent) and identified as "Lean" only in the 1990s.[1][2] It is renowned for its focus on reduction of the original Toyota seven wastes to improve overall customer value, but there are varying perspectives on how this is best achieved. The steady growth of Toyota, from a small company to the world's largest automaker,[3] has focused attention on how it has achieved this. Also known as the flexible mass production, the TPS has two pillar concepts: Just-intime (JIT) or "flow", and "autonomation" (smart automation).[6] Adherents of the Toyota approach would say that the smooth flowing delivery of value achieves all the other improvements as side-effects. If production flows perfectly then there is no inventory; if customer valued features are the only ones produced, then product design is simplified and effort is only expended on features the customer values. The other of the two TPS pillars is the very human aspect of autonomation, whereby automation is achieved with a human touch.[7] The "human touch" here meaning to automate so that the machines/systems are designed to aid humans in focusing on what the humans do best. This aims, for example, to give the machines enough intelligence to recognize when they are working abnormally and flag this for human attention. Thus, in this case, humans would not have to monitor normal production and only have to focus on abnormal, or fault, conditions. Lean implementation is therefore focused on getting the right things to the right place at the right time in the right quantity to achieve perfect work flow, while minimizing waste and being flexible and able to change. These concepts of flexibility and change are principally required to allow production leveling, using tools like SMED, but have their analogues in other processes such as research and development (R&D). The flexibility and ability to change are within bounds and not open-ended, and therefore often not expensive capability requirements. More importantly, all of these concepts have to be understood, appreciated, and embraced by the actual employees who build the products and therefore own the processes that deliver the value. The cultural and managerial aspects of Lean are possibly more important than the actual tools or methodologies of

production itself. There are many examples of Lean tool implementation without sustained benefit, and these are often blamed on weak understanding of Lean throughout the whole organization. Lean aims to make the work simple enough to understand, do and manage. To achieve these three goals at once there is a belief held by some that Toyota's mentoring process, (loosely called Senpai and Kohai), which is Japanese for senior and junior, is one of the best ways to foster Lean Thinking up and down the organizational structure. This is the process undertaken by Toyota as it helps its suppliers improve their own production. The closest equivalent to Toyota's mentoring process is the concept of "Lean Sensei," which encourages companies, organizations, and teams to seek outside, third-party experts, who can provide unbiased advice and coaching, (see Womack et al., Lean Thinking, 1998). There have been recent attempts to link Lean to Service Management, perhaps one of the most recent and spectacular of which was London Heathrow Airport's Terminal 5. This particular case provides a graphic example of how care should be taken in translating successful practices from one context (production) to another (services), expecting the same results. In this case the public perception is more of a spectacular failure, than a spectacular success, resulting in potentially an unfair tainting of the lean manufacturing philosophies A typical example of the interplay of these wastes is the corporate behaviour of "making the numbers" as the end of a reporting period approaches. Demand is raised to 'make plan,' increasing (mura), when the "numbers" are low, which causes production to try to squeeze extra capacity from the process, which causes routines and standards to be modified or stretched. This stretch and improvisation leads to muri-style waste, which leads to downtime, mistakes and back flows, and waiting, thus the muda of waiting, correction and movement. Eliminating wastes: The original seven muda are:

Transport (moving products that is not actually required to perform the processing) Inventory (all components, work in process and finished product not being processed) Motion (people or equipment moving or walking more than is required to perform the processing) Waiting (waiting for the next production step) Overproduction (production ahead of demand) Over Processing (resulting from poor tool or product design creating activity) Defects (the effort involved in inspecting for and fixing defects

JIT OF TOYOTA

Just in Time, or JIT is a set of techniques to improve the return on investment of a business by reducing in-process inventory, and its associated costs. The process is driven by a series of signals, or Kanban that tell production processes to make the next part. Kanban are usually simple visual signals such as the presence or absence of a part on a shelf. JIT causes dramatic improvements in a manufacturing organization's return on investment, quality, and efficiency. History The technique was first adopted and publicized by Toyota Motor Corporation of Japan as part of its Toyota Production System (TPS). Japanese corporations cannot afford large amounts of land to warehouse finished products and parts. Before the 1950s this was thought to be a disadvantage because it reduced the economic lot size. An economic lot size is the number of identical products that should be produced, given the cost of changing the production process over to another product. The undesirable result would be a poor return on investment for a factory. The chief engineer at Toyota in the 1950s examined accounting assumptions, and realized that another method was possible. The factory could be made more flexible, reducing the overhead costs of retooling, and therefore reducing the economic lot size to the available warehouse space. Over a period of several years, Toyota engineers redesigned car models for commonality of tooling for such production processes as paint-spraying and welding. Toyota was one of the first to apply flexible robotic systems for these tasks. Some of the changes were as simple as standardizing the hole sizes used to hang parts on hooks. The number and types of fasteners were reduced in order to standardize assembly steps and tools. In some cases identical subassemblies could be used in several models. Toyota engineers then determined that the remaining critical retooling operation was the time to change the stamping dies used for body parts. Traditionally, these were adjusted by hand, with crowbars and wrenches. It sometimes took as long as several days to install a large (multiton) die set and achieve acceptable quality. Further, these were usually installed one at a time by a team of experts, so that the line would be down for several weeks. Toyota implemented a program called "The Single Minute Exchange of Die," SMED. With very simple fixtures, measurements were substituted for adjustments. Almost immediately, die change times fell to about a half hour. At the same time, quality of the stampings became controlled by a written recipe, reducing the skill reuqired for the

change. Analysis showed that the remaining time was used to search for hand tools, and move dies. Procedural changes (moving the new die in place with the line in operation) and dedicated tool-racks reduced die change times to as little as 40 seconds. Dies were changed in a ripple through the factory, as a new product began flowing. After SMED, economic lot sizes fell to as little as one vehicle in some Toyota plants. Carrying the process into parts-storage made it possible to store as little as one part in each assembly station. When a part disappeared, that was used as a sign to produce or order a new part. Effects Some surprising things occurred. A huge amount of cash appeared, apparently from nowhere, as in-process inventory was built out and sold. This by itself generated tremendous enthusiasm in upper management. Another surprising effect was that the response time of the factory fell to about a day. This improved customer satisfaction by providing vehicles musually within a day or two of the minimum economic shipping delay. Also, many vehicles began to be built to order, completely eliminating any risk that they would not be sold. This dramatically improved the company's return on equity by eliminating a major source of risk. Since assemblers no longer had a choice of which part to use, every part had to fit perfectly. The result was a severe quality assurance crisis, and a dramatic improvement in product quality. Eventually Toyota redesigned every part of its vehicles to eliminate or widen tolerances, while simultaneously implementing careful statistical controls. (See Total Quality Management). Toyota had to test and train suppliers of parts in order to assure quality and delivery. In some cases, they eliminated multiple suppliers. When a process problem or bad parts surfaced on the production line, the entire production line had to be slowed, or even stopped. No inventory meant that a line could not operate from in-process inventory while a production problem was fixed. Many people in Toyota confidently predicted that the initiative would be abandoned for this reason. In the first week, line stops occurred almost hourly. However, by the end of a month, the rate had fallen to a few line stops each day. In six months, line stops had so little economic effect that Toyota had an overhead pull-line, similar to a bus bell-pull, that permitted any worker on the production line to order a line stop for a process or quality problem. Even with this, line stops fell to a few per week. The result was a factory that became the envy of the industrialized world, and which has since been widely emulated.

Company offering quality discounts: ACER Quality discount can be described as an incentive or discount offered by a seller to the buyer for purchasing or also ordering the product greater than the usual quantity and quality, which has to be delivered at one time. Since its founding in 1976, Acer has constantly pursued the goal of breaking the barriers between people and technology. Focused on marketing its brand-name IT products around the globe, Acer ranks as the world's No. 3 vendor for total PCs and No. 2 for notebooks, with the fastest growth among the top-five players. A profitable and sustainable Channel Business Model is instrumental to Acer?s continued growth, while the successful mergers of Gateway and Packard Bell complete the company?s global footprint by strengthening its presence in the U.S., and enhancing its strong position in Europe. Acer Inc. employs 5,000 people worldwide. 2007 revenues reached US$14.07 billion. Over 30 years of making history in the fast-paced IT industry shows that Acer has walked in the right direction. Its far-reaching strategy of focusing on R&D and marketing development laid the foundations and created a company ready to embrace the challenges of the future.

An impact of a company having ERP in accordance with JIT inventory: In the early 1980's a new concept, known as zero inventories" was introduced to the American manufacturing industry. The "zero inventories" concept called for the transportation of materials from the outside vendors directly to the work-in-process area, where the required value added(*) through the manufacturing operations occurred, followed by the shipping of the finished products out of the door, all at a reasonable rate of time. This "zero inventories" concept would save companies the costs of inspection, stocking, material handling, inventory tracking, carrying the inventory, and the risks of damage and obsolescence. The concept now formally termed just-in-time (JIT) inventory has evolved into a corporate philosophy that seeks to do the process right the first time and to eliminate any non-value added activities.(1) The time a part is delayed, moved, or inspected is referred to as non-value added time. It is waste time because no value is created for the customer when the product is not being processed. Under the JIT concept activities such as moving parts, waiting for parts, machine setup, and inspection are referred to as non-valued added activities. Inefficiencies in production cause non-value added activities. There are three basic stages of what JIT is and how JIT works. These stages are termed: (1) Kanban, (2) Production planning, and (3) Global management philosophy. Organizations claim that they are using JIT when they are at any of these stages. In reality, these are not three separate stages but rather a migration path from using JIT simply as a shop-floor-control tool (Kanban) to the installation of a factory wide global management philosophy. In stage one which is the simplest form, JIT is a shop floor-control tool that allows the scheduling of inventory movement through the shop floor with the use of a Kanban, a materials movement tracking device. The Kanban can take the form of a card, a box, or a marked off area on the floor. These Kanbans are used as an authorization to move materials or to produce new product. This initial stage of JIT should generate impressive reductions in work-in-process inventory because of the direct uninterrupted movement of materials between work stations. The second stage of JIT, production planning, focuses on the basic principle of receiving production parts as needed, rather than building up inventories of these components. Using the JIT production planning approach, managers reduce inventory to a minimum level, keeping on hand only the amount needed in production until the next order arrives. This approach eliminates the double handling of products which occurs when storage is relocated to the work area or shipping area. The JIT production stage is driven by having continuous delivery of items. The use of production planning eliminates the need for material requirements planning (MRP) as a production planning tool. In contrast to the JIT system, a MRT system is a "push-through" system driven by forecasted demand. It examines the finished goods requirements before determining the demand for raw materials, components, and subassemblies. The purpose of MRP is to maintain the lowest

possible level of inventory while making certain materials and parts are available. In production planning, detailed bill-of-materials for the manufacturing process which authorize the movement of materials or parts from storage to work areas, are no longer needed. The lead time in JIT is dramatically different. In a large production type environment, lead time may be reduced from months to hours. With such a short time horizon, it is easy to determine what parts will be needed each day. Another important part of the planning environment in JIT involves the long-term contractual relationships which are established with vendors. These relationships will eliminate the need for purchase requisitions and purchase orders. A last critical part of the production planning process in JIT is that quality evaluations are performed differently. Quality is part of the manufacturing process. Every employee is a quality inspector. Inspection is done before the work is started and after it is finished. This process is referred to as in-line quality control or total quality control. TECHNIQUES of JIT More than 6 years of research devoted to the JIT system have led to tentatively distinguish among its elements two main categories: JIT's industrial engineering techniques and Japanese management-related features of JIT. It is a question of JIT techniques that can be seen as belonging or related to the field of industrial engineering. They can be divided into two groups. There are pure industrial engineering methods and there are industrial engineering elements that are closely associated with the worker's actions. JIT's pure engineering elements In this category, one has to find techniques that are universally valid like laws of physics or mathematics. They have no close relationship with the social, cultural, economic or managerial environment in which they appear or are discovered for the first time. Those elements can therefore be applied anywhere and yield the same results. The following are elements of the JIT production system identified as belonging to that group: * Quick set-up (QSU); * Automation (ASD) (poka yoke or automatic stopping device, full-work system); * Breaking of physical barriers (BPB) between processes, sections or departments: Shop floor reduction (SFR); * Flow-of-products-oriented layout of processes and machines (FPL); * U-formed processing line (UPL); * Mass production of mixed models (MMP) - on the same line;

* Total preventive maintenance (TPM); * Kanban (KBN). Those engineering elements constitute the "technical side" of JIT or "technical JIT". Applying them anywhere would unavoidably contribute to the reduction of cost, production lead time, defective parts (work), overproduction of work-in-process inventories and workforce. Worker's operations/activities as JIT elements The worker's operations can and do constitute some JIT elements. In other words, you have JIT techniques that are part of the worker's activities and that interact with the human being. Their application and realization or success depend also on the human factor. If they are accepted by the work force, then they can work, otherwise they cannot. In that group may be included the following JIT techniques or methods: * Multi-machine manning working system (MMM); * Standard operations (SO); * Quality control circles (QCC); * Suggestions system (SS); and * Continuous improvement (CI). Japanese management-related elements of JIT

The Issues : JIT INVENTORY JIT is often viewed in direct conflict with Material Requirements Planning (MRP) since JIT uses pull scheduling and MRP uses a push methodology. JIT is best suited for repetitive production environments. Some consulting firms in the past have recommended replacing MRP and information systems with JIT, and "pulling the plug from the computer." This is nonsense and an overdose of a manufacturing philosophy. Just like anything else, Just-in-time is no panacea, nor should it be embraced as a religion. It is an operational strategy that, if implemented properly, will provide a new dimension to competing: quickly introducing new customerized high quality products and delivering them with unprecedented lead times, swift decisions, and manufacturing products with high velocity

Main IMPACT of JIT include:

Reduced setup time. Cutting setup time allows the company to reduce or eliminate inventory for "changeover" time. The tool used here is SMED (single-minute exchange of dies). The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management. Employees with multiple skills are used more efficiently. Having employees trained to work on different parts of the process allows companies to move workers where they are needed. Production scheduling and work hour consistency synchronized with demand. If there is no demand for a product at the time, it is not made. This saves the company money, either by not having to pay workers overtime or by having them focus on other work or participate in training. Increased emphasis on supplier relationships. A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important. Supplies come in at regular intervals throughout the production day. Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time. When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced.