Throughout this course, and especially in this quality module, we talked a lot about the Toyota Production System. We talked about muda, we talked about jidoka and the andon cord, kanban cards, and the Ishikawa diagram. I apologize, as my Japanese pronunciation is probably even worse than my English one. But I think of these words and the concepts behind these words as really, really important. Let me be clear that I'm not trying to sell you a Camry, nor do I have any shares invested in the Toyota Motor Corporation. I'm not endorsing Toyota as a company. I'm endorsing the Toyota Production System as a great way of dealing with your operations. The Toyota production system is closely related to the idea of lean operation, which we discussed early on in this course. In this last session, I want to talk about the Toyota Production System and how it was developed by Toyota. I want to use this as a capstone to wrap up this course. To try to get a sense of the information of the Toyota Production System, we have to look back into automotive history. The first car was built by two Germans, Daimler and Benz. This was in the late 19th century. Soon, other car builders followed. However, vehicles were produced in job shops at very, very small scale. This made production very inefficient, and vehicles were very expensive, thus they were only affordable to the upper class. Ford was influenced by the idea of Frederick Winslow Taylor. We talked about some of Taylor's ideas in the productivity module. Ford also came up with the idea of an assembly line, a moving line rather than the workers moving, the vehicles as a full unit should be moving through the process. Allegedly, Henry Ford was exposed to this idea during a visit to a French slaughterhouse. You might have heard Ford's quote, you can have any color as long as it is black. Ford did not like customization. He wanted to avoid setups, and emphasizing low variety to keep his huge machines busy. Ford grew very rapidly. Ford was producing already in the millions of vehicles well before World War II. The model of Ford was built around economies of scale. This drove down the learning curve, and soon vehicles became affordable to the middle class. This allowed Ford to flood the market with his cars, further lowering his marginal costs. The company Toyota started out as a maker of automated looms. They moved into vehicle production just prior to World War II. The tragic events of world war left Japanese economy deeply depressed. The United States, following the war, tried to help the Japanese economy. Just as they were involved with the Marshall Plan in Europe, they tried to re-industrialize Japan, including building an automotive industry. As part of this, they moved some of the machines, knowledge, and management from Detroit to Japan. The goal was to replicate the highly successful Ford model in Japan. The problem, however, was is it did not work. The Japanese economy around that time had the total market demand of just a couple of thousands of vehicles, so the production volume in the US was about a hundred times bigger. This lack of scale made the Ford production system fail bitterly in Japan. Soon, the Toyota managers started to realize that they had to come up with their own production model. It's not that the Toyota Production System was born in a weekend retreat in some nice conference hotel. It was an outcome of years and years of work and organic problem-solving. The Toyota Production System was built around the idea of waste elimination. The scarcity of resources forced the Toyota folks to think smart about how to use the resources. They also emphasized the role of serving demand. This lack of having a domestic demand in Japan at the time really forced the Japanese to avoid playing with scale economies. Instead, they have to build a model of flexibility that will allow them to serve small niche markets very profitably. I would like you to think about the Toyota production system in the form of a big house. You will notice that this house includes many of the concepts that we've talked about in this course. So take a look at this slide really as capstone of this course, not just for the Japanese vocabulary. The top priority of the Toyota production system is the reduction of waste, muda. Remember the teachings of Ohno and seven sources of waste. The most evil source of waste is inventory. Now, what does the Toyota production system do about inventory? Inventory gets avoided by synchronizing production flow with market demand. Heijunka stands for mixed model production. Toyota factories emphasize flexibility, and many of their lines are able to change quickly from making one car to making another car. This allows them to produce exactly the vehicles demanded by the market, rather than having to produce the vehicles that are convenient to produce here in the current setup of the plant. Another form of inventory reduction is adjusting the production rate to market demand. Market demand drives attack time, attack time drives the staffing, and that sets a capacity, which avoids a buildup of inventory. We also talked in this module about pull instead of push. Push systems get implemented using kanban cards or make-to-order production, as we saw in the context of Dell. This flow piece is the central model of the Toyota Production System. This is complimented with the quality module that we saw last week. A quality module is built around the idea of jidoka. Detect, stop, and alert. We can apply jidoka to machines, or we can use the andon cord to empower assembly line workers to stop the line. Notice the type coupling between the inventory and the quality module. As we discussed, inventory covers up defects, and oftentimes get in the way of process improvement. This is due to the long information turnaround time that you have if you buffer. The Toyota Production System is built on the foundations of flexibility, standardization, and worker involvement. Flexibility is implemented, as we saw before, through takt time, which drives the staffing level. We've standardized tasks to keep the variability of processing time low and again to reduce buffers. The idea of quartile analysis is to avoid large operator-to-operator variance in performance. And finally, and maybe most importantly, the Toyota Production System is built on the people part. The part of the foundation of the Toyota production system is kaizen, and the problem-solving of full time workers using tools such as separator analysis and the Ishikawa diagram. So how do you apply the Toyota Production System and the lessons of this course to your own work? In this course, we've encountered three enemies that mess up your operations. These three enemies are waste, variability, and inflexibility. We talked about the seven sources of waste and the OEE framework. The OEE framework showed us that from the available time of a machine or a human worker, a lot of the time is wasted, and only relatively little time is spent value-added. That means by reducing the waste, I can get a lot more done with less resources. Variability showed us that we oftentimes have to hold excess capacity because customers don't like to wait around. Excess capacity, unfortunately, oftentimes means idle time. This reminded us of the tension between buffering and suffering. Oftentimes, variability also reflects poor quality. And so whenever you see variability, we have a problem in operations. We saw this earlier on in this module of Six Sigma. And finally, there's inflexibility. Matching supply with demand is always hard. We either have patients waiting for doctors, or doctors waiting for patients. The more we can do to adjust supply to demand, the better of an operations we're going to run. So how do you apply the Toyota Production System and the lessons of this course to your own work? Over the last weeks, we've encountered three enemies that messed up our operations. These three enemies are waste, variability, and inflexibility. We talked about the seven sources of waste in the OEE framework in the productivity module. The OEE framework showed us that from the available time of a machine, or a human worker, a lot of the time is wasted and only relatively little time is spent as value-add time. That means by reducing the waste, I can get a lot more done with less of an expensive resource. Variability further wastes capacity. In this introductory course, we have seen variability hurt us in the form of poor quality. We saw this earlier on in our discussion of Six Sigma. The other problems associated with variability in demand, and variability resulting from poor standardization, that we did not have the time to cover in these four weeks. And then finally, there's inflexibility. Matching supply with demand is always hard. We either have patients wait for doctors, or doctors wait for patients. The more we can do to adjust supply to demand, the better of an operation are we going to go to run. Waste, variability, and inflexibility, these are the three enemies of a successful operation. The Toyota Production System provides us a powerful framework of fighting all three of these enemies. This is why I've chosen the Toyota Production System as the theme of this closing session.
