Toyota Motor Manufacturing, U.S.A., Inc.

Executive Summary

As a result of rising political pressure to improve Japan’s huge trade imbalance with the United States, Toyota Motor Corporation opened an automobile manufacturing plant in Georgetown, Kentucky in July of 1988. The $800,000,000 plant produced Toyota Camry Sedans. In May of 1992 it was determined that a growing number of cars were sitting off the line with defective seats or no seats at all. Doug Friesen, assembly manager had learned of the problem during a meeting on May 1, 1992. Friesen understood that the problem needed to be fixed, however, he felt that trying to do so would hurt line utilization. Friesen was charged with finding and fixing the problem with the defective seats

Questions:

1. Identify three most important principle/concepts of the Toyota Production System in from this case. Explain the principles and discuss the justification for the three.

TPS is aimed at cost reduction by thoroughly eliminating waste. Toyota found that waste tied up working capital in inventory and also created a great deal of unnecessary transportation (movement) and administrative costs. Waste also tended to conceal the true bottleneck which caused investment in unnecessary equipment. As a result Toyota implemented the following three important principles.

a. First by practicing Just in Time (JIT) production there is less WIP inventory as a result there is a lower inventory carrying cost. Not only does this save on the cost of the actual inventory, but it reduces costs due to less warehousing space, fewer material handlers, and less equipment to move inventory. In addition to the cost savings, JIT production would truly expose any bottlenecks within the system, allowing for the proper investment in capital to reduce these bottlenecks. Finally JIT production allows for a better flow of materials and parts from suppliers. Rather than order materials from suppliers in large batches and building up inventory, Toyota would order materials as needed....