Friday, July 06, 2007

What's Next for Toyota?

I just read an outstanding piece in the latest Harvard Business Review (July/August 2007), “Lessons From Toyota’s Long Drive”, an interview of Toyota’s President Katsuaki Watanabe. If you want to learn more about the Toyota Way and the future direction of Toyota, it’s absolutely worth getting a copy. If you don’t want to spend the high cover price for the magazine, just run down to your local library to read it.

President Watanabe provides great insight to the Toyota Way in many of his comments.
In regards to Toyota’s vision for their factory of the future:

“The new manufacturing process at Takaota will completely change the way Toyota makes cars. We call them the “simple, slim, and speedy” production system. Right now our processes are complicated, so when a problem occurs, it is difficult to identify the cause. We’ve tried to make the processes at Takaota simple, keep the facility slim, and have people close by observe the process.

When the first line at Takaota opens, this summer, it be Toyota’s fastest production line, and it will cut lead times, logistics, and assembly time in half.

Instead of transfer bar, we will use robots. That will allow the line to move 1.7 times faster than it used to. We have cut the length of the line by half. A new painting process allows us to apply three coats at the same time, without having to wait for each coat to dry. This will shorten painting times by 40%. To build in quality, we will go beyond visual inspection and use high-precision instruments to measure several parameters.”

As for manufacturing flexibility, President Watanabe goes on to say:

“We will have more flexibility than ever before: Each line at Takaota will be able to produce eight different models, so the plant will produce 16 models on two lines compared with the four or five it used to produce on three lines. In the old plan we used to make 220,000 vehicles a year on each line; now we will be able to make 250,000 units on each line. Toyota needs such radical changes today.”

I was taught that inventory is one of the seven deadly wastes. In the United States, we view inventory as a necessary evil or a cost of doing business. The Toyota Way viewpoint is that inventory is an absolute evil. With this in mind, I found President Watanbe’s comments on material movement and number of parts very interesting:

“Take the movement of parts in a factory, for example. Moving components doesn’t add to their value; on the contrary, it destroys value, because parts may be dropped or scratched. So the movement of components should be limited as much as possible. I want our production engineers to take on the challenge of ensuring that things move as little as possible-close to the theoretical limit of zero-on the shop floor.”

“Our goal is to shrink the number of components we use by half.”

So how is Toyota achieving their vision of the future?

“Toyota must keep growing even as it builds a stronger foundation for the future; it has to do both for the company’s long-term health. There are three keys to building a stronger foundation: We must improve product quality, keep reducing costs, and, in order to attain those two objectives, develop human resources.”


fionaswift said...

This is a quite a fascinating idea of changing the way they make cars. Cars nowadays are getting more slim and speedy.I'm planning on getting a new edition of Toyota after I finished my on my mouose@lot purchase.My old unit of Honda is quite old already and I frequently change some of its part and the latest was my Honda floor liner...Well then,g'lak anyway...

Mark Graban said...

I've read some material lately that says, and I agree with the statement, that Toyota has moved away from the idea that inventory itself is evil. Inventory is a symptom of other evils, or other problems, in your system: lack of flow, lack of reliability, etc. Getting rid of inventory without addressing the root causes will lead to problems worse than the inventory itself, so I think it's not quite right to say inventory is absolute evil in a system.

Mike Wroblewski said...

Mark, you are correct that Toyota has moved away from the "absolute evil" viewpoint of inventory as taught to us in the old days (1980's) from the original Toyota leaders. Maybe we should only call excess inventory as evil.