Moving target: the inventor of lean manufacturing continues to improve the process

Automotive Industries, June, 2004 by Mike Hara

Were James Womack and his M.I.T. research team to update their influential study, "The Machine that Changed the World," the story's ending would remain unchanged: Toyota Motor Corp. is still the world's most efficient carmaker. Content would differ, however, as Japan's leading carmaker continues to reinvent itself and, in the process, reinvent the industry.

Since 1990, when the five-year project was completed, Toyota has nearly doubled global sales and more than doubled earnings; boosted overseas production by 300 percent, thus reduced exposure to exchange rate fluctuations; and raised the bar on quality.

Of 82 models "recommended" this year by Consumer Reports, more than half were Japanese and one-fourth Toyota and Lexus. Moreover, the two brands earned six top ratings and two seconds of the nine vehicle categories reviewed.

Similarly, J. D. Power & Associates reported in its 2004 "Initial Quality Study" that Toyota's Lexus brand had one-fourth fewer problems than the next closest nameplate. Equally impressive, J. D. Power's 2003 "Vehicle Dependability Study," which evaluated quality after two years of ownership, gave nine Toyota and Lexus models first-place finishes. Meanwhile, Toyota's Tahara plant, production site of three Lexus models, ranked first for the third consecutive year in J. D. Power's global plant survey. Against this backdrop, Toyota produces more models and has more model launches in more countries than any carmaker in the world: last year the total came to around 60. And since the late 1990s, the company has brought on stream more than a dozen new plants, including engine and casting facilities, and plans to open at least half a dozen more over the next five years.

"It is absolutely phenomenal the way Toyota manages complexity," says Lance Ealey, senior automotive analyst at Cleveland's Freedonia Group. "This gives the company, tremendous leverage in providing products in micro-segments. In an industry where the automobile has largely become a commodity, differentiation is critical," he says, then adds: "Managing complexity is the way to cost-effectively offer differentiation."

Kosuke Shiramizu, Toyota executive vice president in charge of manufacturing and quality management, says production of many model variants in small lots offers carmakers the best chance for success in today's market. "In the current competitive environment, it would be unwise to target (yearly,) sales of 100,000, even 50,000 units for a single vehicle type," says Shiramizu (see interview). "That would be a huge mistake and, frankly, is the biggest difference between today's market and the past."

Among the highlights of the latest rendering of Toyota's 'lean production' system:

* In die-making, Toyota has reduced lead time to engineer and manufacture die sets for large body panels to 1.7 months, from 3 months two years ago, and expects to reach 1.5 months by the end of this year. The time period is shorter for smaller dies (for smaller stampings). In the coming three years, the automaker plans to introduce the new diemaking process at overseas plants in North America, Europe and Southeast Asia. Toyota believes there is a direct correlation between engineering lead time and production startup cost. Thus a 50 percent reduction in lead time, Toyota's target two years ago, is projected to result in a nearly equivalent saving in tooling expenditures with each new model launch going forward.

* In molding and forging, the company has introduced smaller, faster equipment enabling it to reduce line length, energy, consumption and, most importantly, investment. At its Kamigo engine plant, Toyota installed significantly smaller die casting, forging and injection molding equipment which contributed to a nearly 90 percent investment savings.

* In welding, the automaker has completed installation of its "global body line" at more than 20 plants (a total of 35 lines) since the "flexible" welding system debuted at Toyota Motor Vietnam in 1996 and two years later at the automaker's Takaoka plant in Japan. Installation of 12 more lines, bringing the total to 47, is scheduled over the next three years including Toyota plants in China, Czech Republic, Mexico and the U.S. (in San Antonio, Texas). The global body line has enabled Toyota to reduce tooling investment for new models by an estimated 70 percent and floor space by half.

* In painting, Toyota has shortened the paint line at its Tsutsumi plant by 30 percent to 8,530 ft. and intends to further reduce line length to 6,562 ft. by the end of this year, at which time, because of other process improvements, it will double monthly capacity to 20,000 units from 10,000 today. The result: one of two lines currently in operation will be phased out.

* In final assembly, Toyota reorganized part of the main line at its Tsutsumi assembly plant last August. Under the new scheme, components are brought to a staging area where they are sorted and fed direct to the line or made into modules then brought to the line, eliminating much of the clutter that traditionally builds up inside the plant. The result: line length has been cut in halt and the number of models produced has been increased to eight. Toyota plans to introduce the process gradually over the next few years in Japan although management says it will take longer overseas.