Toyota Motor Corporation Case Study

1 Introduction

Toyota Motor Corporation is the multinational corporation based in Japan by Kiichiro Toyoda in 1937. Nowadays, Toyota has become one of the largest companies in the world, which has one of the best production systems and production philosophy. The main purpose of the company is to reduce costs and improve the productivity of the company. The company's industry is leading by manufacturing and production, which includes just-in-time deliveries and autonomation based on Kanban system. The philosophy Toyota follows is about The Toyota Way (April, 2001) that includes challenge, Kaizen (improvement), Genchi Genbutsu (go and see), respect, and teamwork. Company tries to make continuous improvement all the time, by making innovations, such as first mass-produced hybrid gas-electric vehicles (2006-2007). Moreover, Toyota has the system that has monthly fluctuations in demand of quantities and variety. And becoming the company, that produces not only different kinds of machines but also Toyota technological institute (1981), has factories mostly in all parts of the world, including Japan, USA, Australia, Brazil, India, etc.

2 Lean Production Management System

Toyota Production Management System (TPMS hereafter) was developed by Taiichi Ohno and Eiji Toyoda between 1948 and 1975. It is one of the major production management systems, followed by the Ford's mass production system.

The main target of TPMS is to increase profit and reduce costs through elimination of unnecessary inventory and workforce. However, this can only be possible by accomplish three main conditions: quality and quantity control and respect for humanity. In order for the whole TPMS to be successful all these concepts should work interdependently.

Quantity control

Is the concept which helps system to accommodate to the different levels of demand each month or day. In order to achieve continuous-flow of production, one of the main characteristics of TPMS which is Just-in-time (JIT hereafter) technique should take place. The basic idea of JIT production is to produce certain type of units at the certain time and in the certain quantities. Therefore, eliminating unneeded inventories and as consequence inventory costs (Kaounides, 1995, chapter 3).

In order for JIT work properly Kanban approach is implemented. Workforce of one process supply units from previous process in certain quantities at certain time, in turn previous process should than produce that quantity of units which was withdrawn. This process occurs with the help of card called Kanban (Sugimori, Y. et al, 1977). There are two types of Kanban card: withdrawal and production-ordering. Withdrawal shows the information about quantity which should be withdrawn by the next process, whereas production-ordering Kanban deals with information about the quantity which