Volume 3, Issue 1, January – 2018 International Journal of Innovative Science and Research Technology

ISSN No:-2456 –2165

Toyota Production System as a Benchmark to Improve

Business Productivity

Athira Krishna, Dr. Sini V Nair,

Student, Trimester 2, Operations Management, Master of Assistant Professor, College of Engineering Trivandrum,
Business Administration, College of Engineering School of Management, Affiliated to APJ Abdul Kalam
Trivandrum, School of Management, Affiliated to APJ Technological University (KTU)
Abdul Kalam Technological University (KTU)

Abstract:-The paper aims to prove that Toyota Production Toyota’s success and recent dominance in the auto industry.
System is the best benchmarking system to improve the The Lean formula is well-published, but every day is filled
efficiency and productivity of business. The Toyota with countless make-or-break decisions. And each of those
Production System (TPS) is an integrated socio-technical decisions takes hard work and a gut check to make the right
system, developed by Toyota that comprises its one. Tracking down the source of a problem and fixing it for
management philosophy and practices. The TPS organizes good may take hours of work and lots of frustration.
manufacturing and logistics for the automobile Overcoming this through lean was the success of Toyota.
manufacturer, including interaction with suppliers and
customers. The system is a major precursor of the more TPS improves quality in products and processes. Overall, TPS
generic "lean manufacturing". Taiichi Ohno and Eiji uses several lean methods to help reduce errors and improve
Toyoda, Japanese industrial engineers, developed the quality: Kaizen, 5S, 5 Whys, and Poka-Yoke. These tools help
system between 1948 and 1975.Originally called "just-in- workers spot inefficiencies, errors, or potential defects and
time production", it builds on the approach created by the empowers them to stop the assembly line so that defects are
founder of Toyota, Sakichi Toyoda, his son Kiichiro not included in the final product. TPS reduces waste,
Toyoda, and the engineer Taiichi Ohno. The principles increasing efficiency and reducing costs. The high-quality and
underlying the TPS are embodied in The Toyota Way. cost-competitive products Toyota produces are directly linked
Toyota’s supplier development practises are analysed. The to Toyota’s ability to reduce waste throughout the production
competitiveness of Toyota and the source of Toyota’s process. Just-In-Time (JIT), Kanban, Taki-Time, and Kaizen
competitive strength and the way in which Toyota can be are used to spot waste. Areas that have wasted movement,
used for effective benchmarking is verified. The overproduction, underproduction, inefficient transportation,
applicability of lean operation in retail pricing and unnecessary inventory, and defects are identified and
operation strategy along with the strategies that helped to improved until waste is eliminated. TPS improves customer
increase the capacity through TPS is evaluated for satisfaction by providing products that are free of defects. TPS
improving efficiency in production. For this, a mix of succeeds because it puts the customer first. The company’s
strategic methods are adopted through TPS by reducing zero-defect policy and continuous effort to reduce costs
the cost of product and judicious use of resources thereby enables the company to deliver quality at a price customers
playing the role of a responsible corporate citizen. can afford. TPS improves all aspects of safety for employees
and customers. TPS is a safety-conscious system that works to
Keywords: Kaizen, Kanban, 5S, JIT, Taki-Time, Poka-Yoke. reduce risks in the workplace as well as those found on the
road. 5S helps employees spot and eliminate hazards, while
I. INTRODUCTION Kaizen enables employees to stop the production line and
eliminate errors that may increase risks while driving. Toyota
The Toyota Production System (TPS), the main source for always strives to retain their benchmarking status. Hence it
Lean programmes , is the universally applicable and accepted can be used as a standard to improve business productivity.
system that has proven the test of time in improving business
productivity. The roots of TPS were formed with the
establishment of the Toyota Motor Company by Kiichiro
Toyoda in 1937 and the Honsha Plant being built in 1938. To
some, Toyota might seem surprisingly open with its Lean TPS
information. After all, Lean TPS is the primary reason for

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Volume 3, Issue 1, January – 2018 International Journal of Innovative Science and Research Technology
ISSN No:-2456 –2165

II. LITERATURE REVIEW competitive in the market. The following are the questions and
answers that is discussed in this article,
According to Marksberry (2012), the paper uses a new method
for analyzing Toyota’s supplier development practices by • Fit and finish-Audi
mathematically representing and analyzing Toyota’s • Operating System Benchmark- Toyota
organizational documents. • Flexibility-Honda
• Interior-Volkswagen
Toyota production system (TPS) is one of the most
benchmarked business improvement strategies in modern Thus the article is very useful in comparing the various
industry. It is also important to how Toyota replicates TPS at benchmarking criterion for different brands which can help
suppliers. The purpose of this paper is to investigate the to improve the quality and productivity of business.
evolution of TPS and its in-house capabilities by evaluating
organizational documents using latent semantic analysis The article Integration of Lean Operation and Pricing Strategy
(LSA). The findings shows that Toyota targets processes, in Retail by Noda (2015) clarify whether lean can be
rather than whole systems, in assisting Suppliers Toyota’s successfully applied to retailing and how to develop a
approval does encourage minor day-to-day kaizen. Finally, competitive advantage by introducing lean to retailing. The
this work reports that the Toyota Way for suppliers does not study provides a better understanding of lean operation and
have to be adopted by suppliers, but does represent “A Way” stable pricing such as everyday low price for developing an
to interact with suppliers to drive both culture and productivity alternative business model to successfully compete with large
Simultaneously. retailers. It was found that lean can be successfully applied to
retailing and stable pricing becomes a driver for successful
Fujimoto (2012) in his article, the evolution of Production implementation of lean operation. The study stresses
systems: .Exploring the sources of Toyota’s competitiveness, importance of integration of marketing and operation as a
analyses the formation process the sources of Toyota’s corporate strategy to develop a suggested model.
Competitive Strength. The present paper explores both the
functions and origins of the Toyota-style manufacturing Lean Operation: “Lean production is generally described
system simultaneously. It concludes that the source of from two points of view, either from a philosophical
Toyota’s competitive strength can be explained in part by the perspective related to guiding principles and overreaching
“product architecture” perspective and also shows that goal , or from the practical perspective of a set of management
manufacturing contains three layers of organizational practices, tools, or techniques that can be observed directly .
capability: manufacturing (monozukuri) capability, “The main objective is to eliminate waste by reducing or
improvement (kaizen) capability, and evolutionary capability. minimizing supplier, customer, and internal variability. Lean
This is done through a generic analytical framework that is production not only as a production system, but also as an
applicable to a wide range of different industries. integrated system in a whole business structure. To clarify the
“Competitiveness,” uses the concepts of “closed” and “open” factors of lean operation in retail is of importance where study
to indicate the level of competition within the industry, on low cost was mainly focused by lean production. The three
whether there is international competition, whether the aspects to transform its business model includes marketing
industry is regulated or protected by the government. Products transformation, operational transformation and support
are typically developed by a “mix and match” and designed business transformation.
for generic use across different products where significant
effort upfront to ensure the component design is applicable to However, it is said that it is difficult for the retail industry to
many different products and models, and in this way introduce lean. Moreover, in manufacturing industry,
manufacturers are saved a great deal of effort coordinating production process is managed smoothly with little variation.
their design and assembly of finished products. “Production This model can improve business performance by creating
expansion accompanied by model diversification” was a price advantage for sales growth and cost advantage for low
distinguishing characteristic of the post war Japanese auto cost.
industry.
This article Strategies for increasing productivity in
An article by Vasilash (2003), Who do you benchmark? Some production systems by Pergher et al (2013) aims at a set of
answers from GM manufacturing, the highlights answers to strategies can be adopted to increase the capacity constraints
many questions in such a way that it shows perfect examples in production systems, when the constraint is internal the
of each keyword in the question. Benchmarking is done on the factory and not is in the market. To serve this purpose will be
basis of setting those answers as the base standard for presented strategies that includes theory of Constraints, Lean
comparison. IT highlights “Take your future in a new Manufacturing and Total Productive Maintenance. The
direction”. As said by TROY a Clarke, Benchmarking is the objective set of practical strategy that can be used to increase
most powerful tool that exists. And hence it is better to have a the capacity and productivity of production systems according
strong understanding of what others are doing to be

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Volume 3, Issue 1, January – 2018 International Journal of Innovative Science and Research Technology
ISSN No:-2456 –2165

to the needs of each manufacturing system. The strategies Strategy 16: Conduct analysis of restriction from seven losses
include 25 strategies that help to eliminate bottlenecks and in the TPS is analyzed.
ensure continuous performance improvement. The strategies
include: Strategy 17: Conduct analysis of improvement in the
ergonomic point of view of the operation. Time and motion
Strategy 1: Eliminate all periods of time lost in the bottleneck. study, derived from scientific management are recommended.
An hour lost on bottle neck is an hour lost in the whole system
and being bottleneck should operate 24 hours a day. Strategy 18: Make improvements in the productive system as a
whole.
Strategy 2: Improved processing times per unit. Perform
continuous improvement actions in the working methods and Strategy 19: Evaluate the application of first principle of TOC
the optimum use of the potential of the equipment. that says to not to focus in the balancing of the capacities and
yes to focus the synchronization of the flow.
Strategy 3: Deliver improvements in the power system
engineer. The goal should be to synchronize the timing of food Strategy 20: Evaluate the application of second principle TOC
resources with the speed of processing of the resource itself, that says the value marginal of the time in the resource
seeking continuous system flow. bottleneck is equal to the rate of profit of the products
processed for the bottleneck.
Strategy 4: Improve the quality control system.
Strategy 21: Apply the third principle TOC that says the
Strategy 5: Making the contracting out or outsourcing of work marginal value of time in a resource bottleneck is not
from the bottle. In other words, implies subcontract or negligible.
outsource in order to purchase additional capacity.
Strategy 22: To consider the fourth principle of TOC that
Strategy 6: Buy additional capacity. statements that the level of use of a resource pass is not
controlled for the restriction of the system.
Strategy 7: Relocation of the operations previously performed
in the neck for other non-bottleneck machines that are Strategy 23: Apply the fifth principle of TOC that statement
operating with a surplus of capacity. The goal this point is to the resources must be used and not only activated. The use
divide the operation of the bottleneck in smaller sub- concept mentions the activation to it of resources that
operations and redistribute them. contribute positively for the performance of the company that
is to generate profits for the Company.
Strategy 8: Make improvements in the maintenance of
machine bottleneck and critical system resources. Strategy 24: Apply the sixth principle indeed the lot of
transference does not need to be, and many times do not have
Strategy 9: Conduct analysis and layout changes. to be, equal to the lot of process.

Strategy 10: Synchronize the system from the bottleneck and Strategy 25: Apply the seventh principle that says the process
protects the capacity of the bottleneck using the buffer batch should be variable. The process batch should be variable
immediately prior to the drum. along the route of manufacture and over time.

Strategy 11: Raise the TEEP of the resource bottleneck. His It is reasonable to assume that the lot in process can vary
discussion is central to the capacity calculation because it throughout the route of manufacture due to the impact of the
determines the theoretical and not practical capacity of the statistical fluctuations of the system and the different
equipment. capacities of the resources.

Strategy 12: Increase the availability (A) of the resource A single case study research in one of the plant of Toyota
bottleneck. Motor Corporation located in the Aichi province in Japan
(Eisenhardth , 1989; Yin, 2003). Within this context, we
Strategy 13: Oriented approach to product development. studied the practice of process improvement. The reason to
choose this company is due to the fact that Toyota Production
Strategy 14: Modify existing products to reduce the processing System (TPS) was not easy to replicate in the occidental
time. automobile’s industry (Schroeder & Robinson, 1991; Spear &
Bowen, 1999). Some simple arguments point out that the
Strategy 15: Conduct analysis and improvement of the reason for Toyota Production System’s success lies in its
bottleneck applying the sub systems and techniques of TPS. cultural roots. Meanwhile authors argued that this particular
characteristic (the TPS) can be considered as a set of

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Volume 3, Issue 1, January – 2018 International Journal of Innovative Science and Research Technology
ISSN No:-2456 –2165

capabilities which generate a strong competitive advantage IV. CONCLUSION

(Fujimoto, 1994; Takeyuki, 1995)
All the key factors that are the reasons for the success of
In the paper Responsible Operations through Materials' Toyota and those companies who can be benefitted by
Conservation – An Overview of Techniques and Trends, adopting the Toyota Production System has been analyzed.
Rajashekharaiah (2015) initially brief on operations and The Competitive strength and the mix of strategies resulting in
manufacturing priorities which includes all the issues related development of unique effective ideas that can improve the
and how the changes happened in the competition over time business productivity is evident in this paper. TPS has been
across the countries. The main strategy is to adopt to a best one of the major reasons behind the success of many
practice by mixing various selected strategies for achieving companies. Its adoption has helped many companies to
the goal. The aim include reduction in the total cost of the overcome defects, automation, quality assurance, timely
product by finding out the various probable reasons that may delivery, good retail and good relationship with suppliers.
lead to price hike, re-examination of material strategies to Many companies are adapting to the TPS way, but the real
bring down the cost and reduce the consumption of raw gain is in adopting the success of the system developed by
materials. Hence this paper highlights practices, approaches TPS. The aim of the Toyota production systems is to provide
and techniques to reduce consumption of materials and thus the customers with highest quality products at the lowest
become a responsible corporate citizen. It also includes a list possible cost. The production concepts incorporate quality at
of popular strategies that focus on material conservation. Such each production stage. The Just in Time approach seeks to get
kind of a study would warrant strategies to appeal to conserve the right information about the market demand and the
materials by a mix of strategies which helps in saving production is adapted to the demand. The JIT systems leads to
products of the nature like fast depleting ores, wood and efficient inventory systems and only the required quantities
petroleum products which helps to play the responsible are procured in the production systems. The Kanban systems
corporate citizen. enable the working of the JIT system by providing the
information about the raw materials and keep a check on
III. FINDINGS AND SUGGESTIONS quality. To ensure that the JIT system works, Toyota has
implemented systems to motivate employees and empower
Companies that pursue and emulate TPS best practices have them. The Toyota production system is very efficient that has
seen much success as a result of this highly effective made Toyota a competitive and profitable company. Since the
manufacturing philosophy. Some of the benefits include: 1950s Toyota created the concept of continuous material flow,
process standardization and a pull system that is market
• Identify and enhance customer perceived value responsive. It took the company decades to refine the concepts
• Decrease waste and cost in the manufacturing process such as JIT and make the production system more functional.
• Improve product quality and on-time delivery The TPS is characterized by cross organizational planning and
• Develop a competitive world class manufacturing long term objectives. This production system relies on
operation technology and the integration of all manufacturing activities.
The focus on meeting customer needs made the TPS highly
The TPS is a system that has given companies a blueprint for successful the creation of the JIT philosophy allowed the
manufacturing excellence. Techniques such as Poka Yoke, company to eliminate wastages and inventory to make the
Kanban, and SMED are concrete well understood techniques company more profitable.
to minimize waste and eliminate errors, they are components
of the overall TPS. These techniques are not the definition of Toyota’s supplier network and supply chain is another source
TPS rather they are a result of TPS. By codifying and of the company’s competitive advantage. To conclude, the
understanding the relationship of manufacturing practices and result is a continuous stream of small changes that result in
end customer value TPS allowed Toyota to grow into a world ongoing improvements. Because the changes are small, they
class manufacturing company. The TPS model is simple on its can be quickly and economically implemented. Because they
surface; focus first on finding ways to improve in one area, are continuous, over a short period of time they'll add up to
then another, until every process or area has been considered, significant improvements.
and then think through connections among them to reduce
friction and inefficiencies. It is not just about moving faster,
but also improving quality and conservation of resources by
judiciously using them without any wastage.

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ISSN No:-2456 –2165

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