Professional Documents
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The problem that Doug and the leadership team faces is specifically in the area
of the rear seat assembly. This area has
been a problem for much of the last six
months. Figure 1 illustrates the top 5
sources of problems for each of the past
seven months. While the defects per
vehicle are down from the October 1991
peak, the trend line is disturbing with the
largest month-to-month change occurring
from March to April.
From October through January, there
seemed to be a large number of missing
Figure 1 - TMS USA HBS - Exhibit 7
or broken parts appearing among the
top five problems. This was likely related to poor design or process steps,
which seemed to have been addressed based on the data in the accompanying
chart. Aprils problems seemed to focus more on missing elements (possible
misalignment in the JIT process), manufacturing quality (wrinkles), and
apparent manufacturing process errors (gap in rear seat).
Additional data suggests that the number of defects increased on or about the
14th of April. The timing could suggest that
the introduction of the new European
models, which increased the possible
combinations from a low of 12 in early 1992
to 20 at the beginning of the month, to 30
options. There were plans to increase this
again by 18 as exports were planned for
Japan and the Middle East.
It should be noted that while the trend
increased for both shifts, there is a much
larger defect rate for the 1st shift.
Figure 2 - TMS USA HBC
Exhibit 10
Toyota
also
captured the defects by type in a Pareto
chart. The shaded elements note the TMS
view that the defects were the
responsibility of KFS. Material Flaws and
Missing parts (likely incorrect colors or seat
configuration) lead the list of defects.
2.
What do you think about stopping the line? What is the cost of a
chord pull resulting in a stoppage of 1 minute? 30 minutes? 60
minutes? Do you think the line should be stopped when the station
identifies a defective seat?
It is our belief that the line should not be stopped to fix a defective seat.
The method of noting the defect and creating a triage to handle the problem
does work; however, the company needs to discern the root cause of the
exceptionally high volume of defects and implement appropriate remedial
measures.
An underlying message from The Goal states that the cost of a line stoppage
due to defect costs more than the replacement parts and overtime.
Because the Georgetown plant has capacity for only 200,000 cars and
market demand is for 240,000 cars, every foregone unit of production costs
Toyota the margin they would have made on that car. According to the case,
a Camry sells for $18,500 with Toyota making a 17% margin. Thus, every
foregone unit of production costs Toyota $3,145. If we assume that they will
not operate overtimes, have the demand for the units, the cost for the line
stoppages are:
428
485
0.88
Pricing
Sale Price $ 18,500
Margin
OP
OP Impact Per
Stoppage (minutes)
Cars Lost Shift For Lost Car
1
1 $
3,145.00
17%
$ 3,145
30
60
26 $
53 $
81,770.00
166,685.00
If we are to assume that the demand still exists and overtime is available to
make up for lost Cars related to stoppages, then the costs for the stops
need to consider the overtime to make up for the lost cycles.
Stoppage
(minutes)
385
25.50
163.63
0.88
Additional Cost
Impact for Labor
Per Car
Cars Lost
1
1 $
163.63
30
26 $
4,908.75
60
53 $
9,817.50
0
385
$ 25.50
The costs associated with the line stopages are likely further understated
because there is a minimum overtime requirement for the employees .
52
5
(7
5)
450
769
346,050
427.5
0.001235
769
$
$
0.95
3,145
2,987.75
$ 3,314.58
$ 99,437.25
$ 198,874.50
769
12.82
25.50
326.83
It has been stated that Doug also may be experiencing the problem of
looking at this issue through the prism of a traditional US manufacturer
rather than way the Toyota Motor Company would, fix the problem not the
source.
He is trying to work within the confines of the TPS, but is not taken
advantage of the tools of Jidoka and Kaizen to fully address the problem