Supply Chain

Management 7

Ter m Repor t
Pr esented By:

Sohail Ajmal (11815)

Salik Mahmud Qureshi

(12320)

Habib Ur Rehman (13185)

Company
Introduction
joint venture among the House of Habib (HOH),
Toyota Motor Corporation (TMC) and Toyota
Tsusho Corporation (TTC)
Marketing of Toyota vehicles in Pakistan since
July 01, 1990.
The key behind success is
“To be at the right place at right
time and with the most appropriate offer.”
Indus Motor
Company Vision
and Mission
Vision of Toyota is
● The most respected.
● The most successful.
● Delighting customers.
● Wide range of products.
● The best people.
● The best technology.
Indus Motor
Company Vision
and Mission
Mission of Toyota is
To provide safe & sound journey
Developing various new technologies from the
perspective of energy saving and diversifying
energy sources.
Product line includes 6 variants of the newly
introduced
Toyota Corolla,
Toyota Hilux Single Cabin 4x2 and
4 versions of Daihatsu Cuore
The Toyota
production system
IMC implemented the Toyota production system
based on
Just-in-time (JIT)
Built-in-Quality and
Continuous Improvement through Kaizen
IMC is the pioneer of JIT in Pakistan
The Toyota
production system
JIT system is not possible in its truest
form due to the following reasons
Suppliers and vendors cannot be relied
upon for supplying high quality goods all
the time.
Suppliers and vendors are located at
considerable distances from the plant.
Lead-time not known for certain.
Law and order situation is not stable in
Pakistan
MANAGEMENT

Indus Motor Company makes an active

effort to foster a sense of belonging and
a family feeling amongst its employees.
IMC constantly motivates its employees
through various techniques such as the
reward system in Kaizen, recreational
activities such as fun fair, melas and
conventions.
IMC strictly implements the Japanese
practice of Participative Management
Management
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Second level
● Third level

● Fourth level

● Fifth level
VENDOR RELATIONS AND
DEVELOPMENT OF LOCAL PARTS

Automobile assembler has to follow a

deletion program
Calls for a decrease in imported parts
and development of the local automobile
parts industry.
48 vendors are supplying to the
company
One vendor supplies each part
Inspection of parts supplied by the ISO
9000 certified vendors
to achieve a deletion level of 40%.
FORECASTING DEMAND

Forecasts are developed simply on the

basis of previous trends and future sales
forecasts.
A meeting is held between the
managers of the Marketing, Finance and
Production Planning and Materials
Control departments to study these
forecasts and decide upon two things:
The planned production for the next
month. This includes the model mix and
the colour. The line in/line off plan is
prepared on the basis of this data.
CKD orders for the n+2th month
● n are the month for which the production
plan

Estimated orders are also placed for the

n+3 and n+4 months.
THE PRODUCTION
PROCESS

WELDING
● The first production process begins with
the welding department
● Semi mechanized and employs around 70
workers
● CKDs are given their very first shapes
similar to automobiles
WELDING Process

first process in the welding department

is the unboxing of the CKD cartons.
Each CKD carton contains 10 units of the
part that is packed inside
A Kanban sheet is attached to the car at
the beginning of the process
sheet contains information about the lot
number, color code and line off date and
accompanies the car till the end of the
process.
Underbody is welded together in three
sections
● The engine compartment
● The driver compartment
●   Rear seat and trunk compartments
PAINT SHOP

The paint shop employs around 80

employees
Is the longest of all the processes
Takes three days for one car to be
painted
the department spits out a painted unit
every 10.5 minutes.
Department is divided into 8 stations
First, shell body is sent in for
pretreatment
Next step is Phosphating
The car passes into sealer application
Coloring starts when the primer coat is
applied
Primer coat shields the car from the ultra
violet rays of the sun but also
determines the shine and the beauty of
the final coat
final color of the car as per the schedule
is put on the car.
After a final inspection the car is sent to
the assembly department.
Quality control is again done in the
painting department
After each stage the car is checked and
defective units are reworked
The paints used by IMC are from ICI
The painting department is the most
automated department in the whole
plant.
ASSEMBLY

Next step in the manufacture of the car

is the assembly department
Also partly mechanized
process has three basic lines - namely
Trim Lines 1, 2, and 3.
This department completes 75% of the
car
5000 parts from the engine to the
indicator lights are installed, in this
department . There are 27 stations
Each station has a specific part to install
Whole process takes 1 & 1/2 days but a
car is driven of every 10.5 minutes
QUALITY

Separate quality assurance department

The three tiered system of quality
assurance.
Quality assurance consists of the
following three stage:
● Inspection by the line workers
● Inspection by the next department 
●  Random inspection
Besides, the above mentioned techniques
which ensure quality of the work done at
IMC, the company also makes efforts to
control the quality of the parts produced
by local vendors through better
coordination with them. The vendors are
being encouraged to get ISO 9000
certification with the incentive that the
materials of such vendors are exempt
from inspection.
INSPECTION BY THE LINE
WORKERS

Every line operator is responsible not only

for the work he does and dispatches but
also for the work of the previous team
member. He has to ensure that whatever
he receives is according to the quality
standards of the company and also what
he dispatches is of quality. The IMC follows
the Japanese system of Pokayoke
according to which any worker is allowed
to stop the production line if he feels that
the work is not upto the quality standards.
INSPECTION BY THE NEXT
DEPARTMENT

Whenever a shop receives its share of

work the first step is to ensure that all
jobs performed in t he previous section
are according to the quality standards.
RANDOM INSPECTION
After the end of every shop a random
check is conducted on a few units to see
if the work done in that particular shop
conforms to the quality standards.
The implementation of Toyota Production
System based on Just-in-time (JIT), Built-
in-Quality and continuous improvement
through Kaizen has been further
consolidated and this has helped in
improving efficiencies of all production
activities.
A comprehensive and independent Quality
Assurance division of professionally
qualified engineers is exercising strict
Quality Control in three vital areas
namely:
Incoming materials including process
checks at vendor’s site
Component processing and assembly check
at plant
Final delivery of products at plant
The role of the Quality Assurance
department has been expanded to support
and train vendors, conduct process audits
at vendor premises and also support the
Service Department in grasping customers’
quality expectations and taking corrective
measures to meet them*.
History of Lean
Manufacturing

Car manufacturing at Toyota is based on

the concept of Lean Manufacturing
which dates back to 1850 before the
American Civil War, the concept of lean
manufacturing was generated by El
Whitney; he practiced the concept of
lean manufacturing in interchangeable
parts as the inventor of “cotton gin.”
After the American Civil War, two
famousnames of operations
management, Fredrick Taylor and Frank
Gilbreth laid the foundation of
standardized work, time studies, work
management,
process charts and motion studies.
Gilbreth developed pre-determined time
standards for basic motions known as
therbligs. Therbligs include activities such
as select, grasp, position, assemble,
reach, hold, etc. and these activities are
stated in terms of Time Measurement Unit
(1 TMU = .0006 Min). Predetermined time
studies have few advantages over
conventional time and motion study. First,
they may be established in laboratory
environment, where the process will not
upset running production. Second, the
standard can be set before the task is
actually done.
Third, less biasness as time standards for
various motions are predetermined and
these are acceptable by all, be it
management or labor unions.
Two decades after the advent of 19th
century, Henry Ford proposed the concept
of assembly lines, flow line and
manufacturing strategy, which were
followed by the class work of Edward
Deming who mainly contributed in the
field of quality control by developing
Statistical Process Controls (SPC) and total
Quality Management (TQM). Sir Deming,
also introduced the importance of
customer in any business cycle, he also
created a Deming cycle consisting of four
quadrants Plan, Do, Check, Act (PDCA).
Through his studies Mr. Deming also
proposed that merely 20% of the defects
are caused by humans and the major 80%
of the defects can be triggered through
inadequate process design and faulty
machines.
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Second level
● Third level

● Fourth level

● Fifth level
Key Benefits of Lean
Production

Considerable waste reduction by 80%,

Production cost reduction by 50%, Cycle
times of manufacturing reduced by 50%,
Increasing production by reducing labor
through multi-tasking, Inventory
reduction by 60% through pull concept
and JIT, High quality and profits, Flexible
system designs, Strategic focus,
Improved supply chain, and Reduced
lead times, shipping and billing hassles.
Then, in 1950’s Toyota breakthrough
with Toyota Production System who
relied on the concept of stockless
manufacturing, Just in Time (JIT), Kaizen
and Kanban models.
Toyota Production
System (TPS)
Toyota Production System is a repetitive
modular process design which uses the
formula of assembly design and modules to
manufacture different variants of their
models. So, in order to manufacture and
create value, there must be a standardized
set of rules to follow. The four basic
components under which TPS was designed
include:
Safety
Quality
Cost
Productivity
As stated earlier, TPS’s main target is to
produce more with less, which means
removing all those steps that don’t add any
value to the final product. Moreover, focus
on Kanban/Just in Time (JIT), continuous
improvement, less inventory, pull concept,
multi-tasking, employee empowerment and
doing things right the first time.
The main goals of TPS are to manufacture
highest quality automobiles, with the lowest
possible cost and shortest possible lead
time.
TPS is based on working out a process as
a team that promotes a culture of
earning and giving respect. During the
visit we saw various sign boards
focusing on the importance of team
work. The one board which we saw on
entrance says:
“Together We Achieve More”
The ten basic components of Lean
Manufacturing through which TPS is
designed are as follows:

Optimize throughput
Minimize inventory
Eliminate waste (MUDA/MURI/MURA)
Flexible process design (Multi-tasking)
Pull concept (JIT)
Quality (JIDOKA/KAIZEN/ANDONS)
Doing it right the first time (KANBAN)
Partner with collaborators/suppliers
Employee empowerment
Foster the culture of continuous improvement
Key Principles of Toyota
Production System
Eliminate Waste
Wastes are all those processes that take
up production time while adding no
value to the final product. TPS focuses
on eliminating such situations or
processes that are regarded as a loop
hole in the production system and does
no good to the firm’s operations. TPS
classifies such items into three broad
categories.
MUDA
MURI
MURA
MUDA can be originated through various
bottle necks and loop holes in the system
which mainly includes, over production,
transportation, non-optimum inventory,
waiting, motion, or re-work/scrap. Any
unaddressed MUDA will nurture many other
MUDAs/MURIs/MURAs. These are
inefficiencies in any process design and
contribute in increasing costs of
manufacturing.
According to a key takeaway from our
course, inventory undergoes operations for
only 5% of the time and the rest 95% of the
time inventory is either sitting idle or its in
transit or motion.
Minimize Inventory (Small
Lot Production)
Due to the company’s focus on reducing
all the waste elements, the system
minimizes inventory and lowers the cost.
The main idea is to produce in small lots
that reduce wastage. Because large lots
often bring with them element of risk by
associating higher capital input, holding
costs, extended lead times and increased
chance of error. In contrast, small lots
minimize inventory, lower costs, improve
controls, less stocking, and assist in
achieving economies of scale.
Flexible Process Design
(Multi-tasking)
Small lot-size, efficient workforce, coherent
process and assembly designs aids in
flexible setups. These include quick
change over of internal and external
designs with respect to demand forecast
and customer requirements. The concept
is an integral part of Lean Manufacturing
and fosters the culture of training
workforce that supports multi-tasking.
Pull Concept

Since the company aligns its production

targets on the basis of Pull concept from
the customers, this enables them to
produce under the umbrella of JIT. JIT
means to produce what is required, when
it is required and how much required. JIT is
an efficient tool of minimizing overall
process costs, but it requires good
relations with all the collaborators and
vendors. JIT benefits by minimizing in
work in progress inventory, worker
motivation, lower costs and less
warehousing.
HEIJUNKA (Leveled
Production)

TPS focuses on leveled production which

means they decide one to two months prior
what to make, and how much to make?
This enables them to continue with the
smooth flow of production with a leveled
workforce, capacity and machines. In
contrast chase strategy focuses on the
quantity of units produce on the basis of
demand forecast which surely increases
cost of holding, cost of hiring/laying off
workers etc. The key benefit of leveled
production is efficient aggregate planning,
worker motivation and employee
empowerment.
HEIJUNKA mean balanced and sequenced
production, since they make around six
variants so exact quantity and quality is of
prime importance. HEIJUNKA aids in flexible
and balanced production line which
reduces the vulnerability of over burdened
employees which eventually sets the tone
for employee empowerment and improves
morale and motivation.
Kanban
Kanban means “Sign Board” in Japanese. It
is a card that shows standard quantity of
production. It is derived from two-bin
inventory system and maintains the
discipline of pull production. It authorizes
production and movement of goods.
KAIZEN

“Continuous search for a better way”.

Kaizen is the creative suggestion system
aimed at continuous improvement in all
departments of the organization. Since it
involves recognition, analysis and solution
of problems, it is considered as a very
effective problem solving process. Kaizen
activities are carried individually as well
as in the form of groups called Quality
Circles. The prime focus of these activities
is to bring continuous improvements in
terms of quality, productivity, safety and
cost effectiveness.
Kaizen works in two ways:
1. At Indus Motors, every worker is referred
to as a “team member” so as to foster a
feeling of belonging and thus motivate the
worker to perform better. The first manner in
which Kaizen is implemented is that each
team member can give suggestions related
to his area of work with regards to
•    Efficiency
•    Productivity
•    Cost effectiveness
•    Work simplification
A committee analyzes every suggestion and
if it is found practical and feasible, the team
member gets a reward of Rs.200 per
suggestion.
2. In the second method, a team studies the
problems faced by them and work to solve
the problem. The following steps are taken to
identify solutions:
•    Identification of the problem
•    Analysis
•    Countermeasures
•    Implementation
•    Final report
•    Evaluate
Every year a Kaizen convention is held
where Kaizen teams from the IMC make
presentations on the improvement of
certain processes and problem solving
methods. The team with the most effective
presentation wins the right to represent the
IMC at the International Kaizen Convention
held annually at the Toyota Tsusho
Corporation, Japan. An Indus Kaizen
Steering Committee oversees the activities
of all the Kaizen teams. The MD of the
company, Mr. Farhad Zulficar is the
chairman of the committee.
POKAYOKE

Pokayoke is another word that illuminates

the IMC standard of quality control. It means
that workers are not allowed to let any
defect pass if detected. At IMC any worker is
allowed to stop the production line if he
finds that a product is not upto the high
standards of quality that IMC follows. IMC
uses timer clocks to determine the total
duration for which a line was stopped during
the day. This helps to keep a check on the
delays and their causes.
ANDON

Andon is an offshoot from Pokayoke

as it empowers every member of the
team to be a quality inspector. At the
slightest deviation from quality, colour
coded lights are used to alert the
foreman.
Quality (TQM)
Quality is very important for any firm to
be successful. At IMC it includes visual
controls, like checkpoints. Every worker
in an assembly assumes the next
worker as customer.
This creates the culture of inspection at
source. TPS is aided through Poka Yokes
which means fool proof system or part
design, poka-yokes help in reducing the
vulnerability of producing defects.
JIDOKA means that the worker has the
authority to stop the production line
where ever the fault occurs, in the same
way the automatic machines can also
stop when the process undergoes any
fault, this is done by the high-tech
sensors installed on the machine.
ANDONS are light signals which show
and highlights when there is a problem
that needs to be fixed. KAIZEN is a
system of continuous improvement;
Continuous
Improvement
At IMC, they focus on continuous
improvement through efficient system
design that is promoted by the help of
Kaizen, Kanban, Poka-yokes, Total Quality
Management, Statistical Process Controls
and Employee Empowerment. Such
techniques help a firm seek continuous
improvement on all crucial stages of an
assembly/production line. System
improvement is also aided by continuous
flow of work, since each worker is enable
of doing multi-tasking and forwards his
part of work as if the next worker is a
customer, this idea assists them to check
quality at the source which is truly the
concept behind Total Quality Management
Supplier Networks

Toyota treats its suppliers as collaborators; they

assist TPS by delivering materials as and when
required. Suppliers are trained to reduce setup
and lead times, inventories, defects, machine
breakdowns. This aids in long term supplier
manufacturer relationship that synchronize
production runs, lower costs, emphasis on
quality and through their collaboration provide
innovation and adequate supply chain network.
TAKT Time

TAKT is a German word which mean

“meter”. It is the speed with which the
production is sold in the market. The less
the TAKT time the more efficient the system
is. TAKT time is calculated by the following
expression
TAKT TIME = Total Daily Operating
Time/Total Daily Production
Requirement
At Toyota the TAKT time is approx 4.26
minutes, which means each car takes
about less than 5 minutes to produce in an
assembly line module. However when a
changeover occurs the first car takes
approximately 20-24 hours.
TPS at a Glance
All the techniques mentioned above
perfectly compliment the Toyota Production
System, which relies on two basic
components: 1) People Aspect 2) Process
Improvement. TPS can be elaborated much
more coherently by looking at the Pillars of
TPS.

Please Refer to Attached Word File.

About the Visit
Indus Motor Company is located in Port
Qasim, which is in the outskirts of Karachi.
The location is of prime importance for
Toyota, because a plant near the port
definitely improves the supply chain channel.
IMC has a state of the art plant for
manufacturing which is strictly secured and
maintained. Being an ISO certified firm they
mainly focus on the quality of environment,
safety and precautionary measures for their
employees and visitors. Proper instructions
were given to us with respect to safety and
confidentiality of the visit. We were then
divided into two groups; each group was
escorted by an experience management
representative. The trip was basically
focused on four key areas:
Precautionary Measures and the Process
Floor Management Development System
KANBAN and Material Management
System
Toyota Production System (TPS)
Just as we entered the production plant
(assembly line), we were given
instruction that we should walk on the
green belted mark on the floor which
was the designated corridor to walk on.
This definitely signals that how much
they care about MUDA’s because delays
in material movement certainly
increases lead time and process costs.
We also witnessed that there were
numerous sign boards that showed their
culture of continuous improvement and
employee empowerment.
There were boards (KANBAN) which
emphasized on the concept of QUALITY
COMES FIRST, they are key bullet points
that the employee should always look
upon so that he is always focused on his
task and do things right the first time. The
concept of PDCA, which was proposed by
Edward Deming, was also shown all across
the assembly line. Toyota basically sums
up its values by focusing on the following
key points:
Challenge
Kaizen
Genchi Genbutsu
Respect
Team Work
We were also shown different parts of the
plant which represented their quality policy,
environmental policy and different safety
and precautionary measures.
TPS emphasized on the concept of JOB
SHOP in an assembly line. Now, I will
elaborate the process flow which was being
conducted at TPS to manufacture premium
quality automobiles for their customers.
Trim Line
Trim line basically includes press shops
and weld shops. Both focused on
creating different body parts.
Press Shop
Here the metal sheets were being
pressed and molded to form different
shapes for different body parts of the
car.
Weld Shop
In weld shop parts were joined through
welding, and they were molded together
to form a car structure. It was basically
divided into two parts:
Workers were taking parts like vehicle
doors for welding
Weld different parts to form the car
structure, which includes:
Floor
Luggage Compartment
Roof
Engine Compartment
Chassis Line
In this area of the production line, different
welded parts were perfectly joined with body
pillars and the body base. As the whole
manufacturing is done on the chassis of the
car, so it makes this process of prime
importance, because an unaddressed fault in
chassis will definitely hinders other processes.
So quality check is done here to make sure
everything is in correct form.
Paint Shop
Afterwards the whole body was being painted.
We weren’t allowed to visit the paint shop due
to its sensitive nature. Proper protective
clothes were required to enter the paint shop.
A typical paint process followed the following
steps:
Plastic Assembly
This includes the assembly and plastic
parts of a car like bumpers, mud guards,
mud shields, steering, dash-boards,
interiors, and tires.
Engine Assembly
In the engine assembly shop we were
shown that how the engines were
checked for optimal performance. We
were told the engine parts are usually
imported and then assembled here at
IMC.
There were different variants of
engine which were classified like
Coure Engine, Toyota 1300cc and
1800cc petrol engines, and 2000cc
diesel engines for 2.OD. Engine
Assembly line was further divided
into two rooms:
Room 1 – Engine assembly for different
variants
Room 2 – Quality Check for engines, for
e.g. leakages, bubbling, abrasiveness
Dynamo Room – This includes:
Thorough checking of engines
Fuel consumption
Oil consumption
Engine timing and power checks.
Engine Transmission Fitting
Then the final painted body was equipped
with the engine and transmission, the
workers here were very efficient and were
able to identify defects at the source, this is
the main concept behind JIDOKA.
Final Assembly Shop
This includes the final assembly of all the
parts to complete a car; it comprises of the
assembling of main parts of the body from
the section of engine transmission fitting
area with various accessories like wiring, air-
conditioner etc.
Wiring
Car Air Conditioner
Piping
Panels
Glasses
Shocks
Electronics
Roof Pads, Bumper Pads
Quality Checking Line
(Customer Satisfaction Line)

Here quality assurance is done, because

cars are classified as consumer durables
that are very costly to purchase. Since cars
brings about with them luxury and speed
so good quality measures are of prime
importance because the life of the
customers and users are at stake. Key
areas include:
Every step is checked according to the
standards
Inspection of engine assembly is done
Engine, bolts with standard torque
Tires are fixed
Fuels & fluids
Air conditioner gas is filled
Carpet
Wind shield
Vin plate
Vehicle Performance Line (Quality Audit)

Wheel alignment
Brakes check
Speed check 120 km/h (drum testing)
Shower testing
Wave testing (noise checking)
CNG fitting
SQA (Shipping Quality Audit) Final
Supreme Audit

This is done by Toyota certified quality

inspector; checker is highly qualified and
trained and has its excellence in checking
the car performance. Suppose if 50 cars
are produced in a shift then the inspector
has the authority to select any 4 cars on a
random basis and audit them according to
the specified international standards. Any
defect diagnosed at this stage seriously
causes a dilemma because it is the final
stage of checking. But since TPS is
integrated with quality checking at source
the vulnerability of defects at final stage
are very rare.
Key Takeaways & Learning

At Indus Motor Company, practical

applications of the concepts studied at
Operation Management course made us
realize the importance of Just in Time,
Kaizen, Kanban, Jidoka, Employee
Empowerment and various other
techniques conducted at TPS. The visit
has certainly improved our practical
knowledge. TPS is an ideal mix of human
involvement and automated system
design that help them attain supreme
quality products that add value to their
customers.
MARKETING

SALES PROMOTION

IMC uses various tools to carry on its

marketing efforts such as direct marketing,
promotional campaigns and personal
selling. Direct marketing is done through
circulating printed materials such as
brochures and pamphlets and holding
launching ceremonies and functions.
Personal selling is done mainly on an
institutional level and the sales force is
extensively trained for this purpose.
Promotional campaigns the most
commonly used is the print medium
however the electronic medium is used
sometimes.
The campaigns are conducted by IMC
along with the various dealers, however
the final approval is from the company
itself. A dealer without the approval of
IMC cannot even launch an
advertisement.
DISTRIBUTION

IMC has a large distribution network

keeping in line with its 3S (Sales,
Service and Spares) philosophy, IMC has
also developed a large base of
dealership which presently number 17.
These dealers are present in every
major city of the country including
Karachi, Quetta, Larkana, Lahore,
Faisalabad, Multan, Sialkot, Islamabad,
Pindi, Peshawar, Dera Ismail Khan and
Mirpur.
MATERIALS CONTROL
There are two main functions of the
materials control department:
WAREHOUSING

This includes the warehousing of CKD kits,

local parts and consumables. CKDs are
received once every week and are stored
in the CKD warehouse right next to the
main plant. The logistics department is
responsible for preparing reports on the
receipt of these kits. The requisitions for
local parts are sent 3 months in advance
with a variability of +-10%. Same is the
case with the consumables which consist
of paints, chemicals and lubricants.
The IMC has a policy of keeping as minimum
an inventory as possible to be in line with
the Japanese philosophy of JIT. However,
complete application of JIT is not possible
due to the reasons given before. Thus
inventories are held for a minimum of 3
days and a maximum of 15 days.
DISTRIBUTION ON LINE

Standard trolleys are used for CKDs and

local parts. These trolleys have been
designed to contain parts for lots of 10.
As soon as the parts for the 8th car are
consumed, the operator calls the
material control department, which
supplies the parts for the requisitioned
lot by the time the parts for the 10th car
have been consumed. Consumables
consist of paints, chemicals and
lubricants and are supplied as and when
required.
LOT SIZE/SAFETY STOCK
The Company does not make any
particular use of any particular method to
determine order lots, nor does it uses the
EOQ formula. This is because orders are
placed according to the production plan
specified y the PPMC department, and so
order quantities are not fixed.
The company believes in JIT
manufacturing and so carries the
minimum safety stock possible. The stock
time for large components and parts is
approximately 3 days, while the stock
time for smaller components is about 15
days.
 Thank You All
For Your Time &
Concentration