CASE ANALYSIS:
TOYOTA MOTOR
MANUFACTURING, USA
MARCH 23
HULT INTERNATIONAL BUSINESS SCHOOL
SAGAR TANEJA
MBA COHORT 2
400530
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1) Describe the main points of the case.
In July 1988, Toyota Motor Manufacturing, (TMM) U.S.A. began production of Camry sedans which would
replace its bulk of Japanese imports. Camry was an important segment as it was a midsize family sedan, which
made up of one-third of the American car market and generated an average 17% pretax profit. To produce the
same standard and quality of cars as its Tsutsumi plant in Japan, Toyota Motor Company (TMC) implemented
the Toyota Production System (TPS) in Toyota’s Georgetown, Kentucky, Plant. Kentucky Framed Seat (KFS)
became TMM’s sole seat supplier with whom it operated on a system of sequential pull, and over the years it
learned to supply the complete seat set with help from TMC’s Japanese seat suppliers.
In fall 1991, TMC made a change in the seats of its Camry model, offering 3 seat colors and 5 styles. TMM was
expected to supply 240,000 units of the new models whose sales were up by 20% since the last model. In March,
TMM launched wagon versions of the model, and became the sole producer and distributor of these versions
for Toyota worldwide.
On April 27 1992, Doug Friesen, assembly manager of Toyota’s Georgetown, Kentucky plant, realized that the
plant was having a hectic time. Employees were working overtime to make up for the lost production due to
decrease in the run ratio from 95% to 85%. The cars were not being shipped on time and one of the main reasons
were defective seats. Also, there was an alarmingly high level of off-line vehicle inventory.
Friesen knew that the seat problem had to be resolved but the challenge was to do it without hurting the line
utilization.
2) As Doug Friesen, what would you do to address the seat problem? Where would you focus your
attention efforts and solution efforts?
As Doug Friesen, I would try to get to the source of the problem through the “Five Whys” exercise. From there,
I can understand where I need to focus my attention and solution efforts.
Situation: Cars not being shipped on time due to various seat problems
Problem: Various Seat Problems
Why?
The plant employees didn’t stop the production line as per the Jidoka principles of TPS
Why?
An exception was made
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Why?
1) The problem was already known
2) Cars could be built without seat assemblies
3) Getting replacement seats took a lot of time, and so it was costly to stop the line
Why?
1) It had been happening since last fall
2) The plant wasn’t following Rule 3 of TPS i.e. the specified path along with which every product and service
flows shouldn’t change unless the production line is expressly redesigned
3) Sometimes, KFS sent the wrong seat assemblies that didn’t match any of the cars to be reworked
Why? Root Cause:
1) 1991 Camry’s design change, which included the hook being changed from metal to plastic
2) Plant workers may not have thoroughly understood the principles of TPS
3) The seat reorder form may not be legible and unambiguous to KFS employees
Based on the Five Whys, I would focus my attention and solution efforts on the hook design, retraining of
workers, and seat reorder form.
Counter Measures
1) Make the steps for rear side bolster installation, highly specific, to avoid hook breakages
2) A TPS consultant could reinforce the learning and improvement processes in all the plant employees
3) The seat reorder may be typed/printed, and have time specific details such as delivery time
3) What options exist? What would you recommend? Why?
There are a number of options that exist in front of the company.
Immediate options
1) TMM could pay $50,000 necessary for modifying the relevant tooling for the hook. This would prevent and
reduce the number of hook breakages on KFS’s side.
2) TMM could consult the problem with Tsutsumi as it hasn’t faced this issue.
3) Assembly group leaders can take the help of QC engineers to resolve assembly quality problems and part
quality problems with suppliers.
Long term options
1) With KFS being the sole seat supplier for TMM, it has a high supply risk. To have a low supply risk, it could
have multiple vendors. This will reduce the dependency on KFS.
2) Toyota Supplier Support Center (TSSC) consultant could help KFS employees improve their quality control.
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3) TMM can produce its own seats. However, this might be costly for the company and might take significant
time before it’s able to match the standard of its supplier as seat production is not the company’s core
competency.
The company could follow all the immediate options, and as a long term solution, it can source its seat
production from multiple producers, and train KFS employees with the help of TSSC.
4) Where, if at all, does the current routine for handling defective seats deviate from the principles
of the Toyota Production System?
The current routine for handling defective seats deviated from TPS principles in the following ways:
1. The plant kept producing cars as they could be built, even though they had defective seats, which led to
inventory, thereby defeating the purpose of JIT.
2. The production line was never stopped despite the defective seats. This goes against the principle of Jidoka
which states that the production should be stopped when problems are detected.
5) What is the real problem facing Doug Friesen?
Doug Friesen and his workers haven’t followed the scientific methods of TPS in the following ways: The processes
of installation weren’t specific enough, the Kanban cards and seat reorder forms didn’t specify time details, the
workers didn’t stop the production line as per Jidoka. A bigger concern is that Friesen wasn’t involved in the
assembly line change, and realized the problem of defective seats at the end of April despite the problem existing
since past fall and workers being used to seat defects. As the assembly manager of the plant, Friesen should
have known about the situation when the problem initially occurred.
For TPS to be successful, managers should be willing to engage in the teaching and learning process of
questioning along with supervisors and workers, and employees need to be known very deeply. Friesen hasn’t
been able to do either, and at this point of time, his job and reputation might be at stake.
TMM could resolve the core problem by bringing in external consultants to reinforce the principles of TPS to all
employees. Group activities outside work like a corporate retreat would help in understanding employees more
deeply. Lastly, to avoid or minimize the risk of such problems in the future, Friesen could do the Gemba walk on
a daily basis.
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References
1. Toyota Motor Manufacturing, U.S.A., Inc., Harvard Business School
2. Decoding the DNA of the Toyota Production System, Steven Spear and H.Kent Bowen
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