Supject: MGMT540 Operations Management Class: GaMBA01.C02 Student: Trương Minh Chiến, ID# 113408 Final Individual Assessment TOPIC: IMPROVED LEAN SYSTEM OF TOYOTA CORPORATION BY APPLIED MODERN PROBABILITY STATISTIC THEOREM AND 6 SIGMA MODEL INTRODUCTION 1 - Background Toyota Group is one of the groups leading car manufacturer in the world. But in recent years, U.S. Toyota in US had a recall of over 8.5 million cars and make the company $30 billion hole in the system caused by the brake pedal and no security technique makes all the operators can not operate the vehicle the speed they desire. This shows the weakness in the production stage manager as well as errors in the information management system of the Toyota corporation. Figure 1 Analysis of errors on the accelerator and brakes of the Toyota’s cars On the other hand, the production management system of the Toyota (TPS - Toyota Production System) is a system that Lean forward in the decades 80s, 90s. I will analyze the drawbacks of the TPS. Moreover, I will use the theory of production management and probability statistics to make some suggestions to overcome the disadvantages of the production management system TPS. 1/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 1 2 - Purposes The purpose of this project is to analyze, evaluate and respond to questions in the case study in which are crisis in production management and quality management of Toyota. Based on these results, I will make proposals on the application model combines Lean and 6 Sigma, for example, combining the quality control system of models such as Six Sigma FMEA, QFD, EFM and SIPOC model TPS - Toyota's traditional Lean system, 3 - Progress This report is realized bases upon below steps: i. Understand and gather information Toyota case study – crisis in productions management and quality management. ii. Analysis and evaluation the realistic situation. • Analysis the problem. • Applied operations management [Appendix 1,2]. • Applied probability and statistic theorem for problem solving. iii. Conclusion and recommendation. ARTICLES and ANSWERS Case study Toyota – production system : Read the following articles [Reference 8] about the situation of Toyota company and answer the questions below: Question 1: Let you indicate the mode of governance that the company Toyota production applied? Question 2: Which defects in the operation of international business administration of Toyota Corporation that has led to this tragedy? Question 3: Could you set out how the handle this problem from your viewpoint? (TBKTSG) - The Toyota group's problems clearly illustrates weaknesses of the operating mechanism of Japanese enterprises. It is difficult to exaggerate the importance of Toyota in the psychology of Japanese business. Toyota has long been considered the pinnacle of creativity, production quality and the power industry in Japan - especially after the company past General Motors (USA) became the largest car manufacturer around the world in 2008. 2/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 2 The technical management and production of the Toyota organization, referred to as TPS (Toyota Production Systems), such as streamlining the process of "Lean" supply system "in time" (Just-in- Time), the guideline "continuous improvement (Kaizen) . Toyota has become the envy of all trust business. Many companies around the world send expert team to visit the Toyota factory in hopes of learning is part of the public record of managing it. In Japan, Toyota is considered a champion of industry, along with Sony and Hitachi. But only a few weeks ago, things have changed. The recovery (recall), nearly 8.5 million cars Toyota worldwide due to technical deficiencies endanger the safety for the users has caused a worsening crisis. Since November last year, Toyota started withdrawal of 3.8 million cars to repair parts of the accelerator, to overcome unwanted vehicle acceleration. 1-2010 to May, Toyota recall to 2.3 million vehicles on the same reason, and stop production at five factories in the U.S 9-2 days, Toyota recalls 440,000 additional hybrid vehicles (both cars have gasoline-electric), including the popular Prius model, to fix a problem in parts wins. According to Reuters news agency on 23-2, Toyota is also considering withdrawal Corolla - selling car after the Camry Monday - due to problems in parts of the wheel. A survey of the U.S. Department of Traffic Safety (NHTSA) is conducting shows defects not only in separate parts but also in system software controls the line of Toyota vehicles. Wednesday 24-2 yesterday, Toyota president and other senior officials of Toyota in the U.S. have a hearing before Congress this country. So funeral stage reputation for quality on which Toyota built their work. The company's stock price has fallen about 30 billion dollars, equivalent to the entire market value of Ford Motor. But it is worth noting that according to analysts, this disaster is not only due to technical errors in the components of a car which is mainly caused by management company has not recognized correctly and properly handle the situation crisis. Toyota's problems are detected early. According to the Center for Strategic Research Safety (SRS) is headquartered in Boston, from 1999 to now the center has recorded for 2262 Toyota unintended acceleration caused at least 819 crashes to 26 people death. Thousands of complaints, an application related to the fatal accident, has been submitted to the National Highway Traffic Safety (NHTSA) and Toyota, but companies are not being met. Initially, Toyota has vehemently denied the defect in the product. Until last month they recognized 11-2009 pedal parts may cause problems for car speeding out of control, but said that due to vacuum the carpet lined improperly installed. By the end of the month 1-2010, as more evidence that the 3/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 3 defect lies not in the carpet lining in the legs that increase speed down mechanism, Toyota was forced to withdraw again to 2.3 million vehicles. This time Toyota "dump" the responsibility for CTS Corp. company. - A manufacturer of car parts in Indiana, USA - is a supplier of accelerator components for Toyota, however CTS Corp. quickly objected, said the new CTS offers only the accelerator - is made in accordance design and quality requirements of the Toyota - from late 2005, while the model error has appeared since 1999. This interpretation of the Toyota quickly becoming skeptical, especially as more defects are found not only in parts of the accelerator and brake. How to handle just slowly just to avoid the responsibility of the Toyota has devastated confidence that customers place on this brand. When the press both in and outside Japan to the front page is not good information about Toyota products, the leadership of the group almost disappeared. It was not until days 5-2, Mr. Akio Toyoda, 53, president of Toyota and is the grandson of the founder of the group, appeared in public and apologized, but seems reluctant to clear. Only the day 8-2, when the Manhattan District Prosecutor's Office, the state of New York requires a warrant criminal prosecution, the Toyota board the views and attitudes have changed. (Manhattan Prosecutor's Office has jurisdiction over all public companies listed and traded shares in the stock market on Wall Street New York Street in Manhattan that Toyota is one of such companies). In a presentation posted on the Wall Street Journal earlier this week issued before the hearing before the Review Commission and the Government Reform U.S. House of Representatives, Mr. Akio Toyoda was first admitted: "I clearly see that in recent years, we did not listen carefully and do not respond as fast as we would have to do before the customer's concerns. Despite the attention to investigate the defect, we only focus on technical issues without full attention to the way used car consumer. " Akio Toyoda, and he received all the responsibility as the head whether he was sworn in June from last year. Crisis resolution is disappointing things that happened at Toyota, but as The Economist, they reflect a collective failure of the operating businesses in Japan, making the company vulnerable to large errors in handle negative situations. Almost any Japanese company also maintains a system of strict hierarchies, in which the elderly are revered, subordinates hardly dared to report to their superiors information that is not nice, that information is not to be competent authorities or to please the wife round leaders. Family relationships, relatives interlaced makes this system more sustainable; those who "exceeded supply report" were considered unreliable and violating cultural norms of the business. Groupthink, a 4/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 4 collective responsibility to become the guideline for management executives do not tend to move between firms: the hiring of external experts is considered to break the internal harmony of the company, professionals want to work is considered "the dance of" lack of loyalty. Sticky like family culture that not only hinder the ability to act boldly and resolutely by Japanese companies but also made the company fall asleep on his achievement that few consumers care about and lack of permanently monitoring mechanism and criticism. Particularly at Toyota, including 29 board members are Japanese and have a "home" (insider), does not have an independent expert. Other Japanese companies also lack such diversity, with the exception of Sony and eAccess. Many Japanese companies are now reviewing the experiences of Toyota, such as the use of outside resources to lower production costs, depending on the supplier and relationship management with agencies quality . However, it is important to Toyota's problems, perhaps they should reconsider the way in the internal governance as well as in business relationships with customers, users and products their services. (Theo Economist, Time and Reuters) - [Reference 8] 5/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 5 Problem solving Answer to question 1 Production management model of Toyota (TPS) is a model that combines the application of Lean JIT inventory management system of materials and methods of chain U - Kanban (pull method of line with U the production stages are arranged in a U-shaped) and quality management processes Jidoka (check truou Visualization and corrects problems or incidents). Figure 2 The productions management model of TPS of Toyota. Specifically, Toyota officials and employees to continually hunt for paying all the wasted resources. Toyota's leadership theory is as follows. Value added is the effect of price and cost. Added value will increase if firms raise prices or reduce costs. If the price increase, the firms will lose customers and degradation. If the cost reduction will not be subject to the disadvantages that could reduce the market price and robbed of competition. Toyota classified three main sources of waste: muda (無益), muri (無理) and mura (斑). Restrictions to waste and expense, the industrial management engineer Taiichi Ohno Japanese, Shigeo Shingo, and Masaaki Imai Genichi Taguchi has created a number of management philosophies such as just in time (just in time production), SMED (Single minute exchange of die, tool change in a minute), kaizen (改 善), genchi genbutsu (現地現物), heijunka (平準化), . and some tools as executive producer jidoka (自働化) , nemawashi (根回), andon (行灯), kanban (看板), poka yoke (差错预防), . 6/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 6 Figure 3 Model of 5 principles of Toyota Lean [Reference 19] 1. Specify value from the standpoint of the end customer by product family. 2. Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value. 3. Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer. 4. As flow is introduced, let customers pull value from the next upstream activity. 5. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste. Overall, the quality assurance process includes 3 Jidoka production processes and waste management against the Muda, Mura and Muri, as described above. But in fact, the whole process as well as JIT production process Jidoka or U-shaped line with the Kanban control is based on the formula to calculate the statistical study of English Postgraduate W. Edwards Deming (Deming taught the Japanese to apply statistical theory in production management and sales after the First World War 2 ends). Therefore, we can say the JIT process, Jidoka . all use of TPS tools and theoretical probability statistics by Normal Distribution (Statistics standard) or Chi-square distribution (Chi-square distribution). But there is a paradox here is that the models or applications for statistics in the JIT inventory or stockpile for quality management Jidoka production models are linear or sequential chain model (chi current machine parts are produced based on demand or require spare parts or from the previous stage). Therefore, when there are improvements in the technique or application of technology to automate production lines, the formulas, statistical error checking Deming's theory can not meet the problem. Hay said the other, outdated theories of Deming statistical study array does not satisfy the needs fresh examination of the product line fresh and at the same time a series of modern data as feedback from users , from the feedback distributors and almost simultaneously with the manufacture of products. 7/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 7 Answer to question 2 Based on these remarks and analysis in question 1, I identified three critical mistakes in the international management of Toyota as a mistake on the management of quality fresh food, wrong about the hierarchy of management information, mistakes in applying statistical methods in quality control and automation systems the error Poka-yoke. Figure 4 Quality management model of the Toyota production management system – PQMS Failure in quality management : Braking system and pedal systems Toyota had problems problems from 11 years ago because the design is not consistent with other systems to the customer can not control the speed as desired. Yet, when checking the structure and composition devices are not permitted to manufacture and mass production. Thus, this experiment demonstrated that the stage of fresh products as well as fresh product testing stage after stage of the production and receiving feedback from customers is not performing well. Failure in classified information prohibited threaded : Management systems to exploit customer information (Information System Methodology - ISM) and system management information exploitation project (Information System Project Methodology - ISPM) of the Toyota but the same general system, but they have not been design similar to the same extent and use of such information as the process of using information in other parts of the firm. (Lower level of the ISM ISPM). This happens because they have centralized management, or other people say the role is 29 people closest to each other and focused management style (power in the hands of the great managers and management decentralized tree). Therefore, the warning about the risk of error was less sensitive. Information management process from the customer not return the right to stage a fresh product management and product design delirium. 8/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 8 Figure 5 The model of production management LEAN Failure in Quality control and automatic system error alert Poka-yoke : Deming's statistical theory of probability standard applications (Normal Distribution) in quality management segment is sometimes not met modern needs. Since the basic cause of the production equipment is now more modern and more production processes to shorten the time and place almost simultaneously (Parallel), so there will be a huge error when applied Deming theory into the calculation (because at the time of Deming and statistical theories mainly apply to sequential continuous line asynchronize system while the chain is now attached to synchronize parallel format system). In addition, the application of Deming theory is very much limited in the stage of the sample and data processing should have occurred overload of data that is typically installed when the Toyota system of IBM RUP. Besides, Poka-yoke systems have a standard for devices to assemble together. Thus, if "standard" errors that are not possible, then drag to check the mass violations. 9/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 9 Answer to question 3 After researching the issue of governance of the Toyota production as described above, I would offer the following recommendations: - Applied of combined model and Lean Sigma 6: combined cycle quality management Failure mode and effects analysis (FMEA) to create model LFMEA [Appendix 2]. FMEA development to focus more on processes controlling the quality of the JIT management, HR management personnel, management tools and equipment production line and production schedule management. Figure 6 Ideal model of race in conjunction with FMEA related to LEAN - Included in the application of statistical theories Joglekar and Hunter (2003) on application of quality management systems with new applications of standard probability function of Lachenbruch and Mickey on Holdout-error procedure in order to manage production . This will replace and add alternate for the errors and lack of Deming in modern statistics. In the theory of statistical probability of normal distribution Anand M. Joglekar, he used the concept of standard deviation of an entire system ΔT (from inventories to production and finished products) compared to a standard that allows certain (usually less than 30% compared to the standard) as follows: δ t 2 =δ B 2 +δ P 2 + δ C 2 10/ 15 INTERNATIONAL MASTER OF BUSINESS PROGRAM Website: www.griggs.edu.vn Email: gamba@griggs.edu.vn 10