How Deep is Your Production System?

For all of those out there that have worked for Toyota, and many that have been associated with Toyota, we all have those stories that really indicate the depths of the Toyota Production System. Many of us are now involved in the consulting world and working with other companies to help improve their processes, and we probably all get the question on why it doesn’t work so well in some places. Most companies get improvements, but they do not reach their full potential. Why is that? I’m sure there are many opinions as to why this is, and mine is only one of them, which I will touch on only briefly, but the true essence of what I will talk about is an example that exemplifies the depth of the Toyota Production System.

First, however, I will give you my opinion on why many companies do not reach their full potential. I believe that it is because they tend to pick and choose what to implement, and not engage the whole system. They like to do the standards that we have all heard about…some floor visuals, 5S, standardized work, problem solving, SMED, but many don’t like to touch purchasing, or engineering, or scheduling. And our story today will be about scheduling.

This will take place over a couple articles, but each article will be a standalone also. I want to keep these short and sweet, as they weave in the overseas parts ordering methodology, which you could sub-plant into any part of the supply chain. We will primarily talk about the frozen and forecasted periods and how the orders get released. But, also about what happens when there is a potential disruption in the supply chain, and the lengths they will go to protect the supply chain.

One of my jobs, while at Toyota in Ky, was overseas parts ordering. There are many instances that I can recall that really show the depth of the system, but this one really puts it in perspective.

The frozen period.

Now, don’t nitpick my details, it was a long time ago, and so was the period of my youth, but it was something like this. Toyota always had between 5 and 9 weeks of frozen period in the system. This was a day by day version of what will be built on a particular day so far in the future. Each day, the manufacturing plant would make this number, or very close to it. The frozen period was to allow for the pipeline across the water and across the land. This enabled the collection of parts in Japan and the shipment of them to Ky. It all happened by truck in Japan, by ship across the Pacific, by train from the West Coast to the plant. A fairly long pipeline filled with parts that would arrive at Toyota pretty close to when they would be used on the production line.

On the 3rd Thursday of the month, another month would be frozen, starting about 5 weeks out. So if it is the 3rd Thursday of June, we would be freezing the month of August. This would then be communicated to the suppliers to enable them to do their planning.

Throughout the month, each day, one day’s worth of vehicles would be released to Japan. All the parts would be collected throughout Japan and brought to the vanning center. There, they would be loaded onto a specific number of containers to be shipped across the Pacific. Next, transferred to a train for the ride across the country from the west coast to a railway spur in the back of the plant in Ky. Finally to get trucked to the plant and unloaded on the South Dock (North Dock was for North American parts). Each of these portions of the supply chain would be operating one day at a time. The ship would have one day’s worth of containers, the train would have one day’s worth of containers, and the containers that were brought from the rail spur to the plant, were done one day at a time. Things are different now than when there was only a single assembly line to support.

I’m sure most of you have heard of Heijunka, or leveling, the process that evenly distributes vehicle production based on pre-determined criteria, i.e. a V6 engine can only be produced 1 time out of 3 vehicles. If you have 330 V6’s to produce in a day, they will not be produced all at one time, they will go 1 V6, then 2 4cyls, then 1 V6 and 2 4cyls, and on and on. This not only happened in the assembly process but throughout the supply chain.

At the vanning center, they would also follow, the same methodology. They would collect all the components and then level them over the number of containers that they would be loading. If I recall correctly, they would put, something like, 65-70 vehicles worth of parts in each container. When producing 1000/day, this would equate to something around 15-17 containers per day. And these would be level loaded. If there were 100 vehicles worth of a particular airbag, ideally, they would have been distributed evenly across all the containers. Due to packaging quantities, this was not always possible, but it is what the target was.

The trains arrived in Georgetown, where there was about 3-5 day’s worth of containers available. Each day, a day’s worth of containers would be transported to the plant to be unloaded. The dock would then unload all of the containers scheduled for that day.

Here comes continuous improvement

The unloading of the containers was not tied to the production of vehicles, but was tied to the day that the schedule was supposed to be produced. This would enable the dock to unload the containers faster than the assembly line was utilizing those parts, creating the potential for excess inventory in the overseas super market. The improvement came when they tied the unloading of containers to the completion of a vehicles on the assembly line. After 70 vehicles lined off there would be a signal on the dock to prompt them to unload another container.

What about when the schedule changes?

It usually doesn’t. This is because the order is always placed off a firm order. But there are some gaps. For instance, during the cherry blossom festival in Japan, the country pretty much shuts down for 2 weeks. This means that they must van those 2 weeks of shutdown prior to them shutting down. So, without trying to get to complicated, here is what happens. They will van 1200 vehicles a day instead of 1000. So for every 5 days they would van an extra day. If, under normal vanning conditions, what gets vanned on a particular day in Japan will get used 35 days later, during a period like this it will go to 34 days later, and then to 33 days later, each day coming closer and closer to the period of time that is a forecast and no longer a firm order. There was occasionally the time when orders were placed off a forecast order, but the order was close enough to the forecast that it didn’t matter.

Except Once…but we will talk more about that later

In the next article I will tell you about what happens when there is a drastic change in schedule. Here is the teaser. When we did the first Desert Storm, and thank you to all the veterans who participated in it, our orders for vehicles that were destined for the Middle East went from something like 70/day to 3/day. And yes…there were some components that got ordered off of forecast.