The Toyota Manufacturing System has been admired and to some extent copied throughout the world, but one of its aspects is that it is constantly evolving. Bob Sliwa interviewed Kosuke Ikebuchi, Senior Managing Director in charge of production at Toyota in Japan, to find out just how the system is evolving now.

How has the Toyota Manufacturing System changed over the last few years.
First, our manufacturing system as developed by Sakichi Toyoda and polished by Onno san and Eiji Toyoda is more than a production method, it is our philosophy, the core of our company. It has developed gradually over the years but recently there have been several changes that have greatly effected it.

One major change is the fact that customer demand is now more sophisticated. It is no longer a market where you make the car you decide on and customers come to buy it. Basically you must make the car they order - and build that car to order (custom manufacturing). In this kind of market speed is vital to success. There are three areas we have to look at to improve delivery lead times:

First of all we have had to speed up what we call information lead time - that is information collected from the customer at the time he/she enters our show room and places an order, to when all the orders from all our dealerships and shops are collected, processed and received at the factory. A good information system set in place before manufacturing starts is crucial.

Secondly there is the information system in operation once the car started down the line and the actual physical process of assembly is underway. We strive to get as high a percent of vehicles through each section of the line as possible without reworking, but we are realistic. Say 90% make it through the body line , then 90% the next stage and then say 90% get through the painting line; that leaves 70%. If that 90% drops to 60 or 50%, then it becomes unacceptable. Currently we are operating at just over 70% total problem free line passage.

Some things can be fixed on the line, others require the car to be taken off and attended to. This directly relates to the third and final phase, distributing the finished product. A trailer has four cars loaded and is waiting for the fifth. Should it wait? When will the car be ready? A boat can only wait for two hours, will the car be ready?

In the market of the future (if not the market of today in some cases) the company that can get the car the customer ordered to them fastest will be front runners.

The second big change has been the setting up of transplants around the world and the dissemination of information about the system. Our engineers have worked with and studied other makers, GM and Opel for example and we have worked with other manufacturers to set up factories. These engineers bring back a wealth of information on the system as it works abroad and in conjunction with partners. We really did not know if it would work abroad or not but we have found if their is mutual understanding of the concept and commitment that it will work.

How does the Toyota Manufacturing System vary by country?
One big difference is the experience of the workers. It takes time to become familiar and relaxed with the system. In Japan we have factories where employees have an average of 20 years of experience. These are real veterans. Abroad collective experience might be ten years or less as turnover is high. What this means is that efficiency is quite different. For example, we think that producing two cars on one line makes it four times more difficult for the worker. Three different cars on the same line is nine or ten times more difficult. Experience helps in these difficult tasks. What does not vary is that we allow workers, supervised by team leaders, to improve the efficiency of the tasks they are responsible for by adjusting their own workstations.

While we do allow for differences at the worker level, the product quality should be the same regardless of country.

What about changes in kaizen?
Kaizen is still done on the line on a day to day basis but what we have increased is the level of simultaneous engineering on the factory floor that is utilised. This is particularly true of the new Altezza (IS200) production which started late last year.

When are production schedules set?
Twice a year we send out notices in-house as to production levels for three years from that time. These are general planned levels. After that specific notices are given one year, six months and three months before production. During production we send out confirmation of production figures a month in advance.

What are your current lead in times and what are your goals for improvement?
I am not sure how you measure lead in time but our Progres (domestic mini LS400) takes about a day and a half or two days. That is from when the ordered car hits the line until it is completed. We would like to get this faster but it is not easy and the actual overall speed is also dependent on volume. I would like to get it to one day.

Are you going to shut down any plants?
We will not shut down any factories if our sales stay above three million units. We are all right between 3 and 3.5 million. Over 3.5 million and we will start overtime shifts.

What is the main benefit from you deepened alliance with Daihatsu?
Of course there are advantages to co-operating in sales and distribution, like Toyota successfully selling the Daihatsu Storia as the Duet domestically. On the development and manufacturing side there are also many things to be gained. Daihatsu is basically a small car manufacturing company whereas Toyota offers a full line up . We are good at producing full size sedans like our domestic Crown but we are not as good as Daihatsu at producing small cars cheaply. Daihatsu is as a kei car producer and the company is very competitive in this segment. In fact all the kei car producers are looking strong in Japan at the moment - Honda makes motorcycles and kei cars; Suzuki has low operating costs and it too is a motorcycle and kei car company . We will be co-operating with Daihatsu more in the future. Indeed, our New Basic Car (called Yaris/Vitz/Echo depending on the market) is an example of just such a cooperation. The engine is manufactured by Daihatsu, but the car was developed at Toyota with 20 Daihatsu engineers brought in to the team.

What markets do you see as strong areas of growth?
It goes with out saying that Asia is a large potential market in the long run. Compared to 500 cars for every 1,000 people in Japan the rest of Asia only has an ownership rate of 12 or 13 per 1,000. Particularly China and India. The main transport may be bicycles in china now but it is a market with serious potential.

China and India have massive population so it is natural to look at them but what about the Korean makers who are entering smaller markets in Asia?
They are very aggressive. I am not sure they really considered the possibility of failure though. I do not know much about their strategy but they look to be going after niche markets.

What is the current condition of keiretsu relationships with suppliers? Is keiretsu a dead word?
Keiretsu is a word you in the mass media brought to the limelight , not one we use. From a long time ago we made our suppliers independent. Look at Denso or Aisin, they make parts for other makers though they were once actually part of Toyota. It is only recently that Delphi and Visteon became separate. Denso sells more than half of its parts to other companies. Parts makers decide whether to go abroad with us or not. Of course on the other hand it goes without saying that having your suppliers close to you is advantageous. Look at America, Honda has grouped its operations in Ohio. Engineers can come and look at a problem quickly. This is more efficient than Toyota which has plants and offices in California, Canada and other places.

Has Toyota required its suppliers to change a great deal recently, asking them to do more sub-assembly, R&D, shorter response times or increased globalisation? For example, what about what Mr. Lopez started at VW, basically getting suppliers to construct cars.
There is no way we can do that. Particularly in Japan. It is a matter of scale and capacity. It would not work for us in the majority of cases, at this moment.

In the computer industry we see revolutionary technology coming out every year, what about car manufacturing , do you see revolutionary technology coming out in the future?
Yes, we will see some. For example look at how the borderline between various processes such as pressing, casting and welding is becoming increasingly blurred. The German companies are very advanced with their net shape technology. We will see a greater integration of processes. Europe is more advanced than the US on this front. The integration of manufacturing processes is going to increase. Another area that will advance is technology addressing the environmental concerns of manufacturing and operating cars. Also we will see more plastic in manufacturing , like use in intake manifolds and such. There will be a revolution in material science. This will be key in increasing recyclability.

Are you currently including recycling costs into the your overall calculation of production cost?
Yes. If a new technology is slightly more expensive to employ or manufacture but much cheaper to recycle we go for it.

This article was kindly provided by World Automotive Manufacturing, an FT Automotive publication.
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