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Topic 10: Inside Toyota

In this series we have covered nine topics related to Lean Material Management, and the transformation in material management thinking and methods from the 1990’s until today. Where would you go, you might ask, to see these transformation in action? There may be many good examples, but we know of one: Toyota in Columbus, Indiana. Let’s revisit our topics in this series, to see how they line up with what Toyota is doing today!

Topic 1: The Kanban Method. The Kanban system is alive and well at Toyota, as you might expect. At Toyota Material Handling this method is used to manage small parts, which represent approximately 50% of the part number managed. Paper cards are also used, which sometimes surprises visitors, who expect something more high-tech. A frequent delivery cycle allows them to keep the quantities low.

Topic 2: Pulling From Overseas. Shipping containers arrive daily from Japan, and contain a mix of different items based on the proposed production schedule. Unpacking and putting away is a part of the daily discipline of maintaining this flow of material from across the Pacific.

Topic 3: Material Handling As Waste. It may seem to the visitor to Toyota Material Handling that a lot of material handling is going on, that you would not see in a more traditional factory. The delivery cycles in the range of 30 minutes means that there is a constant flow of parts from the Supermarket areas to the Points of Use all day long. This does not seem to hurt overall profitability however, and material handling personnel are not regarded as second-class citizens or as “indirect workers”.

Topic 4: How Much Inventory? The rule of thumb for quantities of material at the Points of Use is “Several Hours of Production”. This is extremely lean, and without a robust delivery system this would increase the risk of shortages.

Topic 5: Frequent Delivery Cycles. Which brings us to the very frequent material delivery cycles. At Toyota they have divided the working day into 12 delivery cycles, a little over 30 minutes each. The result, as we discussed in this series, is the ability to manage low Point of Use inventories without increasing the risk of part shortages on the line.

Topic 6: Simulation Modeling. This is one topic that you won’t see on a plant tour at Toyota. I suspect that their experience in managing Mixed Model material delivery would allow them to get close to an ideal design without the use of simulation.

Topic 7: JIT Kitting. Any parts required on the line that are not being delivered via the Kanban methodology will need to be delivered one at a time, or in small sets. While I did not see JIT Kitting in use at Toyota Material Handling, its use is widespread at the Toyota factory down the road in Georgetown, KY. At the Toyota Camry plant many of the subassembly production cells were being fed by a JIT Kitting cell that was physically connected.

Topic 8: Inventory Benefits. This topic was a refresher on how to calculate inventory reduction benefits. During a visit to Toyota Material Handling a few years ago, I asked them about inventory turns of the factory floor. The manager I was speaking to told me that the current turns were around 15. I thought to myself that 15 turns per year was a respectable number, but nothing to write home about. And then he added: per month. Keep in mind, that’s the floor material only, but not too shabby, and this is another contributing factor in Toyota’s high profitability.

Topic 9: Conveyance. They make fork trucks here, for goodness sake, so if they wanted to use them on the factory floor they could. What you will see here, however, is Tugger City. Many different delivery routes within the plant, all running to a 30+ minute schedule. Look for the use of AGVs as well, in cases them the movement is very repetitive, like delivery from a feeder line.