Toyota Production System (TPS)

The Toyota Production System (TPS) is an economic philosophy created by the Toyota Motor Corporation, one of the largest automobile manufacturers in the world. Many economists and businesspeople attribute part of the company's success to the TPS, which makes efficiency and the elimination of waste a priority. The TPS helps factories run smoothly, reduces manufacturing time, and reduces the amount of time between a customer's order and when he or she receives the product.

Background

Young Japanese entrepreneur Kiichiro Toyoda founded Toyota in 1933 as Toyoda Motor Corporation. Four years later, the company's name was changed to Toyota Motor Corporation. The Japanese company learned from early US automobile manufacturers, imitating and refining their business practices.

While Toyota's early cars were extremely similar to American cars, Toyota soon began producing smaller, more-compact vehicles than Chevrolet and General Motors. Its first major success, the Toyota Corolla, was an affordable, compact, fuel-efficient sedan. By the late 1970s, the Corolla was the best-selling car in the world. In the 1980s, Toyota followed that design with the Camry, a similar but more modern compact car.

In 1989, Toyota launched its luxury car line, Lexus. While still compact and fuel-efficient, these vehicles were aimed at a different market than the Corolla and Camry. Packed with the latest electronic features and high-end mechanical parts, the Lexus brand was intended for those who valued comfort and power over affordability.

In 2001, Toyota released its next landmark vehicle, the Prius. It was one of the first commercially successful automobiles to run on both gasoline and electricity. Later Prius models were made larger and roomier without compromising on fuel efficiency. Toyota also included revamped airbag systems, as well as additional interior electronics.

Overview

The Toyota Production System (TPS) is a new approach to factory work pioneered by the automotive manufacturer. It has become a model of business practice throughout much of the manufacturing world. Toyota attributes its extremely efficient factories to the TPS.

Effective use of the TPS should lead to three outcomes. The customer should be provided with the highest quality vehicle at the lowest cost in the timeliest manner possible. Members of the workforce should treated fairly and given job security. Lastly, the company should be flexible enough to respond to any changes in the market, flourishing in both the short and long term.

The TPS is divided into three categories: Kaizen, Jidoka, and Just in Time. Kaizen involves specifically planning every motion of the manufacturing process for peak efficiency. The most efficient series of motions for each task are written down for factory workers, and those workers are required to strictly follow them. If a worker has suggestions for making a task more efficient, he or she should take the ideas to a supervisor before trying them. This process ensures that factory workers are working as quickly and safely as possible.

Jidoka means that workers run their own worksites. They are divided into teams, and each team manages the task at which it normally works. Teams are encouraged to bring any concerns or problems about their worksite to their managers. Most importantly, even automated worksites are run by human workers, who are allowed access to a switch that can immediately stop production at any time. Workers are to use that switch the moment they notice any unsafe problems or abnormalities. Additionally, most machines are designed to look for production problems. The moment a production problem is detected, the machine automatically shuts down. It will not restart until nearby workers have corrected the problem.

The most important aspect of the TPS is its Just in Time approach to manufacturing. Before Just in Time manufacturing, most businesses would manufacture a set amount of product, hoping they had enough of the product to meet demand. Toyota leaders decided that this process was imprecise and inefficient. Instead, they advised that careful research be conducted prior to the release and manufacture of the product, carefully estimating the number of products that would be sold if an endless supply of the product was available. They then produce exactly that amount of product, finishing it "just in time" for sale.

This process is repeated throughout the life of the product. It allows Toyota to carefully control the supply and demand of its product, adjusting supply to ensure the optimum ratio for profit. Just in Time manufacturing has achieved widespread acceptance and admiration throughout the business world.

While the TPS has been praised and accepted by much of the business world, some activists speak out against the process. These activists claim the minimal lead time between consumer orders and the manufactured product puts a severe strain on factory workers, who are required to work long hours at monotonous tasks. Additionally, some factories have been accused of sacrificing worker safety to increase efficiency and productivity. They have also been accused of creating a culture that stops workers from coming forward about unsafe working conditions.

After its adoption by Toyota, the TPS was utilized by many other companies. It gave rise to lean economics, which argues for the prioritization of waste reduction and logistics management over many other parts of economics. Proponents of lean economics strive for efficiency above all else. This maximizes profits for the company while reducing prices for the consumer. While it works best with companies that produce products through a series of specified steps, such as building cars on assembly lines. However, the philosophy behind lean economics has spread to all types of businesses.

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