How Toyota Turned Crisis Into Opportunity

How Toyota Turned Crisis Into Opportunity Automotive News June 9, 2009 Planning and executing a change in the daily line speed—known in manufacturing circles as changing the takt times—is akin to directing the choreography of a Broadway musical. A decade ago, Toyota was famed for being able to pull off a change in five months—a competence that enabled it to quickly increase vehicle output without hiring additional workers or running overtime. That was then. Today, Toyota's Tundra pickup truck plant in San Antonio can change the takt time in 10 weeks. In fact, San Antonio is just completing its sixth takt time change in a little over a year. That's the good news. The bad news is that San Antonio is just completing its sixth takt time change in a little over a year. When the U.S. auto industry crashed in 2008, Toyota Motor Corp. stumbled right along with it. The oversized Tundra plant was one of Toyota's chief trouble spots. The line speed has been ratcheted down repeatedly as demand has crumbled. Toyota is praised for its flexible plants and deftly managed supply chains. But last year, the company had to take the same kinds of emergency measures as everyone else—halting production lines, canceling projects, putting suppliers at risk and struggling to sort out bloated inventories. Frozen Tundras San Antonio opened in late 2006 with capacity to build 200,000 full-sized Tundras a year. That was on top of existing capacity to produce 150,000 of the trucks in Princeton, IN. By 2008, with the full-sized pickup market on the ropes, Toyota canceled its second shift in Texas, then stopped production altogether for 3-1/2 months. The 1,800 workers stayed on the payroll to work on skill improvement, take training classes, make changes to factory processes and even perform civic cleanup work around San Antonio. By rotating workers through skill improvement classes for months, San Antonio has been able to create a more nimble assembly process, said Dan Antis, the plant's general manager in charge of manufacturing and engineering. That enabled San Antonio to improve its ability to change takt time. Normally, an auto plant would not attempt more than a single takt time change in a year. Employees across the factory must speed up or slow down in unison, and the delivery of parts must be altered to match. The production of in-sequence parts at supplier plants must change in the same cadence on exactly the same schedule. Supply labor issues arise. Truck deliveries are affected. Paint oven cycles are affected. San Antonio can now do all of that in 10 weeks. But it is not good enough. "The company would like us to get that down to six weeks," said Antis, a 54-year-old former Marine who helped launch the Texas plant. The ability to alter line speed swiftly is critical for Toyota. Burned by its 2008 mismatch between sales and inventory, the company is trying to improve communications between its sales and production arms in North America. Toyota wants to respond faster to market changes. Two kinds of flexibility Antis is sensitive to suggestions that San Antonio is an example of the absence of flexibility at Toyota. The Texas plant produces just one product: the Tundra. By contrast, Toyota's Georgetown, KY, plant turns out Camrys, Avalons, Venzas, Solaras and Camry Hybrids. San Antonio makes different versions of the big pickup, Antis says. And the plant was built with a flexible body line and paint shop to accommodate other models, if necessary. "There are two types of flexibility in a plant," Antis says. "There's the ability to absorb a different vehicle into your line, but there's also the ability to increase or decrease volume on demand. We're trying to get our production in line with sales so that we don't overproduce." Achieving that took more intensive employee training than an automaker normally has time to provide. For Toyota, the opportunity arose from having to suspend production last year. Toyota first gave its workers training in basic skills, such as handling tools and tightening bolts. Then it moved them through sequential skill training so they could perfect a series of multiple jobs in a certain order. Then employees moved through "complete cycle" training, where they improved their ability to perform an entire range of jobs. "The better trained and more multiskilled people are, the faster they can adopt the change," Antis says. "And once they're familiar with it, they can support the change with their own ideas about how to improve the new process." During the months of low-volume production, San Antonio's workforce identified and carried out 2,500 workplace improvements to improve efficiency. They also ferreted out problems. San Antonio identified every process in the factory as red, yellow or green for safety, with green representing no safety concern and red meaning trouble. The final assembly line has 205 processes, 15 of which were identified as red. The workers have taken care of all of those safety issues. Meanwhile, they also made plant improvements that did away with 34 work procedures. Three moves When U.S. sales collapsed last year, Toyota changed model plans at three plants. The moves included stopping construction of a new Prius factory in Tupelo, MS, and simultaneously moving the Japan-built Highlander crossover into the model mix at Princeton, making fuller use of excess plant capacity there. Toyota also consolidated all production of Tundras at San Antonio, ending the truck's run at Princeton. That move aided some of Toyota's suppliers, Antis says. Suppliers that had been using two plants to supply the Tundra in both locations have shifted all parts production to San Antonio, where Toyota has 21 key suppliers working on its plant property. Other Tundra suppliers were able to reduce transportation costs by eliminating shipments to one of the two customer locations. "The benefit of all this is that we're managing our inventory better, which means we're reducing our costs," Antis says. "That includes both finished goods and raw materials, which represents huge money in manufacturing. To do all this, we had to help our people improve their skills. And we were really able to do that because of this period of low volume. It gave us a chance to prepare for the future. We all know the market's coming back. When it does, we'll be ready."

Copyright © 2005 LexisNexis, a division of Reed Elsevier Inc. All rights reserved.   Terms and Conditions   Privacy Policy

Quality News Today is an ASQ member benefit offering quality related news from around the world every business day.