1.

Decrease seat varieties

2. Increase overflow parking area
3. Quality checks at receiving dock prior to assembly lines
4. Fix defective seats offline

Focus attention:
1. Capacity in KFS plant
2. Hook - look at how Tsutsumi plant does not have the hook problem
3. training of new people
4. SOP
4. Materials, quality and design

As Doug Friesen, what would you do to address the seat problem? Where would you focus your attention and solution efforts?
In April 1992, TMM had problems in the run ration of the plant. The run ration was down to 85% from 95%. It meant a shortfall of 45 cars per
shift, which had to be made up with overtime. Consequently, too many cars needed off-line operations of one type or another before they could go
on to shipping. The main source of the problem was the seats defects in the cars.
In case of the cars with seat problems, the car went through the assembly line with the defective seat in it. Then the car was driven to the Code 1
clinic area to see if the problem was correctable there. If the problem called for a replacement seat, the car was moved to the overflow parking area
where the car waited for new seat to be delivered from the supplier. This routine is in fact an exception given the quality control process in TMM.
In TMM, TPS principles would make any production problems instantly self-evident and stop producing whenever problems were detected. In
case of the defective seats, the reasons for exception were:
The final assembly people already knew of the problem.
It was possible to finish building the car without seat assemblies.
It was felt that stopping the line was too expensive given how long it took to obtain the replacement seat.
The seat set was the most expensive of all the purchased parts. TMMs sole seat supplier was Kentucky Framed Seat (KFS), which teamed up well
with TMMs operations until TMM proliferated its products, the seat styles increasing from 3 styles with 4 colors up to 18 styles. Even though the
supplier tried to adapt the cars with seat defects became the major concern of the assembly plant in 1992.
In fact, the manager of the assembly, Dough Friesen should focus mainly on the legitimacy of the exception in the case of the defective seats and
the coordination between the plant and the seat supplier:
It is reported that KFS responded with a special delivery of replacements twice a week. But still, there were cars waiting for the new seats for
more than 4 days.
Occasional incidents of cross threading, that is, when a team member shot a bolt at an angle were fixed easily by team leaders.
There were very few incidents, which could damage the seat covering with hand tools.
The hook breakage problem reported by one of the group leaders might also derivate assembly process.
Consequently, the manager of the assembly should first identify those processes needing improvement. Second, he should gather more data about
the problems by interviewing the personnel in details. Finally, he should analyze this data in order to figure out gaps between the standards and
the current outputs.
2. What options exist? What would you recommend? Why?
We noted that the signs of problems appear after TMM proliferated the number of seat styles from 3 to 18. Even though KFS operated as a part of
the assembly line, all the seat parts being detected through the line from the beginning to the end, the cars have seat defects. In fact, it is not
reported that the seats are delivered defective to the plant. The seats are damaged during the assembly. Hence, one of the options that the
manager has is to revise seat assembly team. Another issue is to redesign or improve off-line operations in case the manager decides to continue
correcting seats off-line.
The manager should also think through the overwork that the plant has after TMM became the sole source of the Camry wagons for the first time
for Toyota worldwide. So in this case, we recommend him these actions:
Revision of the seats design in order to control assembly defects.
One of group leader, Shirley Sargent, suspected that its sharp edge made it difficult to assemble. TMM have also to listen to such feedback.
To have multi-suppliers to lighten the burden of the only one supplier who works for 18 different styles.
It was obvious that this problem started after the styles expanded, so having several supplier could solve this overburden.
Revision of the off-line operations in order to avoid overtime work.
TMM should be able to change its operation mode, since the Clinic Area and Overflow Parking Area were not enough to cover this mass problem.
These are the possible recommendations that may be useful for the manager of the plant, since the high level of off line vehicle inventory affects

negatively the sales and most importantly the JIT principle of TMM. In addition, it is important to note that maintaining the quality in the long
run is closely dependent on the efficiency of each step of the production process.

1.

As Doug Friesen, what would you do to address the seat problem? Where would you focus your
attention and solution efforts? What options exist that you would recommend? Why?

The problem that Doug and the leadership team faces is specifically in the area of the rear seat
assembly. This area has been a problem for much
of the last six months. Figure 1 illustrates the top 5
sources of problems for each of the past seven
months. While the defects per vehicle are down
from the October 1991 peak, the trend line is
disturbing with the largest month-to-month
change occurring from March to April.

From October through January, there seemed to

Figure 1 - TMS USA HBS - Exhibit 7

be a large number of missing or broken parts appearing among the top five problems. This was
likely related to poor design or process steps, which seemed to have been addressed based on the
data in the accompanying chart. Aprils problems seemed to focus more on missing elements
(possible misalignment in the JIT process), manufacturing quality (wrinkles), and apparent
manufacturing process errors (gap in rear seat).

Additional data suggests that the number of defects increased on or about the 14th of April. The
timing could suggest that the introduction of the
new European models, which increased the possible
combinations from a low of 12 in early 1992 to 20 at
the beginning of the month, to 30 options. There
were plans to increase this again by 18 as exports
were planned for Japan and the Middle East.

It should be noted that while the trend increased

for both shifts, there is a much larger defect rate for
the 1st shift.
Figure 2 - TMS USA HBC
Exhibit 10

Toyota also captured the defects by type in a Pareto chart. The shaded
elements note the TMS view that the defects were the responsibility of KFS.
Material Flaws and Missing parts (likely incorrect colors or seat configuration)
lead the list of defects.

It is our recommendation to work actively to address the problematic trend with the seats on two
fronts: (1) quality control with KFS and (2) the discovery of the reason for the differences between
the first and second shift.

The recommended actions related to KFS would focus on incoming inspection. It is unclear if the
Figure 3 - TMS USA HBC - Exhibit 8
material flaws are directly related to the manufacturing
process at KFS, the transport, or the transfer process into the TMS line. This can be easily examined
using Jidoka. Addition focus needs to be placed on ensuring that the number of seat options is not
contributing to the number of missing parts and that the JIT information exchange is correct. Again,
a Jidoka process would uncover quickly the issue and likely result in recommendations to alleviate
this problem. If this was an area of continued concern, the focus of a Kaizen team on this problem
would be justified. A short-term solution might include placing additional Vendor Managed
Inventory golden seats on-site at the TMS facility to replace defective parts to ensure that there
are fewer parts taken off line.

There must also be a close examination of the two TMS areas. The first take would be to explore the
reason for the difference in defect rates between the shifts. If there is a training problem, this
should be addressed immediately. Additional emphasis needs to be focused on the reason for the
delays in obtaining replacements parts from KFS once the source of the problem is identified in the
Clinic or Overflow area.

2. What do you think about stopping the line? What is the cost of a chord pull resulting in a
stoppage of 1 minute? 30 minutes? 60 minutes? Do you think the line should be stopped when
the station identifies a defective seat?

It is our belief that the line should not be stopped to fix a defective seat. The method of noting
the defect and creating a triage to handle the problem does work; however, the company needs
to discern the root cause of the exceptionally high volume of defects and implement appropriate
remedial measures.

An underlying message from The Goal states that the cost of a line stoppage due to defect costs
more than the replacement parts and overtime. Because the Georgetown plant has capacity for
only 200,000 cars and market demand is for 240,000 cars, every foregone unit of production
costs Toyota the margin they would have made on that car. According to the case, a Camry sells
for $18,500 with Toyota making a 17% margin. Thus, every foregone unit of production costs
Toyota $3,145. If we assume that they will not operate overtimes, have the demand for the
units, the cost for the line stoppages are:

Comment [AJB1]: Guys, this is the

Cars Per Shift

428

Minutes Per Shift

Cars per Minute

485
0.88

Pricing
Sale Price $ 18,500
Margin
OP

OP Impact Per Operating Impact Per Car based on the Cars

Stoppage (minutes)
Cars Lost Shift For Lost Carper shift if they did not run the line.
1
1 $
3,145.00

17%
$ 3,145

30
60

26 $
53 $

81,770.00
166,685.00

If we are to assume that the demand still exists and overtime is available to make up for lost
Cars related to stoppages, then the costs for the stops need to consider the overtime to make
up for the lost cycles.

Stoppage
(minutes)

Number of Workers Per Shift

Overtime Cost Per Worker $
Cost Per Minute of Overtime $
Time required to Build One Car (minutes)

385
25.50
163.63
0.88

Additional CostComment [AJB2]: Guys this is very

different from your calcs. See the
Impact for Labor
reasoning behind the numbers in the
Per Car assumptions. I am not calculating lost
Cars Lost
profit. I am answering most directly his
1
1 $
163.63
question of cost.

30

26 $

4,908.75

60

53 $

9,817.50

1 We will assume Anyone in Management is Salaried

2 We will assume the Average Shift Size is 769/2
3 We will assume that Overtime cost are ($17 * 1.5)

0
385
$ 25.50

4 We will assume there is no additional Variable Materal cost

The costs associated with the line stopages are likely further understated because there is a
minimum overtime requirement for the employees.

Shift time (in minutes)

525

Minus lunch & breaks

(75)

Total time per worker

450

Workers per shift

769

Total man-hour mins / shift

346,050

Total cars per shift

427.5

Cars per man-hour minute

0.001235

Times workers affected

769

Car production lost / minute of stoppage

0.95

Margin per car

Profit lost per minute of stoppage

$ 2,987.75

Plus 1 min of overtime for 769 workers

3,145

769

Overtime hours

12.82

Overtime rate

25.50

Total overtime for 1 min. of lost production

326.83

Total cost for 1 minute delay

$ 3,314.58

Total cost for 30 minute delay

$ 99,437.25

Total cost for 60 minute delay

$ 198,874.50

Comment [TC3]: Andy, not sure if Im

fully understanding the point here.