Alessandra Guido

Operations Management – Case study assignment

Toyota Supplier Relations: Fixing the Suprima Chassis

Discussion Points
1. PERFORMANCES
Which operations performances did you find in the case?
Time:
 Delivery Speed = 27 shipment per day leaving plant, Just in Time
 Delivery Reliability = Toyota created a parts tracking system for ChassisCo;

Price (cost): aggressively worked the prices on second tier parts supply to meet the extremely
aggressive target price demanded by Toyota

Quality:
- Design/Specifications = amount of welding on each rear suspension cradle doubled from
previous model, JIDOKA, Toyota engineers had ‘tuned’ the stamped parts for improved
welding quality.
- Conformance = because part conformance was high, incoming inspection in Athens was
not required. Toyota engineers had designed the plant and its equipment to ensure
successful integration of product and process; collaboration among Toyota design, process
engineering, the supplier, and manufacturing allows for parts to meet manufacturing
needs much better.

Flexibility:
- Product = “We thought we were pretty good. We were doing material flow kaizens
(improvement projects), we had established a team leader system, and we had a strong
training system for incoming welders. Of course, we did run into quality problems from
time to time, but each time we were able to get things back under control”.
- Plan = ChassisCo were doing material flow kaizen, ChassisCo estabilished a team leader
system.

Service: reduced production cycle times, automation increased (Robots from 13 to 102), taken
responsibility for the development and supply of virtually every one of the 85 parts in the Suprima
rear suspension cradle

Why do you think they are relevant for the overall strategy? 

 Increase productivity
 Problem solving capability
 Increase automation
 Quality enhancement

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 2. LEVERS
Which choices fall under the Design /Manage / Improve framework you can find in
the case? Who took these decisions?
DESIGN
Structure
 Strategic “buy” decision to outsource the rear suspension cradle assembly to the ChassicCo
North Amertica supplier;
 ChassisCo involved more automation for the Responsa model (50 robots added);

Organization
 Responsability allocation (2003 Suprima launch): Toyota gave to ChassiCo ownership of
project management for the components parts during launch with Toyota providing
technological support;
 TIS — Technical Instruction Sheet — which specified for every part several pages of
detailed technical requirements;
 Toyota placed high value on frequent and open communications and expected suppliers to
alert Toyota personnel to problems very quickly so corrective action could be taken.

MANAGE
 Just in Time;
 JIDOKA;
 Outsourcing to ChassisCo in 1997;

IMPROVE
 JIDOKA;
 Toyota invested in supplier organization’s education in TPS and capabilities wherever
needed;
 During the development phase, Toyota engeneering helped Chassis Co in learning.
 Semplifying for ChassisCo aspects to assigned tasks: e.g. all of the stamped parts were
designed and manufactured by Toyota and its affiliates in Japan and shipped first to
TMMGA where they were kitted for shipment to ChassisCo in Athens (limited amount of
tuning needed to be done in USA);
 Training system for incoming welders (said by Richards Roberts, ChassisCo plant quality
manager)
 Riveting process for Athens plant

All of these decisions were made by Toyota (with some exception expressively written).

Where did the main disalignment fall?

Delegating full responsibility of Project Management to ChassisCo was a risky Toyota’s choice. This
was an independent model by which the Toyota manufactures requires much diligence, careful
planning, stringent supervision, regular inspection and sufficient book keeping. The success of
1997 Suprima & Responsa led ChassisCo to believe that they fully understood Toyota's model of
TPS and JIT which was actually not true, because ChassisCo did not have the project management
skills they needed.

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 As Toyota delegated responsability of the project to ChassisCo, they also failed to check up on the
progress of the project time to time.
The aggressive target prices that Toyota set for the new rear suspension cradles compounded the
project’s problems.
Another problem was that ChassisCo’s global development organization was decentralized in
2000. The consequence was that experienced people were ‘split up’ to cover three independent
geographic groups, significantly weakening capabilities to support new launches
Suprima launch, ChassisCo had an unprecedented number of new launches in the works, for a
wide range of customers, all around the globe. Engineering support people were stretched very
thin.
Moreover, TPS has a policy of bad news first such that quick actions can be taken to mitigate
problems. ChassiCo failed to follow through and the problems kept adding up.

3. AUTONOMATION
One of the challenges of the case study was the introduction of automated
activities, in the place of the previous manual work. Find which sentences in the
text express this issue.

“Increased level of automation in the welding processes compounded challenge for staff and
operators”;

“ Inspection of welding process was more difficult and required resources they didnt’t have for
rework to identify and repair defects”;

“ We have increased the automation in our plant dramatically. The number of robots has gone
from 13 to 102 and the amount of welding on each rear suspension cradle has doubled from the
previous model”;

“For this new model (Responsa), manufacturing involved considerably more automation. There
were now 50 robots added to the line, which posed a new level of challenge for ChassiCo, and
potentially increased the need for tuning”.

Why was this a problem?

In the manual welding processes used for the 1997 Suprima cradles, a weld operator could visually
inspect his work in real time to assure a quality weld. With the new automated welding robots
used for the 2003 Suprima cradles no such real time, closed loop feedback system existed. If a part
was off spec by a small amount or a weld gun was out of alignment, the weld would just miss or
imperfectly join the parts, requiring significant inspection and rework to identify and repair the
defects. Additional resources would then be required to trace down the source of the defects and
adjust the welding system and/or work with the part supplier to improve its part conformance.
These resources did not exist in the Athens plant when the 2003 Suprima was launched.

4. THE POTENTIALITY OF INDUSTRY 4.0

Express which are the potentialities of the digitalization and digital technologies to
smooth the problems encountered in the case study
Thanks to digitalization and digital technologies the company could increase his operational
efficiency putting together his resources (plants, machinaries, people).

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 Some of the potentialities are here listed: the machines connected to the network allow to control
them remotely; the logistics and handling systems are traceable throughout their progress; tools
could be equipped automatically at the setup change, engines are controllable in their state of
operation with a tablet, instructions and technical assistance of an industrial equipment could
communicate their need on the operator’s terminal, smart-watches alert could be responsible for
a machine outage.
The combined use of multiple 4.0 technologies, together with a good attitude towards market
orientation, will bring to the creation of new business models.
Digital technologies give new insights and means to reduce organizational and procedural
inefficiencies and waste. They offer powerful tools for improvement.

5. THE IMPORTANCE OF MEASURING

Find in the text all the measures and KPI that are mentioned in the case study
 Number of rework required for fix a faulty product (with the new automated welding
robots)
 Utilization = the effective use of a system in relation to its potential.
 Availability = impact of failures and manutention = actual operating time/planned
operating.
 Saturation = time spent on equipment adjustment and machine setup
 Quality yields = Toyota performed a complete arc welding process audit at Athens in which
the plant scored only 13% out of 100%.
 Defectiveness = scrap rates were high, as was downtime, parts quality poor, and parts
inventories were subjected to a great deal of inspection.
 OEE = overall performance of a productive resource
 Production lead time = the period of time between the customer’s purchase order being
placed and the manufacturer completing the order. JIT allowed savings in overall
inventory;
 Availability = Inventory turnover index = reduction of waste and variability in demand and
supply (for example, making sure that production steps were consistent, so that little
inventory was required for protection against uncertainty).
 Available production capacity/ production rate.
 Delivery lead time.
 Quality index = number of waste.
 Percentage of waste = Toyota found that some assembly-critical welds were out of
conformance and then found additional assembly-critical concerns in November related to
welds in key structural components.

Would you measure other performances to better monitor and evaluate the
situation and eventually find a solution?
1. Alongside the overall average handle time of tasks, you can easily spot if any deficiency is
occurring in the system, and, therefore, adjust accordingly.
2. Measure the amount of products realized during the period that fits the specifcations.
3. Measure every stage of productivity.
4. Measure the speed of delivery.
5. Measure each operation expenses. Bob Curtis complained that “our accounting system did
not recognize and separate operations expenses from pre- production or launch
expenses”.

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 Which KPI would you use (and with which unit of measure and frequency of
collection)?
1. Avarage handle time = weekly.
2. Compliance rate = at the end of each production.
3. Phase-Gate process = at the end of each phase.
4. Avarage delay = for each delivery.
5. Avarage cost = annual.

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