Toyota Case Write Up

Toyota Motor Manufacturing, U.S.A. (TMM) is a branch of Toyota Motor Corporation (TMC) in the United States that was initially established to produce the bulk of Toyota’s Camry sedans. TMM’s leaders were trained in the Toyota Production System (TPS) and strove to offer “better cars for more people” through reducing cost by thoroughly eliminating waste. According to the president of TMM, Fujio Cho, by 1992, TMM’s cars were as good as the cars made by its Japanese counterparts and only slightly behind in productivity, but TMM needed to move toward the next step of dealing with costs and spreading TPS to its suppliers to reach its full potential.

As of 1992, however, TMM was facing several key problems. The first cause for concern was that the “run ratio”—the number of cards actually assembled in proportion to the number of cars that could’ve been assembled with no line stoppages—had dropped to 85% from 95%. This 10-point drop meant a shortfall of 45 cars per shift that had to be made up with overtime, which was expensive for Toyota and taxing for workers. Another cause for concern was that levels of off-line vehicle inventory were increasing, meaning that more and more cars were needing additional work before they could go on to shipping. Consequently, the sales department was not getting cars on time as promised. A third challenge was that the number of products had proliferated as a result of TMM becoming the sole source of Camry wagons worldwide: for example, two additional styles were added to the Camry line and 18 additional seat variations were designed for Japan and the Middle East. This substantial increase in variety added strain on the system, likely contributing to the growing amount of errors involving car seats. Fourth, there was uncertainty surrounding how to best recover from endemic problems such as defective seats, and whether this could be done in accordance with traditional TPS practices. Lacking a sound recovery system is a threat in and of itself, and, even more,