Toyota Case Study (Case 4). Toyota: Origins, Evolution, and Current Prospects

The typical mass-production system established by Henry T. Ford in the early 1900’s is based on the idea that there would be an assembly line that was to produce a limited product line in massive quantities to gain economies of scale. To do this the company needs to stretch its fixed costs that are involved in setting up a specialized machine and the way to do this produce a massive amount of that part of the equipment, store it in warehouses, and change the equipment to produce the next needed part. In doing this, the employees do the same job continuously and this increases in the likelihood possible errors because without the incentive to be efficient, employees will not be careful. Also, you have to pay managers and foremen to oversee the operations which seem frivolous. This practice does not force employees to take responsibility for their work. Toyota’s manufacturing system is slightly different in that it promotes efficient work, decrease in inventory costs, and production more based on demand. Toyota took the “main structure” of the mass-production system, but implemented changes based on observations of U.S. companies. First, auto parts were produces in small batches to decrease warehouse costs and to do this they decreased the time to change stamping from days to minutes through different trial and error processes. By doing this Toyota afforded themselves the ability to produce on demand and not have much overhead. Secondly, workers worked together and were responsible for finding their own errors instead of letting it wait until the end where it could be more costly to repair. If an error is found everyone of the line would stop and fix the error and over time everyone become sufficient in detecting them. By doing this there was also no need to have all of the foremen to overlook employees, again decreasing costs. Toyota’s manufacturing system is cost effective, efficient in production, cost reduction and less overhead, better employee relations, better