This document discusses various aspects of international corporations and lean production systems like Toyota Production System. It provides examples of how different types of international corporations might handle having two cows. It then discusses key elements of Toyota Production System like just-in-time, kanban systems, eliminating waste, 5S principles, and the role of inventory reduction.

2. How International Corporations Work
A French Corporation
You have two cows.
You go on strike because you want three cows.
An Italian Corporation
You have two cows, but you don't know where they are.
So you break for lunch.
A Swiss Corporation
You have 5000 cows, none of which belong to you.
You charge others for storing them.
A German Corporation
You have two cows.
You reengineer them so they live for 100 years, eat
once a month, and milk themselves.
An Indian Corporation
You have two cows.
You worship them !!!!!!

3. An American Corporation
You have two cows.
You sell three of them to your publicly listed company, using letters of
credit opened by your brother-in-law at the band, then execute a
debt/equity swap with a general offer so that you get all four cows back,
with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a
company secretly owned by the majority shareholder who sells the
rights to all seven cows back to your listed company. The annual report
says the company owns eight cows, with an option on one more.
Sell one cow to buy a new president of the United States, leaving you
with nine cows. No balance sheet provided with the release.
The public buys your BULL !!!!!!!!!!
A Japanese Corporation
You have two cows. You redesign them so they are one-tenth the size
of an ordinary cow and produce twenty times the milk.
You then create clever cow cartoon images called 'Cowkimon' and
market them World-Wide.

4. Toyota Production System (TPS)
(Lean Production System)
Lean production system is the western jargon for a system rooted in Toyota
Production System.
A production control system based on many years of continuous
improvements, with the objective: "making the vehicles ordered by
customers in the quickest and most efficient way, in order to deliver the
vehicles as quickly as possible."
(TPS) was established based on two concepts:
6."jidoka" (translated as "automation with a human touch") means that when
a problem occurs, the equipment stops immediately, preventing defective
products from being produced
7. "Just-in-Time," in which each process produces only what is needed by
the next process in a continuous flow.

5. Why study Toyota?
 Total annual profit on March 2003 was $8.23 billion-
larger than combined earnings of GM, Chrysler and Ford.
Profit margin is 8.3 times higher than industry average.
 Toyota shares rose 24% from their 2002 values. Market
capitalization was $105 billion as of 2003 – higher than
total of Big 3.
 In 2003, sold more vehicles than Ford and Chevrolet.
 The company has made profit every year over the last 25
years and has approximately $20-$30 billion in cash on a
consistent basis.

6. JIT Philosophy
 Getting the right quantity of goods at the right
place and the right time
 Concept of inventory reduction
 Founded on eliminating waste : Waste is
anything that does not add value
 A broad JIT view is one that encompasses the
entire organization

7. JIT Philosophy

8. Elements of JIT Manufacturing
 JIT Manufacturing is a philosophy of value-
added manufacturing
 Achieved by
 Inventory reduction - exposes problems
 Kanban & pull production systems
 Small lots & quick setups
 Uniform plant loading
 Flexible resources
 Efficient facility layouts

9. KANABAN
The word Kan means "visual" in Japanese and "ban" means "card". So
Kanban refers to "visual cards".
Let's say one of the components needed to make widgets is a 42" stem-
bolt and it arrives on pallets. There are 100 stem-bolts on a pallet. When
the pallet is empty, the person assembling the widgets takes a card that
was attached to the pallet and sends it to the stem-bolt manufacturing
area. Another pallet of stem-bolts is then manufactured and sent to the
widget assembler.
A new pallet of stem-bolts is not made until a card is received.
This is Kanban, in it's simplest form.

10. Number of Kanbans Required
DT + S
N=
C
N = number of containers
D = demand rate at the withdraw station
T = lead time from supply station
C = container size
S = safety stock
© Wiley 2007

11. Computing the Number of Kanbans: an aspirin manufacturer has
converted to JIT manufacturing using kanban containers. They wish to
determine the number of containers at the bottle filling operation which fills
at a rate of 200 per hour. Each container holds 25 bottles, it takes 30
minutes to receive more bottles, safety stock is 10% of demand during LT.
Solution :
D = 200 bottles per hour
T = 30 minutes = .5 hour
C = 25 bottles per container
S = 0.10(demand)(T) = 0.10(200)(.5) = 10 bottles
DT + S (200)(.5) + 10
N= = = 4.4 kanban containers
C 25

12. Waste Removal
Types of wastes include:
 Overproduction: Producing items for which there
are no orders, which generates such wastes as
overstaffing and storage and transportation costs
because of excess inventory.
 Waiting: Workers having to stand around waiting
for the next processing step, tool, part etc. Or no
work because of stock-outs, lot processing delays,
equipment downtime, and capacity bottlenecks.
 Unnecessary transport: Carrying WIP long
distances, creating inefficient transport, or moving
parts in and out of storage facility.
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13.  Over-processing or incorrect processing:
Taking unneeded steps to process the parts.
Inefficient processing due to poor tools and product
design, causing unnecessary motion and producing
defects.
 Excess inventory:
Excess raw material, WIP or finished goods causing
longer lead times, obsolescence, damaged goods.
 Unnecessary movements: Any wasted motion
employees have to perform during the course of their
work, such as looking for, reaching for, or stacking
parts, tools etc. Walking is a waste.
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14.  Defects: Production of defective parts or
correction. Repair or rework, scrap, replacement
production, and inspection mean wasteful
handling, time and efforts.
 Unused employee creativity: Losing ideas, skills,
improvements, and learning opportunities by not
engaging or listening to your employees.
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15. Eliminating Waste
 First step in removing non-value added steps from a
process is to map the process. Map the value stream
following the actual path taken by the part in the plant.
 Walk the full path yourself (genchi genbutsu).
 One can draw the path on a layout and calculate the
time and distances traveled (spaghetti diagram).
 Traditional cost saving focuses on value-added items
and try to improve those.
 TPS focuses on the entire value stream to eliminate
the non-value adding items.
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16. Role of Inventory Reduction
 Inventory hides problems

17. 5S Principles
• Seiri => means Organization :
separate things that are necessary from those that are not keeping the
number of unnecessary items as low as possible, at a convenient location.
• Seiton => means Neatness:
how quickly one can get the things needed and how quickly one can put
these things away.
• Seiso => means Cleanliness:
which is the concern of everyone in the organization.
• Seiketsu => means Standardization :
continually and repeatedly maintaining one’s organization, its neatness and
cleanliness.
• Shitsuke => means Discipline : instilling the ability to do things the ways
they are supposed to be done -> creates a workplace with good habits.