Following on from last month’s article all about the power of JIT manufacturing, let’s take look now at TAIZO’s four key initiatives (incorporated into their fictitious ‘OPERATION TRANSFORM’). Enjoy!
NOTE: For the purposes of this article (and June’s post), I have created an imaginary car company called TAIZO MOTORS. California-based TAIZO produces a range of six car models, and is typical of many companies seeking to compete with Toyota.
TAIZO’s OPERATION TRANSFORM – FOUR INITIATIVES
INITIATIVE 1: (prior to relocating)
- TAIZO will carry out further in-depth research into The Toyota Lean Production System. Toyota – the industry bench-markers
- TAIZO will identify and seek to learn from other bench-markers: leading companies outside of the car manufacturing industry
INITIATIVE 2: (also prior to relocating)
TAIZO will research/survey the following, to find out how they can offer an improved service:
- Current dealers
- TAIZO employees at every level
- Current TAIZO car owners
- Non-TAIZO customers – car buyers in general
INITIATIVE 3: (also prior to relocating)
Sales forecasting carried out, taking into account that from their new location TAIZO could now more easily reach the Canadian car-buying market.
INITIATIVE 4: (after relocation and adoption of the new JIT system)
Aim: To internally and externally measure products, services and practices against those of their toughest competitors, continually.
Once in Detroit, TAIZO’s operational processes will have changed in the following ways:
- INVENTORY CONTROL – At their new premises, TAIZO will have no warehouse or stock control personnel, as their adoption of the JIT system means that they will no longer carry buffer stock, or indeed warehoused stock of any kind. Instead, cars will be produced exactly as they are needed.
Former inventory control department staff, and TAIZO’s in-house EOQ and obsolescence professionals, will now be redeployed into other areas of the company.
- PROCUREMENT & RE-ORDERING OF COMPONENTS – As part of their Supply Base Management strategy, partly to save money through reducing transaction costs, TAIZO will develop partnerships with one local preferred supplier for each class of components.
Preferred suppliers will be put on long-term sole sourcing agreements, and will be treated as partners of TAIZO. Partly in return, TAIZO requests that delivered components are ‘installation ready’ upon arrival, so that TAIZO workers do not have to do anything but fit them with ease upon receipt.
TAIZO’s physical distribution department will see from an EDI system what stock dealers currently hold, and how many cars will be required to ‘top up’ stock in accordance with pre-signed stock-level holding agreements. Components can then be automatically re-ordered from partners via a linked computer system to ensure that all stock replenishments are transported to dealers without time delays. Scheduling with suppliers will be open not closed, therefore.
- RECEIVING & INVOICING – Once a components order arrives on an agreed date and time, rather than crosschecking delivery notes/BOMs and invoices and then forwarding the invoice to their Accounts Department, TAIZO will use video camera footage as proof of delivery from their ‘synchronised’ partners. This will trigger an automatic pay system.
However, all payments and details of deliveries will be logged on a computer system for when TAIZO is required by law and in accordance with Statutory Requirement to undergo an annual audit.
- MATERIALS HANDLING – Just as no manual updating of stores records is required, there will be no need for received raw materials to be stored away. Internal movement of received inputs, the work in progress, is only now from specially-designed delivery bays to and then through different production areas.
To minimise waste and avoid double handling, TAIZO will provide partner suppliers with their own reusable wheeled containers-cum-trolleys, for ease and speed of unloading at delivery bays. Components will not need to be decanted into other containers upon arrival.
- WORK IN PROGRESS – Each new TAIZO car will pass through a sequence of manufacturing processing areas at the plant:
- Body framework welding
- Resin moulding
- Assembly (incl. engine, tires, instruments, interior and exterior components, and electrical wiring)
- Quality Control: Rigorous inspection & multi-faceted testing
- MOVEMENT OF FINISHED GOODS – After passing Quality Control, each new car will be packaged (where applicable) and despatched to TAIZO’s Distribution Area ready for arranged collection and transportation by a Third Party Carrier – a partner company who will also be responsible for route scheduling.
- RETURNS – Upon arrival at TAIZO’s plant, the Third Party Carrier can also deliver any faulty cars that have been returned to dealerships from dissatisfied customers.
Finally, TAIZO will have full insurance in place and contingencies.