Continuing the Legacy

Manufacturing VP Shiramizu keeps Taichi Ohno’s vision alive.

The following are excerpts of an interview with Kosuke Shiramizu, Toyota executive vice president in charge of manufacturing and quality management. Shiramizu, 64, is a proteg? of the late Taichi Ohno, the Toyota executive credited with inventing “lean production.”

Q: Of Toyota’s roughly 35 worldwide body-welding lines, how many more must be converted to your “global body line” in 2004 and 2005 before you complete the conversion process? Is the conversion process on schedule to be finished in 2005 as previously stated?

A: We are ahead of schedule having installed 35 lines to date. In fact, as we look toward the future, the number has actually increased and now stands at 47.

Q: That means that 12 more are in the pipeline. When will they be installed?

A: We expect our China, Czech Republic and Mexican operations to be completed in 2005 or 2006.

Q: Will there be more after that?

A: Yes. As soon as one line has been completed or converted, a new line will be on the drawing board. So this total will never come down to zero. It’s an endless process.

Q: Two years ago you indicated Toyota’s target for large die production was 1.5 months, down from 3 months at the time, to be achieved in three years’ time or by 2004. Are you on schedule, thus around 2 months?

A: We targeted 1.5 months and so far have achieved 1.7 months. We hope to achieve 1.5 months within this year. This is for large stamping dies and does not include the design and drawing stage, but from the point design has been finalized and frozen to when we start making the dies.

Q: What is the next step; will you try to shorten lead time further?

A: The next step will be to transfer the technology to our diemaking operations outside Japan (mainly to Toyota assembly plants in North America and Europe).

Q: How long will it take you to complete this transfer process — three years?

A: I believe so.

Q: Related to this, are you making progress in prototype production for engines and completed cars?

A: (Over the past few years) we cut the number of engine prototypes in half. We still need several thousand units, however. Our target is to reduce that number to several hundred. Unfortunately, we can’t eliminate prototypes. Otherwise we wouldn’t be able to assure the machining tolerances. Concerning lead time to engineer and manufacture a new engine, we have shortened the period to around 7.5 months, from 15 months before. For completed cars, we only need 6 months, down from 12.

Q: Concerning quality levels, you indicated in an interview two years ago that “in process” defects in die making had been reduced to .003 percent in Japan and 80 defects per die in China; your China target was 8 defects in three years’ time or by 2005. What sort of progress have you made over the past two years?

A: Let me just say that results haven’t gotten worse in Japan or overseas.

Q: Toyota president Cho recently commented that Toyota is facing increased quality problems as the company expands its manufacturing operations overseas and, in fact, Toyota’s score in the 2003 J.D. Power initial quality study showed a noticeable decline compared to the previous year. How serious is this issue?

A: If we review J.D. Power results, all carmakers are getting better. The gap is narrowing. With respect to Mr. Cho’s comments, overseas expansion has caused some problems and delays, but we have taken action to solve these problems (specifically with respect to problems involving the launch of the remodeled Camry at Toyota Motor Manufacturing, Kentucky and the all-new Sienna at Toyota Motor Manufacturing, Indiana).

Q: When will these be resolved?

A: Improving quality is a never-ending struggle. The company that thinks it has beaten the quality problem will eventually decline.

Q: In August, Toyota reorganized the final assembly operation at its Tsutsumi plant by dividing the line into two parts: a staging area for sorting components and building modules and an assembly area now free of line-side parts racks. What are your plans introducing this layout elsewhere?

A: Initially, we will install the new line in Japan, then overseas. To be frank, it will take us longer to introduce it overseas than the global body line because it is not merely a question of installing new machinery and jigs but training people, and training people always takes longer.

Q: In terms of a timetable, when do you expect to introduce the new operation at all overseas plants — in five or six years?

A: Longer.

Q: Why will you introduce it in Japan first?

A: Japan has the greatest need for this kind of operation because in no other country do we produce so many different models on a single line. Second, in no other country do we have such a high rate of model changes. And finally, the Japanese worker population is aging the fastest in the world. These are the specific circumstances of Japan.

Q: In the same vein, does Toyota have a similar concept for improving efficiency on the final assembly line?

A: First, we want to make a line that is suitable for the needs of elderly workers and, secondly, one that can produce a greater number of models while also reducing downtime during model changes. What we came up with (at the Tsutsumi plant) is a line that has no line-side parts racks. Essentially we’ve split the operation into two: actual assembly work and parts supply in a separate staging area off the main line. By employing this concept, we have cut line length in half, improved quality levels and increased the number of models that can be made on a single line to eight.

Q: What is Toyota’s approach regarding placement and development of in-house versus external competencies and specifically with respect to future power supply options such as super-capacitors and hybrid storage devices?

A: We plan to bring components for hybrid vehicles including motors and transaxles in-house and, to the extent possible, outsource lowervalue components such as injection-molded 30 plastic parts. Generally, we want to bring highvalued components and processes in-house.

Q: Then will cost be the primary consideration for future outsourcing?

A: No, more important than cost is hightech versus low-tech.

Q: Switching to modules, Nissan has introduced a modular assembly process at its Oppama and Tochigi plants whereby it brings suppliers into the plant to make modules. Toyota historically has had reservations about modularization due to quality concerns. Have you changed your views in light of Nissan’s experience?

A: More important than modularization is the way we organize the final assembly plant. Outside Japan, suppliers often come into the plant to make modules. This makes economic sense when pay scales differ substantially between carmakers and suppliers. Such is not the case in Japan, however. That said, we will consider modular production at overseas plants if the conditions are right. Our new San Antonio plant, as an example, will have ample floor space and sufficiently low labor costs to permit such an operation. The key point is that manufacturing systems must be country-dependent. In Japan, our suppliers are so close geographically that we almost consider them as part of the assembly plant. In fact, we view them as de facto module makers. So although we rarely use the expression “modular production”, that in fact is what it is.

Q: Another of your Japanese competitors, Honda Motor Co., has put in place a global manufacturing structure that enables it to produce every passenger car in all but one or two plants? Does Toyota have the same concept for factory deployment?

A: We have no plans to produce the same car in every plant. In the case of our Lexus models, we will try to concentrate production in several plants in Japan. But with respect to mass-market cars like the Corolla and Camry, we want to produce them worldwide. It would be a mistake to make the Corolla and Camry only at Takaoka. It would overstretch a single plant to make cars for 15 different countries.

Q: Switching to the subject of “platforms,” some of your competitors have begun using the word “architecture” instead of “platform.” In their definition they include components and systems such as HVAC units, instrument clusters, steering systems, and so forth. What is Toyota’s view?

A: We do not feel the definition of “platform” has changed to include HVAC units, clusters and steering systems. These are not part of our definition of platform which centers on the engine, transmission, suspension, floor and underbody, and fuel tank.

Q: Some Toyota competitors believe that aluminum space frames eventually will become a sort of “platform” on which future powertrains, seats and interior components, and eventually plastic body panels, will be placed. What are your views?

A: I am basically negative about space frames. Aluminum has structural problems, and it is not easy to meet required narrow tolerances with existing joining technology. Thus, I feel that high-tensile steel is a better alternative.

Q: Flexibility to serve changing market demands has become increasingly important. To what extent are Toyota’s plants capable of increasing or decreasing output without significant additional per-unit cost? And isn’t this essentially Taichi Ohno’s concept — to be able to produce vehicles in small lots?

A: If you look at individual model variations in our lineup, each one represents a small lot. Take the Corolla as an example: last year, we produced nearly 500,000 in Japan and 1.1 million worldwide. Among these were scores of variants, each effectively a small lot. I don’t think Toyota makes a car today in which a single model variant exceeds 10,000 units.

Toyota defines variant in terms of body type (sedan, hatchback, station wagon, passenger van, SUV), grade, destination market (North America, Europe and Asia), engine type, transmission, exhaust system and so forth.

In the past, we expanded our global sales by producing cars in large volumes with few variations. The success of that strategy is reflected in our current global sales total of nearly 6 million units and 6.5 million including Daihatsu and Hino. In the current environment, it would be unwise to target (yearly) sales of 100,000, even 50,000 units for a single vehicle type. That would be a huge mistake and is the biggest difference between today’s market and the past.

I am not sure whether Taichi Ohno had a clear vision of the future, but he certainly was right to insist that many variations could be built economically. And today there is a clear need for such a concept. Ohno apparently saw this need decades ago, one reason I feel his legacy lives on.