Assignment 2
Due Wednesday, October 25, 2006
Worth 20% more than the usual assignment
This is it. The huge assignment that propels this course. Your group should be able to
answer every question on the exam, but for the homework, I'm requiring your
group to submit one of either A, B, C, or D. Your team must then proceed
to answer the case questions (part II).
The following three sets of readings give different angles on TPS. Durward Sobek lived in Japan and did his doctoral dissertation on Toyota. Stephen Spears and Kent Bowen headed a multi-year investigation into Toyota Japan. Paul Adler takes a behavioral science approach to examining TPS.
Part A. Decoding the DNA of the Toyota Production System
Steven Spears and Kent Bowen present their distillation of the Toyota system across the globe. It's quite the decent overview.
Required Reading for Part A
1. Decoding the DNA of the Toyota Production System
Optional Reading for Part A
1. Another Look at How Toyota Integrates Product Development - You can view this paper as being complementary to the required reading. It's written by Sobek and Jeff Liker (a frequent co-author of Paul Collins). It's also useful reading if you're trying to answer the question regarding: "Show how Ford leverages automation while Toyota leverages information."
Homework Questions for Part A
1. How has Toyota managed to overcome the paradox between continuous improvement and standardization? What is the scientific method? What is the role of the scientific method at Toyota? Which rule or practice appear to make the most sense for your workplace? You may modify it if you wish.
2. What is different about Toyota's application of lean thinking vs. other companies? Some people say that Toyota doesn't really practice lean thinking. They certainly don't appear to optimize many individual parts of the system. For example, they don't pool the inventory. It almost sounds like they are sacrificing some optimization to ensure the consistent implementation of their managerial system. Do you agree with this? Do you see any other practices that appear counter-intuitive?
3. How has the Asian Mattress factory been able to overcome the tradeoffs between product range, inventory reduction, and productivity? Can this any of this be applied to your work setting?
4. Suppose we’re designing for a service (or even software) operation. Remember, we can throw this away or refine it. Some people say that we should insert the simplest process that will work. Remember the operative term: will work. (If you are interested in software, you can think of the simplest algorithm that will work within a module). Simplest does not equal most efficient. Simplest may mean what is easiest to implement. Why might this be a valid way to design an operation? Argue this in view of the readings and class discussions.
Part B. The Second Toyota Paradox
Although this sounds really academic, this is probably the one part that gives you grist for different types of operations. Durward Sobek deserves an award for framing this concept into easy language. It pulls together many of Toyota's notions regarding supplier management within a single phrase. He's bright and it's a crime that he almost didn't get into academia, let alone a major university.
Required Reading for Part B
Optional Readings for Part B
1. A Set-based Model of Design - This is the easier reader's digest version of this concept. It's a bit surprising that such is found in the Mechanical Engineering journal.
2. Toyota's Principles of Set-Based Concurrent Engineering (file has corruption problems. I'll hopefully fix tonight) - This is the updated article, written after Sobek forced himself to learn Japanese and then spend 6 months in Japan to confirm his analyses. It was written in response to the shock that some expressed although if you look at some of the other articles, Sobek's findings are consistent with them.
3. Feel free to check out NUMMI's and TMM's statements of supplier relations.
Homework Questions for Part B
1. Can you imagine trying to talk with your supplier in terms of set-based solutions? How does that change the role of your supplier? How is Toyota like Dell? Recall the statements that I once made in class, that Toyota America has rarely disqualified a supplier. What's going on? This seems hardly rational, or does it?
2. Suppose your group is outsourcing a part of the company operations. Choose one of following situations and embed your answer within the larger context of the set-based communication.
a) We currently have a less than stellar record with outsourcing software, or outsourcing IT. We end up receiving solutions that don't solve the user's problem. Suppose you are in a software group that has decided to outsource the development of an important application for your company. Or perhaps, you're outsourcing a part of your company's IT. The outsourcing group may or may not be nearby. In the usual set-up, we usually transmit just our functional and perhaps our design requirements. What else might we transmit? Consider the following elements: better functional requirements; user processes; learned wisdom (from your IT group about the users); and communication. Which of these should we also transmit to the outsourcing group? What are the risks? What characteristics would you want in your supplier (outsourcer)? How might you qualify them? According to Sobek, how should this (hopefully) modify the communications between your team and the software or IT supplier?
b) Suppose you are the proud owner of a successful chain across San Diego: Mickey D’s Finest Restaurants. For a number of reasons, you’ve decided to finally outsource kitchen and customer waste management and restaurant sanitation. You aren’t going after the low-cost approach because although your food is insanely cheap, your greasy food joints are supposed to be clean. California also requires that you post in your window, the letter grade from the Health Inspector, and so this is a serious matter for your business. What type of supplier do you want? Do you want a supplier that only wants to offer cleaning packages? Or do you want a supplier who can do something else? Are there any risks to making a partner out of the sanitation engineering company? What are these risks?
c) Suppose your company has decided to outsource its call center. Apply the principles from the reading to choosing, qualifying, and communicating with the supplier. I think you get the gist from the prior two situations.
3. Here’s the full accusation. Takahiro Fujimoto claims that Ford tries to advance its operations through adding automation while Toyota tries to leverage increased information flow. What evidence do you have for both? Some of the Toyota production methods appear ridiculously low-tech. (Hint: Toyota does not equate better information flow with increased speed which could be achieved through technology) Others Toyota techniques, like set-based communication are sublime. What does this say about using technology to improve operations? What other factors deserve precedence in your workplace?
Discussion Question (Not to be turned in)
1. Optional question after reading about Dell in another week. Recall notions on the relation between product design and operational efficiency. How might this apply to service or software development? We’re not arguing that it applies to every product or service, but there's some intriguing possibilities. For example, suppose you have to build some defect-free operations. How might you sequence the following: design, make or build (in some service operations, design and build are essentially the same), test case construction, testing, approval? Fill in the blanks and explain your reasoning. Is this counter-intuitive for your industry?
Part C. Time and Motion Regained
More than the other sections, Part C deals with the management issues involved in trying to change operations. In this situation, Toyota used a modified form of Taylor Scientific Management at a failing plant to restructure its operations. I can think of few things that would be more drop dead boring. Paul Adler writes that the employees still consider assembly line work a "lousy job", but even under this type of operation, most are taking pride in what they do.
"Paul Adler, a professor at USC's Business School, spent more than 2 years studying the New United Motor Manufacturing Inc. (NUMMI). NUMMI is the car factory in Fremont, California, jointly owned by General Motors (GM) and Toyota. He attributes NUMMI's phenomenal success to the widespread application of Frederick Winslow Taylor's scientific management, but with a crucial difference. GM wanted to learn about Toyota Production methods and Toyota wanted to ease trade frictions while finding if it could adapt its production methods to the United States. It could not have chosen a rougher test. The GM factory at Fremont had been one of the company's worst since it opened in 1963. Productivity and quality were abysmal, drug and alcohol abuse were rampant, and absenteeism was high. The local branch of the United Auto Workers (UAW) became one of the most militant in the country, and the Fremont factory was closed four times by wild-cat strikes. In 1982 GM shut it. Two years later, Toyota and GM started a joint venture out of this plant. By the end of 1986, two years after NUMMI restarted the Fremont assembly line, its productivity was higher than any other GM factory and more than twice as high as the level achieved at the same factory under GM management." (modified from The Economist, Jan 23, 1993). The quality metrics eventually exceeded those from any other GM plant and surprised not only GM but also Toyota.
Required Reading for Part C
Optional Readings for Part C
1. Designed for Learning: A Tale of Two Auto Plants - Adler and his co-author compare the practices of two auto plants that embody two different ways of organizing the labor-intensive production of auto assembly. NUMMI vs. Uddevalla (a Scandinavian Volvo plant that uses a "human centered model").
2. Rebuttal to above Article - Written by a Swedish Professor who is the author of "Alternatives to Lean Production". Adler's Rejoinder to the rebuttal is also included - It's brief, but a fight always makes the points clear, doesn't it?
Homework Questions for Part C
1. Contrast conventional Taylorism and its application at NUMMI? How tough a sell is standardization? Is the NUMMI method the best way to sell it? How does standardization fit with market need? Remember Alan's contention that product design determined operational efficacy. How does an automobile dovetail with the modified Taylorism?
2. Why do you suppose the change at Fremont was so successful? What accounts for NUMMI's success? Evaluate the approach to the management of operations. What strengths and weaknesses do you find? What points of vulnerability should concern management? What recommendations would you make to management to insure its continued success?
3. How can a hierarchical organization learn? What role did/does the union play at NUMMI? What is the role of management at NUMMI? What recommendations would you make to UAW Local 2244 to assure the future well-being of its members?
4. What similarities do you see between this article and the information in Decoding the DNA of the Toyota Production System (featured in Part B)? Is the NUMMI plant really that different from what's seen in the "Decoding the DNA" article? What's modified?
Strictly Optional
1. Why Toyota and other are choosing the South to build these plants - Interesting article from the Fed Reserve Bank of Atlanta concerning why Toyota and other automakers are choosing the South to build their new plants...and as these companies like Nissan and Toyota move to the South, so do the suppliers.
2. Why JIT is vulnerable to external delays and conditions. CA power problems idle NUMMI Plant – How might you be lean and robust to external delays? Is it worth having a JIT supply chain? When?
Supplier Strategies
This is optional although some of these readings will come up in a later assignment. It's for those of you who are fascinated with the subject. In the first two articles, they discuss supplier segmentation: preferred vs. non-preferred, etc. The last article deals with parts criticality in the auto industry. If your product involves several parts, you can't make every part available all the time to everyone. It's too expensive. The last discusses assigning a criticality score to each part, and from there, use it to guide provisioning strategy.
1. Strategic Supplier Segmentation: The Next Best Practice in Supplier Management
2. Portfolios of Buyer Supplier Relationships
3. Saturn's Supply Chain Innovation
Part D. American Lean
Depending upon your background and prior coursework, and just even who was your particular instructor, you may be a relative newbie to the so-called Japanese and Toyota operations concepts. Don't feel bad. Operations is such a huge topic. Nor may you be in settings which breathes this. If, however, you're already familiar with Toyota production concepts and Lean concepts, I would advise against doing Part D. I'll discuss EOQ in class and then create a handout for it.
Required Reading for Part
If you're interested in TONS of free goodies on lean thinking, go and register yourself at http://www.lean.org
It's the only way you'll get access to these articles.
Lean Consumption and other lean readings - Register, and go to this page and grab the Harvard Business Review article that presents Jim Womack's ideas on Lean Consumption (his new book). Only a limited number of downloads are allowed and so you might want to grab it before it runs out. Womack has been moving lean towards improving service operations.
As for the other readings, you can start from the bottom of the article and work upwards. For some reason, the authors put the topics in reverse order, I suppose they were copying chronology by stacking the more recent article on top of the older one. This gives you the bare essentials of lean in a brief reading. It's a bit technical at times, but if you want something more narrative (and longer), I have tons on my bookshelf. You now have to register (darn it!) but it's free and free is a good word.You can also grab other articles on lean Consumption.
Homework Questions
1. Now that you've read through these articles, what metrics do you think are crucial for measuring the Toyota Production System. Is it different from how you would have measured it under a conventional system?
2. How does Womack's discussion of Lean differ from your impressions gleaned from your prior readings on the Toyota Production System?
3. Consider this conundrum: Japanese companies employ practices that seem to defy math and conventional logic. For example, Toyota: breaks its lots far below “minimum economic order size; uses each worker, rather than professional inspectors, to inspect the previous worker’s results; allows any worker to stop the line and has automatic line stops; and encourages workers to redesign their own work rather than using industrial engineers to break the work. (almost verbatim from “The Second Toyota Paradox”, HBR, Spring 1995). Observers look at individual parts of the Toyota production system and find it "rough" and crude. Toyota, nevertheless, has higher than average efficiencies. What do you suppose is going on to create these efficiencies? You may use material from your other chosen Part (B, C, or D..or even the Case) to assist you with the answer.
If you've completed Part I, then you will feel this is relatively easy. The case focuses on a specific problem facing the manager of assembly - a challenging problem of many facets. You are thus engaged in an exercise of finding the root cause. It also highlights the distinction between technical and managerial problem solving, thereby defining the role of operations managers.
In this case, Doug Friesen, manager of assembly, at the TMM plant is concerned about problems with seat installation and wonders how best to resolve them. With sales approaching plant capacity, it is crucial that Friesen chooses the best path in light of the Toyota Production System and the realities of the plant organization.
Case Homework Questions
1. As Doug Friesen, what would you do to address the seat problem? Where would you focus your attention and solution efforts? What options exist? What would you recommend? Explain.
2. Where does the current routine for handing defective seats deviate from the Toyota Production System Principles?
3. What is the real problem facing Doug Friesen? What does this tell you about the real role of operations managers?