All entries for Thursday 01 January 2015

January 01, 2015

The history of Toyota production system

Toyota Production System is an apporach, which was founded by Toyota. TPS was developed in order to help Toyota to survive in the intense compettion in the 1960s, when Toyota was the new entrant in the automotive market. In addition, at that time, most of automotive companies used mass production approch, which was founded by Henry Ford to reduce the cost. Mass production approach has an aim to reduce the cost by standardized the process and using economy of scale to reduce the cost, as a result, many automotive companies took over their supplier to make the vertical integration to have the lowest cost in the strategic product to have an competitive edge. However, to apply mass production, the company has to spend a number of investing budget on inventory, work-in-process, low utilized machine,etc. Consequently, it seems to be clear that the small company could not afford on this approach, as a result, Toyota was forced to find another apporach to reduce the cost because Toyota could not replicate the mass production strategy of western company, for the reason that the company could not afford for a huge number of investing budget and if Toyota replicate the western approach, the company might not perform as well as the western company, as a result the management team in Toyota founded another approach to reduce the cost from different method from their competitors by reducing non-added value activities to increase efficiency and to satisfy the customer. As a result, this approach has become an important approach for Toyota to compete in the market with their competitor and this approach could help Toyota to be the largest company in automotive industry.

Mass production