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Business Process Reengineering
Transcript of Business Process Reengineering
Toyota Motor Corporation is a Japanese automotive manufacturer headquartered in Toyota, Aichi, Japan. The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's company Toyota Industries to create automobiles.
Toyota Industries was founded in 1926 as Toyoda Automatic Loom Works, Ltd. by Sakichi Toyoda, the inventor of a series of manual and machine-powered looms.
Kiichiro wanted to start manufacturing automobiles expanding business from mere machine making company.
Why Toyota wanted to reengineer its business processes ?
Toyota automobiles are termed as inefficient and cheap motors. To change the notion, Toyota administration decided to re-engineer its business processes.
Toyota used to send its representatives and employees to US to learn about automobile manufacturing from Ford.
But in reality, Toyota did not have the space, resources and many other factors as ford has in US and therefore not practical to implement the same process as in Ford.
How did Idea come up
Toyota received their inspiration for the system, not from the American automotive industry (at that time the world's largest by far), but from visiting a supermarket.
Taiichi Ohno visited the supermarket in his trip to US and found it interesting to find all the goods at one place and rack is filled once the product is bought or emptied from the rack.
He though this could be very useful idea to implement the JIT technique.
Business Process Reengineering
Case study on Toyota Production System
Anil Kumar Jallepalli
What is BPR ?
Reengineering is the fundamental rethinking and radical redesign of business process to achieve dramatic improvements such as cost, quality, service and speed.
BPR advocates that enterprise go back to the basics and reexamine their very roots. It does not believe in small improvements. Rather it aims at total reinvention. (Hammer, 1990)
BPR focuses on processes and not on tasks, jobs or people.
How is BPR implemented
Minimum Inventory. Sub-assembles are produced on demand or order from customer.
Minimum setup cost.
Machines are setup in U-shaped with minimum space occupied and a single person attending multiple machines.
Have all your suppliers near-by and resources delivers to work point or workstation.
Use PULL method in manufacturing, contrary to PUSH method used in Ford.
(Heizer and Render, 2011)
Advantages and Dis-advantages
With minimum or no inventory, inventory storage expenses are reduced or removed.
Lesser the setup time and cost, lesser the lot size.
Less space occupied.
Transportation costs are reduced with all your suppliers near by and takes less time in transportation.
PULL method, refers to making sub-assemble parts on need, instead of manufacturing them much before order. Thus decreasing WIP inventory.
Any worker at work station can stop assembly line, if they find defect.
With minimum inventory, Toyota is very much dependent on suppliers, if they fail to deliver, then there is loss.
Need more accuracy, since there is no additional inventory.
Employees may require to work on multiple machines, their might be chance of a mistake.
Have to find suppliers near to work station and suppliers deliver at workstation, therefore need trustworthy suppliers.
With PULL strategy, need to adjust with demand hike.
Outcome of BPR for Toyota
From an image of non-productive and low quality automobile company to One of the best automobile with best processes and most number of automobiles manufactured in an year.
Toyota displaced GM and became the world's largest automobile maker (Ahrens and Freeman, 2007)
Toyota Production System is implemented at many other manufacturing companies and a concept of Lean Operations is created with reference to TPS to implement similar process in other fields.
Michael Hammer (July 1990). "
Reengineering Work: Don’t Automate, Obliterate"
, Harvard Business Review.
Jay Heizer and Barry Render (2011)
, New Jersey, Pearson publisher.
Frank Ahrens and Sholnn Freeman (2007). Toyota Topples The King, Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2007/04/24/AR2007042400167.html