Strengthening Stamping Capability for Competitiveness in a Global Marketplace

Brian Krinock
Vice President, Production Engineering Toyota Motor Engineering & Manufacturing North America, Inc.

Presentation Agenda
Toyota Global Operations II. Toyota North American Operations III. Stamping Supply Base for Toyota in NA IV. Competitiveness of Global Stamping Operations V. Expectations of a Supplier VI. Internal Methods for Competitiveness VII. Example of Supply Base Improvement VIII. Q&A
I.

Toyotas Global Operations

Region

Mfg. Companies 11 5 8 2 37 1 1

65 manufacturing companies 27 countries and regions 299,394 Toyota employees worldwide

North America Latin America Europe Africa Asia (including Japan) Oceania Middle East

North American Manufactured Vehicles

Venza 2008

RAV 4 2008

Highlander 2009

Prius 2010

12 NA Manufactured models in 2008; 14 by 2010

15 North American Manufacturing plants 5 Design / Research & Development locations

North American Operations

Direct Employment: 43,858 Direct, Supplier and Indirect Employment: 386,300* Direct Investment: $21.8 billion Toyota, Lexus & Scion Dealers: 1,745 2007 Vehicle Production: 1,671,009 2007 Vehicle Sales: 2,922,821

* 2005 CAR Study

State of Toyota
As our Sales continue to grow in North America

1980-1989

1990-1999

2000-2007
2,922,821 Vehicles Sold 2.9% increase from 2006 2 million 1 million

14 11 12 13

$21.8 billion Invested

No. of Plants

our Investment increases

1 2 3 4

10

$ 15 b

$ 10 b 5 7 $5b

In 2010, Toyota will open its 15th NA plant in Blue Springs, Mississippi

43,858 Team Members

our Jobs are increasing

30,000 20,000

5,000

and our Production continues to grow Suppliers are our biggest contributor

1,671,009 NA Produced 2.2 million (2010 capacity) 1.5 million 1 million 500,000
Projected Capacity in 2010

Suppliers in North America

Annual Buy - $30B

Direct Parts & Materials Construction, Machinery & Equipment Logistics R&D

Marketing Advertising Facilities Maintenance Other

Suppliers in North America

More than 500 suppliers in NA 700 locations $30+ billion in annual purchases
9

Toyota Purchasing Principles

Open Door Policy/Fair Competition Mutual Trust/Benefit & Long Term Relationships Contribution to Local Economy

Toyotas Expectations of Suppliers

1. Safety 2. Quality 3. Delivery & Production 4. Cost 5. Technical Capability 6. Be Competitive

Prevent The Seven Mudas

1. Safety
Philosophy:
Safety First

Safety is the starting point for everything Akio Toyoda

Sustainable Growth Cost

Volume Quality Safety

Eiji Toyoda

2. Quality
Philosophy:
Build Quality into Process

Sakichi Toyoda The loom stops if a broken thread is detected

Toyoda G-type automatic loom

Jidoka

3. Delivery & Production

Philosophy:
Toyota Production System (TPS)

Taiichi Ohno "what is needed, when it is needed, and in the amount needed."

Just in Time

4. Cost
Philosophy:
Highest Customer Value at Lowest Cost

Value

Function Cost

5. Technical Capability
Philosophy:
Innovative, Competitive, Technology

Tundra Prius - Hybrid Technology - Tailgate Lift Assist

6. Be Competitive: Prevent The Seven Mudas

A. B. C. D. E. F. G.

Overproduction Excess Inventory Unnecessary Conveyance Overprocessing Waiting Unnecessary Movement Defects

A. Overproduction

B. Excess Inventory

C. Unnecessary Conveyance

T H E

S E V E N

M U D A S

D. Overprocessing

E. Waiting

F. Unnecessary Movement

G. Defects

Result = Reward

Positioning Ourselves to be Competitive

TPS focuses on high quality at low cost Removes Muda from the system Muda = non-value added activity

Toyota Stamping Supplier Supply Base Overview

Toyota Global Stamping Supply Base

EUROPE

JA PA N

N .A M ERICA

A SIA

S.A M ERICA

A USTRA LIA A FRICA

: Toyota Plant : Toyota Affiliate Supplier(s) : Non- Affiliate Supplier(s)

Toyota Stamping Supply Base Map

TMMC-1&2

TMMC-1&2

TMMK NUMMI

TMMK NUMMI TMMI

TABC

TA BC

TMMTX

TMMTX

NA 1990

NA 2000
TMMC-1&2

SIA

TMMWV

TMMK NUMMI TMMI

TA BC

TMMAL

TMMMS

TMMBC

TMMTX

NA Today

How to be a Competitive Stamping Supplier

Material: Usage / Blank Layout Productivity SPM, Die Change Time, Downtime Direct & Indirect Labor Usage & Rate Tooling Cost Minimize Processes/Stations, Specification Logistics Cost Distance, Packaging

Global Competitive Analysis: GSPH

GSPH Performance by Region (Estimate)

5-10% Gap

GSPH JPN Best

EU Best

NA Best

CHN Best

Labor, technology and Process are contributing factors

NA Competitive Analysis: SPM

SPM Global v Local Suppliers: North American Production

~30% Gap

SPM

Global Affiliate Supplier

NA Local Supplier (Avg)

NA Competitive Analysis: Die Change

Die Change Time (Transfer Die in Minutes)

~ 4x longer

NA Local Supplier (Avg)

Global Affiliate Supplier

How does Toyota Remain Competitive?

Toyotas Industry Postion: Harbour data

History of Stamping Hours Per Unit (HPU)

6.3

Average Die Changeover Time (Minutes)

3.71 3.57 2.95 2.61 2.40

51.5
3.29 2.98 2.46 2.35 1.64

37.9

2003

2004

2005

2006

2007

24.9 22.9

25.6 19.6

13.2 8.6

12.7 8.4 7.8 2004 2005 2006 2007

2003

Toyotas Industry Postion: Harbour data

Operating Hours Per Die Change (Die Change Frequency)
10.7

7.5 7.3

7.3

Parts Per Hour

828

5.7 5.6

2.1 1.9 2003 2004 2005 2006

2.2 2.0 1.7 2007

750 736

695 694 668 664 646 636 671 659

2003

2004

2005

2006

2007

Toyota Worldwide Press Operations

North America

Europe

Asia South America

Toyota Motor Corporation (TMC)

In the Beginning, Operations Led from Japan by TMC

Toyota In-House NA Press Expansion

1980s
TABC NUMMI TMMK TMMC

1990s
TABC NUMMI + Exp. TMMK + Exp. TMMC + Exp. TMMI

2000s
TABC NUMMI + Exp. TMMK + Exp. TMMC + Exp. TMMI + Exp. TMMTX

Grow

th & Capa bility

SIA

Incre a

sing

TMMC #2 TMMMS (Future)

Individual Plants

Individual Plants Limited Benchmarking

Connected & Aligned Strong Communication Friendly Competition Share Resources & Best Practices

Toyota Internal Competition

1988
Productivity TMC

Never Give Up

----------------------Large Gap

aising Bar keeps r - - - - - - ---

2008

Gap is Smaller

CONTINUOUS IMPROVEMENT

NAMC

TMC

NAMC

Start-Up

Key Activities

Capability inreasing

Future

Bench Marking * Best Practice Application

Always find ways to re-think and re-invent

Jishuken / Yoketen

* *

Training / Skill Improvement Technology Advancements Innovative Thinking Standardization

Continue to Strengthen Toyota Way Thinking

Toyota Internal Benchmarking & Best Practice = Safety

1. As a group (All NAM) we compare each NAMC to each other as well as TMC

Example
Safety Concern at NAMC triggered activity to bench mark each NAMC to find best practice Each plant investigated their own current activity At the all NAM meeting each NAMC presented their activity Best Practices from each NAMC were combined to make a North American wide standard that would be used at all NAMCs

2. Identify Leader

3. Investigate the lead plant activity and roll out as Best Practice to all other NAMC

New Standard

Utilize each NAMC resources / skill for the benefit of all

New Standard with all NAMC buy-in!

Jishuken Activity / Yokoten

1. Each NAMC sends member(s) to participate in the Jishuken Activity at alternating NAMCs
TMMC TMMI

2. Team focus on issue at the NAMC as a Group

3. Team uses Toyota problem solving methods (TBP) develop countermeasure or suggestions to NAMC. NAMC implements changes and documents results

4. Roll out to all NAMC (Yokoten)

Report

Introduce to all other NAMC (Yokoten)

TEMA

NUMMI

Alternating NAMC Common Problem or Theme

TABC

TMMK

SIA

Results
TMMTX

Safety Quality

10% Up

TMMMS

Yokoten to Other NAMC

Productivity (GSPH)

P A

P P

D C C

P A

TMMC #2

Productivity Etc.

P A

Come together as a TEAM to Solve Common Problem

-T/M Development - Solving Critical Problems

PreA Prod.
D P C A

Before

After

Future Technology & Trends

Die Related
Multiple Part Production (1 Stroke) Double Dies Baby Part Die Design Standards: Interchangeability from Line to Line / Plant to Plant Process Reductions (4 Dies to 3 Dies to 2 Dies) Increased focus on Die Repeatability Increased use of digital development tools (FEA, FEM) and measurement for more accurate initial die build (less modifications after first hit) Material Changes Coatings High Strength Materials Balance Technology & Investment

Equipment Related
Increased Focus on Machine Accuracy (key point of Die Repeatability) Adopt Servo Press technologies with High Speed Automation for increased productivity Increase common equipment and part usage for spare parts reduction and sharing amongst NAMC Reduction in plant size with streamlined layout and less inventory Increased focus on reducing Die Change Time and methods to aid as a method to achieve reduced lot sizes

Take advantage of New Technology to improve productivity, reduce lead times & cost

Supplier Competition
How can you increase your abilities and, at the same time, share your capability with others in the same industry?
Example: Toyota Based Stamping Forum

Supplier Forum: Co-opetition

Competitors

Cooperation (Technical Forum)

Co-opetition

Competition to strengthen each other... But not to reveal trade or product secrets

Toyota

Supplier Forum Example: GSPH/SPM

What Does Competition Do?
Ex: 600 Ton Press Line
Co-opetition

Changes your Environment & Challenges

SPM

SPM

Share

Internal Benchmark Know How - Why is there a Gap in SPM? - What are others doing? - What are your limitations?

Through Competition - See Others - Change Ceiling - All Benefit - Keep for Knowledge, but set more

Supplier Forum Example: Die Change Time

1200 Ton Transfer Line
Supplier A, B Great Reduction 17 Minutes 12 Break Through By Co-opetition Supplier A,B,C,D New Targets

7 4 A B Suppliers C D

Supplier Example:

Metalsa: Fagor Improvement Activity

Rear Side Rail Full Frame

Metalsa: Initial Condition

Fagor 3600 GSPM

Struggle to Meet Targets

Fagor 3600 Changeover

Metalsa: Kaizen Events

20%

Minutes

10%

Metalsa: Quick Fix (Small Kaizens)

6 C/O p/Week

24 C/O p/Week

Metalsa: Improvements on Lot Size

Metalsa: KPIs

Summary
9 Crisis is good, Dont create comfort zone. 9 Kaizen without human factor, is not success. 9 Seeing is believing.
Crisis (Pressure)
* Create * It Happens

Human Factor
* Team consistent * TM involvement on improvements * Friendly competition between shifts

Ownership
* Different KPIs * Clarify Group leader roles

Future Challenges: Raw Material Increases

Steel Spot Market- ($/Metric Ton)
$1,500 $1,300 $1,100
$160 $140 $120 $100 $80 $60

Crude Oil - ($/Barrel)

$/M T

$900 $700 $500 $300 $100

anJ 06 FebMa r 06 -

HR CR GA

$40 $20 $0
u J n0 -8

2006

Apr 06 -

Ma y 06 -

J un06

u J l06

Aug-

Se p -

Oc t 06 -

No v -

De c -

J an0 -7

2007

Feb-

Ma r 07 -

Ap r 07 -

Ma y 07 -

unJ 07

J ul07

Au g -

Sep-

Oc t 07 -

No v -

2008

De c -

J an08

Feb-

Ma r 08 -

Ap r 08 -

Ma y 08 -

2006

2007

2008

Challenge for all stamping suppliers: Make every effort to offset cost of raw materials Many small items add up to large change Challenge: Find your own unique ways to remain competitive

Thank You ICOSPA !