The problems are shifting down from the assembly line to the clinic; Toyota’s philosophy is to deal with the problem where it was found, using their Five Why’s approach. Most of the seat problems, however, are material flaws or missing parts, which cannot be corrected online because no replacement is immediately available. TMM’s workers occasionally install a seat-bolt at the wrong angle, but this problem is easily fixed within 30 seconds. This only accounted for approximately 11% of all seat problems between April 14 and April 30, 1992 according to the Group Leader’s Seat Defect Data, so KFS is responsible for the remaining problems. The two most significant problems are material flaws and missing parts, which account for almost 60% of all defects. It is clear that the problem should first be analyzed on the supplier side. KFS has been a very reliable supplier to date, so it can be assumed that the problems we are facing are not due to incompetence. From the case information, it is evident that the problem began in March 1992 when Toyota began increasing the seat varieties from twelve to about thirty-three. The problems will further intensify in May when more varieties are introduced with plans to reach more than fifty. We are predicting that this trend will exacerbate the problems TMM is experiencing, especially since KFS is their only seat supplier and has exhibited vulnerability to style proliferation. It seems that the ten-day change over and the ten weeks to ramp up production that TMM allowed KFS was sufficient for KFS to efficiently adapt. It appears KFS employees are not
sufficiently trained in JIT to allow them to accommodate the level of modifications introduced with the wagon. This will result in even more defects in the near term. The $50,000 investment will resolve TMM’s problem with the Plastic hook and may justify the expense. Currently, the hook breaks about once per shift. Assuming two shifts per day and a five-day workweek, there will be approximately 500 breaks per year. Further assuming an internal rate of return of 15%, each replacement would have to exceed $15 to justify avoiding the $50,000. Statistics represent that this occurrence has significantly declined, most likely due to learning curve benefits. Furthermore, no problems have been reported in Japan where they have used the same design. Therefore, we do not recommend investing the $50,000 at this time. TMM could also change the seat supplier or get an additional supplier. Toyota generally prefers to resolve issues with its suppliers rather than just replacing them. Additionally, it would be challenging to find a supplier that is geographically closer than KFS.
- Fall '17