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Mass Production – Too Many Defects – Too Much Inventory

Mass Production too many Defects

Prior to and up to 1950, the total production volume of the Toyota Motor Company was 2685 automobiles.  The most efficient automobile factory in the world, operated by Ford, produced 7000 in a single day. This led Eiji Toyoda, who studied every square inch of that Ford plant, to conclude with Taiichi Ohno, that mass production did not work – too much waste and defects, in Japan.

Japan’s situation in the world had changed. The Japanese automobile market was small.  Japan faced an empowered workforce.  The war depleted Japanese business capital and foreign exchange.  This is the environment that Toyota engineers found themselves in.

You maximize production in Mass Production by never shutting off the assembly line. This leads to two possible outcomes with respect to quality: 1) defective parts are pulled aside to avoid contaminating the population or 2) defects are overlooked. Defects become buried in the product and are difficult to discover later on in the process.

Toyota’s engineers saw something else in this situation also. They saw that defects represented a waste that they could not afford. Mass Production did not work – too much waste and defects in Japan at that time.

Toyota’s Production System is also famous for innovation. Taiichi Ohno discovered that it is less expensive to produce small batches than large lots. This is based on two phenomena. 1) Small batches result in much less inventory and, 2) If you run off a small number of parts to assemble into your final product, defects show up right away.

Ford

Fords manufacturing requirements were – yield and quality. The yield requirement means that falling below production yields is not acceptable. Workers pass on defects because they believe they will be fixed later in quality areas.  The assembly line just passes the defects downstream. The automobile going down the assembly line with a misaligned part was the correct decision because it did not stop the assembly line or impact the yield. This led to Ford not aggressively chasing down the source of defects. Toyota determined that Mass Production led to too many defects.

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