TOYOTA OPENS STATE-OF-THE-ART PARTS FACILITY
SMALLER IS SMARTER WITH JUST-IN-TIME PARTS
ORDER IN THE (WARE)HOUSE
SUPPLIERS ADOPT TOYOTA PRODUCTION SYSTEM
QUALITY AND EFFICIENCY ARE ALL WRAPPED UP
ALL PARTS OF A RECORD TOYOTA YEAR
ALTONA'S 21ST BIRTHDAY GIFT
TOYOTA OPENS STATE-OF-THE-ART PARTS FACILITY
Toyota has opened Australia's newest and most technically advanced vehicle parts distribution centre adjacent to its state-of-the-art Altona car manufacturing plant.
The $15 million facility was officially opened today by the Premier of Victoria, Mr Steve Bracks, accompanied by Toyota Motor Corporation Director and member of the board, Mr S. Takahashi.
Located in Dohertys Road, Altona North, the facility has direct access to the manufacturing plant to facilitate efficient handling and distribution of parts manufactured in the plant.
Major components produced at Altona include body panels for the locally built Camry and Vienta range plus a variety of cast alloy engine components.
Body panels for Toyota's new large Australian family car, the Avalon, will be added to the Altona-manufactured parts inventory next year.
The new facility completes the integrated Altona manufacturing complex, and its commissioning comes almost exactly 21 years after Altona's first plant, the foundry and engine shop, entered production.
Toyota Australia President, Mr Sam Komori, said the facility consolidated Toyota's commitment to Australia and to all Australian Toyota owners.
"This new parts centre ensures the fastest and most reliable delivery of parts to our customers anywhere in Australia - and indeed the world," he said.
"Through satellite links with our New South Wales parts centre at Woolooware Bay, our computerised parts ordering system ensures that the right part is despatched from the most appropriate source to meet our customer's needs.
"Toyota has sold more than three million vehicles in Australia over almost four decades, and we aim to ensure that every one of those vehicles still in service is well supported.
"Even for locally delivered models more than 35 years old, we can provide regular service parts from stock, and owners of classic Toyotas are frequently amazed at the parts availability."
A key feature of the new plant is its fully integrated handling of body panels produced at the nearby body press shop.
It is the first parts facility in Australia which can package parts direct from an adjacent plant and send them on to customers with a turnaround time typically less than 24 hours.
This rapid turnaround of large components reflects the just-in-time concepts Toyota has championed in manufacturing.
With some panels being packaged and despatched without so much as an overnight stay, the size of the warehouse has been reduced to just two-thirds of that normally required for the volume of parts it handles.
This large reduction in the space requirement reflects the large proportion of storage needed for relatively few large parts such as body panels, door trims and major mechanical components.
Of 60,000 different part numbers stocked at Altona, more than 50,000 are small parts occupying only around 10 percent of the building.
Mr Komori said the parts facility completed the current round of development at Altona, following last year's commissioning of a new emissions testing laboratory at the opposite end of the site.
He said the total investment in buildings and plant exceeded $1 billion over 21 years, and the site still had room to expand to meet the future needs of Toyota Australia's customers both locally and overseas.
SMALLER IS SMARTER WITH JUST-IN-TIME PARTS
Toyota Australia's new Parts Centre is only two-thirds the size of a conventional parts facility because of the efficiencies of just-in-time inventory management.
The facility applies similar concepts to those that have made Toyota a global leader in manufacturing, with the introduction of kanban tracking of components to achieve on-time availability without excess stock-holding.
It operates on a "pull" system rather than a "push" system of supply and demand, with parts delivery into the centre dictated by customer demand rather than production schedules.
As in the plant, kanbans - or tickets attached to each batch of parts - are used to control the timely delivery and re-ordering of components in the same way that they are delivered to the Camry-Vienta production line.
Toyota Australia senior executive vice-president John Conomos said the centre used sophisticated forecasting to ensure suppliers had the right raw materials and components in the pipeline when required.
"This is very much a Toyota approach - making a commitment to our customers' needs and backing it with the systems that will meet those needs." he said.
"We have both the people and the systems to predict parts demand well in advance, and this enables us to meet daily orders with parts which may have begun their production cycle months earlier with raw materials ordering.
"The big breakthrough with this facility is with the integrated scheduling of body panels produced in the adjoining car assembly plant.
"Panels earmarked for the parts centre as service parts are now integrated into the same production schedules that produce OE (original equipment) parts for the plant to build new cars.
"Our press shop now delivers panels for service parts four times a day, exactly when we need them for despatch to our customers."
In common with other parts facilities in the global Toyota network, the Altona facility bases its operations on the seven points of the Toyota Storage Technique.
This technique, like the Toyota Production System used in manufacturing, reflects a systematic approach to maximising efficiency.
A key consideration is to minimise muda - or waste - of effort and space, and this underpins much of the seven-technique system:
- Vertical storage product by product ensures reduced damage to parts, and reduces wasted space with easy picking and binning.
- Storage by product, where high frequency parts have special zoning, reduces wasted space and damage to parts, and increases ease of picking and binning.
-Heavy parts are stored down low to minimise up-and-down movement during picking and binning, and to keep workers in the storage environment safe from heavy parts falling.
- Separate locations for each part number, along with a minimum of digits for matching of labels and locations, reduces searching time.
- Storing within easy reach simplifies picking and binning, including visual confirmation of the correct part at the time of picking and binning.
- Irregularity is controlled as stock can be identified due to a consistent storage environment and the opportunity for thorough visual checking.
- Storage by movement ensures fast-moving parts are placed in easy-to-pick locations - near the aisles, in the mid-section of racks, and close to the operations area to shorten the picking route.
As in the manufacturing plant, the facility embraces the concept of kaizen or continuous improvement.
Employees are encouraged to revise their work procedures and standards to continually improve efficiency, parts quality, and working conditions.
ORDER IN THE (WARE)HOUSE
Toyota Australia has restructured its entire service parts operation to ensure that customer demand governs every stage of parts production and delivery.
General Manager - Customer Service Division, Mr Nigel Tyler, said vehicle parts that may take weeks to deliver after raw materials order were now being changed over to daily ordering as part of Toyota's streamlined parts management systems.
"Over the past year we have refined the system to the point where we can alert suppliers to our future needs well in advance," he said.
"Even suppliers who need to order raw materials months ahead of time can now be ready to manufacture the parts when our customers need them.
"This is the same sort of `pull' system of production that Toyota uses for building cars, with parts being ‘pulled' through the system by demand, rather than being ‘pushed' by supply."
Mr Tyler said there were several steps to achieving daily ordering of service parts.
The first involves long-range forecasting of demand, not only for fast-moving parts but for those with less regular and substantial demand.
"If a part has any movement at all, we can forecast demand," he said.
"Even with something like a rarely damaged body panel or trim item, we can analyse its demand history and determine our likely future requirements.
"Once we have an accurate forecast, we can give our suppliers plenty of advance notice to schedule their procurement and production accordingly.
"Then, for the actual supply of parts, we are able to order according to demand, knowing that the supply pipeline is ready to deliver because of the forecast."
The first suppliers to adopt daily ordering will be those already receiving daily orders to deliver OE (original equipment) components to the Altona assembly plant.
Trialing has begun with Altona's own press shop, which produces panels for both current and previous Australian-built Toyota models.
Mr Tyler said the key to achieving the changes was close collaboration and communication between the various parties in the supply chain.
"We are talking a massive reduction in stock and cost here - moving from monthly orders to daily orders," he said.
"This calls for a great deal of cooperation between our manufacturing people and our external suppliers, with support from our plant's production control people to coordinate orders involving OE suppliers.
"Part of this involves the introduction of the kanban system to bring service parts production into line with OE production."
Mr Tyler said the move to daily ordering meant that some parts were delivered several times a day, such as the panels from the press shop which arrive at the adjacent parts centre routinely four times a day.
"From the customer's point of view, for a slow-moving part which may once have had a lead time of three to six months, that lead time is now potentially reduced to four days or less," he said.
"It's more than just ensuring the right parts are on hand: because the supplier pipeline is more attuned to demand, we can carry less inventory, which saves space and cost. But more importantly, we can improve customer service.
"Initially the kanban system is being introduced for internal parts from the plant, after which it will extend to a few OE suppliers, but eventually we will have full just-in-time control of all 1.3 million individual parts in the service parts supply chain.
"Our new computerised inventory management systems went on line just this week, giving us all the information on every single component registered in the system."
Mr Tyler said the step-by-step implementation of the new parts system was initially focussed on current production models.
"We have begun with current and recent models because they represent the bulk of demand," he said.
"In the longer term, though, all the systems such as kanban control and sophisticated forecasting will extend to cover all those faithful, reliable Toyotas that are still going strong after many years of service."
SUPPLIERS ADOPT TOYOTA PRODUCTION SYSTEM
Toyota's new parts centre epitomises the adoption of the Toyota Production System (TPS) by local component suppliers for the supply of service parts as well as parts used to build new cars.
The recent consolidation of Toyota's parts, accessories and service businesses into one super division has brought a greater emphasis on integrating service parts into the same supply line that feeds the Altona production line.
Toyota Australia's General Manager - Customer Services Division, Mr Nigel Tyler, said some local suppliers were now applying TPS concepts of just-in-time delivery to the service parts as well as those for the plant.
Kanban, quality control (jidoka) and just-in-time delivery - the hallmarks of TPS - are already second nature to Toyota OE suppliers.
Mr Tyler said the application of these concepts to service parts would ensure the highest quality parts and the most timely delivery for Toyota customers.
"OE suppliers account for just under half of our 200 local parts suppliers, with the remainder being split between service parts for previous local models and suppliers of Toyota Genuine Accessories," he said.
"Naturally, our OE suppliers are well versed in meeting the quality and delivery standards required by the Altona assembly plant.
"These standards are now also becoming second nature for some suppliers of service parts and genuine accessories, whether for current or previous Toyotas."
One of the leaders in the just-in-time delivery of service parts is the Altona plant itself, which now delivers freshly pressed body panels to the adjoining parts centre four times a day.
Mr Tyler said the Toyota approach differed from traditional service part production in that its manufacture was scheduled into normal OE production.
"The industry's traditional approach was for suppliers to produce service parts when they could find the time after fulfilling their OE commitments," he said.
"By contrast, Toyota suppliers are adopting a system which integrates service part production into standard production hours - into the normal `nine to five' production.
"That means the parts are subject to exactly the same systems, quality checks and delivery as the parts which have helped earn the Altona Camry its reputation as a top quality Australian-built car."
Beyond the "inside" parts from Altona, a prime example of the new TPS approach in action is MHG, which makes wheel trims and body side moulding for Camry and Vienta at Melton in Melbourne's west.
MHG general manager Mr Steve Hadenich said the adoption of TPS for service parts had transformed his company's output and eliminated the low priority given to non-OE production.
"We relocated from New South Wales to supply the new Camry in 1997, and we struggled to get our service part delivery up to Toyota's targets," he said.
"To be frank, service parts were second priority to meeting the OE requirements, and that showed in a very poor success rate at meeting delivery schedules."
Mr Hadenich said MHG had turned this around in the past year to the point where it consistently achieved 98.7 per cent on-time delivery, if not better.
"But it has not been done by computers or robots, as you might expect. It has all been the result of human effort and commitment by Toyota's people and our own," he said.
"With Toyota's help and encouragement, we have woven service parts into our production so it's as simple as sending a certain number of stillages to the plant and then one to Dohertys Road.
"Quality and on-time delivery are now something to be proud of, and every single employee shares in that pride - people enjoy coming to work here and take pride in telling other people where they work.
"From a supplier's point of view, adopting the Toyota approach leads to a happier workforce, a higher level of productivity, reduced wastage and a better bottom line."
QUALITY AND EFFICIENCY ARE ALL WRAPPED UP
Toyota's new Dohertys Road parts centre is the first Toyota customer service operation in the world to use the kanban system of demand-driven stock control for packaging and service parts.
The new complex uses kanbans to control the flow of new body panels and their packaging in the same way as they are used to control the flow of parts into the adjacent Altona assembly plant.
Toyota Australia senior executive vice-president John Conomos said the in-house packing and kanban stock control enhanced efficiency out of all proportion to the apparent simplicity of the operations involved.
"By moving large body panels in and out of the warehouse within 24 hours, packed and on their way to customers, we have been able to reduce the size of the building to just two-thirds of what it would otherwise need to be," he said.
"Panels arrive at the packing area four times a day from the nearby press shop, and in short order they are packed, palletted and loaded into trucks or containers bound for customers.
"At the same time, kanbans are used to ensure the correct supply of packaging to match the parts.
"The process is the same whether the parts are for a Toyota dealer just down the road or for one of our tens of thousands of customers in the Middle East."
Each stillage carrying a batch of body panels has an identifying ticket or kanban attached at the point of manufacture.
The kanban is returned to the manufacturer (in this case the Altona press shop) once the parts are used, in order to indicate a re-order for the required parts.
Mr Conomos said the new arrangement offered real gains in both quality and efficiency.
He said panels coming into the parts facility were subject to the same stringent quality checks as those sent to the Altona weld shop to be built into new Camrys and Vientas.
"This is a system where panels for the warehouse are part of the same production schedule as for the plant. The only difference is that some turn right when they leave the press shop and some turn left," he said.
"All the quality checks happen automatically, and there is further checking when the panels arrive in the warehouse.
"Panels are then packed in their protective casing before they travel again, so they are protected from the possibility of transit damage.
"This means a greater assurance of quality when they reach the customer."
Mr Conomos said the kanban system would eventually extend to all suppliers of Toyota service parts and accessories.
"It's all to do with providing efficient and timely service to our customers," he said.
"By treating service parts the same way we treat production parts for the plant, we minimise delays and maximise quality while enhancing cost efficiency."
ALL PARTS OF A RECORD TOYOTA YEAR
Toyota's new Altona parts facility builds on an all-time record year in parts sales last year.
Toyota Australia posted a record $409 million sales of parts and accessories in 1998 - up 18.5 per cent over the previous year.
The record performance matched Toyota's record sales year overall, in which it achieved new-vehicle sales leadership for the fifth year in the 1990s.
Sales of Toyota Genuine parts, accessories and air-conditioning eclipsed the 1997 figure of $345 million - itself a record - by $64 million.
The greatly expanded Toyota Genuine Accessories range experienced the most significant sales increase in 1998, up 50 percent over 1997.
Sales of accessories topped $47 million in 1998 compared to $31 million in 1997.
Last year's record figures easily exceeded the targets Toyota Australia set for its National Parts, Accessories and Service Division.
Toyota Australia's General Manager - Customer Services Division, Mr Nigel Tyler, said the record sales figure of $409 million was a direct result of the buoyant new vehicle market and Toyota's sales leadership.
"It was a tremendous result, particularly the record sales of Genuine Accessories," he said.
"With the consolidation of our parts, accessories and service businesses into one super division, improved customer service will provide further sales increases.
"In keeping our parts operations abreast of modern requirements, we are upholding the tradition set by Sir Leslie Thiess when he first brought Toyota LandCruisers into Australia.
"Sir Leslie knew then that fast and certain supply of parts was crucial to people relying on their vehicles, and he set a standard then which we continue to this day."
ALTONA'S 21ST BIRTHDAY GIFT
Toyota's state-of-the-art Altona manufacturing complex celebrates its 21st birthday this year with the addition of a new parts centre on the site's northern boundary.
It is just over 21 years since Toyota Australia produced the first engines from its brand new Altona engine shop to supply cars built at its Port Melbourne assembly plant.
Construction of the engine shop and its adjacent foundry began on the 54 hectare Altona site in 1977, with production commencing one year later.
Set well back from its Grieve Parade frontage, the engine shop incorporated administrative offices to serve the site in its early years.
The first engines were 4K-C four-cylinder units for the 1.3 litre Toyota Corolla of the day.
Exports of Altona-built 5S-FE engines to South Africa to power locally built versions of the Toyota Camry commenced in 1993.
The site was expanded in 1981 with the addition of a press shop to produce body panels for the Port Melbourne built cars.
Altona's next major expansion came in April 1994 with the opening of a large new administration building in front of the engine plant.
By then, construction was almost complete on the massive $420 million integrated manufacturing plant which trebled the size of the manufacturing buildings.
The new plant incorporated a robot-equipped body weld shop, industry-leading water-borne paint shop and assembly shop.
Production began in August 1994 with the launch of the then-new "really roomy" Corolla to replace the model previously built at Toyota's Dandenong plant.
Altona became - and remains - the newest and most technically advanced car manufacturing facility in Australia.
In March 1995 at the official commissioning of the new plant, by Prime Minister Paul Keating, celebrated the introduction of Camry production to Altona and the launch of a major export program.
Construction of the parts facility is one of several subsequent upgrades and additions to the Altona facilities.
Over the Christmas 1997 break and again at Christmas 1998 the plant was upgraded to increase its actual production output to the original design capacity of 100,000 units per year.
In August 1998 a new emissions testing laboratory was added to the south of the main plant, consolidating Altona's state-of-the-art technology with its inclusion of the world's most advanced driver-operated emissions testing dynamometer.
Although the 1995 transfer of Camry production to Altona signalled the end of vehicle assembly at the Port Melbourne plant, this site remains the biggest single supplier of components to Altona.
Port Melbourne supplies painted bumper skins, complete seats and a range of other major components.
The Altona site remains in a state of dynamic development since completion of the parts facility.
Since production of Corolla ceased in July this year, the plant has been undergoing a major refit in readiness to produce Toyota's new large six-cylinder family car, the Avalon, for introduction in mid-2000.
