Automakers in the U.S., as well as Japan, are required by law to keep service parts for vehicles for at least 10 years after they stop making the vehicles. This adds up to having millions of different parts available. Toyota’s goal is to have them available just in time, as its manufacturing philosophy preaches.
Hebron, Kentucky, is home of the newest and biggest Toyota service parts facility in the world. This facility ships parts all over North America to regional distribution centers, which ship them to automotive dealers. Contrary to the tenets of JIT, it is a true warehouse, with 843,000 square feet of space and about 232 hourly and 86 salaried associates working there. In 2002 they shipped an average of 51 truckloads of service parts a day, which constituted 154,000 items per day. Parts are brought in from over 400 suppliers all over the United States and Mexico and most of them are put on the shelf until a Toyota dealer needs them. The Hebron facility sends parts to the nine regional parts distribution centers, which then send them to the Toyota dealers. Being global and modern, the facility uses sophisticated information technology, though the basic Toyota principles are apparent, including visual control.
First, the warehouse is organized into cells called home positions. The home positions have similar-sized parts stored in the same way, e.g., small parts. Teams of associates are dedicated to home positions. Second, a powerful computer system was custom-designed. The volume of each part was meticulously entered into the computer as was its physical location. A batch of a variety of small parts are all packaged into a standard-sized box to be shipped to a particular regional distribution center. A computer algorithm figures out what parts going to a particular location will just fill the box going to that destination, based on the volumes, and develops a parts-picking route that can be completed in 15 minutes. Pickers have a handheld radio frequency-controlled device with a small screen; it tells them what to pick next and they scan each item as they pick it. Third, visual control is used extensively. Throughout the facility, you will see various types of white boards called “process control boards.” These are the nerve centers of the operation. Illustrates a process control board with actual data from the Hebron facility. The data is handwritten with dry-erase markers. This one was for picking parts in a home position to be put into a box for shipment. It captures an enormous amount of information, including the status of the operation every 15 minutes. It is worth describing how it operates to illustrate the power of visual control to pace an operation and monitor progress vs. takt time.
Each morning before the pickers arrive to work, the parts orders for the day come in by computer. The computer sorts them by home position. Then the algorithm described above assigns parts to 15-minute batches, in this case picking routes. The supervisor of the team fills in the process control boards.
The supervisor starts with the data to the right. In this case, he wrote in the number of pieces that would be picked for the day—2838—which the computer determined was 82 15-minute batches to be picked. The total “time window” for picking those parts is 420 minutes in the shift, after breaks are taken out. 420 minutes divided by 82 batches gives a takt time of 5.1 minutes per batch—the rate at which boxes must be filled with parts to satisfy the customers. A 15-minute cycle time per batch divided by the takt time of 5.1 minutes means that 2.9 people will be needed to pick the orders for the day.
To the left the team supervisor notes that three of his four team members will be needed to pick parts for that day, so he finds another assignment that day for John (to department 18/99). He then writes in the planned number and cumulative number of batches to be picked, spread evenly throughout the shift. There are a few light periods during which there will be 11 boxes filled instead of 12 and those will include break periods. At the beginning of each 15-minute part-picking route, the associates will put a small round magnet on the batch they are picking—a green magnet if they are on time or a red magnet if they are running late. In this case, you can see that Jane is right where she should be, since it is 10:18 a.m., while Bill is ahead and Linda is behind. But in this period the load is light—11 boxes—so they are taking breaks and there is some flexibility. Everyone is OK. At a glance the supervisor knows the status of the operation. Moreover, the board helps to enforce a continuous flow of work throughout the day. Associates will immediately know if they are getting behind and put in extra effort or call for help to catch up. If they try to work ahead of the leveled schedule, it will be clear to the supervisor. Heijunka is reinforced daily.
This system at Hebron is quite powerful and is a good example of the ingenuity of Toyota TPS experts who figured out how to create continuous flow in a non-traditional, pick-to-order environment—an environment in which many people would have thrown up their hands and said TPS tools “do not apply here.” Despite the complex computer systems, the key tools that govern daily operations are visual management tools. One of the bigger stories at Hebron is how they are building a culture of associate involvement to improve this world-class system (discussed in Develop Exceptional People and Teams Who Follow Your Company’s Philosophy).
But even before this huge distribution center was built, Toyota’s smaller service parts facilities using these same TPS methods led the industry in productivity and facing fill rates and system fill rates—the key indicators that track and measure such facilities. (The facing fill rate is the percent of time a part ordered is immediately available at the distribution center assigned to that dealer. The system fill rate is the percent of time a part ordered is immediately available somewhere in a Toyota parts distribution center.) For example, from 1992 to 1998 Toyota’s parts distribution center in Cincinnati, Ohio, had the highest level of productivity in the industry: the facing fill rate was 95% and the system fill rate was over 98%. Toyota’s fill rates are routinely among the top three in the industry.