TRAVERSE CITY, Mich. - Ray Tanguay wants to build Toyota Camry Solaras only five days after they are ordered from dealers.
To accomplish this tall order, Toyota had to overhaul its parts procurement program, which had been geared to a 30-day lead time.
Toyota Motor Corp. is using its Cambridge, Ontario, plant to test the system, which it wants to introduce worldwide. Starting in September, the plant will build vehicles on five days' notice from Toyota dealers, said Tanguay, vice president of Toyota Motor Manufacturing Canada.
The 'logistics kaizen,' or continuous improvement, is intended to make sure the right colors and combinations of parts arrive at the plant exactly when they are needed. Toyota thus can save money on logistics and become more responsive to the market, said Tanguay.
A five-day production lead time is a difficult task in North America, where factories and suppliers are spread across the continent.
'Japan has fewer problems with logistics because the suppliers are located around the plant,' Tanguay said. 'In North America, you have longer distances, longer lead times and higher shipping costs.'
The new system assigns each supplier to a circuit resembling a postal route. Trucks travel from supplier to supplier exchanging empty containers for parts, then take the parts to a regional 'cross-dock' where they are sorted into small lots.
The lots are matched to the production schedule, which is revised every 15 days, and loaded on trucks. Each truck heading to the plant carries a similar assortment of parts, but each shipment is sequenced exactly to the planned production. The plant receives 2,400 parts orders per day from 300 just-in-time suppliers.
The system cuts costs. The company has reduced its parts inventory to a few hours. At the end of the model year, leftover parts now cost 50 cents per vehicle, a sharp decline in the company's parts surplus.
Toyota plants in California, England, France and Japan will adopt the system later, while in September Toyota dealers can start ordering vehicles using the five-day schedule.
'We built the foundation from the manufacturing side,' said Tanguay. 'Now we can go to the sales organization and say, `Here's what we can do for you.''