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Great events 2. fall, 1973 – oil crisis

Great events 2. fall, 1973 – oil crisis

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Catch up with america

• Based on 2 pillars supported TPS:

• Just-in-time (JIT): in perfect JIT model, the inventory is zero 

dramatically cut cost.

• Autonomation or automation with a human touch: give the

machine intelligence – it changes the meaning of management:

an operator is not needed while the machine is working normally.

Only when the machine stops because of an abnormal situation

does it get human attention. As the result, one worker can attend

several machines.

•  synergy effect of 2 pillars to make a better individual skill and


• Kanban (card) method: to control the amount of production

based on the idea of the communication between many

processes. Kanban conveys information about picking up

or receiving the production order.

• From the time the industry acquired mass production of

American system until 1973 oil crisis, Japan had the

illusion a system fit their needs.

Cost reduction is the goal

• Before: Selling price = profit + actual cost. And consumer

responsible for every cost.

• Now: Cost reduction must be the goal to survive.

• Establishing a production flow:

Then: one operator, one machine

Now: one operator many machines in different processes

• Production leveling: need a big warehouse to store part or

materials (however, they did foresee the big problem if the

production increased); dealing with the suppliers’ cooperation

in terms of manpower, material, and money

• A successful result in TPS lies in history and culture: in

American system, a lathe operator is always a lathe operator

and welder is a welder to the end. But in Japanese system, an

operator has a broad spectrum of skills.

• There is no waste in business more terrible than

overproduction. But it happened because of farming society

before. This type of hoarding is no longer practical in industry

society. --> The need of revolution in Consciousness

Ohno’s principles

seven wastes

• Waste (Muda)?

• 1. Delay, waiting or time spent in a queue with no

value being added

2. Producing more than you need

3. Over processing or undertaking non-value

added activity

4. Transportation

5. Unnecessary movement or motion

6. Inventory

7. Reduction of Defects


• https://en.wikipedia.org/wiki/Toyota

• https://en.wikipedia.org/wiki/Taiichi_Ohno

• http://www.bobemiliani.com/goodies/emiliani_eos_slides.


• http://www.toyotaglobal.com/company/history_of_toyota/75years/data/aut


• (*) https://en.wikipedia.org/wiki/Satoshi_Nakamoto

• Taiichi Ohno, 1978, Toyota Production System Beyond

Large-Scale Production


• Q1: What are the two pillars of TPS?

• Answer:

• Two pillars are:

• Just-in-time

• Autonomation, or automation with a human touch.


• Q2: How are automation and

autonomation different?

• Answer:

• The automation is the machine operates by

itself once the switch is turned on. However,

autonomation is an automation with a human

touch. According to the text, human intelligence

is given to the machines.


• Q3: Do you know someone came from

different business field and made a big


• Answer:

• As far as I know, Bitcoin is a virtual currency that

has caused a lot of controversy recently. But no one

can deny that it is a great innovation in the 4.0 era,

and bitcoin will effect to many industries, especially

in banking and finance. Furthermore, the father of

the coin is unknown and named as Satoshi

Nakamoto (*) is thought to be an expert in

scientific computer.


• Q4: What does it mean: making a flow in a

business process

• Answer:

• Making a flow in a business process (or production

flow) means a range of various machines is

managed in the sequence of machining

processes, therefore many parts of a product

would be assembled in a flow from the earlier

processes toward the later one, forming the unit

parts then the body of products, and then a

operator can take care for many machines.


• Q5: What is your opinion about what Mr.Ohno said:

“Need cannot be found if you just try to wait for

and see it. In order to find Need, you should go

into such a troublesome situation and try to see

the source of complexity…”

• Answer:

• In my opinion, what Mr. Ohno said means if you are in need of

something, you must be experienced or suffered from the real

situtation, then you’ll have motivation to improve or change it

becomes more efficient, more convinience or higher performance.

This motivation is from your internal need by enthusiasm or

under pressure. And I totally agree with such kind of thought.

Thank you

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Great events 2. fall, 1973 – oil crisis

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