The Role of Technology, Skill and Flexibility in Toyota Production System

This paper analyzes distinctive features of technology, skill and 'flexibility' in Toyota Production system, and tries to conceptualize 'flexibility' in industrial production. This analysis focuses on the body shop of Toyota Motor Corporation; the main reason is, though welding process has been highly automated, flexibility of labor still plays a key role for QCD (Quality, Cost, Delivery) in the shop. The welding process of Toyota had been highly automated until 1980's, with the intention of seeking the economies of scale. Since 1990's, however, further automation has been refrained in Toyota, mainly because of maturity of the market, which prompts manufacturers to seek the economies of scope; they should diversify and improve their products and to change quantities of the products drastically in short term. In other words, they should produce various products with shortened product lifecycle in order to get any rent. But this tends to cause excessive investment especially in automated welding machines and various jigs. This encourages manufacturers to rely on flexibility of labor, whereby they can change fixed cost of automated production into variable cost of flexible production. Since late 1990's, Toyota has developed GBL (Global new Body Line) to deal with various quantities of production in all domestic and foreign plants. GBL is the welding system that makes it possible to fix pressed steel parts for all sorts of products only with inner jigs (i.e. without outer jigs). By introducing this system, many workers can take part in welding process with portable spot welding machines. In order to weld various quantities of product with lower fixed cost, GBL involves flexibility of labor, on one hand. On the other, however, to effectively function such system, the company needs well-trained skilled workers. In this sense, Toyota's education and training system, which has fostered skilled intellectual workers with firm-specific skills, is an integral part of GBL. Based on this observation, the author suggests the three types of flexibility in industrial production system: they are, 'technology-oriented flexibility,' 'skill-oriented flexibility,' and 'market-oriented integral flexibility.' In Toyota production system, they shift emphasis from 'technology-oriented flexibility' to 'market-oriented integral flexibility' after achieving a certain level of automation of the process. In the matured market, automobile manufacturers ever more need to improve this type of flexibility for maintaining market competitive edges; In order to achieve this, they still need to educate and train workers with firm-specific skills based on long-term employment system.