Toyota Tsusho Chooses SYSPRO for New Steel Processing Plant

Established under the company “TT Steel Centre Australia”, the new operation will supply all of car panel “blanks” in the Toyota Camry car assembly.  It will be the fifth of Toyota Tsusho’s blank supply sites globally; the others being located in Kentucky (USA) , Thailand and Guangzhou & Tianjin (P.R.C.).

The Toyota Australia Camry plant is a substantial manufacturing operation, exporting even more cars to the Middle East and Asia than are produced for its local market in Australia.

Toyota Tsusho will supply flat “blanks” to Toyota Australia which in turn presses these shapes into door, roof, chassis and other car panels.  Currently steel sheet is being purchased from steel mills, the new plant will instead purchase coils directly, allowing the steel mills to focus on steel production rather than downstream processing. Improvements in supply chain efficiency are expected.  Additionally, by outsourcing some of its “blank” pressing, Toyota gains capacity within its own press shop with the elimination of this operation.

The scale of the manufacturing operations is massive.  Toyota Tsusho will source “master coils” from steel mills weighing up to 15 to 25 tonnes each and up to just under two metres wide.  These coils are unrolled then “slit” (cutting lengthways) and “sheared” (cutting across the width).  These cut sheets are pressed into flat “blanks” of curved, trapezoid, die shaped or square pieces of metal and then on-sold to Toyota Australia to make up the Camry cars.

Chris Fissenden, Finance Manager of TT Steel Centre Australia had responsibility for selecting the Enterprise Resource Planning (ERP) system for the new setup. 

“Initially the selection was for a financial-based system, and manufacturing was a secondary thought,” he says.  However his experience with integrated systems indicated to him that more could be achieved.

“We started by looking at the hardware and software side; then ranked these.  We looked at SYSPRO and its real strength that came down to its flexibility in manufacturing and distribution.” 

Crucially, Toyota Australia operates on a Just-In-Time (JIT) and Kanban system – and it must be receiving parts continuously to maintain production.  It is envisaged that Toyota Tsusho’s SYSPRO system will ultimately communicate directly with Toyota Australia’s various systems including its SAP data. 

Kanbans and JIT is the principle Toyota uses to ‘keep working to a steady beat’, says Fissenden.  It eliminates spikes and troughs; and is how they regulate working capital, he explains.  When one Kanban card is “posted” as empty, it triggers the next inventory supply.

“This underpins Toyota’s whole philosophy, which is about eliminating “muda” or waste.  It is premised on continuity or pull at the other end – working to a steady beat,” he says

Toyota Australia currently produce around 460 Camry’s per day. With the discontinuation of the Avalon vehicle in June 2006, coupled with various manufacturing process changes, additional capacity is achieved and now enables production of just over 500 vehicles per day.

“SYSPRO has an e-Kanban capability,” Fissenden says.  The Toyota Tsusho system will operate a number of electronic Kanbans which are replenished by using barcoding to track product movements.

The need for Toyota Tsusho to be a flawless supplier in the automotive industry is clearly apparent. 

“There are 118 parts that need to be supplied to them.  We mirror their production cycle – the assembly line cannot stop,” Fissenden says.  Toyota Australia doesn’t want any risk transferred to them, he notes.

The blanking line alone is a AUD$15m investment involving the set up of a coil feed line with a series of rollers & levellers, a Komatsu press and purpose-built stacker to accumulate the parts into Kanban packs.  When fully operationa,l around 120 different shapes and pieces will be produced at (run rate) 500 pieces per day to match the Camry vehicle build.

With such a sizeable investment, a key challenge is to have the plant operational as quickly as possible and to maintain optimal efficiency.

Implementation of SYSPRO began in December 2004 and the financials modules went live in July 2005.  Construction of the plant buildings was completed by mid 2005 and assembly operations expected to start just several months after that.

“We will hit capacity very quickly and should be at full capacity by mid to late 2006,” says Fissenden.

The advantage of SYSPRO is that it offered a complete package; Toyota Tsusho didn’t need to go to third parties for EDI or the barcoding functionalities, Fissenden says.

The new operations will use SYSPRO's “Engineering Change Control”.  With Toyota making ongoing improvements to its cars, there is a need to mirror these in tandem at the Toyota Tsusho plant, he explains. 

SYSPRO's “Lot Traceability” module will be another important SYSPRO module, he says.  The auto industry demands quality assurance and ISO requirements.  When there is a need to have a product recall, this will require the ability to trace panels back and identify the steel that has come from steel mills. 

Having a proven .NET platform was an important factor in choosing SYSPRO, adds Fissenden.  SYSPRO's e.net connectivity will allow the system to be kept open for communicating with both Toyota Australia and its steel mill suppliers.

“SYSPRO allows us to minimise the customisation needed to communicate with other interfaces – such as with Toyota Australia or our bank. 

“We want to take ownership of supplying the blanks to Toyota Australia.  We can lead the connectivity without the angst of linking with other interfaces.  Additionally, SYSPRO provides the ability for it to report back to its parent company using different charts of accounts.

SYSPRO's implementation (channel) partners have been crucial to the process, particularly with the auto industry focus on quality assurance and product life cycle.  “AR Consulting (Vic) Pty Ltd (ARC), the local implementation partner and their efforts in the outlining of specifications, piloting, and project management gave us a chance to review what’s needed and to get it pretty much right the first time is paramount,” said Chris Fissenden.

“Unfortunately, the stories most often heard are the screw-ups and disasters – ARC’s knowledge of the system and ability to logically work through the various sub-processes in the workshops to date, have been a great comfort. Nobody wants that to happen here,” he added. “The system documentation and change management processes used by ARC the partner, ensures we do not lose our ultimate focus. They bring vast experience where proven solutions are working elsewhere.”

Toyota is renowned for quality and with the operational success expected by Toyota Tsusho, it is envisaged there will be expansion to supply other car manufacturers in the longer term.

Fissenden sums up; “we want to showcase Toyota Tsusho in Australia and the SYSPRO ERP system to other Toyota companies.  What we’re doing in Australia is unique in terms of processing capability and automation of processes.”