The Toyota Way 1

The Toyota Way (The Company that invented Lean Production) 14 Management Principles from the World’s Greatest Manufacturer  By: Jeffrey K. Liker  (Paperback,330p,ISBN (Paperback,330p,ISBN 0-07-058747-7,R 0- 07-058747-7,Rs. s. 250) (Tata McGraw-Hill)

Why to read this book ? • You’ll learn how Toyota creates an ideal environment for  implementing Lean techniques & tools by

:

-Fostering an atmosphere of continuous improvement and learning -Satisfying customers (and eliminating waste at the same time) -Getting quality right the first time -Grooming leaders from within rather than recruiting them from the outside -Teaching all employees to become problem solver  -Growing together with suppliers and partners for mutual benefits

About Toyota • Market capitalization over $ 105 billion; 2,40,000 employees • 3rd Largest auto manufacturer in the world; behind GM & Ford • Global Vehicle sale of over 6 million per  year in 170 countries • Big Brands like Corolla, Camry, Lexus • Annual Profit margin: 8.3 times higher  than industry average

Contents… • Development of Toyota Production System “TPS” (5-9) • Fundamentals of TPS (10-15)

• • •

The Toyota Principles (16-19) What can be learnt from Toyota (20-28) How to adopt TPS (29-32)

Development Development of Toyota Production System (TPS) • Toyota customer requirement was in small lots & different verities unlike Ford & GM using ‘mass production’ concepts • These requirement is to be met with same assembly line • Toyota was having cash crunch and there was no stable supply chain • Toyota studied that ‘mass production’ concepts cannot be feasible in Japan. Ford & GM were facing many issues due to same.

Lean Manufacturing or TPS To be a lean manufacturer requires a way of thinking that focuses on making the product flow through value-adding processes without interruption (one piece flow), a ‘Pull’ system that cascades back from customer demand by replenishing only what the next operation takes away at short intervals, and a culture in which everyone is striving continuously to improve

Five Step process • • • • •

Defining Customer Value Defining the value stream Making it ‘Flow’ ‘Pulling’ from the customer back Striving for excellence

‘Pull’ System • Same as ‘Supermarket’ where replenishment depends on consumption • It means at shop floor, step 1 in a process should not make parts until the next process (step 2) uses up its original supply • Small safety stock is kept to raise alarm • This is same as we get signal from fuel tank of  our vehicle for re-fuelling • This can be termed as ‘JIT’ or ‘Single Piece’ flow

Toyota Production System Best Quality - Lowest Cost - Shortest Lead Time Best Safety - High Morale (QCDSM) through shortening the production flow by eliminating waste Just - in - Time Right Part, Right Amount, RightTime Take time planning Continous f low Pull system Quick changeover  Integrated logistics logistic s

People & Teamwork

Just - in - Time

Selection Common goals

(In-station qu ality) ality)

Joint Joint decision dec ision making Cross-trained

Continuous Improvement

Waste Reduction Go & See 5 Why's

Eyes f or w aste Problem solving

Leveled Production Stable and Standardized Processes Visual Visual Ma nageme nt Toyota Toyota Wa y Philosophy Philosophy

Make Problem Visible Automatic stops Andon Person-machine seperation Error rr or proofing pr oofing In-station n-s tation quality control Solve Solve root c ause of problems problems (5 Why's)

The "4 P" model and where w here most companies are   u   s    i    t    h   u   c    b   n   n   e   e    G   G

Continual organizational learning through Kaizen Go see for yourself to thoroughly understand the Problem situation situati on (Genchi Genbutsu) Solving (Continuous Make decisions slowly by consensus, thoroughly thorough ly Improvement Improv ement and considering all options; impl implement ement rapidly (Nemawashi).

Where most "lean" companies are

Learning)

  n   e   z    i   a    K

   d   n    k   a   r   o    t   c   w   e   m   p   s   a   e   e    T    R

People and Partners (Respect, Challeng Challenge, e, and Grow Them)

Process (Eliminate Waste)

  e   g   n   e    l    l   a    h    C

Philosophy (Long-Term Thinking)

Grow leaders who live the philosophy Respect, develop, and challenge your people pe ople and teams. Respect, challenge, and help your suppliers supp liers Create process "flow" to surface problems prob lems Use pull systems to avoid overproduction Level out the workload (Heijunka) Stop when whe n there is a qualit q uality y problem ((jidoka) ((jidoka) Standardize taks for continuous improvem improvement ent Use visual control so no problems are hidden. Use only reliable, thoroughly tested technology Base management decisions on a long-term philosophy, even at the expense ex pense of short-term sh ort-term financial financial goals.

Fundamentals of TPS The basics of TPS refers to elimination of 3 M  (ie Muda, Muri & Mura)

• Muda-Non-value-added. The most familiar M includes the eight e ight wastes. These are wasteful activities that lengthen lead times, cause extra movement to get parts or tools, create excess inventory, or  result in any type of waiting.

Waste (Anything which is not adding any value or customer  do not want to pay for that)

•

Overproduction. Overproduction. Producing items for which there are no

orders, which generates such wastes as overstaffing and storage and transportation costs because of excess inventory.

•

Waiting (time on hand). hand). Workers merely serving to watch an

•

Unnecessary transport or conveyance. Carrying work in

automated machine or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of stock outs, lot processing delays, equipment downtime, and capacity bottlenecks.

process (WIP) long distances, creating inefficient transport, or  moving materials, parts, or finished goods into or out of  storage or between processes

Waste… •

Over processing or incorrect processing. Taking unneeded

steps to process the parts. Inefficiently processing due due to poor  tool and product design, causing unnecessary motion m otion and producing defects. Waste is generated when providing providing higherquality products than is necessary

•

Excess inventory. Excess raw material, WIP, or finished

•

Unnecessary movement. Any wasted motion employees

goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times have to perform during the course of their work, such as looking for, reaching reaching for, or stacking parts, tools, etc. Also, walking is waste.

Waste… •

Defects. Production of defective parts or correction.

Repair or rework, scrap, replacement production, and inspection mean wasteful handling, time, and effort.

•

Unused employee creativity. Losing time, ideas,

skills, improvements, and learning opportunities by not engaging or listening to your employees.

Fundamentals of TPS….

• Mura-Unevenness. Unevenness results from an irregular  production schedule or fluctuating production volumes due to internal problems, like downtime or missing parts or defects.

Fundamentals of TPS…. • Muri-Overburdening people or  equipment. This is in some respect on the opposite end of the spectrum from muda. Muri if pushing a machine or  person beyond natural limits. Overburdening people results in safety and quality problems. Overburdening equipment causes breakdowns and defects

Toyota Principles • Section I : Long-Term Philosophy • Principle 1. Base your management decisions • • • •

on a long-term philosophy, even at the expense of short-term financial goals. Section II: The Right Process Will Produce P roduce the Right Results Principle 2. Create continuous process flow to bring problems to the surface. Principle 3. Use “pull” systems to avoid overproduction. Principle 4. Level out the workload (Work like the tortoise, not the hare.)

Toyota Principles… • Principle 5. Build a culture of stopping to fix problems, to get quality right the first time.

• Principle 6. Standardized tasks are the foundation for continuous improvement and employee empowerment.

• Principle 7. Use visual control so no problems are hidden.

• Principle 8. Use only reliable, thoroughly tested technology that serves your people and processes.

Toyota Principles… • Section III: Add Value to the Organization by Developing Your People and Partners

• Principle 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

• Principle 10. Develop exceptional people and teams who follow your company’s philosophy

• Principle 11. Respect your extended network of  partners and suppliers by challenging them and helping them improve.

Toyota Principles… • Section IV: Continuously Solving Root

Problems Drives organizational Learning • Principle 12. Go and see for yourself to thoroughly understand the situation (genchi  (genchi  genbustu). genbustu). • Principle 13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi ). ). • Principle 14. Become a learning organization though relentless reflection (hansei  (hansei ) and continuous improvement (kaizen (kaizen). ).

What can be learnt from Toyota?

1. Simplicity

• • • •

At Toyota they keep things simple and use very few complex statistical tools. The quality specialists and team members have just four key tools: Go and see. Analyze the situation. Use one-piece flow and andon to surface problems. Ask “Why” five times.

2. Clean It Up, Make It Visual When Americans were making pilgrimages to Japanese plants in the 1970s and ‘80s, the first reaction was invariably “The factories were so clean you could eat off of the floor. In Japan

• • • • •

there are “5S programs” that comprise a series of activities for  eliminating wastes that contribute to errors, defects, and injuries in the workplace. Here are the five S’s (seiri, seiton, seiso, seiketsu, and shitsuke, translated into English): Sort – Sort through items and keep only what is needed while disposing of what is not. Straighten (orderliness) – “A place for everything and everything in its place.” Shine (cleanliness) – The cleaning process often acts as a form of  inspection that exposes abnormal and pre-failure conditions that could hurt quality or cause machine failure. Standardize (create rules) - Develop systems and procedures to maintain and monitor the first three S’s. Sustain (self-discipline) – Maintaining a stabilized workplace is an ongoing process of continuous improvement.

3. Decision Making Thorough consideration in decision making includes five major elements: • Finding out what is really going on, including go and see.

• Understanding underlying causes that explain surface appearances – asking “ Why?” five times. • Broadly considering alternative solutions and developing a detailed rationale for the preferred solution. • Building consensus within the team , including company employees and outside partners. • Using very efficient communication vehicles to share the decision and tracking

“5-Why” Investigation questions Level of Problem

Corresponding Level of  Countermeasure

There is a pudd puddle le of oil oil on the the shop shop floor floor Clean Clean up the oil oil Because the machine is leaking oil

Fix the machine

Because th the ga gasket ha has de deteriorated

Replace th the ga gasket

Because we bought gaskets made of Change gasket specifications inferior material Because we got a good deal (price) on Change purchasing policies those gaskets Because the purchasing agent gets Change the evaluation evaluated on short-term cost saving. purchasing agents

policy

for

4. Achieving No-Compromise Objectives 1

Great high-speed handling / stability

YET

A pleasant ride

2

Fast and smooth ride

YET

Low fuel consumption

3

Super quiet

YET

Light w eight

4

Elegant styling

YET

Great aerodynamics

5

Warm

YET

Functional interior  

6

Great stability at high speed

YET

Great C D value (low friction)

Development of Lexus

5. Coercive vs. Enabling Employee Empowerment Coercive Systems and Procedures (Taylorism)

Enabling Systems Systems and Procedure s (Toyota Way)

Focus on be st practice me thods: Systems fo foc cus on performance standards so as information on performance standards is not to highlight poor pe rform rformance ance . much much use wit without informat mation on best practices for achieving them. to S tandardiz e th e syste ms gameplaying gameplaying and monitoring costs. costs .

min minimize mize

Syst Syste ems sho should allow cust custo omiza mizattion to different levels of skill/experience and should guide flexible im improvisation provisation.

eop ple contro roll thei eir  r  Systems should help peo Syste Systems ms shou should ld be desi design gne ed so as to keep eep own wor own ork: k: help them form mental models of  e mploy ployee ee s out of the control loop. the system by “glass box” design. Systems are instru ruc ctions to be followed ed,, not Sy Systems stems are be st practice tem te mplates to be challenged. improved.

•

6. Deeply Understanding and Reporting What You See Always keep the final target in mind

Carefully plan for your final target Have a clear purpose for meetings. • •

Clearly assign tasks to yourself and to others o thers Think and speak based on verified, proven information and data

Go and confirm the facts for f or yourself  You are responsible for the information you are reporting to other. • • •

Take full advantage of the wisdom and experiences of others to Send, gather or discuss information Share your information with others in a timely manner 

Always consider who will benefit from receiving the information. • •

Always report, inform and consult in a timely manner. Analyze and understand shortcomings in your capabilities in a measurable way

Clarify the skills and knowledge that you need to further develop yourself. • • •

Relentlessly strive to conduct kaizen activities Think “outside the box,” or beyond common sense and standard rules. Always be mindful of protecting your safety and health.

7. Themes of Leadership at Toyota Focused on a long-term purpose for Toyota as a value-added contributor to society. Never deviated from the precepts of the Toyota Way  DNA and lived and modeled themselves around this for all to see. Worked their way up doing the detailed work and continued to go to the Gemba-the actual place where the real added-value work is done. See problems as opportunities to train and coach their people.  A common phrase heard around Toyota is “Before “ Before we build cars, we build people.”.

How to adopt TPS • A Commitment from the Top to Build a Total • Culture from the Ground Up • What do we know about a change of the

• • • •

culture? Start from the top Involve from the bottom up. Use middle managers as change agents. It takes time to develop people who really understand and live the philosophy.

13 Tips for Transitioning to a Lean Enterprise •

Start with action in the technical system; follow  quickly with cultural change.

• •

Learn by doing first and training second.

•

Use value stream mapping to develop future state visions and help “lean to see”.

•

Use kaizen workshops to teach and make rapid  changes.

•

Organize around value streams.

Start with value stream pilots to demonstrate lean as a system and provide a “go “ go see” model.

13 Tips… • • • • • • •

Make it mandatory.  A crisis may prompt a lean movement, but may not  be necessary to turn a company around. Be opportunistic in indentifying opportunities for big  financial impacts. Realign metrics with a value stream perspective. Build on your company’s roots to develop your own way. Hire or develop lean leaders and develop a succession system. Use experts for teaching and getting quick results.

Six Sigma, Lean Tools, and Lean Sigma: Just a Bunch of Tools? Myth What TPS T PS Is Not

Reality What TPS TP S Is

- A tangible recipe for success

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A consistent way of thinking

- A management project or program

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A total tot al management management philosophy

- A set of tools for implementation

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Focus on total customer satisfaction

- A System for production floor only.

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An environment of teamwork and improvement

- Implementable in a short-or mid-term period

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A never-ending search for a better way

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Quality built in process

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Organized, disciplined Workplace.

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Evolutionary