The Toyoda family and Toyota Production System (TPS)

The Toyoda Family: Generations of Consistent Leadership:

The story begins with Sakichi Toyoda, a tinkerer and inventor, not unlike Henry Ford, who grew up in the late 1800’s in a remote farming community outside of Nagoya.

At that time, weaving was a major industry and the Japanese government, wishing to promote the development of small businesses, encouraged the creation of cottage industries spread across Japan. Small shops and mills employing a handful of people was the norm. Housewives made a little spending money by working in these shops or at home. As a boy, Toyoda learned carpentry from his father and eventually applied that skill to designing and building wooden spinning machines. In 1894 he began to make manual looms that were cheaper but worked better than existing looms.

Toyoda was pleased with his looms, but disturbed that his mother, grandmother, and their friends still had to work so hard spinning and weaving. He wanted to find a way to relieve them of this punishing labour, so he set out to develop power-driven wooden looms.

This was an age when inventors had to do everything themselves. There were no large R&D departments to delegate work to. When Toyoda first developed the power loom, there was no available power to run the loom, so he turned his attention to the problem of generating power. Steam engines were the most common source of power, so he bought a used steam engine and experimented with running the looms from this source. He figured out how to make this work by trial and error and getting his hands dirty an approach that would become part of the foundation of the Toyota Way, genchi genbutsu. In 1926, He started Toyoda Automatic Loom Works, the parent firm of the Toyota Group and still a central player in the Toyota conglomerate (or keiretsu) today.

Toyoda’s endless tinkering and inventing eventually resulted in sophisticated automatic power looms that became as famous as Mikimoto pearls and Suzuki violins (Toyoda, 1987). Among his inventions was a special mechanism to automatically stop a loom whenever a thread broke an invention that evolved into a broader system that became one of the two pillars of the Toyota Production System, called jidoka (automation with a human touch). Essentially, jidoka means building in quality as you produce the material or mistake proofing. It also refers to designing operations and equipment so your workers are not tied to machines and are free to perform value-added work. Throughout his life, Sakichi Toyoda was a great engineer and later referred to as Japan’s King of Inventors.

His mistake-proof loom became Toyoda’s most popular model, and in 1929 he sent his son, Kiichiro, to England to negotiate the sale of the patent rights to Platt Brothers, the premier maker of spinning and weaving equipment. His son negotiated a price of 100,000 English pounds, and in 1930 he used that capital to start building the Toyota Motor Corporation (Fujimoto, 1999).

It is perhaps ironic that the founder of Toyota Motor Company, Kiichiro Toyoda, was a frail and sickly boy, who many felt did not have the physical capacity to become a leader. But his father disagreed and Kiichiro Toyoda persevered. When Sakichi Toyoda tasked his son with building the car business, it was not to increase the family fortune. He could just as well have handed over to him the family loom business. Sakichi Toyoda was undoubtedly aware that the world was changing and power looms would become yesterday’s technology while automobiles were tomorrow’s technology. But more than this, he had put his mark on the industrial world through loom making and wanted his son to have his opportunity to contribute to the world. He explained so to Kiichiro:

Everyone should tackle some great project at least once in their life. I devoted most of my life to inventing new kinds of looms. Now it is your turn. You should make an effort to complete something that will benefit society. (Reingold, 1999)

Kiichiro’s father sent him to the prestigious Tokyo Imperial University to study mechanical engineering; he focused on engine technology. He was able to draw on the wealth of knowledge within Toyoda Automatic Loom Works on casting and machining metal parts. Despite his formal engineering education, he followed in his father’s footsteps of learning by doing. Shoichiro Toyoda, his son, described Kiichiro Toyoda as a genuine engineer who gave genuine thought to an issue rather than rely on intuition. He always liked to accumulate facts. Before he made the decision to make an automobile engine, he made a small engine. The cylinder block was the most difficult thing to cast, so he gained a lot of experience in that area and, based on the confidence he then had, he went ahead. (Reingold, 1999)

His approach to learning and creating mirrored that of his father. After World War II, Kiichiro Toyoda wrote the next:

I would have grave reservations about our ability to rebuild Japan’s industry if our engineers were the type who could sit down to take their meals without ever having to wash their hands.

He built Toyota Automotive Company on his father’s philosophy and management approach, but added his own innovations. For example, while Sakichi Toyoda was the father of what would become the jidoka pillar of the Toyota Production System, Just-In-Time was Kiichiro Toyoda’s contribution. His ideas were influenced by a study trip to Ford’s plants in Michigan to see the automobile industry as well as seeing the U.S. supermarket system of replacing products on the shelves just in time as customers purchased them. His vision was at the root of the kanban system, which is modelled after the supermarket system. Notwithstanding these achievements, it was his actions as a leader, like his father, that left the largest imprint on Toyota.

Along the way to building a car company, World War II happened, Japan lost, and the American victors could have halted car production. Kiichiro Toyoda was very concerned that the post-war occupation would shut down his company. On the contrary, the Americans realized the need for trucks in order to rebuild Japan and even helped Toyota to start building trucks again.

As the economy revitalized under the occupation, Toyota had little difficulty getting orders for automobiles, but rampant inflation made money worthless and getting paid by customers was very difficult. Cash flow became so horrendous that at one point in 1948, Toyota’s debt was eight times its total capital value. To avoid bankruptcy, Toyota adopted strict cost-cutting policies, including voluntary pay cuts by managers and a 10 percent cut in pay for all employees. This was part of a negotiation with employees in lieu of layoffs, to maintain Kiichiro Toyoda’s policy against firing employees. Finally, even the pay cuts were not enough. This forced him to ask for 1,600 workers to retire voluntarily. This led to work stoppages and public demonstrations by workers, which at the time were becoming commonplace across Japan.

Companies went out of business every day. The usual story we hear these days is of the CEO hanging on and fighting to salvage his or her sweetheart option packages or perhaps selling off the company to be broken up for any valuable assets. It is always some other person’s fault that the company has failed.

Kiichiro Toyoda took a different approach. He accepted responsibility for the failing of the automobile company and resigned as president, even though in reality the problems were well beyond his or anyone else’s control. His personal sacrifice helped to quell worker dissatisfaction. More workers voluntarily left the company and labour peace was restored. However, his tremendous personal sacrifice had a more profound impact on the history of Toyota. Everyone in Toyota knew what he did and why.

The philosophy of Toyota to this day is to think beyond individual concerns to the long-term good of the company, as well as to take responsibility for problems.

Kiichiro Toyoda was leading by example in a way that is unfathomable to most of us.

Toyoda family members grew up with similar philosophies. They all learned to get their hands dirty, learned the spirit of innovation, and understood the values of the company in contributing to society. Moreover, they all had the vision of creating a special company with a long-term future.

After Kiichiro Toyoda, one of the Toyoda family leaders who shaped the company was Eiji Toyoda, the nephew of Sakichi and younger cousin of Kiichiro. Eiji Toyoda also studied mechanical engineering, entering Tokyo Imperial University in 1933. When he graduated, his cousin Kiichiro gave him the assignment of setting up, all by himself, a research lab in a car hotel in Shibaura (Toyoda, 1987).

By car hotel, Kiichiro was referring to the equivalent of a large parking garage. These were jointly owned by Toyota and other firms, and were necessary to encourage car ownership among the small number of wealthy individuals who could afford cars. Eiji Toyoda started by cleaning a room in one corner of the building himself and getting some basic furniture and drafting boards. He worked alone for a while and it took one year to finally build a group of about 10 people. His first task was to research machine tools, which he knew nothing about. He also checked defective cars, as one role of the car hotel was to service Toyota products. In his spare time, he would check out companies that could make auto parts for Toyota. He also had to find reliable parts suppliers in the Tokyo area in time for the completion of a Toyota plant.

So Eiji Toyoda, like his cousin and uncle, grew up believing that the only way to get things done was to do it yourself and get your hands dirty. When a challenge arose, the answer was to try things to learn by doing. With this system of beliefs and values, it would be unimaginable to hand over the company to a son, cousin, or nephew who did not get his hands dirty and truly love the automobile business. The company values shaped the development and selection of each generation of leaders.

Eventually Eiji Toyoda became the president and then chairman of Toyota Motor Manufacturing. He helped lead and then presided over the company during its most vital years of growth after the war and through its growth into a global powerhouse. Eiji Toyoda played a key role in selecting and empowering the leaders who shaped sales, manufacturing, and product development, and, most importantly, the Toyota Production System.

Now the Toyota Way has been spread beyond the leaders in Japan to Toyota associates around the world. But since today’s leaders did not go through the growing pains of starting a company from scratch, Toyota is always thinking about how to teach and reinforce the value system that drove the company founders to get their hands dirty, to truly innovate and think deeply about problems based on actual facts. This is the legacy of the Toyoda family.

The Development of the Toyota Production System (TPS):

Toyota Motor Corporation struggled through the 1930’s, primarily making simple trucks. In the early years, the company produced poor-quality vehicles with primitive technology and had little success. In the 1930’s, Toyota’s leaders visited Ford and GM to study their assembly lines and carefully read Henry Ford’s book, Today and Tomorrow (1926). They tested the conveyor system, precision machine tools, and the economies of scale idea in their loom production.

Even before World War II, Toyota realized that the Japanese market was too small and demand too fragmented to support the high production volumes in the U.S. (A U.S. auto line might produce 9,000 units per month, while Toyota would produce only about 900 units per month, and Ford was about 10 times as productive.) Toyota managers knew that if they were to survive in the long run they would have to adapt the mass production approach for the Japanese market. But how?

Now jump ahead to Toyota’s situation after World War II, in 1950. It had a budding automotive business. The country had been decimated by two atom bombs, most industries had been destroyed, the supply base was nil, and consumers had little money. Imagine being the plant manager, Taiichi Ohno. Your boss, Eiji Toyoda, has returned from another tour of U.S. plants, including the Ford’s River Rouge complex, and he calls you into his office. He calmly hands you a new assignment. (Don't all bosses come back from trips with new assignments?) The assignment is to improve Toyota’s manufacturing process so that it equals the productivity of Ford. It makes you wonder what Toyoda could have been thinking. Based on the mass production paradigm of the moment, economies of scale alone should have made this an impossible feat for tiny Toyota. This was David trying to take on Goliath.

Ford’s mass production system was designed to make huge quantities of a limited number of models. This is why all Model T’s were originally black. In contrast, Toyota needed to churn out low volumes of different models using the same assembly line, because consumer demand in their auto market was too low to support dedicated assembly lines for one vehicle. Ford had tons of cash and a large U.S. and international market. Toyota had no cash and operated in a small country.

With few resources and capital, Toyota needed to turn cash around quickly (from receiving the order to getting paid). Ford had a complete supply system, Toyota did not. Toyota didn’t have the luxury of taking cover under high volume and economies of scale afforded by Ford’s mass production system. It needed to adapt Ford’s manufacturing process to achieve simultaneously high quality, low cost, short lead times, and flexibility.

One-Piece Flow, a Core Principle:

When Eiji Toyoda and his managers took their 12-week study tour of U.S plants in 1950, they were expecting to be dazzled by their manufacturing progress. Instead they were surprised that the development of mass production techniques hadn't changed much since the 1930’s. In fact, the mass production system had many inherent flaws.

What they saw was lots of equipment making large amounts of products that were stored in inventory, only to be later moved to another department where big equipment processed the product, and so on to the next step. They saw how these discrete process steps were based on large volumes, with interruptions between these steps causing large amounts of material to sit in inventory and wait. They saw the high cost of the equipment and its so-called efficiency in reducing the cost per piece, with workers keeping busy by keeping the equipment busy. They looked at traditional accounting measures that rewarded managers who cranked out lots of parts and kept machines and workers busy, resulting in a lot of overproduction and a very uneven flow, with defects hidden in these large batches that could go undiscovered for weeks. Entire workplaces were disorganized and out of control. With big forklift trucks moving mountains of materials everywhere, the factories often looked more like warehouses. To say the least, they were not impressed. In fact, they saw an opportunity to catch up.

Fortunately for Ohno, his assignment from Eiji Toyoda to catch up with Ford’s productivity didn't mean competing head-on with Ford. He just had to focus on improving Toyota’s manufacturing within the protected Japanese market a daunting assignment nonetheless. So Ohno did what any good manager would have done in his situation: he benchmarked the competition through further visits to the U.S. He also studied Ford’s book, Today and Tomorrow.

After all, one of the major components that Ohno believed Toyota needed to master was continuous flow and the best example of that at the time was Ford’s moving assembly line. Henry Ford had broken the tradition of craft production by devising a new mass production paradigm to fill the needs of the early 20th century. A key enabler of mass production’s success was the development of precision machine tools and interchangeable parts. Using principles from the scientific management movement pioneered by Frederick Taylor, Ford also relied heavily on time studies, very specialized tasks for workers, and a separation between the planning done by engineers and the work performed by workers.

In his book Ford also preached the importance of creating continuous material flow throughout the manufacturing process, standardizing processes, and eliminating waste. But while he preached it, his company didn't always practice it. His company turned out millions of black Model T’s and later Model A's using wasteful batch production methods that built up huge banks of work-in-process inventory throughout the value chain, pushing product onto the next stage of production. Toyota saw this as an inherent flaw in Ford’s mass production system.

Toyota did not have the luxury of creating waste, it lacked warehouse and factory space and money, and it didn’t produce large volumes of just one type of vehicle. But it determined it could use Ford’s original idea of continuous material flow (as illustrated by the assembly line) to develop a system of one-piece flow that flexibly changed according to customer demand and was efficient at the same time. Flexibility required marshalling the ingenuity of the workers to continually improve processes.

Creating the Manufacturing System That Changed the World:

In the 1950’s, Ohno returned to the place he understood best, the shop floor, and went to work to change the rules of the game. He did not have a big consulting firm, Post-it® notes, or PowerPoint to reinvent his business processes. He could not install an ERP system or use the Internet to make information move at the speed of light. But he was armed with his shop-floor knowledge, dedicated engineers, managers, and workers who would give their all to help the company succeed. With this, he began his many hands-on journeys through Toyota’s few factories, applying the principles of jidoka and one-piece flow. Over years and then decades of practice, he had come up with the new Toyota Production System. Of course, Ohno and his team did not do this alone.

Along with the lessons of Henry Ford, TPS borrowed many of its ideas from the U.S. One very important idea was the concept of the pull system, which was inspired by American supermarkets. In any well-run supermarket, individual items are replenished as each item begins to run low on the shelf. That is, material replenishment is initiated by consumption. Applied to a shop floor, it means that Step 1 in a process shouldn’t t make (replenish) its parts until the next process after it (Step 2) uses up its original supply of parts from Step 1 (that is down to a small amount of safety stock ). In TPS, when Step 2 is down to a small amount of safety stock, this triggers a signal to Step 1 asking it for more parts.

This is similar to what happens when you fill the gas tank in your car. As in Step 2, your car signals a need for more fuel when the gauge tells you that fuel is low. Then you go to the gas station, Step 1, to refill. It would be foolish to fill your gas tank when you re not low on gas, but the equivalent of this overproduction happens all the time in mass production. At Toyota every step of every manufacturing process has the equivalent of a gas gauge built in, (called kanban), to signal to the previous step when its parts need to be replenished. This creates pull which continues cascading backwards to the beginning of the manufacturing cycle. In contrast, most businesses use processes that are filled with waste, because work in Step 1 is performed in large batches before it is needed by Step 2. This work in process must then be stored and tracked and maintained until needed by step 2, a waste of many resources. Without this pull system, just-in-time (JIT), one of the two pillars of TPS (the other is jidoka, built-in quality), would never have evolved.

JIT is a set of principles, tools, and techniques that allows a company to produce and deliver products in small quantities, with short lead times, to meet specific customer needs. Simply put, JIT delivers the right items at the right time in the right amounts. The power of JIT is that it allows you to be responsive to the day-by-day shifts in customer demand, which was exactly what Toyota needed all along.

Toyota also took to heart the teachings of the American quality pioneer, W. Edwards Deming. He gave U.S. quality and productivity seminars in Japan and taught that, in a typical business system, meeting and exceeding the customers requirements is the task of everyone within an organization. And he dramatically broadened the definition of customer to include both internal and external customers. Each person or step in a production line or business process was to be treated as a customer and to be supplied with exactly what was needed, at the exact time needed. This was the origin of Deming s principle, the next process is the customer. The Japanese phrase for this, atokotei wa o-kyakusama, became one of the most significant expressions in JIT, because in a pull system it means the preceding process must always do what the subsequent process says. Otherwise JIT won’t work.

Deming also encouraged the Japanese to adopt a systematic approach to problem solving, which later became known as the Deming Cycle or Plan-Do-Check-Act (PDCA) Cycle, a cornerstone of continuous improvement. The Japanese term for continuous improvement is kaizen and is the process of making incremental improvements, no matter how small, and achieving the lean goal of eliminating all waste that adds cost without adding to value.

Kaizen teaches individuals skills for working effectively in small groups, solving problems, documenting and improving processes, collecting and analyzing data, and self-managing within a peer group. It pushes the decision making (or proposal making) down to the workers and requires open discussion and a group consensus before implementing any decisions. Kaizen is a total philosophy that strives for perfection and sustains TPS on a daily basis.

When Ohno and his team emerged from the shop floor with a new manufacturing system, it wasn't just for one company in a particular market and culture. What they had created was a new paradigm in manufacturing or service delivery a new way of seeing, understanding, and interpreting what is happening in a production process, that could propel them beyond the mass production system.

By the 1960s, TPS was a powerful philosophy that all types of businesses and processes could learn to use, but this would take a while. Toyota did take the first steps to spread lean by diligently teaching the principles of TPS to their key suppliers. This moved its isolated lean manufacturing plants toward a total lean extended enterprise when everyone in the supply chain is practicing the same TPS principles. A powerful business model indeed! Still, the power of TPS was mostly unknown outside of Toyota and its affiliated suppliers until the first oil shock of 1973 that sent the world into a global recession, with Japan among the hardest hit. Japanese industry went into a tailspin and the name of the game was survival. But the Japanese government began to notice when Toyota went into the red for less time than other companies and came back to profitability faster. The Japanese government took the initiative to launch seminars on TPS, even though it understood only a fraction of what made Toyota tick.

This kind of thinking ruled the manufacturing world until the 1980s. Then the business world got the quality religion from Deming, Joseph Juran, Kaoru Ishikawa, and other quality gurus. It learned that focusing on quality actually reduced cost more than focusing only on cost. Finally, in the 1990s, through the work of MIT’s Auto Industry Program and the bestseller based on its research, The Machine That Changed the World (Womack, Jones, Roos, 1991), the world manufacturing community discovered Lean Production the authors term for what Toyota had learned decades earlier through focusing on speed in the supply chain: shortening lead time by eliminating waste in each step of a process leads to best quality and lowest cost, while improving safety and morale.

Still one of the best and surprisingly readable overviews of the Toyota Production System is Taiichi Ohno s own book, Toyota Production System: Beyond Large-Scale Production (Portland, OR: Productivity Press, 1988). Ohno gives a very personalized account of the system in a story fashion. Actually kaizen means change for the better and can refer to very large changes or small, incremental changes.

Because Western firms tend to focus on breakthrough innovation and are weak at continuously improving in small amounts, this has been the focus of teaching kaizen to Western firms. Sometimes kaikaiku is used to refer to major, revolutionary changes.

Toyota started with the values and ideals of the Toyoda family. To understand the Toyota Way, we must start with the Toyoda family. They were innovators, they were pragmatic idealists, they learned by doing, and they always believed in the mission of contributing to society. They were relentless in achieving their goals. Most importantly, they were leaders who led by example.

TPS evolved to meet the particular challenges Toyota faced as it grew as a company. It evolved as Taiichi Ohno and his contemporaries put these principles to work on the shop floor through years of trial and error. When we take a snapshot of this at a point in time, we can describe the technical features and accomplishments of TPS. But the way that Toyota developed TPS and the challenges it faced and the approach it took to solving these problems is really a reflection of the Toyota Way. Toyota‘s own internal Toyota Way document talks about the spirit of challenge and the acceptance of responsibility to meet that challenge. The document states:

We accept challenges with a creative spirit and the courage to realize our own dreams without losing drive or energy. We approach our work vigorously, with optimism and a sincere belief in the value of our contribution.

And further:

We strive to decide our own fate. We act with self-reliance, trusting in our own abilities. We accept responsibility for our conduct and for maintaining and improving the skills that enable us to produce added value.

These powerful words describe well what Ohno and the team accomplished. Out of the rubble of WWII, they accepted seemingly impossible challenge match Ford’s productivity. Ohno accepted the challenge and, with a creative spirit and courage, solved problem after problem and evolved a new production system. He and his team did it themselves and did not look to be bailed out by the Japanese government or any third party. This same process has been played out time and time again throughout the history of Toyota.

The Heart of the Toyota Production System. Eliminating Waste:

Many good American companies have respect for individuals, and practice kaizen and other TPS tools. But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner not in spurts in a concrete way on the shop floor.

Fujio Cho, President, Toyota Motor Corporation

We touched on the philosophy of eliminating waste, or muda, as they say in Japan, with Ohno’s journey through the shop floor. He spent a great deal of time there, learning to map the activities that added value to the product and getting rid of non-value-adding activity. It’s important to take a closer look at this, because many of the tools of TPS and principles of the Toyota Way derive from this focused behaviour.

I want to be clear that the Toyota Production System is not the Toyota Way. TPS is the most systematic and highly developed example of what the principles of the Toyota Way can accomplish. The Toyota Way consists of the foundational principles of the Toyota culture, which allow TPS to function so effectively. Though they are different, the development of TPS and its stunning success are intimately connected with the evolution and development of the Toyota Way.

When applying TPS, you start with examining the manufacturing process from the customer’s perspective. The first question in TPS is always what does the customer want from this process? This defines value. Through the customer’s eyes, you can observe a process and separate the value-added steps from the non-value-added steps. You can apply this to any process manufacturing, information, or service.

Toyota has identified seven major types of non-value-adding waste in business or manufacturing processes, which are described below. You can apply these to product development, order taking, and the office, not just a production line. There is an eighth waste, which I have included.

1. Overproduction. Producing items for which there are no orders, which generates such wastes as overstaffing and storage and transportation costs because of excess inventory.

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

3. Unnecessary transport or conveyance. Carrying work in process (WIP) long distances, creating inefficient transport, or moving materials, parts, or finished goods into or out of storage or between processes.

4. Over processing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher-quality products than is necessary.

5. Excess inventory. Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times.

6. Unnecessary movement. Any wasted motion employees have to perform during the course of their work, such as looking for, reaching for, or stacking parts, tools, etc. Also, walking is waste.

7.Defects. Production of defective parts or correction. Repair or rework, scrap, replacement production, and inspection mean wasteful handling, time, and effort.

8. Unused employee creativity. Losing time, ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees. Ohno considered the fundamental waste to be overproduction, since it causes most of the other wastes. Producing more than the customer wants by any operation in the manufacturing process necessarily leads to a build-up of inventory somewhere downstream: the material is just sitting around waiting to be processed in the next operation.

Mass or larger-batch manufacturers might ask, what s the problem with this, as long as people and equipment are producing parts? The problem is that big buffers (inventory between processes) lead to other suboptimal behaviour, like reducing your motivation to continuously improve your operations. Why worry about preventive maintenance on equipment when shutdowns do not immediately affect final assembly anyway? Why get overly concerned about a few quality errors when you can just toss out defective parts? Because by the time a defective piece works its way to the later operation where an operator tries to assemble that piece, there may be weeks of bad parts in process and sitting in buffers.

Local efficiencies were emphasized at the cost of slowing down the value stream by creating large amounts of in-process and finished-goods inventory and taking a long time to identify problems (defects) that reduced quality. As a result, the plant was not flexible to changes in customer demand. The concept of value-added and non-value-added work is eloquently explained by James P. Womack and Daniel T. Jones in Lean Thinking (1996). They introduce the value stream perspective that is the essence of lean thinking, based on the Toyota Production System.

Traditional Process Improvement vs. Lean Improvement:

The traditional approach to process improvement focuses on identifying local efficiencies Go to the equipment, the value-added processes, and improve uptime, or make it cycle faster, or replace the person with automated equipment. The result might be a significant percent improvement for that individual process, but have little impact on the overall value stream. This is especially true because in most processes there are relatively few value-added steps, so improving those value-added steps will not amount to much. Without lean thinking, most people can’t see the huge opportunities for reducing waste by getting rid of or shrinking non-value-added steps.

In a lean improvement initiative, most of the progress comes because a large number of non-value-added steps are squeezed out. In the process, the value-added time is also reduced. We can see this most vividly by taking a process like the nut-making example and creating a one-piece-flow cell.

In lean manufacturing, a cell consists of a close arrangement of the people, machines, or workstations in a processing sequence. You create cells to facilitate one-piece flow of a product or service, through various operations, for example, welding, assembly, packing, one unit at a time, at a rate determined by the needs of the customer and with the least amount of delay and waiting.

In fact, the ultimate goal of lean manufacturing is to apply the ideal of one-piece flow to all business operations, from product design to launch, order taking, and physical production. Anyone who has experienced the power of lean thinking becomes a zealot and wants to rid the world of waste, applying it to every process, from administrative to engineering.

The TPS House Diagram: A System Based on a Structure, Not Just a Set of Techniques:

For decades Toyota was doing just fine in applying and improving TPS on the shop floor day in and day out without documenting TPS theory. Workers and managers were constantly learning new methods and variations on old methods through actual practice on the shop floor. Communication was strong in what was a relatively small company, so best practices developed within Toyota spread to other Toyota plants and ultimately to suppliers. But as the practices matured within Toyota, it became clear that the task of teaching TPS to the supply base was never ending. So Taiichi Ohno disciple Fujio Cho developed a simple representation a house.

The TPS house diagram has become one of the most recognizable symbols in modern manufacturing.

Why a house? Because a house is a structural system. The house is strong only if the roof, the pillars, and the foundation are strong. A weak link weakens the whole system.

It starts with the goals of best quality, lowest cost, and shortest lead time the roof. There are then two outer pillars just-in-time, probably the most visible and highly publicized characteristic of TPS, and jidoka, which in essence means never letting a defect pass into the next station and freeing people from machines automation with a human touch. In the centre of the system are people. Finally there are various foundational elements, which include the need for standardized, stable, reliable processes, and also heijunka, which means levelling out the production schedule in both volume and variety. A levelled schedule or heijunka is necessary to keep the system stable and to allow for minimum inventory. Big spikes in the production of certain products to the exclusion of others will create part shortages unless lots of inventory are added into the system.

Each element of the house by itself is critical, but more important is the way the elements reinforce each other. JIT means removing, as much as possible, the inventory used to buffer operations against problems that may arise in production. The ideal of one-piece flow is to make one unit at a time at the rate of customer demand or takt (German word for meter). Using smaller buffers (removing the safety net) means that problems like quality defects become immediately visible. This reinforces jidoka, which halts the production process. This means workers must resolve the problems immediately and urgently to resume production. At the foundation of the house is stability. Ironically, the requirement for working with little inventory and stopping production when there is a problem causes instability and a sense of urgency among workers. In mass production, when a machine goes down, there is no sense of urgency: the maintenance department is scheduled to fix it while inventory keeps the operations running.

By contrast:

In Lean Production, when an operator shuts down equipment to fix a problem, other operations will soon stop producing, creating a crisis. So there is always a sense of urgency for everyone in production to fix problems together to get the equipment up and running. If the same problem happens repeatedly, management will quickly conclude that this is a critical situation and it may be time to invest in Total Productive Maintenance (TPM), where everyone learns how to clean, inspect, and maintain equipment. A high degree of stability is needed so that the system is not constantly stopped. People are at the center of the house because only through continuous improvement can the operation ever attaining this needed stability. People must be trained to see waste and solve problems at the root cause by repeatedly asking why the problem really occurs. Problem solving is at the actual place to see what is really going on (genchi genbutsu).

In some versions of the house model, several of the Toyota Way philosophies are added into the foundation, such as respect for humanity. While Toyota often presents this house with the goals of cost, quality, and timely delivery, in actuality their plants follow a common practice in Japan of focusing on QCDSM (quality, cost, delivery, safety, and morale) or some variation. Toyota will never sacrifice the safety of their workers for production. And they do not need to, as eliminating waste does not imply creating stressful, unsafe work practices. As Ohno wrote:

Every method available for man-hour reduction to reduce cost must, of course, be pursued vigorously; but we must never forget that safety is the foundation of all our activities. There are times when improvement activities do not proceed in the name of safety. In such instances, return to the starting point and take another look at the purpose of that operation. Never be satisfied with inaction. Question and redefine your purpose to attain progress.

Conclusion:

TPS is not a toolkit. It is not just a set of lean tools like just-in-time, cells, 5S (sort, stabilize, shine, standardize, sustain, kanban, etc.). It is a sophisticated system of production in which all of the parts contribute to a whole. The whole at its roots focuses on supporting and encouraging people to continually improve the processes they work on. Unfortunately, many books about lean manufacturing reinforce the misunderstanding that TPS is a collection of tools that lead to more efficient operations. The purpose of these tools is lost and the centrality of people is missed. When looked at more broadly, TPS is about applying the principles of the Toyota Way. The initial focus was on the shop floor, but the principles are broad and, in fact, apply just as well to engineering and business service operations as well.

Text extracted from the Book “The Toyota Way: 14 Management Principles World's Greatest Manufacturer”

Wrote by Jeffrey K. Liker – Ed. McGraw Hill