This Is The Toyota Way

Posted on November 7, 2012 by

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In this post I’ll run though the awesome book: The Toyota Way.

Fewer man-hours. Less inventory. The highest quality cars with the fewest defects of any competing manufacturer. In factories around the globe, Toyota consistently raises the bar for manufacturing, product development, and process excellence. The result is an amazing business success story: steadily taking market share from price-cutting competitors, earning far more profit than any other automaker, and winning the praise of business leaders worldwide.

The Toyota Way” reveals the management principles behind Toyota’s worldwide reputation for quality and reliability. Dr. Jeffrey Liker, a renowned authority on Toyota’s Lean methods, explains how you can adopt these principles – known as the ‘Toyota Production System’ or ‘Lean Production’ – to improve the speed of your business processes, improve product and service quality, and cut costs, no matter what your industry.

Drawing on his extensive research on Toyota, Dr.Liker shares his insights into the foundational principles at work in the Toyota culture. He explains how the Toyota Production System evolved as a new paradigm of manufacturing excellence, transforming businesses across industries. You’ll learn how Toyota fosters employee involvement at all levels, discover the difference between traditional process improvement and Toyota’s Lean improvement, and learn why companies often think they are Lean-but aren’t.

The fourteen management principles of the “Toyota Way” create the ideal environment for implementing Lean techniques and tools. Dr. Liker explains each key principle with detailed, examples from Toyota and other Lean companies on how to:

  • foster an atmosphere of continuous improvement and learning;
  • create continuous process ‘flow’ to unearth problems;
  • satisfy customers (and eliminate waste at the same time);
  • grow your leaders rather than purchase them;
  • get quality right the first time;
  • and grow together with your suppliers and partners for mutual benefit.

Dr.Liker shows the Toyota Way in action, then outlines how to apply the “Toyota Way” in your organization, with examples of how other companies have rebuilt their culture to create a Lean, learning enterprise. “The Toyota Way” is an inspiring guide to taking the steps necessary to emulate Toyota’s remarkable success.

  • What can your business learn from Toyota?
  • How to double or triple the speed of any business process?
  • How to build quality into workplace systems?
  • How to eliminate the huge costs of hidden waste?
  • How to turn every employee into a quality control inspector?
  • How to dramatically improve your products and services!

With a market capitalization greater than the value of General Motors, Ford, and Chrysler combined, Toyota is also, (by far), the world’s most profitable automaker. Toyota’s secret weapon is Lean production – the revolutionary approach to business processes that it invented in the 1950′s and has spent decades perfecting. Today businesses around the world are implementing Toyota’s radical system for speeding up processes, reducing waste, and improving quality.

Toyota Way“, explains Toyota’s unique approach to lean – the 14 management principles and philosophy that drive Toyota’s quality and efficiency-obsessed culture. You’ll gain valuable insights that can be applied to any organization and any business process, whether in services or manufacturing. Professor Jeffrey Liker has been studying Toyota for twenty years, and was given unprecedented access to Toyota executives, employees and factories, both in Japan and the United States, for this landmark work. The book is full of examples of the 14 fundamental principles at work in the Toyota culture, and how these principles create a culture of continuous learning and improvement. You’ll discover how the right combination of long-term philosophy, process, people, and problem solving can transform your organization into a Lean, learning enterprise – the Toyota Way.

Summary of the book

Presented below is a summary of the main points contained in The Toyota Way.

World Class Power of the Toyota Way
Toyota first caught the worlds attention in the 1980s when consumers started noticing that Toyota cars lasted longer and required fewer repairs than American cars. Today, not only is Asia leading the way in car production (see graphic below) but the company has the biggest market value, consistently producing high-quality cars using fewer man hours and less on-hand inventories.

The Toyota Way explains the management principle and business philosophy behind Toyotas success. It narrates Toyotas approach to Lean Production (known as the Toyota Production System) and the 14 principles that drive Toyota towards quality and excellence. The book also explains how you can adopt the same principles to improve your business processes, while cutting down on operations and production costs.

For an understanding of how the TPS is being applied outside of manufacturing, you may also want to listen to this which answers this question:

Japanese management techniques have revolutionised the car industry, but what do waste-averse production lines have to do with the delicate business of health care?

Using Operational Excellence as a Strategic Weapon

Toyota developed Lean Production methods in the 1940s and 50s. The company focused on eliminating wasted time and material from every step of the production process (from raw materials to finished goods).

The result was a fast and flexible process that gives the customers what they want, when they want it, at the highest quality and most affordable cost. Toyota improved production by:

  • Eliminating wasted time and resources.
  • Building quality into workplace systems.
  • Finding low-cost and yet reliable alternatives to expensive new technology.
  • Perfecting business processes.
  • Building a learning culture for continuous improvement.

The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out “mura” (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or “muri” (overburden) since this generates “muda” (waste). Finally the tactical improvements of waste reduction or the elimination of muda are very valuable. There are seven kinds of muda that are addressed in the TPS:

  1. over-production
  2. motion (of operator or machine)
  3. waiting (of operator or machine)
  4. conveyance
  5. processing itself
  6. inventory (raw material)
  7. correction (rework and scrap)

The elimination of muda has come to dominate the thinking of many when they look at the effects of the TPS because it is the most familiar of the three to implement. In the TPS many initiatives are triggered by mura or muri reduction which drives out muda without specific focus on its reduction. 

The Fourteen Principles of the Toyota Way

Section I — Long-Term Philosophy

Principle 1

  • Base your management decision on a long-term philosophy, even at the expense of short-term financial goals

The Toyota message is consistent: Do the right thing for the company, its employees, the customer and the society as a whole. This long-term philosophy is the guiding post of the company in its continuous quest to offer the best in quality and service to its customers, employees and stockholders.

Long-term goal should supersede short-term decision making or goals: Develop, work, grow and align the company towards a common goal that is bigger than making money.Your philosophical mission is and should be the foundation of all our other principles.

Toyota is aligned around satisfying the customer. It believes that a satisfied customer comes back and gives more business through referrals. It generates value for the customer, the society and the economy.

One of the keys to success of Toyota is that it lives by the philosophy of self reliance and a “let’s do it ourselves” attitude. This can be best illustrated when it ventured into the luxury car industry. It did not buy a company that already made luxury cars.

Rather, it created its own luxury division – the Lexus – from scratch in order to learn and understand the essence of a luxury car. 

Section II — The Right Process Will Produce the Right Results

Principle 2

  • Create continuous process flow to bring problems to the surface

The mass production system used by many manufacturers assures overproduction in large batches which in turn guarantees inventory being idle and taking up a lot of plant space. Toyota’s lean production system has redesigned the work process to move both materials and information faster.To optimize the flow of materials so that it would move quickly, Toyota reduced batch sizes and came up with work cells that were grouped by product rather than by process. The continuous process flow links the process and the people together so that if a problem surfaced, it can be solved right away.

  1. Builds in quality.
  2. Creates real flexibility.
  3. Creates higher productivity.
  4. Frees up floor space.
  5. Improves safety.
  6. Improves moral.
  7. Reduces cost of inventory.

Principle 3

  • Use “pull” systems to avoid overproduction.

A method where a process signals its predecessor that more material is needed. The pull system produces only the required material after the subsequent operation signals a need for it. This process is necessary to reduce overproduction.

Principle 4

  • Level out the workload (heijunka). (Work like the tortoise, not the hare).

This helps achieve the goal of minimizing waste (muda), not overburdening people or the equipment (muri), and not creating uneven production levels (mura).

Principle 5

  • Build a culture of stopping to fix problems, to get quality right the first time.

Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue.

Principle 6

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

Although Toyota has a bureaucratic system, the way that it is implemented allows for continuous improvement (kaizen) from the people affected by that system. It empowers the employee to aid in the growth and improvement of the company.

Principle 7

  • Use visual control so no problems are hidden.

Included in this principle is the 5S Program – steps that are used to make all work spaces efficient and productive, help people share work stations, reduce time looking for needed tools and improve the work environment.

  • Sort: Sort out unneeded items
  • Straighten: Have a place for everything
  • Shine: Keep the area clean
  • Standardize: Create rules and standard operating procedures
  • Sustain: Maintain the system and continue to improve it

Principle 8

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

Technology is pulled by manufacturing, not pushed to manufacturing.  

Section III — Add Value to the Organization by Developing Your People

Principle 9

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

Without constant attention, the principles will fade. The principles have to be ingrained, it must be the way one thinks. Employees must be educated and trained: they have to maintain a learning organization.

Principle 10

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

Teams should consist of 4-5 people and numerous management tiers. Success is based on the team, not the individual.

Principle 11

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

Toyota treats suppliers much like they treat their employees, challenging them to do better and helping them to achieve it. Toyota provides cross functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.

Section IV: Continuously Solving Root Problems Drives Organizational Learning

Principle 12

  • Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).

Toyota managers are expected to “go-and-see” operations. Without experiencing the situation firsthand, managers will not have an understanding of how it can be improved. Furthermore, managers use Tadashi Yamashima’s (President, Toyota Technical Center (TTC)) ten management principles as a guideline:

  1. Always keep the final target in mind.
  2. Clearly assign tasks to yourself and others.
  3. Think and speak on verified, proven information and data.
  4. Take full advantage of the wisdom and experiences of others to send, gather or discuss information.
  5. Share information with others in a timely fashion.
  6. Always report, inform and consult in a timely manner.
  7. Analyze and understand shortcomings in your capabilities in a measurable way.
  8. Relentlessly strive to conduct kaizen activities.
  9. Think “outside the box,” or beyond common sense and standard rules.
  10. Always be mindful of protecting your safety and health.

Principle 13

  • Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi).

The following are decision parameters:

  1. Find what is really going on (go-and-see) to test
  2. Determine the underlying cause
  3. Consider a broad range of alternatives
  4. Build consensus on the resolution
  5. Use efficient communication tools

Principle 14

  • Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).

The process of becoming a learning organization involves criticizing every aspect of what one does. The general problem solving technique to determine the root cause of a problem includes:

  1. Initial problem perception
  2. Clarify the problem
  3. Locate area/point of cause
  4. Investigate root cause (5 whys)
  5. Countermeasure
  6. Evaluate
  7. Standardize

Translating the principles
There is a question of uptake of the principles now that Toyota has production operations in many different countries around the world. As a New York Times article notes, while the corporate culture may have been easily disseminated by word of mouth when Toyota manufacturing was only in Japan, with worldwide production, many different cultures must be taken into account. Concepts such as “mutual ownership of problems,” or “genchi genbutsu,” (solving problems at the source instead of behind desks), and the “kaizen mind,” (an unending sense of crisis behind the company’s constant drive to improve), may be unfamiliar to North Americans and people of other cultures. A recent increase in vehicle recalls may be due, in part, to “a failure by Toyota to spread its obsession for craftsmanship among its growing ranks of overseas factory workers and managers.” Toyota is attempting to address these needs by establishing training institutes in the United States and in Thailand.

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Posted in: Books, Lean, TPS