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Tuesday, June 23, 2015

What Toyota Production System is Really About?

Many people don't understand the DNA of the Toyota Production System and the core values of the Toyota Way. I have seen many who think about TPS as a toolkit or lean manufacturing techniques that have worked with Toyota because Toyota has a different process, a stable environment, or a less fluctuation in customer demand. Some others believe that TPS works only with the automotive industry.

Jeff K Liker came out with a remarkable series of books starting from the Toyota Way: 14 Management Principles to the Toyota Way to Lean Leadership. He showed us what is the real TPS based on his 30+ years of experience studying Toyota. It took him 7 books to explain what TPS is and decode the system. It is a Thinking Production System. Neither a waste removal tool nor a lean manufacturing tactic. Jeff also presented very well the leadership model that is behind the success of the system.

From my several years of experience in using TPS and leading improvement projects in various industries and businesses, testing what works and what doesn't, talking with professionals like Jeff K Liker, reading different business resources and Lean books, studying the Toyota series books, participating in international conferences and seminars, writing publications and teaching at the University. I can confidently say that TPS is not what many do think it is.

So what is TPS?

TPS is a thinking production system: yes the real point is to make people think and people are the value of the system. One of the students of Taiichi Ohno said “We at Toyota made a mistake. We should have never called it the Toyota Production System, we should have called it the Thinking Production System. Because the real point is to make people think and people are the value of the system." The TPS is made by people, adapted by people, improved by people, and  is being improved by people everyday and every year. Toyota's employees are making several improvements to the process everyday and thousands of improvements every year.
When a company say TPS didn't work for us, it is a leadership failure. I suspect they have tried to use the tools in a rigid way. The tools are flexible, adaptable, and implementable in many different conditions and industries. That's why you have to think about the tools and use your own mind. Develop your people and motivate them to think and act.

TPS is a long-term innovation process: without innovation Toyota would have never succeeded in anything. The Toyota R&D department has played a major role in the success of Toyota. The Toyota wiring loom has gone through several major improvements and developments. Toyota Prius was the first hybrid vehicle. Minomi is a revolution in the material movement. For those who don't know Minomi. It is  an innovation initiated in Japan focused on eliminating container completely. One of the Toyota group of companies in Japan called Central Motors has successfully created a revolution in material flow by a well designed system to move parts without containers, the system called (Minomi). The details are in the Toyota Way to Lean Leadership.

TPS is a customizable production system: the system can't be copied. What has worked in an environment or specific industry may not work in the other. Even from a Toyota plant to another, the system can't be copied identically. You have to think and adapt the tools. And make them tailored to your needs to suite the current condition. The best example comes from the Menomi system. When the Toyota Georgetown, Kentucky tried to copy and paste the technique from the Japanese plant, the process failed. Later, under the leadership of Gary Convis, the president of Kentucky plant, and because Gary was trained very well in lean thinking, he led the implementation using the Toyota Way. Again this leads us to the first point. TPS is a Thinking Production System. The real point is to make people think and the system won't succeed without leaders trained on lean thinking and lean culture.

TPS is a productivity improvement system: it is not only for manufacturing. TPS gives outstanding results in any area that want to achieve overall improvement in productivity, quality, safety, and reliability. It works very well with many different industries and businesses include healthcare, hospitals, hotels, accommodations, banking, services, construction,...etc. The problem in the use of word "production" makes many think that the system is for manufacturing. What about accelerating the check in and check out process in the hotel? Won't this improve productivity? Improve customer experience? There are many success stories in non-manufacturing industries presented in many lean references. We somehow managed to ignore the whole system aspect of Lean thinking and started calling it "Lean" or "Lean manufacturing" instead. This tragic reduction in scope allowed business leaders dismiss lean as a manufacturing thing. As a result, manufacturing companies believed that lean could be delegated down, and non manufacturing companies believed that lean didn't apply to them at all.

TPS is the Toyota problem solving kata: yes, Toyota has its own unique way in solving problems and developing leaders. Toyota has a psychology of process improvement unlike its other competitor. Kata is a Japanese term and is used in many Japanese martial arts. Literately mean "way of doing" and refers to a series of practice moves to build on form and technique. As Mike Rother presented What is the core form and technique that we want to build in leaders? 1. The ability to systematically improve processes toward a clear target (Improvement Kata) 2. The ability to coach others on the Improvement Kata (Coaching Kata). The routine of process improvement is done through the Toyota improvement kata, and the routine of coaching people is done through the Toyota coaching kata. The Deming cycle (PDCA) is a learning cycle rather than a process improvement cycle. If you have solved the problem and didn't develop your people, then the process will fail! People won't be able to continue managing the process with the new way if they haven't been trained on the culture of continuous improvement. Things will slip back and it will be difficult to sustain the lean results which is the problem in many companies. I highly encourage you to read this article: Culture Change Through the Problem Solving Kata.

TPS is the Toyota people & system: the system is built by people, modified by people and improved by people. People are the foundation of the continuous improvement. Actually, people are more important than the process. And companies should give higher priority in developing their people and provide an excellent working environment for them. Unfortunately, many companies say that they do lean, six sigma and other improvement projects to improve the morale of people and develop a new routine of thinking. But they are actually focusing only on the process and seeking the short outcomes. Toyota is highly committed to leadership development and training and coaching their employees.
In the Toyota Under Fire, when Jeff interviewed Akio Toyoda after the several recalls crisis, Mr Toyoda said that the rate of growth was higher than the rate of people development.

TPS is a system to build quality for customers: Jidoka is one of the main pillar of TPS. The TPS has been made like a roof. If you take any of the pillars holding the roof, the system will collapse. Take out quality, then no TPS. Jidoka is a principle of building quality for customers not inspecting quality. Building quality mean making it right at the first time. If you are making defected products or unacceptable quality standard for your customer and filtering this defects out through an inspection system, then there is no build in quality. And No Jidoka. You are just fire fighting the mistakes made at the manufacturing process. This costs a lot of money, resources, and put the business in risk if a defected product passed to your customer. Quality is what keeps any organization in business.

TPS is a strategy: a strategy for excellence. TPS is a strategy to achieve the operations excellence goals in quality, productivity, costs, safety and people morale. Without a vision aligned with the strategic objectives and the stretch goals, the improvement effort will have no direction to go. A process like Hoshin Kanri will help align the goals, the plan and the effort toward a common goal in order to achieve the strategic business objectives. Hoshin Kanri pays attention to the method rather than the results unlike the management by objectives MBO. Hoshin kanri focus on the innovative methods of achieving the target under a high motivation and development system.

TPS is total performance solutions: the tools and if used properly can turnaround any organization. Speed kills the competition. All the tools you need to maximize the productivity, quality, speeds, and delivery are included in the TPS. You just need to learn how to use these tools and the culture required to implement them in your organization. And remember, a good culture will last forever, a good toolkit under s stressed management system will die quickly! It is all about leadership and how are you going to use these tools.

TPS is not lean: yes we called it an inventory reduction program when we first heard of it. Just In Time is one of the main pillars in TPS. Just In Time mean ideally "One Piece Flow" the biggest waste in the process is the inventory. Inventory is the greatest waste and it hides many problems like quality, downtimes, waiting,...etc.  Lets get back to history. Prior to the 1970 oil crisis, very few people in the world know what Toyota was up to. The fact that is emerged stronger than ever while many of its competitors were quite battered made people take notice. People went to Japan to find out how Toyota had done this. What came back was that Toyota was doing something called "just in time." in the west this was interpreted as an inventory reduction program. As a result it became known as "just in time inventory" program. No body really believed that inventory could be taken out of the whole value stream, and so "just-in-time" came to mean "just-in-time inventory; go beat the heck out of your suppliers." The big three auto companies (Ford, General Motors, Chrysler) had lots of power over their suppliers, and they became pretty expert at this tactic - to their eventual detriment. James P Womack came with Lean Thinking in 1996 and helped many to see the whole value chain. He showed how waste clogs the system, and how continuous improvement was needed to link all parts of the chain to customer demand. he explain his findings in plain English, but once again we didn't hear. We somehow managed to ignore the whole system aspect of Lean thinking and started calling it "Lean" or "Lean manufacturing" instead. This tragic reduction in scope allowed business leaders dismiss lean as a manufacturing thing . As a result, manufacturing companies believed that lean could be delegated down, and non manufacturing companies believed that lean didn't apply to them at all. Lean may be an element of the larger strategy, but it most likely to be relegated to the plant. As a result, one company after another has tried Lean and has failed.

TPS is not a translated production system: many techniques that we use today with little or no conscious  are Japanese terms. Techniques like Poka Yoka, Hoshin Kanri, Genchi Genbutsu and the others. TPS is not a documented process so it can be translated via people in Japan and USA and passed through different cultures. Taiichi Ohno refused at the beginning to document TPS in fear that people will narrowly focus on tools and theories. He said, if you write it, you will kill it. For example Genchu Genbutsu also mean gemba which is translated as "go and see" is being used by many leaders. Leaders would only go & see when there is a problem. Gemba is being used only as a problem solving process. Actually, Gemba is a place for teaching, and learning management. Gemba is the place where value creating work happen, and where you should put value for your customers. All lean tools and techniques like value stream mapping, work standardization process, ...etc must be planned, measured, adapted, standardized and improved at the workplace. Gemba is not only a place to solve problems by grasping the current situation and finding the root causes by asking 5 whys. If you are interested in this subject, please read my article Daily Walks Train Future Leaders published in the Industrial Management Magazine JAN/FEB 2014 at the IIE.

TPS is a pull system not a kanban system: a pull system is the key to avoid over production waste. You are linking the chain to the customer demand instead of a schedule. You are no longer producing based on a schedule. As presented in Toyota Way, kanban is an organized system of inventory buffer. And according to Ohno, inventory is a waste. So kanban is something to strive to get rid of, not to be proud of!

TPS is not making to order in sequence: TPS promotes leveling rather than making to order in sequence. Most of suppliers try to follow the lean principle of making to order. But since customer demands can never been stable, and is naturally unpredictable, irregular and vary significantly, following the customer demand in sequence will cause a lot of issues and wastes. You have to level the product volume and mix. That's why many businesses have difficulties building to order, and say that Toyota has a stable environment, less fluctuation in customer demand, and TPS is only suitable for Toyota. They don't understand the underlying power of leveling.

TPS is 8 steps Toyota business practice: those are the eight steps of Toyota business practice in solving problems. 1. Define the problem relative to the ideal (plan). 2. Break down the problem into manageable pieces (plan).  3. Find the root cause of the problem (plan).  4. Set the targets for achievement (plan). 5. Select the suitable solution from different countermeasures (plan).  6. Implement the plan (do). 7. Revise the outcomes as expected (check). 8. Find out what is going wrong, adapt, adjust, and then repeat the cycle (act). The plan is invoked 5 times, this is to ensure that the root cause of the problem has been eliminated. Lean emphasize on the plan. And the plan phase cannot be created without a daily observation at the gemba to find the root causes, gather facts, discuss things with the process operators and develop the best countermeasure from different alternatives. For more about how the Deming cycle is utilized to develop leaders, read this article.

TPS is not zero inventory: many think that JIT is a zero inventory. The ideal thing is "one piece flow" which can ONLY be established through a production cell. There is a buffer. A little use of buffer. There is a buffer in the Andon system. There is a buffer to protect your customer. There is a buffer to avoid stopping the whole production line to fix a problem. There is a buffer to avoid breaking down a critical manufacturing process.

TPS is build on deep supplier relationships: this is one of the most important factors in the success of Toyota. Few companies realize so. Giving a small example, if you are not working with your suppliers to truly reduce the inventory holding, the process will fail. If you are trying to reduce inventory and asking your supplier to deliver fewer batch sizes and deliver more frequent, if your supplier is not ready, the process will fail. I have seen many and many companies trying to shift the cost of holding the inventory to their suppliers. No real savings in the complete value stream! You are redistribution of cost to suppliers, and no real savings. Very few people understand this. I recommend reading this article at Harvard Business Review. Building this kind of relation with suppliers is really one of the most difficult parts in implementing the TPS, but it is the most important part too.

I highly recommend this list of books that will help you significantly in your career. Here in my Amazon page

So what about you, have you tried to use the Toyota Way in your organization? How was the success? The results? Do you think that all employees and people in your organization are truly understanding the TPS principles? What about the top management commitment to the change? Do you think this article made any difference in what you were thinking about TPS? How?

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