The Toyota Production System (TPS) -- What Are the Misconceptions?

Earlier this month, Sarah K. Womack published a very interesting new book entitled Toyota's Improvement Thinking from the Inside: From Personal Transformation to Organizational Transformation, which describes how Toyota, through its coaches and leaders, develops its members’ capabilities through a series of continuous improvement (kaizen and problem-solving) activities. For many members of Toyota, this process results in a personal transformation that ultimately leads to organizational transformation.

When I spoke with Sarah this past week, I asked her: "What are the biggest misconceptions about Toyota’s continuous improvement methods and management system?” Here is her complete response:

The biggest misconception I personally had about Toyota’s continuous improvement methods and management system was a degree of personal development and deliberate challenge required to learn how to improve.  It was a journey of mastery of improvement tools, business needs, and how to work with members of your team to accomplish daily objectives.  For most members, that mastery was deeply personal and demanded humility and continuous reflection to transform our mindsets.  And, while there was some talk about Toyota’s philosophy of respect for people, respect is a social construct and difficult to understand from outside of the group.  Once I was inside, I saw how much emphasis there was on reducing team member burden towards the end of reducing waste and creating value for customers. 

More generally speaking of the field, I find many misconceptions about how the entire system works together.  Organizations tend to over-emphasize or de-emphasize the Toyota Production System (TPS) tools for improvement when a successful approach lands at a healthy balance.  The TPS tools are good entry points for people development and continuous improvement.  Value stream mapping, for example, is a tool to chart how material and information flows within a system, show waste, and tell a kaizen story (of waste reduction).  Even if a system is not very complex, learning it through deep study then articulating that learning visually is a special skill set developed over time.  You can feel confident in your skill set when you are able to use such a tool to tell the story of your improvement work.

Finally, I would highlight the misconception around standardization.  Many organizations, within and outside of manufacturing, think it is too rigid to work successfully.  However, Toyota and others have shown that by deeply studying processes and standardizing them, continuous improvements in safety, quality, and other performance outcomes are achievable.

What do you think about Sarah's experience? Has your company implemented a Lean initiative based on the Toyota Production System? Was is transformative?

The Toyota Production System -- A Humanitarian Economic System?

In August,  Olivier Larue publsihed a book entitled The Toyota Economic System: How Leaders Create True Prosperity Through Financial Congruency, Dignity of Work, and Environmental Stewardship, which analyzes the purpose and relationship between the different elements of the Toyota Production System (TPS) and how they add up to an economic system rather than just a production system that brings engineering and managerial solutions to businesses. It argues how TPS can be viewed as a science as opposed to a tool-based technique. 

When I spoke with Olivier this month, I asked him, "Why do you believe that the various components of the Toyota Production System (TPS) constitute a humanitarian economic system rather than just a production system?" Here is his complete response:

Many people associate societal economic progress with the creation of goods. However, from the era of craftsmanship to the advent of mass production, the way we organize work also plays a pivotal role in enhancing living standards.

The Toyota Production System represents the most recent methodology in this realm and possesses the potential to become the third and most advanced production system. It comprises three distinctive elements: the better-known technical element, which focuses on eliminating unevenness, waste, and overburden; the familiar managerial element, which prioritizes human safety and development; and the lesser-known philosophical element, which serves as the guiding principle for both the technical and managerial elements. When all three elements are simultaneously implemented, the benefits derived from adopting TPS are not confined to a company's gains alone. Instead, as with previous production systems, these benefits extend to the broader spectrum of our society. However, this is particularly pronounced with TPS because it is not primarily the result of technological advancements, as was the case with mass production systems. TPS also emerges from the application of human principles guided by a distinct philosophical concept of efficiency that markedly deviates from the efficiency favored by the mass production system.

Rather than fixating on a singular notion of efficiency—individual efficiency—with the belief that it will yield the optimal level of efficiency for all, TPS centers around total and true efficiency through the elimination of waste to remove the trade-offs inherent in optimization. Total efficiency entails resolving issues that hinder all factors or actors from attaining their full benefits. True efficiency entails eliminating costs rather than transferring them elsewhere. Eliminating waste entails increasing the ratio of value-added activity in work. 

The principle of total and true efficiencies through the elimination of waste is not confined to the shop floor, where TPS originated. 

• The principle of total efficiency doesn’t stop at a particular line, process, or piece of equipment which should not be boosted independently from the efficiency of preceding or subsequent processes. Total efficiency extends to the broader realm of efficiency management. For instance, it applies in the boardroom, where the pursuit of profit should not come at the expense of cash flow. Profit is undoubtedly essential for competitiveness, but it is equally crucial and substantially more efficient to achieve sufficient cash flow from operations to meet financial obligations promptly. 

• The principle of true efficiency is not restricted to the shop floor either, where the aim is to use the minimum number of workers, equipment, and materials required to produce only what is needed. True efficiency also implies not trading one self-worth in the workplace for better comfort at home, or raising the living standards of people in the present at the expense of the future when payments are due later. 

• The principle of eliminating waste is not limited to increasing the portion of value-added activity in the work, reducing unevenness and overburden to reduce cost but it also extends to reducing the environmental footprint as a result of all activities, value-added or not. 

Together, the philosophies of total and true efficiencies through the elimination of unevenness, waste, and overburden extend to all the stakeholders of society that contribute to a firm's success. This includes customers, employees, and the ecological environment of our planet. Each benefit supports the other as opposed to itself individually regardless of the cost to others. When all parts of the system reap their full benefits without incurring future costs, it coalesces into an economically humanitarian system. It contrasts with a more primitive economic system based on competition where losers are necessary in order to have winners. 

Of course, this call for a specific course of action necessitates problem-solving, and the unattainable remains beyond our reach. However, what is attainable is not always accomplished unless guided by economic humanitarian principles. As Pastor Tim Keller reminds us of what the critical philosopher Jurgen Habermas said “Science might tell us what is, but it doesn’t tell us what ought to be.” Today, The Toyota Production System offers possibilities beyond what a company can gain from adopting it. It presents an opportunity to eliminate socio-economic and environmental contradictions that have historically compelled economic trade-offs. 

What do you think of Olivier's thoughts regarding the far-reaching effects of the Toyota Production System? Do you feel TPS can be an "economically humanitarian system"?

Should US Manufacturers Relocate Factories and Production Back to the USA?

In June of this year, William A. Levinson published a book entitled Reshore Production Now: How to Rebuild Manufacturing and Restore High Wages, High Profits, and National Prosperity in the USA. The author contends that a manufacturing resurgence in the United States will not only increase the standard of living enormously but generate taxable economic activity that will help pay down rather than increase the Federal debt. Higher productivity also delivers a greater supply of goods to accompany higher wages and thus works against inflation. This can prevent looming recessions and disruptions.

I had a chance to speak with William this month, and during our conversation, I had the chance to ask him two crucial questions. I'm posting them here with William's answers following the questions:

What aspects of reshoring do manufacturers not fully understand? 

Accounting metrics often ignore the total cost of purchase or ownership of a product or service, and focus instead on only the immediate price. Harrington Emerson's Twelve Principles of Efficiency depicted the latter as near common sense, or focus on only the immediate bottom line, in contrast to supernal common sense which seeks to account for all costs. These include but are not limited to the carriage of inventory—one of the Toyota production system's Seven Wastes—in transit, the incompatibility of container ship-sized quantities with just-in-time production systems, the additional lead time associated with transportation, the fact that inventory gives defects a place to hide and additional exposure to force majeure supply chain interruptions. An earthquake that idles a vital offshore supplier factory, a ship that gets stuck in the Suez Canal, or a strike by longshore workers can all paralyze a supply chain. While domestic supply chains also are vulnerable to force majeure, they are also a lot shorter so there is much less exposure.

Many manufacturers and also retailers are also dependent on products from the People's Republic of China (PRC), whose recent activities have proven it to be a dangerous, untrustworthy, and unreliable supply chain partner. The PRC has a long track record of selling us counterfeit semiconductor devices, substandard active pharmaceutical intermediates (APIs), contaminated heparin, melamine-tainted foods, and most recently counterfeit N95 respirators that may have exposed their users to Covid-19. Cheap becomes expensive for domestic sellers who find themselves at the wrong ends of product liability lawsuits because their offshore suppliers, who are often beyond the reach of our judicial systems, cut corners. The PRC also threatened to cut off supplies of vital products, including medications needed to treat Covid-19, and it is now openly threatening nearby countries like Japan, Taiwan (a major exporter of semiconductors), and Australia with military force. The United States was able to respond quickly to wartime losses of access to, for example, natural rubber during the Second World War and we ought to be up to the job of making ourselves independent of the PRC today. 

Why are many company leaders reticent to rebuild manufacturing in the US?

The dysfunctional focus on labor costs drove the exportation of valuable American manufacturing jobs even though American industrial pioneers like Frederick Winslow Taylor, Harrington Emerson, and Henry Ford proved with real-world results that wages become largely irrelevant if management makes the job sufficiently productive. Emerson's Twelve Principles of Efficiency suggests that the idea of a contest of efficiency against inefficiency originated in Prussia where Helmuth von Moltke had to "do more with less" against France in 1870, as France had more soldiers, better rifles, and a superior economy. Japan adopted these principles and used them to win wars against China and Russia, both of whose populations outnumbered them. Japan applied the same organizational principles to its industries, and to the effect that American industrialists were alarmed at the prospect of having to compete against them. Americans such as Taylor, Ford, and Frank Bunker Gilbreth—who cited explicitly the application of military motion efficiency principles to civilian occupations—responded with what we now call lean manufacturing as later adopted by Toyota.

The dysfunctional focus on labor costs drove the exportation of valuable American manufacturing jobs even though American industrial pioneers like Frederick Winslow Taylor, Harrington Emerson, and Henry Ford proved with real-world results that wages become largely irrelevant if management makes the job sufficiently productive. Emerson's Twelve Principles of Efficiency suggests that the idea of a contest of efficiency against inefficiency originated in Prussia where Helmuth von Moltke had to "do more with less" against France in 1870, as France had more soldiers and a superior economy. The Japanese adopted these principles and used them to win wars against China and Russia, both of whose populations outnumbered them. Japan applied the same organizational principles to its industries, and to the effect that American industrialists were alarmed at the prospect of having to compete against them. Americans such as Taylor, Ford, and Frank Bunker Gilbreth—who cited explicitly the application of military motion efficiency principles to civilian occupations—responded with what we now call lean manufacturing as later adopted by Toyota.

Emerson, Taylor, Ford, and others also pointed out the short-sightedness of choosing cheap labor over efficiency. Ford's My Life and Work urges executives, "to overcome by management what other people try to overcome by wage reduction." Emerson's Twelve Principles of Efficiency adds, "It is unfortunate that the employer shies at the suggestion of a 10 percent advance and pays scant if any attention to a 50 percent inefficiency, two-thirds of which is his own fault." Taylor's Principles of Scientific Efficiency talked about the need to hire "high-priced men"—we would say high-priced workers today—who would follow instructions such as those typical of what we now call standard work. Taylor and Ford both added that, when workers realize that the benefits of productivity improvements will show up in their pay envelopes, they will look for ways to make their jobs more efficient. When employers pay as little as possible, the workforce will respond accordingly by doing only what it is told, and probably only when a supervisor is watching. Low wages also give management little incentive to, as Ford put it, "put more brains into the business" to make the jobs sufficiently productive to pay high wages. 

What do you think of Willam A. Levinson's perspective on manufacturing in the USA? Do you think manufacturers can be more profitable in the long run by relocating factories and production back to the USA?

What Is the "Toyota Template"?

Lean implementations, operational excellence initiatives, and even specifically, the Toyota Production System (TPS) are often misconstrued as simply a methodology focused on the formulaic implementation of tools. In a recent book entitled The Toyota Template: The Plan for Just-In-Time and Culture Change Beyond Lean Tools, the author -- Phil Ledbetter -- posits that the building of TPS, with the goal to eliminate waste, evolved as problems were encountered and solutions put in place and a wonderful byproduct of it was the growth of a problem-solving culture throughout Toyota that is unique in the business world. I spoke with Phil this month and asked him: “What is the Toyota template and how does it help sustain a Lean implementation?” Here is his response:

The Toyota template is about the relevance of the Toyota Production System to any type of business today. It succinctly identifies the key elements, places them in a logical, sequential or of implementation, and explains how each contributed to the formation of the Toyota culture. It's a blueprint for any business interested in a true lean transformation. The gold standard is Toyota and my book, The Toyota Template, demonstrates how businesses can use the "template" to arrive at a truly Lean, just-in-time production system.

Specifically, The Toyota Template explains the critically important elements of the Toyota Production System, analyzes the sequence of implementation as the system developed, and places these elements in a logical order of implementation based on the history and current knowledge. In addition, it addresses the effect of each element on the culture and some of the reasons for Lean implementation failures, including the problem with the value stream mapping.

Fujio Cho, Ohno protege' and former Chairman of Toyota Motor Corporation, has said, "Many good 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." The Toyota Template shows exactly how to develop this system. 

What do you feel are the major hindrances to a successful and long-term Lean implementation? 

Does Overall Equipment Effectiveness (OEE) Improve Manufacturing Processes?

“How does OEE systematically improve your manufacturing processes?” -- That was the question I recently posed to Ross Kennedy, author of a recently published book entitled Understanding, Measuring, and Improving Overall Equipment Effectiveness: How to Use OEE to Drive Significant Process Improvement. Ross is recognized as Australasia’s leading authority on total productive maintenance (TPM) and continuous improvement, and he had some key insights. Here is his complete answer:

OEE or Overall Equipment Effectiveness was created during the development of the Toyota Production System to help understand all the losses that could affect equipment performance so as to reduce lead times and improve quality, rather than relying on the traditional approach of measuring just equipment downtime. I first came across the concept in 1989 in a Productivity Press book titled TPM Development Program. It outlined that equipment could only be effective if it was Available when required, running at the ideal or theoretical speed or Rate (very best in ideal situation), and producing good Quality output first time. Hence OEE = Availability% x Rate% x Quality%.

Originally OEE involved the Six Big Losses (equipment failure, sets and adjustments, idling and minor stops, reduced speed, process defects, reduced yield) , however in more recent times this has been expanded to seven losses with the inclusion of planned downtime when the operating crew are at work.

OEE is often referred to as the measure that allows you to expose and capture the "hidden factory" within your plant. Often sites will identify opportunities worth 20% to 50% more capacity from their production lines or processes with little or no capital expenditure simply by fully understanding and doing something about all the losses that stop their equipment from being effective. I have certainly witnessed this in manufacturing, mining, and process industries during the past 20 years of applying this learning in a structured discipline way.

I have found when studied in detail, OEE losses can be attributed to three key areas:

• Technical issues such as design weaknesses or poor maintenance practices.
• People Development issues such as poorly trained operators or maintainers who lack an understand of prevention at source for equipment.
• Management issues such as inappropriate organization structures, rostering, recruitment, daily management policies, planned maintenance and planned break times.

Once identified and actioned, the improvement results can be very significant.

One mine site in Indonesia reported at an international conference in Asia how over two years they saved over US$135million by focusing OEE improvement on their run-of-mine. At Australia’s largest privately owned brewery, OEE was used to increase the capacity of their main production line by more than 15% each year to defer the need to increase to a two-shift operation for three years while still meeting the growth of their business which was reported in the local media as 17.5% average yearly growth from 1993 to 2012.

Unfortunately at many sites, OEE has become the most misused and abused indicator of equipment performance with some sites changing the definitions to make it appear better as they are required to submit it to corporate for comparison between other sites.

At one large multi-national food manufacturing site I visited they were boasting about their high OEE performance, however when I delved into the way they were measuring OEE, I realised that they had removed Planned Downtime and Set-up or Changeover Downtime and had an Ideal speed set at the standard average speed used for setting budgets and doing costing (typically 20% lower than true ideal or theoretical speed). In effect, they were hiding many opportunities for improvement so that they could report a good performance figure to corporate management. In other words, they had a culture of always trying to look good rather than seeking out opportunities for continuous improvement.

OEE should be seen and used as a "driver" for improvement, not as a performance measure to be compared or benchmarked between equipment and sites. As a "driver" for improvement, the definition for OEE should have a 100% correlation to the good output produced from your line or plant. In other words, if OEE increases by 10% then you should be making 10% more good output or making the same amount of good output within 10% less time, hence the need for the OEE definition to include all the seven losses. 

What are you thoughts on Ross Kennedy's perspective on the use of OEE for process performance improvements? Do you use OEE as a key performance indicator of manufacturing productivity?

What are Current Leader-Development Systems Lacking?

This month, David Veech published a very interesting new book called Leadersights: Creating Great Leaders Who Create Great Workplaces. This book addresses an important need: How organizations can create a leader-development system that defines, builds, and reinforces critical leader behaviors. When I had the chance to speak with David about his book, I asked him: What is the biggest problem with current leader-development systems and how can they be improved? He provided an insightful answer:

I'm not sure there are problems with leader-development systems that would threaten the livelihood of organizations, but as with everything else in our continuous-improvement community, there are always parts we can improve. I’ve centered and focused on a couple of areas, and I’ve tried to simplify things a bit as I try to communicate with people about becoming better leaders.

After years of studying the Toyota Production System and other companies that demonstrate consistent success, specifically those profiled in Jim Collins’ books Good to Great and Great by Choice, I have come to believe that the key features of any leader-development program must be built on a platform of servant leadership. I get a lot of agreement with this from people, but there are lots of pieces to becoming an effective servant leader.

The most significant of these pieces is the structure of the workplace. If we have an organization structure that is based on traditional, functional silos, and one that bases compensation of the accomplishment of self-set goals, that structure forces leaders into a particularly results-oriented focus, regardless of their personal leadership style preferences. The system affects their leadership behavior. When a leader assumes a new role, the subtle (or not-so-subtle) competitive pressures implied by the results-oriented system force that leader, out of self-preservation, to either undo what previous leaders have done, or make a change that has their fingerprints on it so they can stand out a bit from the crowd. In most organizations, leaders rotate through key positions moderately frequently (sometimes as little as 18 months between roles), and they get conditioned to this kind of activity even though personally they may be humble and very people-oriented. Lean helps because we try to change the work structures for better performance, and because we focus on the development of people as the primary outcome.

Changing the fundamental structure of the conventional organization is a large undertaking, so I have tried to outline something of a more subversive approach than blowing things up and rebuilding from the rubble. We’ll need to first identify what behaviors are truly important to us as a workplace. Empathy. Listening. Encouraging. Correcting. Coaching. These we describe and operationalize in our statement of corporate values, which with our vision and mission set out our operating philosophy. Then we tie these to performance appraisals and bonus compensation. These are hard to measure, so this is a leap of faith for most workplaces. More importantly though, we must have systems and leaders who model and teach these behaviors, and as with other skills we want to develop, these need to be set out in the leaders’ standardized work. I think this might be the biggest departure from what most of us talk about when we describe leaders’ standardized work. Where most of us use this tool as a checklist and reminder of the key things we must complete daily, weekly, and monthly, we don’t articulate how to be empathetic; how to listen; how to encourage. I think we can fix this be setting out standardized work for these types of skills and reinforcing these skills through frequent coaching as a task within Short-Interval Leadership. 

Ultimately, leaders only need to do three things: Decide to love, continue to learn, and let go of the control they think they have over the workplace. Those skills I mentioned are all components of these three decisions/actions/ habits. These allow us to integrate various leadership styles in our daily work, including the “go out and get noticed” piece that I call “connecting”. But I have to take this back to the structure conversation. Without key changes in the way we describe, hire, evaluate, and compensate leaders; and without key changes in how the work is structured in the workplace away from batch-and-queue, lots of handoffs, and transaction-driven and toward flow, it will be very difficult to build these types of leaders for the future.  

What type of leadership-development system exists in your organization?  What are the major factors affecting your leaders' behaviors?

The Toyota Production System and Job Shops

For this blog post, I’m turning the reigns over to Dr. Shahrukh Irani to explore how Lean initiatives can be successful in high-mix/low-volume environments and job shops. As an associate professor in the department of Integrated Systems Engineering at Ohio State University, his research at OSU produced JobshopLean.

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Lean is Necessary for Every Manufacturer
The goal of any manufacturer is to reduce the total time that customers must wait from the time that they place their order to the time that they receive their order free of defects. The Seven Types of Waste are activities that add:
1. Delays to the time that customers must wait to receive their order.
2. Costs to the price that customers must pay to receive their order.

A High-Mix Low-Volume Manufacturer is not like Toyota 
Without question, the revolutionary Toyota Production System is the gold standard for how any business can pursue cost reduction through waste elimination without headcount reduction. But does a high-mix low-volume manufacturer implement Lean the same way as a low-mix high-volume manufacturer such as Toyota? No -- no Toyota facility makes refrigerators and bicycles on any of their automobile assembly lines. An assembly line that uses a conveyor to move a product (or product family) through a fixed sequence of work stations is inflexible. It could not make other products whose manufacturing routings, bills of materials, and processes used to make the final product are different from those used to make automobiles. Finally, every Toyota assembly line must be just flexible enough only to build a limited variety of automobiles whose annual demand provides sufficient return on investment to justify continued operation of that line.

How a Job Shop Differs from an Assembly Line 
An assembly line and a job shop are radically different manufacturing systems. An assembly line is a low-mix high-volume manufacturing system. A job shop is a high-mix low-volume manufacturing system. Some of the characteristics of a typical job shop that make its production system radically different from the Toyota Production System are:

• It fulfills orders for a diverse mix of hundreds (sometimes thousands) of different products.
• Manufacturing routings differ significantly in their equipment requirements, setup times, cycle times, and lot sizes.
• The facility has a functional layout (i.e. the facility is organized into departments --“process villages”) such that each department carries equipment with identical/similar process capabilities.
• Demand variability is high.
• Production schedules are driven by due dates.
• Due dates are subject to change.
• Production bottlenecks can shift over time.
• Finite capacity constraints limit how many orders can be completed on any given machine on any day. 
• Order quantities can range from low to high.
• Lead times quoted to customers must be adjusted based on knowledge of the production schedule.
• The diverse mix of equipment from different manufacturers makes operator training and maintenance more challenging than for an assembly line.
• It is a challenge to identify the part families in the product mix.
• Customer loyalty is not guaranteed.
• It is necessary to be able to serve different markets. In fact, a job shop must deal with the tendency for their product mix to alter as their customer base changes or they hire new sales and marketing staff who bring with them their past business contacts from new sectors of industry.
• It could be a challenge to recruit and retain talented employees with a strong work ethic, a desire to learn on the job and get cross-trained to operate different machines.
• There are limited resources for workforce training.
• It is hard to control the delivery schedule and quality of suppliers.
• It is hard to negotiate the due dates set by customers.
• Production control and scheduling is more complex.

What Do You Think?
If you are a high-mix low-volume manufacturer and have customized the implementation of Lean in your facility or you would like to know how, please send us your questions and comments.  Let’s get a conversation going! 

Thank you,  
Dr. Shahrukh Irani
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So Why Did Pascal Dennis Update a Classic Book?

I spoke with Pascal Dennis this past week and had the chance to ask him a few questions about the recent publication of his new book Lean Production Simplified, Third Edition: A Plain-Language Guide to the World's Most Powerful Production System.The two previous editions of this book have been very successful with Lean practitioners at all levels within organizations, and these books have proven to be the best introductory texts to Lean methodology on the market. Here are a few of the questions I asked him and his answers follow.

What motivated you to originally write the book Lean Production Simplified?

I wrote the first edition of Lean Production Simplified hoping to share what I’d learned at Toyota. It had been my blind luck to work with patient senseis. I felt that if I could explain things simply, then perhaps I had gained a certain level of understanding. During the past 20 years, I’ve been the sensei helping companies apply the Toyota system or Lean. My practice has taken me far from the Toyota shop floor – into hospitals, power plants, container terminals, and research laboratories.  I’m certain that I learn as much as I teach. And the more I learn, the more I think of Socrates -- "The more I know, the more I realize I don’t know."

Why did you write the 3^rd edition? 

We must learn the Toyota system – and not just in manufacturing.  Hospitals, banks, universities, software developers, government agencies and other service providers are also hungry for Lean thinking and methods. Customers will no longer accept substandard safety, quality, delivery, or cost performance. 

Who composes the audience for this book?

Leaders and learners at all levels in manufacturing and in the ‘undiscovered countries’ – healthcare, financial services, the process industries, software development, construction, universities and the public service.

What’s different about the 3^rd edition?

I’ve added many more examples from outside the factory (e.g. design, engineering, administration, etc.) and from the industry sectors I previously mentioned. I’ve also included study questions at the end of each chapter.  My hope is that this third edition will be a working book, and that I’ll continue to find in the gemba, filled with highlights and notes in the margin. My study of aikido had prepared me for the Toyota “way.” I understood that it was a "do" or path, and that the Toyota shop floor was a dojo -- a place where you practiced a profound art or worked on your technique and on yourself.  Indeed, before stepping on to the shop floor, I felt like bowing -- a sign of respect for my team, organization, and the art of management. I still feel that way.  

What are your thoughts on Pascal's book Lean Production Simplified? Did it help you understand the objectives of a Lean initiative and enhance a successful journey?

Lean RFS (Repetitive Flexible Supply) -- A Missing Part of Lean Journeys?

Ian Glenday and Rick Sather recently published a very interesting book titled Lean RFS (Repetitive Flexible Supply): Putting the Pieces Together. I recently had an email exchange with both authors, and I had the chance to ask them about two key assertions that appear in the book:

1. “Existing planning processes used by most companies are fundamentally flawed.”

2. “The original foundation of the Toyota Production System is the least understood aspect of Lean, yet is crucially important.”

These are bold – some would say controversial – statements, and I asked them directly how they justify them. I’m reprinting their entire answer here:

In most companies, the weekly plan or schedule is different every week and then usually changes resulting in firefighting. This makes continuous improvement, agreed standards, and root cause resolution of problems very difficult to achieve and, more importantly, sustain. Planning is based on “economic order quantity” or batch logic that uses three main data sources – the sales forecast, actual production, and inventory levels. If any of these have changed since the plan was last calculated then one gets a different plan. For the plan not to change would require 100% perfect data – and that is NEVER going to happen. Forecasts will be wrong, production will make more or less than the plan, and as for 100% inventory accuracy – who has that?

There is an alternative planning logic – often referred to as flow. It is seen as the logic of Lean and is usually described as focused on achieving greater responsiveness to demand. However, this aspect of flow is the last two steps in a five step process Toyota followed. The initial steps focused on creating stability -- an essential foundation for sustainable continuous improvement, root cause resolution, and the following of standards. The term Toyota now uses to describe this is “heijunka.” It was, however, originally called “patterned production” as it created a fixed repeating plan. This seems impossible to achieve when demand is seen as variable. In steps 1 to 3, this repeating plan gets faster and faster resulting in shorter runs and more change-overs. This flies in the face of conventional thinking on how to improve performance. Using examples and quantified results from Kimberly-Clark and other companies, we show how it can be done and how levels of performance improvement previously thought impossible were achieved.

Is the weekly plan ever changed in your company? Have you ever heard of “patterned production”? In his foreword to the book, Professor Daniel Jones makes the following comment: “This book is the missing link in many Lean journeys.” What do you think of that powerful statement?

The A3 Problem-Solving Process

One of the most effective problem-solving approaches used by Toyota is the A3 report. "A3" is actually a paper size (11" x 17") that was used at Toyota to keep problem-solving documentation consistent, structured, and clear.

I recently spoke with Daniel D. Matthews, who spent 14 years as trainer, coach, and implementer of Lean Manufacturing at Toyota and recently published a book titled The A3 Workbook: Unlock Your Problem-Solving Mind. I asked Dan: "What would you say is the biggest mistake people make when trying to solve problems and how can the A3 problem-solving process help?"

Here is his complete response:

"The one mistake that is consistent from class to class is that participants jump to potential causes or even countermeasures before they fully understand the characteristics of the problem.

My first step is to coach them to ignore their natural inclination to take some kind of action. In the A3 problem-solving process, you are encouraged to delay acting on the problem until you have stated it clearly and precisely.

It is critical that you identify the facts that explain what is actually occurring and try to make your first 'sense' of the problem more specific. To do this, you must remove the subjectivity and replace it with facts.

To accurately depict the current situation, it is important to look at existing data related to the situation. Make sure that you go and see the situation for yourself; don’t rely on others to provide you with the information you need.

The data you gather will also help you later in the process when you have to break the problem down. To truly understand the problem, you must break it down into specific characteristics. The key to solving any problem is to follow the process and let the facts lead you instead of acting on your opinions and feelings."

Are you using A3 reports to solve problems? Do they hasten the path to the root cause?

Toyota from the Inside?

I've been acquiring and editing books about the production system, culture, and tools used at Toyota for many years now. Some of these books were written by leaders formerly employed by the automaker, and most are analytical and explanatory.

It was quite refreshing to read this article on the Kentucky.com site about a book written by Tim Turner, a team leader at Toyota's Georgetown plant. The book, titled One Team on All Levels: The Story of the Toyota Team Members, compiles true narrative stories composed by actual Toyota employees illustrating teamwork, principles, leadership, and values. All proceeds from the sales of book will be donated to the Toyota benevolent fund, which helps team members in times of need.

It quite interesting to read what working at this Georgetown plant actually means to this cross section of team members. This book gives a glimpse past value stream maps and A3s and reveals a part of the "on the ground" culture of dedication -- to improvement and each team member.

The writing of the book started in 2008, so the recent recall and associated developments at Toyota are not addressed in the book, but as Turner states in the article, "... the chapter's not yet written for our company, and we're all in the right mode."

Has anyone read this book yet? Feel free to share your thoughts.

Taking Toyota Out of Lean?

Like most lean advocates, I surely enjoy reading about presentations or case studies that detail the application of lean think and culture to new business and nontraditional industries. I was quite happy to read this article about a presentation given by Darren Bassett from FormaShape (a Canadian company that produces huge water slides) given at the recent "Composites 2010" convention in Las Vegas. He explains the benefits the organization received after adopting a lean initiative and, more specifically, how a specific TAKT time was established.

What I find curiously interesting about the article is the section that gives a brief background on the origin and history of lean. It states that the beginnings of lean manufacturing date back to Henry Ford's early 20th-century plants, but then continues with "the concept was taken up by the Japanese in automobile manufacturing in the '40s...." Not once is there a mention of Toyota! In addition, most lean practitioners know that lean culture was not something generally "taken up" by all Japanese automobile makers. The term lean was coined retroactively to describe the Toyota Production System -- the methodologies and culture we call "lean" were specifically honed at Toyota.

Do you think that because of the negative press Toyota has been receiving lately in regard to its recall of so many vehicles, writers are now shy to associate benefits derived from the most-powerful production system of the past 60 years with its originator? I might be reading too much into this one specific article, but do you think committees and organizations that sponsor lean and performance-improvement conferences will start to explicitly downplay the association of lean with Toyota?

The Toyota "Crisis" -- Is it the Problem or the Response?

I’m sure all lean practitioners and advocates are quite dismayed and disappointed with the continual reports of Toyota’s problems with their accelerators and braking systems emanating from all the news outlets. Of course, unfortunately, the current situation has also provided endless fodder for sarcastic sniping throughout the blogosphere. Although I think these current woes in no way repudiate Toyota’s noted production philosophy and culture or its massive accomplishments during the past 50 years, the credibility issues cannot be ignored. When reading or watching the news coverage, one realizes that the central topics -- Toyota’s equipment failures and its supply-chain process – have been overtaken by the debate of whether Toyota’s response to the crisis has been clear, timely, and at least adequate.

I’d very much like to hear the opinions of this blog’s audience – Are you satisfied or dissatisfied with Toyota’s response to this crisis? How has this crisis been affecting Toyota’s reputation? Do you think many business leaders and pundits will co-opt this crisis as an opportunity to wrongly declare that ultimately lean methodologies are critically flawed? Most importantly, what do you think Toyota can learn from its own lauded production system during this time?

The Best Sources of Information About the Toyota Production System

A question posted recently on LinkedIn asked about sources of information regarding the Toyota Production System.

I was pleased to see 20 responses to the question, with the recommendations including several books we publish.

The Productivity Press books suggested include Toyota Production System by Taiichi Ohno, Lean Production Simplified, Second Edition by Pascal Dennis, Value Stream Management by Don Tapping, Tom Luyster and Tom Shuker, several of the books by Shigeo Shingo, and even Today and Tomorrow by Henry Ford. And there were more.

Other recommendations (beyond our books) featured works by Jeffrey Liker, James Womack, Daniel Jones, John Shook, Richard Schonberger, and several others.

I thought I would ask the question of those of you who read this blog (which presumably includes people knowledgeable about lean).

What is your best source of information about lean or the Toyota Production System? I’ll even divide that into a couple of more specific questions: What is your best source of information on the concepts and principles, and what is your best source of how-to or training material?

Please join the discussion by posting your comments below.