Toyota - a Brief History

I will discuss Toyota history as follows:
• The start
• The 1940s
• The 1950s
• Etc. The start. The Toyota Motor Corp. (TMC) had its beginning in 1933 when it was established as a division within the Toyoda Automatic Loom Works, Ltd. The founder of Toyota was Kiichiro Toyoda (1894–1952), the son of Sakichi Toyoda (1867–1930). The values that have underpinned Toyota success startedwith Sakichi who was the son of a carpenter. Sakichi went from carpentry, which he had learned from his father, to making looms for weaving.

He then came up with many inventionsthat resulted in remarkable improvements in looms. For example, by 1924 he had developed the famous “Type G” automatic loom, but not without much of that “hard work and persistence. ” One of the important features of Toyoda’s looms was a device that would automatically stop the loom should a thread break. This prevented any defective cloth from being produced. This concept of building into a machine features that prevent poor quality is know as jidoka and would become one of the TMC’s two “pillars” of the Toyota Production System (TPS)

According to Wikipedia (Sakichi Toyoda, 2006) Sakichi is often referred to as the “King of Japanese Inventors” and as the “father of the Japanese industrial revolution.

” Toyota Motor Corporation the name was changed from Toyoda to Toyota for three reasons: (1) to differentiate the founders’ work from his personal life, (2) ease of pronunciation (3) to give the company a happy beginning as “Toyota” has eight strokes in katakana and eight is considered a lucky number in Japan.

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In 1926 Sakichi started the Toyoda Automatic Loom Works that, due to the superiority of the Toyoda looms, became highly successful.

Even today, Toyota produces highly praised spinning and weaving machines. However, to Sakichi’s credit he recognized that more than weaving machines, the automobile was the wave of the future. Therefore he encouraged his son, Kiichiro to get into the automobile business. Drawing on the resources of the Toyoda loom business, in 1930, Kiichiro began doing research into small gasoline-powered engines and, as mentioned, an automobile division was established within the Toyoda loom works in 1933. But it wasn’t just to increase the Toyoda fortunes that caused the elder Toyoda to encourage his son.

As quoted this is what Sakichi told 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. ” Which exemplifies another part of the Toyota philosophy that a company should always do what it can to better society. There was a lot of hard learning for Toyota in those early years: Toyota Motor Corporation struggled through the 1930s, primarily making simple trucks.

In the early years, the company produced poor-quality vehicles with primitive technology and had little success. But, with persistence in 1935 Toyota came out with its first prototype car, the A1. Early units broke down a lot, so customers were carefully chosen for loyalty. Aftermarket sale support was so strong that entire trucks were often replaced without question. Development and production engineers were loaned to dealers so that repairs could be done and so that the engineers could learn about what needed to be changed in production. And, in 1936 Toyota came out with its first production car, the Model AA Sedan.

In 1937 the Toyota Motor Co (TMC) was established as an independent company. One year later the first TMC plant started operations and the just-in-time system was launched on a full-scale basis This plant (Honsha), near Toyota’s head office in Aichi Prefecture (near Nagoya), is still operating making Land Cruisers. The 1940s. This was a time of dramatic change for Toyota. It was expanding rapidly trying to meet the demands of WWII and later the consumer market. During the Pacific War the company was dedicated to truck production for the Imperial Army.

Because of severe shortages in Japan, military trucks were kept as simple as possible. For example, the trucks had only one headlight on the center of the hood. Fortunately for Toyota, the war ended shortly before a scheduled allied bombing run on the Toyota factories in Aichi. Following the war, production returned to the needs of the consumer with the introduction of the SB small truck and the SA compact passenger car in 1947. That same year Toyota celebrated the production of its 100,000th vehicle. The 1950s. The 1950s were again a time of remarkable change for Toyota.

Two people now took on prominent roles in Toyota’s development: Eiji Toyoda and Taiichi Ohno. In a way one can say their contributions were “just-in-time. ” Towards the end of the 1940s Toyota was experiencing a severe cash flow problem. In trying to stave off bankruptcy, it called for strict cost cutting and a request for “voluntary” retirements. This led to a labor dispute that was only quelled when the president, Kiichiro, accepted responsibility and resigned. This personal sacrifice on the part of Kiichiro reflects one of the foundational elements of Toyota’s philosophy.

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 At this same time when Toyota was near collapse Eiji Toyoda and Taiichi Ohno were busy devising ways that the company could better compete with its American counterparts, Ford and GM. Towards this end Eiji, who had been given a leading role in the company, visited U. S. plants to learn the secret of their success.

What he found was both good and bad: the good was the continuous flow system of the assembly line, the bad was the batch and queue system of making parts. Large companies like Ford and GM could afford to make a lot of one part at one time and have huge inventories of it sitting around to be used, Toyota didn’t have that luxury. This led Eiji and Taiichi Ohno (a production genius) to continue perfecting the just-in-time system with the idea of not making and delivering a part to the assembly line until it is called for; in other words, a “pull” system. About this time Toyota began applying some of W. Edwards Deming’s ideas such as everyone being responsible for meeting the customer’s expectations, the idea of an internal customer, the PDCA cycle – Plan, Do, Check, Act (PDCA) cycle is a way of approaching almost any task: based on “customer” expectations, plan the task, then do it, then check to see how well the results conform to what the customer wanted, finally act to improve the results , and kaizen (continual incremental improvement). In fact, in 1965, Toyota won Japan’s top quality award named after Deming. As these ideas were adopted and put into practice, the now famous ToyotaProduction System (TPS) gradually emerged.

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. The 1950s saw Toyota, despite its earlier difficulties, continue to come out with new models of cars and trucks such as the famous Crown introduced in 1955. In fact by 1955 Toyota was making 8,400 cars per year and 600,000 cars per year by 1965. Some other notable events that took place during the 1950s were:
• 1951: The creative idea suggestion system was started. 1953: The corporate slogan “Good Thinking, Good Products” was established.
• 1957: Toyota Motor Sales, U. S. A. Inc. was established.
• 1958: Toyota opens a plant in Brazil (its first outside of Japan).
• 1959: Toyota’s second Japanese plant starts operations (Motomachi). The 1960s. This decade was one of explosive growth for Toyota. By 1962 Toyota had produced its one-millionth vehicle domestically. It was a time of expanding exports too with cumulative exports also reaching the one million mark by 1969 . In 1961 Toyota announced what it hoped would be car for everyone much like the original Volkswagen.

The Publica—for “Public Car”—was small, cheap, economical, and plain. It fact it proved too plain for a Japanese public that was moving upscale faster than Toyota realized. So Toyota, in typically fashion, reacted to give the customer what he or she wanted, the famous Corolla. It was sized between the Publica (700cc) and Corona (1500cc), looked classy, had modest power, yet was economical and inexpensive. The Corolla was announced in 1966 and by March 1968 more than 3,000 were being exported every month. In fact, once it was introduced into America in 1968 with its selling price of $1,800, sales there grew at a rapid pace.

The Corolla was on the way to becoming “the people’s car” for the entire world! Considering the often-negative affect of unions on American automakers, this continuing effort on Toyota part to foster mutual trust and respect between labor and management surely has contributed to its success. Some other notable events that took place during the 1960s were:
• 1961: Toyota Motor Thailand Co. , Ltd. established.
• 1965: Toyota awarded the Deming Prize, Japan’s highest honor for quality. Toyota’s Kamigo Plant (engines) starts operations. 1966: Toyota’s Takaoka Plant starts operations—current main products: Corolla, Allex, Platz, Funcargo, Vitz, ist, Sienta, Porte.
• 1968: Toyota’s Miyoshi Plant starts operations—current main products: drive trains, forged parts. The 1970s. The 1970s saw Toyota continuing to advance in both sales and quality. As the Toyota Production System (TPS) became more and more refined, Toyota was able to ramp up production yet not at the expense of the quality and reliability of its vehicles. Having already won the Deming Prize in 1965, Toyota became the first company to be awarded the Japan Quality Control Medal.

According the Union of Japanese Scientists and Engineers (JUSE) When it is recognized that an applicant’s implementation of TQM has improved substantially beyond the level at the time it won the Deming Application Prize, the company is awarded the Japan Quality Medal. This was also the decade when Toyota came out with the Celica, it’s popular sports car. In 1965 Toyota produced the sporty but small Sports 800, and then in 1967 a much beefier 2000GT. Some other models that came out during the 1970s were: Carina (now Allion), Light Ace, Publica Starlet, Town Ace, Chaser, Tercel, and Corsa.

By 1972 Toyota had produced its ten millionth vehicle domestically and cumulative exports reached five and ten million units respectively in 1975 and 1979. The 1980s. Toyota’s production and sales continue to soar. By 1985 cumulative exports had reached 20 million units and by 1986 Toyota had produced its 50 millionth vehicle domestically . The New United Motor Manufacturing, Inc. (NUMMI) was established as a joint 50/50 venture with GM to reactivate a GM plant in Fremont, California. This huge plant continues to this day as a benchmark against which other U. S. plants measure themselves.

NUMMI’s current main products are Toyota’s Corolla and Tacoma pickup truck, and GM’s Pontiac Vibe. Toyota assigned Ichiro Suzuki as the lead engineer. Suzuki had become a legend within Toyota and was known as the “Michael Jordan” of chief engineers. After conducting a couple of focus group interviews with “luxury car” owners, Suzuki began compiling the features that he thought such people wanted. For example, in rank order, these were the things most important to buyers of Mercedes:
• Status and prestige of image
• High quality
• Resale value
• Performance (e. g. , handling, ride, power) Safety. In fact, Suzuki set targets for the Lexus based on beating an “equivalent” Mercedes and BMW in five areas: top speed, fuel consumption, noise (quietness), aerodynamics, and vehicle weight. The guiding philosophy for the development effort was a set of “no-compromise” goals. Some other notable events that took place during the 1980s were:
• 1981: Toyota Motor Co. , Ltd. and Toyota Motor Sales Co. , Ltd. Merged into Toyota Motor Corporation.
• 1986: Toyota’s Teiho Plant starts operations—current main products: machinery, dies for casting/forging plastic molds. 1987: Toyota Technical Center of Europe established in Belgium (now TMME Technical Center).
• 1988: Toyota Motor Manufacturing, U. S. A. , Inc. (TMM) starts operations in Georgetown, Kentucky (now Toyota Motor Manufacturing, Kentucky Inc. [TMMK])—current man products: Avalon, Camry, Solara, engines.
• 1989: Toyota’s Hirose Plant starts operations—current main products: electronic parts and components. Tokyo Design Center established. The 1990s. Although Toyota had been steadily developing overseas production facilities it was in this decade that such production really took off.

By 1994 annual overseas output had exceeded one million units and was on the rise . Toyota would continue to add new brands to its line up such as the Estima, Windom, RAV4, Avalon, Harrier, and, most significantly, the Prius hybrid. In fact, introduction of the Prius in 1997 was to change the auto industry for all time, as it was a radical departure from the use of a gasoline or diesel engine only to power the vehicle. Now a gasoline engine would be coupled with a battery- powered electric motor to improve the car’s fuel mileage. But the Prius didn’t start as a hybrid.

In the early 1990s there was concern that Toyota needed to begin thinking about how it could do a better job of developing and manufacturing cars as the company moved into the 21st century. This concern then morphed into the Global 21 (G21) project to build a car that was just the opposite of the gas-guzzlers of the time. In fact the challenge was to build a car that was relatively small yet roomy inside and with radically better fuel economy. The initial goal was for a 50% improvement over the then current fuel economy. In 1994 management changed this to 100%.

Given the state of technology at the time, this essentially eliminated everything except a hybrid gas/electric power combination. Once the hybrid concept was decided on, the project began to move along, not a little influenced by Hiroshi Okuda, who became Toyota’s president in 1995. When Okuda asked about when the G21 would be ready he was told the development team was “aiming for December 1998, ‘if all goes well. ” To which Okuda replied: “That is too late; no good. Can you get it done a year earlier? There will be great significance in launching the car early.

This car may change the course of Toyota’s future and even that of the auto industry. ” So the target launch date was now December 1997. As related in Liker, remarkable, even heroic efforts allowed the engineering team to not only meet that date but also better it by two months with an October 1997 launch
• 1998: Toyota Motor Manufacturing Indiana, Inc. (TMMI, Inc. ) starts operations—current main products: Tundra truck, Sequoia, Sienna. Toyota Motor Manufacturing, West Virginia, Inc. (TMMWV) starts operations—current main products: engines, transmissions. Toyota Motor Tohoku, Inc. tarts operations—current main products: mechanical and electronic parts. The 2000s. The 2000s might be described as the decade of globalization for Toyota. For example these are some of the foreign operations by start year and their current main products listed under Toyota Up Close (Quarterly Highlights) North American production continues to set records with a cumulative production of 10 million units achieved in 2002. In the same year the highly successful Prius achieved sales of 100,000 2002 was also the year Toyota entered Formula One (F1) competition which it continue to vigorously pursue

Toyota today. Toyota Motor Corporation is one of the world’s leading auto manufacturers, offering a full range of models, from minivehicles to large trucks. Global sales of its Toyota and Lexus brands, combined with those of Daihatsu and Hino, totaled 8. 12 million units from January 1, 2005 to December 31,2005. Besides its own 12 plants and a number of manufacturing subsidiaries and affiliates in Japan, Toyota has 53 manufacturing companies in 27 countries and regions, which produce Lexus- and Toyota-brand vehicles and components.

As of March 2005, Toyota employs approximately 265,800 people worldwide (on a consolidated basis), and markets vehicles in more than 170 countries. Toyota’s automotive business, including sales finance, accounts for more than 90% of the company’s total sales, which came to a consolidated ? 18. 55 trillion14) in the fiscal year to March 2005. Its diversified operations include telecommunications and prefabricated housing. Having somewhat briefly covered the history of Toyota let’s now look at what makes Toyota tick so successfully. 3. The Toyota Way This section is based on the work of Dr.

Jeffrey K. Liker, which he published in his 2004 book The Toyota Way. Liker is a Professor of Industrial and Operations Engineering at the University of Michigan (Ann Arbor) and has been studying Toyota for more than twenty years. The basic idea of Liker’s Toyota Way is that there is much more to Toyota’s success than the commonly accepted view that it is due to the Toyota Production System (TPS). As we shall see, the TPS is only a part of the Toyota Way. Having just reviewed Toyota’s history we have already picked up some clues as to why Toyota has been successful besides practicing its TPS.

Take, for example, Sakichi Toyoda’s and son Kiichiro’s belief in hard work and persistence, and that they should think longterm and be contributing to the good of society. Take also the example of Kiichiro accepting responsibility for the company’s troubles in 1950 and stepping down from the presidency. Take also the almost heroic efforts that went into the Lexus and Prius developments demonstrating Toyota’s stick-to-itiveness in tackling the toughest problems until they are solved. These examples are but a few reflecting the Toyota Way that has becoming the very fabric of the company’s culture.

We will now take a look at the fourteen principles that comprise Liker’s Toyota Way. To add some structure to these fourteen principles, Liker came up with his “4P” model. The 4Ps are: Philosophy, Process, People & Partners, and Problem Solving. Associated with each P is one or more principles thusly:
• Philosophy (Long-Term Thinking)

Principle 1: Base your management decisions on a long-term philosophy even at the expense of short-term financial goals.
• Process (Eliminate Waste)

Principle 2: Create continuous process flow to bring problems to the surface.

Principle 3: Use “pull” systems to avoid overproduction.

Principle 4: Level out the workload (heijunka). (Work like the tortoise, not the hare. )

Principle 5: Build a culture of stopping to fix problems to get quality right the first time.

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

Principle 7: Use visual controls so no problems are hidden.

Principle 8: Use only thoroughly tested technology that serves your people and processes.
• People and Partners (Respect, Challenge, and Grow Them) Philosophy (Long-Term Thinking)—One principle

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

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

Principle 11: Respect your extended network of suppliers and partners by challenging them and helping them improve.
• Problem Solving (Continuous Improvement and Learning)

Principle 12: Go and see for yourself to thoroughly understand the situation (genchi genbutsu).

Principle 13: Make decision slowly by consensus, thoroughly considering all options; implement decisions quickly.

Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). Let’s now learn more about each principle and see how it has contributed to Toyota’s success. Process (Eliminate Waste)—Seven principles Point 1: Create constancy of purpose towards improvementof product and service, with the aim to become competitive and to stay in business,and to provide jobs. Principle 2: Create continuous process flow to bring problems to the surface. Continuous flow is the opposite of traditional batch and queue.

Companies often believe they can be the most efficient by making or working on as many of the same part as possible at the same time; i. e. , taking advantage of the economies of scale. Therefore a traditional manufacturing company might have separate departments for stamping, welding, assembly,etc. As Liker points out once you have set up your operation this way the next question is how do you move these batches from one department to another, and when? This means you need another system to plan all this, which also means adding to the non-value adding bureaucracy.

And, worse yet you have generated a massive amount of work-in-process (WIP) inventory that is just sitting around waiting to be moved/used and conPapers upstream is only made/performed when the next downstream operation places the demand for it. Thus, in an ideal setup, all inventory is eliminated These are the benefits of continuous flow:
• Improves quality since a part is moved one at a time forcing the operation receiving the part to ensure it is OK. When there is a lot of inventory from which an operation is working it is too easy (and human nature) to just toss the bad part and grab another.

Then whatever caused that bad part never gets addressed.
• Improves flexibility since the order-to-delivery cycle time is much shorter and, if the customer’s needs change, it becomes much easier to respond to the change.
• Improves productivity since it is much easier to determine exactly how many resources (people, machines, etc. ) are needed when you are making just what’s needed.
• Frees up all that floor space that was wasted holding, as Liker puts it, “piles and piles” of inventory.
• Improves safety since smaller amounts of material are being moved.

This means less chance of lifting strain and accidents involving the equipment needed for moving large batches (such as forklift trucks).
• Improves morale because the workers can see better that what they’re doing is truly value-adding and not just churning out hundreds of parts without really knowing why.
• Reduces the cost of inventory as already discussed. Principle 3: Use “pull” systems to avoid overproduction. In the ideal onepiece flow an operation does not get what it needs from the next upstream operation until it calls for it, in other words there is zero WIP inventory

Applying this idea to manufacturing, the question became how to best signal the source of supplies for any operation when more supplies are needed. Thus was born the famous kanban system. A kanban is simply some device to signal the next upstream supply source that more of whatever it supplies is needed. Kanban in Japanese means card and a card of some sort is usually used along with a standard size container for that particular item. At the far right an operator is using up parts from a standardized container.

Once those parts are used up, the empty container, along with it “parts retrieval kanban” goes back to a nearby replenishment store for refilling and return to the operator. Of course while this replenishment is going on another erations. This is called “pull” because the operation is “pulling” what it needs versus having it being “pushed” on to it for use. As mentioned, in a traditional batch and queue operation a lot of parts are made or processed at the same time and then placed in an inventory and moved to wherever they’ll be used next waiting to be used. Obviously this creates a lot of waste.

Although in a mass production system, such as Toyota’s, it is not possible to have perfect one-piece flow, the idea of pull is applied to the maximum extent possible. The idea for this, as the story goes, came when Taiichi Ohno visited the U. S. in the 1950s and became fascinated by the way supermarkets operated. Instead of a lot of inventory being held by these stores, the customer was “signaling” what should be bought from the wholesalers and when it should be bought. This “signal” was simply how much of each item was bought requiring it to be replenished to the shelf.

Another example is the gas gauge in our car signaling us when it’s time to fill up. Similarly, when assembly line workers begin to use parts from bins (hinges, door handles, windshield wipers), they take out a kanban card and put it in a mailbox. A material handler will come on a timed route and pick it up and go back to a store to replenish what is used on the assembly line. Another material handler will replenish the store based on parts from a supermarket of supplier parts. This will trigger an order back to parts suppliers. And so on.

This has resulted in a great payoff in reducing costs and cycle times and increased customer satisfaction. Principle 4: Level Out the Workload (Heijunka). When we discussed creating flow, several benefits were listed. Another way to describe the benefits of flow is that it helps eliminate waste and this is the whole purpose of lean manufacturing. There are eight “non-value-adding” wastes:
• Overproduction
• Waiting
• Unnecessary transport
• Overprocessing
• Excess inventory
• Unnecessary movement
• Defects
• Unused employee creativity The Japanese word for waste is muda. “M’s”: muri and mura.

Muri is overburdening your people and machines and mura is unevenness. Although in the process of oing lean a company is trying to get the most out of its processes, this doesn’t mean pushing those processes beyond their natural capability (muri). However, this is what usually happens in a company because of the unevenness (mura) that exists. Say a company is making two products, a fairly large and complicated one and a less expensive, simpler one. The time and effort required to make the more complicated model will always be greater than the time and effort required for the simpler one.

Therefore, when there is strong customer demand for one model or the other the manufacturing process will either be overburdened or under burdened. That is, when trying to meet demand for the more complicated model every worker and machine will be overworked and when the demand shifts to the simpler model there will probably be a lot of “free time. ” This is especially true for “build-to-order” type of operations. In such cases companies will often have a lot of the most popular products being held in expensive finished product inventory.

Another reason for this unevenness is companies tend to build a lot of one model at a time due to the time it takes to set up the tools and equipment for another model. Primarily based on the pioneering work of Shigeo Shingo who worked closely with Toyota, previous setup times that were measured in hours are now measured in mere minutes. A lot of this was accomplished by carefully studying what was required to effect the changeover—for example of a large stamping press—and doing as much of it as possible while the press was still operating.

It turns out that often there are only a few things that still need to be done to affect the changeover thus allowing it to be accomplished quickly. To minimize mura and thus minimize muri and the muda it causes, Toyota practices heijunka. Heijunka means leveling to even out the workload as much as possible. This is also known as “balancing the line” Klein (2006), for mixed model assembly lines such as Toyota’s, a key factor is solving the model-sequencing problem. This means finding “a sequence of all model units to be produced such that inefficiencies (work overload, line stoppage,off-line repair, etc. are minimized. ” Given Toyota’s ability to meticulously plan everything, they have essentially solved this problem. Toyota’s ability to quickly affect changeovers also greatly contributes to heijunka. One of the benefits of this line leveling is the stabilizing affect it has on the whole supply chain. When a supplier knows he or she can almost always depend on the schedule planned by Toyota, their operation too becomes “evener” as doesthat of his or her suppliers in turn, etc. Although heijunka may entail making some customers wait a little longer for the particular car they want, the net effect benefits everyone.

However, even with heijunka in place, Toyota has been working to make it possible for dealers to call in with “last minute” changes so that many times any change “except for the basic body type” can be accommodated One way to think of heijunka is like the race between the tortoise and the hare. As quoted from Ohno (1988) in Liker (p. 115): The slower but consistent tortoise causes less waste and is much more desirable than the speedy hare that races ahead and then stops occasionally to doze.

The Toyota Production System can be realized only when all the workers become tortoises. Principle 5: Build a culture of stopping to fix problems to get quality right thefirst time. The traditional approach to manufacturing by companies like GM and Ford has been to keep the assembly line running at all costs. On the surface this seems to make sense. However, it also causes and hides a lot of problems since to expect a complicated operation such as an automobile assembly line to operate problem-free for any length of time really makes no sense.

Therefore Toyota goes to great lengths to create an operation that can stop when there is a problem. The idea is to not only prevent bad product but also solve the problem, be it a temporary aberration or something that could cause long-term quality problems. This building of a system that has the inherent ability to prevent bad quality from being produced goes back to Toyota’s automatic loom origins when Sakichi Toyoda invented a loom that would automatically stop if a thread broke.

The Japanese term is jidoka and, along with just-in-time, is considered one of the two “pillars” of the TPS. The elements of jidoka are:
• Devices built into the machine or system to prevent a wrong operation or to stop the process or cause a signal to occur when a problem occurs.
• Employees who are authorized to stop an operations when they notice a problem.
• Employees who are trained on how to respond to stoppages (e. g. , a team leader who will quickly help an assembly line worker).
• Standardized work procedures.

Devices to either prevent a wrong operation or alert the operator when one has occurred are called poka-yoke or, in English parlance, fail-safe devices. There are many examples such as the third prong on most U. S. electrical plugs meant to ensure it is inserted so a proper ground occurs. Liker gives the example of a certain cotter pin that needs to be inserted in assembling an axel. A light curtain must be passed through when reaching for the cotter pin. If this doesn’t happen a light goes on. Signals such as this are called andon and are used throughout Toyota.

An andon is simply a signaling device and could be a light or an audible signal. For example, above the Toyota assembly lines are light boards that will light up to show which work station is having a problem so the team leader can quickly attend to that problem. The line worker usually activates these andon lights on Toyota’s assembly lines when he or she sees a problem. Furthermore when activated the assembly line is temporarily stopped. The worker is not only authorized to stop the line but also is expected to do so—almost the ultimate empowerment.

At the same time a highly trained team leader will immediately step in to assess the situation and take whatever action is required. The team leader has until the vehicle moves into the next workstation zone to respond, before the andon turns red [from white] and the line segment automatically stops. This is likely to be a matter of 15–30 seconds… In that time the team leader might immediately fix the problem or note it can be fixed while the car is moving into other workstations and push the button again, canceling out the line stoppage. Or the team leader might conclude that the line should be stopped.

However, since the line is divided up into segments with buffer in between, up to 10 minutes could pass before the entire line has to stop. As rarely happens. When I visited a Toyota plant recently I noticed while we were watching an assembly line that the andon lights were often coming on but almost as often they were quickly turned off as each “problem” was quickly attended to. The final element of a good jidoka system is standardized work. This applies not only to how problems are responded to but also to each operation on the assembly line.

In fact the two are related since should a new problem spring up that hasn’t been encountered before, the first step will probably be to carefully review the way the operation in question is presently being performed—without standardized work procedures this would be impossible. After a careful analysis of the existing procedure and why it failed, the necessary changes to it can be made. So the idea of jidoka and building quality into the product by ensuring any problems are immediately nipped in the bud has many benefits.

These include ensuring extremely high-quality product, making each worker feel like he or she really is making a difference, encouraging and letting everyone continually practice problem solving, and creating a culture that says “problems will occur, let’s work together to solve them and not waste time blaming people! ” Principle 6: Standardized tasks are the foundation for continuous improvement and employee empowerment. When we think of standardized work we think of some controlling, all knowing bureaucracy that develops the standards and imposes them on the poor worker.

Such was the legacy of Fredrick Taylor whose well-intentioned efforts to get more out of each worker often made the job so onerous that the worker resisted to the point where any gains were wiped out by this resistance. At Toyota the emphasis is not on “control” but on “empowerment. ” Toyota too has a bureaucracy but one whose purpose is to support the worker by ensuring that the work standards are “best practice standards” versus coercive “performance standards. ”The philosophy behind Toyota work standards is you can’t improve something if it isn’t stable.

Liker uses the example of improving a golfer’s swing; if he or she has not yet learned to swing consistently, it will not be possible to improve it. Similarly, if a certain way of doing something on the assembly line hasn’t been standardized so it is always done the same way, it won’t be possible to move to an improved level. And this improvement is largely left to those doing the work since they are in the best position to know how to improve it. However, Liker also mentions what happens when something appears to go wrong during normal operations: the standardized procedure will be checked to see if it was followed.

If it was, then the team/group leader will watch as the worker goes through the procedure to see what needs changing. But the idea of letting the worker him or herself make improvements is very empowering and is probably the reason Toyota gets so many useful suggestions from its workforce. This is one way Toyota encourages its employees to follow its motto: Good Thinking, Good Products. Also, by having the workers write and improve the standards ensures they will be in a “language” that the worker can understand.

Recognizing the great variation in type of tasks, from those that are highly repetitive to those less so (like design work), Toyota strives to find the proper balance for each task. For the highly repetitive tasks the standards will be very detailed, for those at the other end of the spectrum there will be more room for individual initiative in doing the task. However, it must be again emphasized that even for the detailed standards, the worker is empowered and expected to come up with improvements to it reflecting a culture that says “you’re important and we want to know what you think will make our company better. Principle 7: Use visual controls so noproblems are hidden. Liker starts talking about this principle by describing how most companies outside Japan operated: with “piles and piles of inventory stacked to the roof ” so you couldn’t see if everything was where it should be or if the work was being performed as it should. This resulted in a problem being hidden until the company is forced to address it. And, by that time, the problem was so serious it had become a crisis. In fact, “crisis management was the accepted mentality of the day”.

Liker quotes Fujio Cho, a recent president of Toyota, about how Taiichi Ohno, the “father” of TPS felt about visual control:Mr. Ohno was passionate about TPS. He said you must clean up everything so you can see problems. He would complain if he could not look and see and tell if there is a problem. It is safe to say you can’t have a good lean system without good visual controls. Visual controls could be anything that helps you see if things are where they should be and the work is being performed as it should. For example, a good lean system will include the practice of 5S.

The five S’s are: sort, straighten, shine,standardize, and sustain. Sort what is needed in the work place from what’s not needed and get rid of what’s not needed. Straighten up what’s needed, for example by arranging all the tools at a work station in a way so the worker knows where each tool is and knows immediately if a tool is not there. Continually shine up everything to keep tools, equipment, and the work area clean and well-working and to be able to quickly detect any problems such as leaky pipes. Have standards for carrying out the first three S’s and periodic audits to sustain and constantly improve the 5S system.

Some other visual controls include the use of kanban cards to tell when a bin needs filling, markings on the plant floor to show where WIP or a parts bin should be placed, and—as discussed under Principle 5—andon lights and standard work procedures. The standard work procedures are posted at each workstation and are the current best practices for that work. As Liker puts it: “In essence, Toyota uses an integrated set of visual controls or a visual control system designed to create a transparent and waste-free environment”

Such a system allows the supervisor to walk through an area and immediately tell if the work is being performed as it should or if any problems exist. Liker gives several examples of how a good visual control system can greatly improve an operation. For example a process control board at a Toyota parts distribution center in Kentucky allows almost minute by minute monitoring of a highly sophisticated picking operation thus making the operation very efficient. Another example is in the area of product development that started with the Lexus development.

For a new development Toyota now sets up an obeya (large room) where everything relevant to that development is displayed: schedules, design graphics, manpower charts, financial status, quality information, etc. Also the chief engineer and his/her key people work out of this room. Such a system provides everyone involved a full picture of what’s going on at any time. It also facilitates coordination among the various functions eliminating a lot of previous waste in “transporting” information from one function to another.

It is interesting that most visual controls are manual systems such as the kanban and obeya. With the remarkable advances in computer technology and the advent of the Internet and intranets it is tempting to try and do more visual controlling with this technology. However, as Liker notes, such can often have unintended consequences. For example when some visual control requires a person to log on to a computer to see it there is a good chance that will never happen. Often a tried and true manual system that makes the visual control plainly visible to everyone is the best.

Principle 8: Use only thoroughly tested technology that serves your peopleand processes. Toyota believes in adopting new technology but only to the extent it truly supports its people and processes. Too often a company will be enticed into adopting some new technology based on the vendor’s promises of how much more efficient it will make some process or operation. Liker gives the example of an American auto parts supplier that felt its operation would be greatly improved by adopting software that allowed anyone real time visibility of inventory in the supply chain.

The object was to increase its inventory turns. As Liker pointed out to the company, just knowing what was in the supply chain without actually doing anything to reduce inventory would not help. And, in fact, Liker later proved this by cutting inventory by 80% at one of their plants without any information technology. Contrast this with the way Toyota’s service parts operation views technology. As Liker states it:…they continue to use an old software system developed in house years ago under much simpler circumstances.

It has continuously evolved over the years and does exactly what is needed today. Typically, when Toyota is considering adopting new technology it will first study the process that will be affected and be sure that everything possible has been done without that technology to make the process efficient. Then a pilot program will be carefully run to ensure the new technology really will significantly improve the process without distracting the worker(s) involved. In other words, the new technology must truly add value to the process and make it easier for the worker(s) to do a good job.

In some cases the new technology will be adapted to meet Toyota’s specific needs versus being adopted wholesale. An example given by Liker is when Toyota decided to consider using CATIA and in the event customized it to “fit their development process. ” Toyota’s adoption of CATIA is also an example of how thoroughly it studies technology before making that final decision since, according to Liker, it was only “after two years of thinking and debating” that Toyota decided to make the shift. The bottom-line is will the new technology really support Toyota’s people and processes.

The continuation and promotion of traditional values such as these provide Toyota the stability it needs to be a true learning organization and progress to the next level of excellence. Contrast this with organizations that are up one day and then in the doldrums the next, requiring the next drastic shakeup, maybe by bringing in a “turn around artist. ” The idea of a learning organization also means Toyota places a genuine value on its people. Toyota leadership differs from other companies and it focuses on building a true learning organization by People and Partners (Respect, Challenge, and Grow Them)—Three principles

Principle 9: Grow leaders who thoroughly understand the work, live the philosophy,and teach it to others. When compared to most other major automakers, Toyota top leaders are quite different. Most of the others tend to bring in outsiders, often for the purpose of “turning the company around. ” A case in point is Carlos Ghosn of Nissan. Toyota believes in growing its leaders from within. For example the current president, Katsuaki Watanabe, who took over in early 2005, oversaw procurement and business development at the time of being named to that post.

He also came with experience in production and corporate planning . In fact Watanabe represents a continuation of a long line of such presidents dating from the founder, Kiichiro Toyoda. What is most significant about this line is how it has preserved the traditional values that actually started with Kiichiro’s father, Sakichi. These are such things as hard work, having first-hand knowledge of the work, and making customer satisfaction and the good of society important priorities. The bureaucratic manager has little understanding of the value-added work being done and leads by enforcing the rules.

The group facilitator may be a great motivator but can he or she really provide that much guidance on how to do the job. There is probably little respect for either of these leaders—one a “command and control” type and the other a “feel gooder”—both know less than the workers about what’s really going on. The task master is the micro-manager who does know what’s going on but has little faith in the workers, directing their almost every move and again, probably getting little respect. The Toyota leader operates mostly in the fourth quadrant: the builder of learning organizations.

He or she not only knows what’s going on because of having “been there,” but also is firmly committed to the Toyota Way of doing things and seeks to pass this on to his or her subordinates. As shown by the shading in Figure 8 sometimes it is necessary to operate in the other three quadrants depending on the situation. Liker sums up the common traits of Toyota’s past great leaders:
• Focused on a long-term purpose for Toyota as a value-added contributor to society.
• Never deviated from the precepts of the Toyota Way DNA and lived and modeled themselves around this for all to see. Worked their way up doing the detailed work and continued to go to the gemba—the actual place where the real value-added work is done.
• Saw problems as opportunities to train and coach their people. Such leaders are respected for both their knowledge of the business and leadership abilities. As opposed to the bureaucratic manager or task master they seldom give orders. Instead they ask people questions to encourage them to think problems through themselves and thus learn so the whole organization becomes better. Principle 10: Develop exceptional people and teams who follow yourcompany’s philosophy.

Toyota believes that you cannot get exceptional teams without hiring and training exceptional people. Liker relates how employees were selected for a new service parts facility in Hebron, Kentucky. Out of a total of 13,500 applicants for the 275 jobs a subset of randomly selected applicants was chosen to attend a job fair. At the job fair these applicants were further screened and given information about Toyota. Finally, based on the job fair, certain applicants were invited to undergo three one-hour interview meetings.

In the year leading up to the launch of the new facility only some of the jobs were filled to form a design team to develop the operational process and begin learning the Toyota Way. This cadre of workers was also used to help select additional “associates” as the operation gradually ramped up. The point is that rather than immediately begin a full-fledged operation, the Hebron launch was well thought out and gradual to ensure not only the best people were selected but also that there was enough time to, in effect, build theculture first.

This began with the job fair where information was given out about Toyota and how it does things, through to the training and assimilation of more and more associates as the launch progressed. No doubt, Hebron is a model of how Toyota wishes to bring on board not only the best and brightest but also those who will share its traditional values and make good team members. In most organizations the hierarchy is top-down, in Toyota it is “bottomdown”; that is, the team members are considered the most important people since they are the ones adding value for the customer on the assembly line.

Figure 9 shows this along with typical spans of control. At first glance the excessive number of group and team leaders would seem a waste of manpower. However pared with most companies, these team and group leaders are not just standing or sitting around to “supervise” the work but have many specifically assigned duties all designed to provide maximum support to the team members doing the work. And not least of these is to fill in for a team member when necessary or be ready to aid assistance when a problem arises. As mentioned earlier, each team member has the authority—and esponsibility—to stop the line when a problem arises. This signals the team leader who is immediately available to lend assistance or make a decision about what to do. And, from my recent experience of visiting a Toyota plant, it was apparent from all the times the andon lights came on that these team leaders were kept busy and earning their pay. Liker describes how Toyota firmly believes in the various motivation theories such as the Maslow and Hertzberg “internal” theories and the “external” theories of Taylor and Skinner.

However, there is much more to developing exceptional people and teams than simply trying to apply these theories. It requires building a culture that integrates your technical and social systems and is based on a consistent set of principles and this is something that takes years. As far as motivation, Liker sums it up well: People must have a degree of security and feel they belong to a team. You must design jobs to be challenging. People need some autonomy to feel they have control over the job.

Moreover, there seems to be nothing as motivating as challenging targets, constant measurement and feedback on progress,and an occasional reward thrown challenging them and helping them improve. It doesn’t take a “rocket scientist” to realize that if you want a quality product you must use quality supplies. Problem Solving (Continuous Improvement and Learning)—Three principles the principles of the TPS. According to Liker another way Toyota supports its suppliers is by closely monitoring and rating them.

A rating of “one” means the supplier has completely shut down due, say, to its plant burning down; a “five” is exemplary. If a supplier puts a Toyota assembly plant in danger of shutting down it is rated “two”and this happens: Toyota will then send in a team of people swarming through the supplier’s plant and the supplier must develop an action plan to address all of their concerns. A level two typically means severe probation for a year. But note that the supplier is not simply chastised or dropped as might happen with other major automakers, but helped to recover to again begin meeting Toyota’s high standards.

Again we see this general theme in the way Toyota operates: working with its partners to solve the problem not wasting time on the “blame game. ” This is the way it works with its employees too. And, in the end, everyone wins with better suppliers and better employees. As Toyota continues to refine the way it develops and supports its suppliers,bringing them closer and closer to the ideal of not just the TPS but the Toyota Way, we see the what Jeffrey Liker believes is a unique achievement: “…an extended learning enterprise. This is, to me, the highest form of the lean enterprise”

Principle 12: Go and see for yourself to thoroughly understand the situation (genchi genbutsu). On the surface this principle seems very simple even though it may not be practiced that much by most companies. It reminds me of another management “rule”: manage by walking around; that is, don’t stay in your office all day but get out and see what’s really going on. However, for Toyota this principle is considered throughout the company as what most distinguishes its management approach from that of other companies And, in its full realization, genchi genbutsu is far from simply going and seeing.

Liker quotes the president of the Toyota Technical Center (TTC), Tadashi Yamashina: “It is more than going and seeing. ‘What happened? What did you see? What are the issues? What are the problems? ’” To practice what Toyota calls “deep” genchi genbutsu requires years of training and practice, and is expected of all employees. The practice entails not just observing the situation but analyzing it in terms of what problems might exist and what might be their causes based on your knowledge and experience.

This need to have sufficient prerequisite knowledge and experience is why acquiring the ability to practice really “deep” genchi genbutsu may take years to acquire. All this is not to say data doesn’t have its palace, but data alone will usually not tell the whole story and should be used with genchi genbutsu, not in place of it. An example of this in Liker is a story told by David Baxter, a vice president at TTC One of his early assignments was visiting a testing lab Toyota was thinking about using.

The purpose of the visit was to see exactly how that lab carried out the testing by giving them a sample test that had already been run by Toyota. According to Baxter, they got the “right answer” but by doing genchi genbutsu, Toyota found out the lab wasn’t doing the test to Toyota standards. Had Toyota simply accepted the results data without going to the lab it would have said this lab’s OK even though the test was not up to Toyota’s high standards. A simpler example of genchi genbutsu related by Liker is the major redesign of the Sienna minivan in 2004. Since it was targeted at the U.

S. , Canada, and Mexico, the chief engineer on this project, Yuji Yokoya, decided to go and see for himself just what it was like to drive such a vehicle in those places. In fact his goal was to drive in every U. S. state and in Canada and Mexico. As Liker relates it:Yokoya achieved his goal of driving in every single U. S. state, including Alaska and Hawaii, and every part of Canada and Mexico. In most cases they were able to rent a Toyota Sienna, looking for ways to improve it. As a result, he made many design changes that would make no sense to a Japanese engineer living in Japan.

For example improving “drift” control due to the roads in Canada having a higher crown than those in America, and incorporating a flip-up tray the driver can use to hold food since Americans often eat in their cars as opposed to the Japanese who usually stop to eat. Principle 13: Make decision slowly by consensus, thoroughly considering all options;implement decisions quickly. Alex Warren, a former Toyota Motor Manufacturing, Kentucky VP, contrasts the way Toyota makes decisions with the way they are made in a typical American company. Say there’s a project that is to be fully implemented in a year.

The American company will begin implementing in three months but spend the rest of the year correcting problems. Toyota will spend nine to 10 months planning, then implement in a small way—such as with pilot production—and be fully implemented at the end of the year, with virtually no remaining problems. It is another case of Toyota believing in the wisdom of the slow but steady approach of the “tortoise” versus the herky-jerky approach of the “hare. ” According to Liker there are five major elements to Toyota’s decision making:
• Find out what’s really going on—the situation—including the use of genchi genbutsu. Fully understand the problem (e. g. , by asking “why” five times).
• Consider all possible alternatives and develop a rationale for the preferred one.
• Build consensus with all possible stakeholders both inside and outside of Toyota.
• Use very efficient communications to accomplish the first four elements. Another thing that contributes to a smoother and speedier implementation once the decision is made is nemawashi. Nemawashi is common in Japan and means discussing a decision with all concerned before the decision is made to get consensus (the fourth element).

Often these discussions will be informal but a formal request for a proposal to be reviewed could also be part of the nemawashiprocess. With Toyota the purpose of nemawashi is twofold: to not only get the person’s agreement but, even more important, to see if that person has something to contribute that will result in a better decision. And it is important not to leave anyone out who could have an interest in the decision. The fifth element means communicating in a clear and concise way to accomplish the other four elements. Toyota has come up with what it calls the A3 report.

The idea is to place all relevant information about a decision to be made on an A3 size sheet (297 ?? 420 mm). In American terms this would be about the size of two letter-size sheets side by side. This may seem very restrictive since we think of a typical company report outlining a major decision as consisting of the tightly scheduled Prius development; for example, the hybrid engine technology started with 80 different alternative approaches that were eventually narrowed down to ten and then four. These four were then carefully evaluated resulting in a final solution that was confidently selected as the best.

The point is that all this takes time but, in the end, results in faster developments since all the details have been worked out beforehand for a sound final decision. An actual A3 report and what is probably a typical presentation format: current situation,proposal, labor cost & time analysis, plan, implementation, controls, and timeline. Indeed, if all these points have been thoroughly addressed and fully coordinated through nemawashi, it is likely the final decision will go quickly and smoothly. In fact a certain proposal was given final approval in less than five minutes at the executive board meeting.

In sum, Toyota’s way of making decisions ensures all possible alternatives have been considered, ensures all potential interests are heard from and, sort of serendipitously, contributes to Toyota’s goal of being a true learning organization since all the work that must happen before the decision requires a lot of learning to take place. And this brings us to the last of the fourteen principles: becoming a learning organization. Principle 14: Become a learning organization through relentless reflection ( hansei) and continuous improvement(kaizen).

The key to becoming a learning organization is “learning how to learn” and Toyota seems to have this down pretty well. An old truism is we learn by our mistakes and this is the basis for much of the learning that goes on in Toyota and why “relentless reflection” or hansei is part of the Toyota culture. Hansei means to continually be looking for the weaknesses in what you’re doing, be it some process you’re responsible for or a program you’re running. And by doing hansei, your ultimate goal is continual improvement (kaizen). Hansei is really much deeper than reflection.

It is really being honest about your own weaknesses. If you are talking about only your strengths, your are bragging. If you are recognizing your weaknesses with sincerity, it is a high level of strength. But it does not end there. How do you change to overcome those weaknesses? That is at the root of the very notion of kaizen. And, as Liker points out, it is not easy for Americans to accept this essentially Japanese cultural trait. In a traditional American program review setting the program manager would expect to be praised for all his or her hard work.

At Toyota the emphasis is not so much on what went right but what are the weaknesses in the program and how can they be overcome? Of course the idea is not to belittle a person’s efforts but to improve things; however, initially anyway, an American might take it as the former. The ideal is to establish this hansei mindset in every employee so this continual reflection on what’s being done in terms of how it can be improved becomes second nature. Closely related to hansei is Toyota’s attention to problem solving and training its people in it.

We’ve already discussed this under the last principle about the elements for making good decisions. For example, a lot of time is spent in understanding the true situation/problem including using genchi genbutsu. Once the problem is well understood then the “five whys” are asked. This means asking “why” five or more times as you progress back towards a root cause. A final word about Toyota as a learning organization: Toyota is process-oriented. Most companies are results-oriented; that is, focused on how much they can make or sell or how much money they can make in a quarter.

Toyota’s emphasis on learning is in terms of how to improve its processes be they for making a Camry or developing the next concept car. With good processes Toyota knows the results will follow and surely that’s being proven true today. Summary and Conclusion There are numerous examples to exemplify the greatness of Totyota management . One is from an interview with Jim Press who used to work for Ford before coming to Toyota. His experience at Ford was one of chronic customer complaints whereas once he came to Toyota: “In contrast, Toyota is aligned around satisfying the customer.

It felt like I finally had found a home” Another example is the way Toyota took a failed GM plant in Fremont, California and, with persistence, turned it into one of best plants in America, thus restoring jobs and contributing to the economy. Toyota has always believed in taking responsibility for its own problems. The thought of a government bailout would seem very strange to a company like Toyota. Toyota has faced and overcome many challenges in its past such as its initial efforts to build cars that would compete with the likes of GM and Ford with it’s then meager resources.

Such difficulties prompted the ideas of “just-in-time” and “pull. ” Starting with the values Sakichi Toyoda learned from his father and continuing with the preservation, enhancement, and passing on of those values right up to the present day, Toyota has become one of the most successful, admired, and imitated companies in the world. Throughout its history Toyota has had to overcome many problems. Not only has Toyota been able to do this, it has shown it can radically innovate as demonstrated with its Lexus and Prius developments.

Toyota is expected to soon be the number one producer of cars in the world, and this at a time when former powerhouses such as GM and Ford are struggling to survive. What is it about the way Toyota operates that sets it apart to be so successful? It is its values, and the specifics of how those values are actually practiced are what Liker has tried to describe in his book on the 14 Principles. It is not simply the Toyota Production System (TPS) that accounts for Toyota’s success but something bigger called the Toyota Way. This is what the 14 Principles, in effect, describe.

Probably the reason so many companies that try to imitate Toyota never achieve its level of performance is they, either consciously or not, have failed to develop a culture essentially based on the Toyota Way. Unless you are thinking long-term, developing your people, and striving to truly become a learning organization, practicing the TPS is only working at a surface level and will never result in true excellence. In fact, as companies often find, it becomes very difficult to sustain a good lean TPS-like operation without a change in their culture, and that’s the really hard part.

Base your management decisions on a long-term philosophy even at the expense of short-term financial goals. This principle says you should be acting in such a way as to improve the company as a whole, to bring value to the customer and society, and to accept responsibility for your own behavior. Everything Toyota does reflects this commitment to the company and society. It isn’t trying to simply make a lot of money but to make itself better so it can do more for its employees, customers, partners, and society as a whole, sort of a “vicious circle” but a good one!