Posts Tagged ‘The Toyota Way’

The Toyota Way Principle 4. Level out the workload

July 8, 2008

In general, when you try to apply the TPS, the first ting you have to do is to even out or level the production. Leveling the production schedule may require some front-loading of shipments or postponing of shipments and you may have to ask some customers to wait for a short period of time. Once the production level is more or less the same or constant for a month, you will be able to apply pull systems and balance the assembly line. But if production levels – the output – varies from day to day, there is no sense in trying to apply those other systems, because you simply cannot establish standardized work under such circumstances.

So says Fujio Cho, President, Toyota Motor Corporation.

Jeffrey Liker’s book, The Toyota Way, Jeffrey explains how it’s not possible to run a lean operation using Dell’s build to order model. One day you will have many customer orders, forcing your staff to work beyond capacity. The next there will be much fewer orders (and your people will be idle).

Toyota found that to work lean, they needed to even out production.

They do this by focusing on the three M’s of waste:

1. Muda – Non-value added work

2. Muri – Overburdening people or equipment

3. Mura – Unevenness

When most people start with lean, they tend to focus on Muda because it is the easiest to identify and eliminate. Unfortunately, fixing muda by itself can cause greater stress in the organization as now spikes in customer demand forces people to work harder. People become overburdened, equipment breaks down, and people abandon the lean initiative.

As Taiichi Ohno describes it:

The slower but consistent tortoise cause less waste and is much more desirable than the speed hare that races ahead and then stops occasionally to doze. The Toyota Production System can be realized only when all the workers become tortoises (Ohno, 1988).

To read more about these and other Toyota principles I recommend picking up a copy ofJeffrey Liker’s book The Toyota Way.


The Toyota Way – Use Pull Systems to Avoid Overproduction

May 19, 2008

Overproduction (waste) is one of the biggest tenets of the Toyota Production System. In this principle, Toyota recommends using pull systems to avoid producing overproduction.

Section II: The Right Process Will Produce the Right Results

Principle 3. Use “Pull” Systems to Avoid Overproduction

■ Provide your downline customers in the production process with what
they want, when they want it, and in the amount they want. Material
replenishment initiated by consumption is the basic principle of just-intime.
■ Minimize your work in process and warehousing of inventory by stocking
small amounts of each product and frequently restocking based on
what the customer actually takes away.
■ Be responsive to the day-by-day shifts in customer demand rather than
relying on computer schedules and systems to track wasteful inventory.

A tool Toyota uses to prevent overproduction is called kanban. A kanban is a sign. It could be well placed card signally that one area is about to run out of parts, or it could be an empty bin, indicating it is ready to be filled again with a specific number of parts. The kanban system is used for managing the flow and production of materials in a just-in-time system.

What is interesting is that even today, with all the electronics and computers at their disposal, you can walk into a Toyota factory and still see simple cards, and empty bins being used to manage production on the plant floor.

While kanban is a useful tool for managing inventory, Toyota still strives to eliminate the need for cards and signs, as inventory of any kind is seen as a form of waste. In Toyota’s view that is the greatest challenge. To create a learning organization that will find ways to reduce the number of kanban and thereby eliminate the inventory buffer all together.

This makes me wonder if there are ways we can reduce, or eliminate the kanban system we often use on our agile projects. The card wall.

The Toyota Way – Long-term philosophy

April 27, 2008

Section I: Long-Term Philosophy

Principle 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

■ Have a philosophical sense of purpose that supersedes any short-term decision making. Work, grow, and align the whole organization toward a common purpose that is bigger than making money. Understand your place in the history of the company and work to bring the company to
the next level. Your philosophical mission is the foundation for all the other principles.
■ Generate value for the customer, society, and the economy—it is your starting point. Evaluate every function in the company in terms of its ability to achieve this.
■ Be responsible. Strive to decide your own fate. Act with self-reliance and trust in your own abilities. Accept responsibility for your conduct and maintain and improve the skills that enable you to produce added value.

I have always been fascinated by companies who have discovered what they stand for, beyond making money. I have been fortunate enough to work for one (ThoughtWorks). I tried creating another with some friends (CambrianHouse). And I look forward to getting up every day and continuing my search for others.

My current fascination is with Toyota. Toyota seems to know whom they serve, why they exist, why they are here.

Here is a quote from Jeffrey Liker’s interview with Jim Press, Executive Vice President and C.O.O. of Toyota Sales North America.

The purpose of the money we make is not for us as a company to gain, and it’s not for us as associates to see our stock portfolio grow or anything like that. The purpose is so we can reinvest in the future, so we can continue to do this. That’s the purpose of our investment. And to help society and to help the community , and to contribute back to the community that we’re fortunate enough to do business in. I’ve got a trillion examples of that.

How can that be? How does Toyota stay in business (and become the 2nd largest car maker in the world) if it isn’t focused on making money?

To see another way in which Toyota distinguishes itself, compare Toyota and Ford missions statements:

Ford Motor Company

1. Ford is a worldwide leader in automotive and automotive related products and services as well as in newer industries such as aerospace, communications, and financial services.

2. Our mission is to improve continually our products and services to meet our customer’s needs, allowing us to prosper as a business and to provide a reasonable return to our stockholders, the owners of our business.

Ford’s seems reasonable. It wants to continuously improve products, to prosper as a business, and ultimately provide a return for the owners of the business.

Compare this now with Toyota’s.

Toyota Motor Manufacturing (North America)

1. As an American company, contribute to the economic growth of the community and the United States.

2. As an independent company, contribute to the stability and well-being of team members.

3. As a Toyota group company, contribute to the overall growth of Toyota by adding value to our customers.

No mention of shareholder value. No mention of quality products. Nor the pursuit of excellence (all things Toyota is passionate about).

Toyota doesn’t see it’s purpose as making quality products that sell and make money. That is only in support of the mission. The true mission is:

1. Contribute to economic growth of the country in which it is located (external stakeholders).
2. Contribute to the stability and well being of team members (internal stakeholders).
3. Contribute to the overall growth of Toyota.

In other words, in order to contribute to external or internal stakeholders, it must enhance the growth of society. This is the reason for making excellent products. This seems so backwards to how most companies operate. Toyota wants its employee’s to grow, continuously improve, build high quality products, and learn, to create dedicated repeat customers that will last a life time.

Their reason for being is to keep doing what they do – enhance society.

The Toyota Way is made of 14 principles. We have only scratched the surface here with Principle #1.

In the future I hope to look more closely at each. In the mean time, if you have other examples of companies, that have found meaning beyond making money, I would love to hear about them.

To learn more about Toyota, and how it does what it does, I recommend picking up a copy of the Toyota Way by Jeffrey Liker.

Batch vs continuous flow processing

April 16, 2008

If you are at a cocktail party, and someone asks you to compare and contrast the differences between batch and continuous flowing processes, calmly lower your martini, grab the nearest table napkin, and proceed to draw the following picture:

batch processing

Suppose we were in the toy car manufacturing business and there were three stages to building a car: the body, the wheels, and the paint. You decide the most optimal way to build the cars would be to batch them up into groups of ten, and send them from one stage to the next in one big batch.

If we assume it takes 1 min per car at each stage, then we would expect the following results:

Time to build first car: 21 minutes
Time to build first batch of ten: 30 minutes

Now, suppose we were to draw this picture on another napkin:

flow processing

Only this time instead of manufacturing our cars in groups of ten, we build them one at a time in a one-piece continuous flow process. Were we to do this, we could expect these results:

Time to build first car: 3 minutes
Time to build first batch of ten: 12 minutes

In the continuous flow example, the first car rolled off the assembly in in 3 minutes (18 minutes faster than the batch process).

All ten cars were built in 12 minutes (an improvement of 18 minutes over the batch process).

To really impress your guests, you could then demonstrate your worldly knowledge and command of automotive history by explaining that this is precisely what Toyota figured out when it began competing with Ford’s mass production system.

Toyota realized that a continuous one-piece flow process:
* increases productivity – more cars in less time
* builds in quality – easier to spot defective parts sooner
* is more efficient – less material lying around
* reduces costs – less inventory

By this time, other party goers will have no doubt picked up on your conversation, and you will most likely be the life of the party with everyone hinged on your every word.

You could excuse yourself.
You could change topics.

Or you could pickup a copy of Jeffrey Liker’s excellent book, The Toyota Way, and prepare yourself for the next party.

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The Toyota Way – You have a new assignment

April 9, 2008

The year is 1950. You are an up and coming manager at a young automotive company in Japan. Your county has just lost a world war. You’ve had two atom bombs dropped on you. Your industrial capability has been decimated. Your supply base is wiped out. And your consumers have little money.

Your boss comes back from the Ford River Rouge plant in the U.S., calls you into his office, and calmly hands you a new assignment. He wants you to improve your manufacturing process so that it rivals Ford’s.

Sound like something from mission impossible?

This is precisely the circumstances that Taiichi Ohno faced when he was tasked with this very challenge over 50 years ago. From which emerged the Toyota Production System (TPS).

Would you be up to the challenge?

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The Toyota Way

April 8, 2008

The Toyota Way

Every once in a while you pick up a book you just can’t put down. This happened to me recently when I finally got around to reading The Toyota Way, by Jeffery Liker.

The Toyota Way goes deep inside the heart of the company. Jeffrey shepherds readers through the birth of the company, the development of its founding principles, and the ever so popular Toyota Production System (TPS) itself.

The book is full of stories about the birth of Lexus (Toyota exec’s basically got tired of driving European luxury cars into work everyday) and the revolutionary development of the Prius.

If there is one thing that is made apparent to me after reading this book, it is how young the agile software movement is, and how universal the Toyota principals are. They cross industry, transcend business, and could be used by many companies (more on this later).

I am also starting to appreciate how difficult it is to copy Toyota (I don’t believe you can). Toyota’s been practicing and refining these practices for over 70 years. It’s no wonder Ford and GM can’t catch these guys. It’s much more than the practices.

If you are looking for a great read, and hunger for more after reading Mary and Tom’s Implementing Lean Software Development, this book is for you.

Share, learn, and grow!

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