Posts Tagged ‘Toyota’

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.

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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.

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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