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1-Page Summary of The Toyota Way
The Toyota Commitment
Kaizen is a Japanese philosophy that means continuous improvement. It’s the secret behind Toyota’s world-class quality and excellence, which defines its way of life and approach to business. Kaizen isn’t just a set of tools; it’s the firm commitment to strive for continual improvement in an environment that embraces change. The value of this goal is obvious, but few firms even come close. Continual improvement requires continuous learning in an environment that embraces change, so Toyota has another principle: Respect for its people. The combination of kaizen and respect equals “The Toyota Way,” which is a powerful strategic weapon against competitors who don’t have these tools or philosophies at their disposal.
Toyota is the third largest automobile manufacturer in the world, after General Motors and Ford. It sells more than six million vehicles a year and earns billions of dollars each year. Toyota has been incredibly successful recently; it earned $8.13 billion by March 2003, which was more than any other car company at that time. Industry analysts predict that sometime next year, Toyota will surpass Ford in global vehicle sales and eventually overtake General Motors as well. The reason for this success is not because they’re trying harder but rather because they are doing something different from their competitors: they’re succeeding more often than anyone else.
The Toyota Production System (TPS)
The Toyota Production System (TPS) is a unique manufacturing system that has inspired many companies to be more productive. TPS is not just about the tools used, such as JIT and 5S. It’s also about becoming part of an organization’s culture. Usually, senior managers don’t get involved in the daily operations or continual improvement efforts, but at Toyota they do.
Taiichi Ohno, founder of TPS (Toyota Production System), said that lean production is all about examining the time it takes to get an order from the customer and getting paid by them. It’s about reducing waste in each step of this process. The results are surprising:
It’s often best to stop the production line. This way you avoid overproduction, which is a major form of waste in the Toyota Production System (TPS).
To avoid overproduction, it’s important to build up inventory and support your direct labor. It’s also important not to try to max out the workforce because that will lead to overproduction and increase costs.
Use manpower when it’s better than using computers — Manual processes are often more effective (and flexible) than computer automation. Computers can reduce headcount, but people offer many advantages over machines.
The most common forms of waste that Toyota looks to eliminate are overproduction, delay, unneeded transport, over-processing, excess inventory and defects. When other companies try to adopt lean production methods they have problems because they see this process as a series of tools instead of a cultural adjustment. TPS is pervasive cultural transformation in which the company becomes more dependent on its workforce than ever before.
When Toyota formed a joint venture with GM in the early 1980s to set up its first overseas plant, it did two unusual things. First, it agreed to teach GM about how it made cars because its leaders realized that GM was struggling with its manufacturing operations. By helping GM, Toyota’s leaders believed they were helping U.S. society and giving something back for all of the help that America gave Japan after World War II ended in 1945.
Additionally, they decided to work with the UAW local union instead of GM’s advice. In fact, they sent a skeptical shop committee to Japan to study TPS and made them converts. When the factory reopened in 1984, its productivity was higher than any other North American plant owned by GM.
