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Lesson 3: Without knowledge and understanding of the Toyota Production System, you are a small ship in heavy fog without a reliable compass.
Learning about world-class performance is certainly an international endeavor. Japan in particular has pioneered systems that, if used correctly, can increase output while minimizing input. Japan has also shown us an example of the success of a strict system, which works in any industry or business, large or small.
Starting with the loom
The world standard today for efficient production is the Toyota Production System pioneered early in the twentieth century by Sakichi Toyoda, his son Kiichiro, and a production engineer by the name of Taiichi Ohno.
Figure 3.1: Machines that can stop automatically when encountering problems
Sakichi Toyoda, the inventor of automatic looms, founded the Toyota Group. In 1902 he came up with a loom that stopped automatically if any of the threads snapped. (See Figure 3.1.) His invention — autonomation, or a machine that worked not only automatically but autonomously — opened the way for loom works that enabled a single operator to handle dozens of looms. Because such looms would not continue to produce imperfect fabric and use up thread after a problem occurred, Sakichi’s invention reduced defects and raised yields. This principle of designing equipment to stop automatically and immediately call attention to problems is a cornerstone of the Toyota Production System.
When the Toyota Group set up an automobile-manufacturing operation in the 1930s, Sakichi’s son, Kiichiro, headed the new venture. Kiichiro traveled to the United States to study Henry Ford’s production operations. He returned to Japan with an understanding of Ford’s conveyor system, which he was determined to adapt to the small production volumes of the Japanese market.5
In Japan, the younger Toyoda implemented Ford’s conveyor system. He also organized production of the different assembly parts so that each was produced only in the varieties and quantities needed and was supplied only when necessary for the assembly sequence. In this way, each process produced exactly what was required by the next process, and no more. Toyoda coined the term “Just in Time” for this basic philosophical foundation.
Borrowing from the supermarket
Taiichi Ohno took just-in-time manufacturing a step farther, integrating it into a comprehensive production framework. In the late 1940s, Ohno, who later became an executive vice president at Toyota, managed a machining shop for the company. There, he experimented with ways of configuring the equipment to produce needed items in a timely manner. But he got an entirely new perspective on his JIT production system when he visited the United States in 1956.
Ohno went to the United States to visit automobile plants, but it was the supermarkets that most influenced his thinking. At that time, Japan did not have many self-service stores, and American grocery stores impressed Ohno. He marveled at the way customers chose exactly what and how much of a commodity they wanted, right from the shelves. He also admired the way the supermarkets supplied varied merchandise in a simple, efficient, and timely manner.
In later years, Ohno often described his production system in terms of the American supermarket. Each production line arrayed its diverse output for the following line to choose from, like merchandise on supermarket shelves. Each line became the customer for the preceding line and the supermarket for the subsequent line. The downstream line would come and choose the items it needed and take only those items. Then the upstream line would produce only the items to replace those just selected. Thus Ohno’s industrial supermarket concept was a customer-driven system, activated and defined by the needs of the downstream process.
Ohno’s legacy: The Toyota Production System
Ohno developed a number of tools for operating his production format in a systematic framework. His disciples improved on and codified his contributions into what is now known as the Toyota Production System. The Toyota Production System is commonly represented as a house with a foundation and two pillars holding up a roof. Shingijutsu sensei adapted and expanded this model to what they call the Global Production System (see Figure 3.2), which can be applied to any organization’s efforts toward achieving world-class performance.
Figure 3.2: The Global Production System house
•The two pillars of the house, arguably the most important elements, are Just in Time and jidoka. The former emphasizes operating with the minimum resources to consistently deliver the product or service. The latter, which is also known as line-stop authority or inline quality assurance, is a system for confirming quality and detecting abnormalities before they can pass farther downstream in the process. I’ll discuss both of these pillars in more detail shortly.
•The foundation of a Global Production System incorporates the elimination of waste, which reduces costs and levels production. Leveled production is required to make just-in-time production possible.
•The house roof represents the system’s goals, the attainment of world-class performance: satisfying customers with high-quality, low-cost products or services that are provided by employees who work safely and enjoy high morale. In short: providing goods or services the right way.
In this two-pillared concept, other key aspects of the system, including people, teamwork, and continuous improvement, may be shown variously as part of the structure or inside of the house. But let me caution you regarding how you think about building this house with your company, because even with this blueprint, the order of construction often goes awry.
Too many corporate leaders who want to reengineer their organizations think they know how to go about it in traditional MBA fashion. Typically, driven by shareholder pressure, short-term thinking, and impatience, they focus on the foundation of cost reduction and then proceed to erect walls and a roof of technology. Somewhere in the structure, they may address people — but not too many people, because these leaders commonly assume that this cost-focused house won’t accommodate all the people the company now employs.
This is not my idea, nor Toyota’s, of the way to build for world-class performance. Instead of starting with the cost-reduction foundation, which is too often interpreted to mean layoffs, those in pursuit of world-class performance should begin with the roof supported by the two pillars. Clear goals and commitment right from the top will establish the direction and get the people inside, under cover. A solid roof that doesn’t leak in rough weather will encourage the workers to continue building the rest of the structure. Otherwise, the slowness of the building will discourage them, and even the leaders will get sidetracked.
You must be a leader and build a solid roof with your people, who then will work with you to build the remainder of the structure following your well-thought-out plan. The Global Production System is a people-based system with three operating philosophies: Just in Time, jidoka, and cost reduction through the elimination of waste. All decisions must be based on their consistency with these three philosophies. Let’s look at each in more detail.
Pull, don’t push
The first pillar of the Global Production System is just-in-time production, which starts with the customer. All production activity is linked to sales in the marketplace. At Toyota, for example, assembly plants make vehicles only in response to firm dealer orders. Each process arrays items for the subsequent processes to withdraw and use only as needed. Each process withdraws items from the preceding process only to make items to replace those that the next process has withdrawn.
This is what is known as a pull system. (See Figure 3.3.) Rather than manufacturing processes that push products out to buyers who may or may not exist, all pull-system production is linked to and prompted, or pulled, by real demand. Everything that happens is a response to fulfilling real orders from dealers. Inventory becomes unnecessary, because all supplies arrive and goods are manufactured just in time to fill customer orders.
Figure 3.3: Pull and push production
To communicate in a pull system, Toyota’s production lines operate using kanban, which are typically printed cards that are laminated or sleeved in clear plastics cases. Every item or set of items that flows through the production system carries its own kanban. Kanban cards are removed from items that have been used or transported and sent back to the preceding process as orders for additional items. (See Figures 3.4, 3.5, and 3.6.)
Figure 3.4: Kanban cards can be used for production and between a supplier and the factory, as well as between processes.
Kanban are the best-known of the tools developed by Taiichi Ohno for systematic operation of a just-in-time system. Toyota uses two kinds of kanban: one for parts withdrawal and one for production instructions. Withdrawal kanban communicate between processes. Production-instruction kanban communicate within processes. Employees use kanban to continuously monitor the material they withdraw from the preceding processes and the finished items they pass on to the next process. Every large assembly shop at Toyota has two or more kanban stations. Paperwork is minimized and efficiency is maximized.
Figure 3.5: Boxes containing parts can also be kanbans themselves; when they are empty, they are returned as a signal to make or provide more parts. Signal kanbans are especially useful for high-quantity parts.
Figure 3.6: Signal kanbans can also show the order point in stacks of containers. When the reorder box is reached, the kanban card comes off to signal the need for replenishment.
Leveled, continuous-flow production
To achieve just-in-time production, Toyota arranges equipment to ensure a single, smooth flow. Work within each process is arranged to flow evenly and directly from one step to the next. Logistics are devised to move the work on a precise schedule from raw materials plants, through machining plants, to assembly plants, and on to distributors, dealers, and customers.
Instead of grouping machines together by type of machine, with all the lathes together, all the milling machines together, and so on, Toyota arranges the machines in the sequence in which they are used in the manufacturing process. In-process goods move directly and in small quantities (if not one at a time) from one stage to the next, rather than being worked and then transported to the next stage, or to storage, in large batches. This arrangement produces lower work-in-process inventories and small lot sizes, which in turn helps reduce space requirements and cycle time for improved continuous-flow processing. (See Figure 3.7.)
An important aspect of just-in-time operations, so important that it is part of the foundation of the Global Production System house, is leveled production. Leveled production smooths out the peaks in product volume and mix, and it allows the pattern of production to follow the pattern of sales. At Toyota, for instance, various body types move along the same assembly line at the same time, and the production of different body types is staggered evenly over the course of the day. This strategy makes the most efficient use of people and equipment, steadying the workload in all processes. Leveled production also prevents a disproportionate burden from being imposed on one team or type of machinery while others are idle or lightly loaded.
Figure 3.7: Equipment is arranged to aid flow and reduce work in process
Cycle or takt time
Toyota uses the term takt to describe the pace of sales in the marketplace. Takt is a German word for meter. Takt is quantified in Toyota plants as the quotient of daily working hours divided by the number of vehicle orders to be fulfilled each day: takt is expressed in hours, minutes, and/or seconds per product, per day. According to this quotient, takt times are also worked out for each component used to produce the vehicles. Takt time equals the total available production time divided by the number of units required to meet customer demand.
Once a takt time is determined, work is allocated to maintain a steady, optimum workload for each operator and each machine. Relying on multi-skilled workers further improves continuous flow and gives Toyota the flexibility to allocate work precisely according to takt times, but without overloading individual workers.
Standardized work is another method for successfully balancing takt time (production requirements) with people’s work time. That’s why a Global Production System strives for standardized work. Standardized work keeps productivity, quality, and safety at high levels. It also provides a consistent framework for performing work to designated takt times and identifying opportunities for improving work procedures. Once standard work is in place, takt time becomes a management tool for jidoka.
Jidoka and kaizen
Jidoka is another important principle at Toyota — one so important that it forms the second pillar working with just-in-time production to hold up the roof. Jidoka is the principle of stopping work immediately whenever a problem or abnormality occurs. Toyota production equipment is designed to stop automatically if an error is detected, and workers are expected to halt the line when defects are suspected. Defects are thus prevented from traveling any further into the system. Jidoka also helps identify the causes of problems by halting the line as soon as the problem is recognized.
In essence, jidoka means assuring the quality of everything by confirming the outcome of each process step before going on to the next. Jidoka does not have to be a feature of machines. Human workers can also detect abnormalities, particularly if they have a visual standard to watch for, and stop the process when a problem is detected. Certainly it is up to the workers to fix or correct the immediate problem and then install a countermeasure so that it cannot occur again.
The advantage of automating jidoka, however, is that it separates human work from machine work and frees workers for more value-added activities. Instead of watching machines run, employees can solve problems and find new ways to improve productivity and eliminate waste. This continuous improvement process is known as kaizen. Kaizen improvements in standardized work help to maximize productivity by encouraging individuals to help design, manage, and improve their own jobs.
When all the pieces of just-in-time production, jidoka, and waste reduction are working together, the Global Production System drives a cycle of continuous improvement. (See Figure 3.8.) Here’s how the cycle works:
•Just-in-time production reveals abnormalities by making inconsistent results immediately obvious, because bloated inventories no longer exist to conceal problems.
•Through jidoka, workers respond to the abnormalities by stopping and fixing problems, then changing the process or installing countermeasures that improve the system and the resulting quality.
•The corrections or improvements eliminate waste and cost and establish the new standard of consistency for subsequent just-intime operations.
Figure 3.8: GPS house with cycle of continuous improvement
This Global Production System will keep you in business forever. It represents revolutionary change to many industries and organizations, just as the Toyota Production System brought revolutionary changes to automobile manufacturing. Today, Toyota dominates the automobile market and is a model for manufacturing excellence. And Ford Motor Company, once the mentor, nearly failed before following the path of its protégé. The student became the teacher, and the teacher the student. In the school of hard knocks, Ford people have learned a lot in recent decades and implemented better production techniques, because clearly their survival depends on it. Many companies are trying to follow Toyota’s lead, and they’re learning that a world-class operation is highly efficient but quite difficult to achieve.
Spreading the Toyota message
After Ohno’s time, his legacy of controlled production improvement rested in the hands of two protégés, Yoshiki Iwata and Chihiro Nakao. Both men eventually retired from Toyota to form an international consulting firm, Shingijutsu Ltd. For many years, they worked together as leading emissaries of what the Japanese have learned about producing efficiently and with the highest possible quality. Their pioneering endeavors in the realms of better manufacturing methods and continuous quality improvement are unquestionably world class. Although Iwata is no longer with us, Nakao continues to help others implement lean production techniques through his company, Shingijutsu USA, and Iwata’s daughter, Kumi Iwata Otake, carries on her father’s work through Shingijutsu Global Consulting. The closer that a company can get to implementing Shingijutsu’s advice, the closer it will be to world-class performance.
