The Toyota Production System Toyota Motor Corporation Public Affairs Division Operations Management Consulting DivisionContents Foreword / v Introduction # Productivity / 2 * A Biographical Perspective / 5 * Putting the System to Work / 7 Part I: Just-in-Time Production * Doing It All for the Customer / 12 * Leveled Production / 13 # Running a Pull System / 15 * Continuous-Flow Processing / 20 #Takt Time / 22 # Multiskilled Operators / 23 Part I: Jidoka * Building Quality into the Production Processes / 26 Part Ill: Standardized Work and Kaizen * Standardized Work: the Basis for Kaizen / 32 * Kaizen: the Lifeblood of Standardized Work / 3.4 Part I The Continuing Evolution of the Toyota Production System * The System Is Alive / 36 * Case Study 1: North America / 37 * Case Study 2: Europe / 39 + Employee Satisfaction as the Key to Customer Satisfaction / 41 * Hands Across the Sea / 42 * Beyond Manufacturing / 43 * Afterword / 44 iiiForeword The Toyota Production System. And the Earth Here is yet another printing of a booklet that we first issued in 1992.and revised extensively in 1995. The essential elements of the Toyota Production System are unchanging, and the content on the following pages is essentially unchanged from the material we issued in 1995. But we have provided the booklet with a new cover and with this new foreword to call attention to an important and often-oyerlooked aspect of our system: its role in safeguarding the environment. ‘Manufactarers in every industry have a big responsibility to fulfill in ensur- ing a sound envionment for future generations. Along with preventing pollution and other overt damage to the environment, they need to conserve resourees by using material and energy efficiently. The Toyota Production System is a framework for conserving resources by eliminating waste. People who participate in the system learn to identify expenditures of material, effort, and time that do nor generate yalue for customers. In other words, they learn to recognize waste. They also learn, to take the initiative in developing measures for eliminating, the waste and prevent ing its recurrence. As always, we hope this booklet will make Toyota a more familiar and understand: able presence, especially in nations where we operate plants. We are eager to show our host communities that Toyota plants are opportunities for employees to master new skills and to exercise initiative. We want to show people how our production system makes work fulfilling —how i puts employees in charge of their worksites; how it encourages them to use their own ereativity in devising better ways to pr forma their work We also want to show how suppliers benefit from participating in the ‘Toyota Production System. To be sure, the system is a demanding regimen, But participating in the system has enabled suppliers worldwide to achieve dramatic improvements in productivity and quality. They have hecome more-competitive companies, And that has enabled them to win increased business with Toyora and with other antomakers. In preparing this booklet, we have avoided a “how-to” approach. The booklet is not a manual. Rather, it is an overview of the concepts that underlie our production system. It is a reminder that lasting gains in productivity and quality are possible whenever and wherever management and employees are united in a commitment to positive change. December 1998Introduction Of Productivity DO A Biographical Perspective O Putting the System to Work @ For Suppliers: Benefit or Burden? @ For Employees: Stimulating or Stressful?Productivity: It’s a matter of Life ana Death! Introduction Companies that are more efficient than their competitors in providing customers with high-quality goods and services will thrive. Companies ‘that are less efficient than their competitors will perish. Of course, all companies must provide customers with world-class quality, And they must provide prompt delivery and service. Customers won't accept anything less. The globalization of markets means they don’t have to accept anything less. The Toyota Production System is a framework of concepts and methods for enhancing corporate vitality. It enables companies to achieve continual gains in productivity while satisfying customers! expectations for quality and prompt delivery, Eliminating waste (and thereby raising quality) Basically the Toyota Production System provides for eliminating waste in the ways that companies employ human resources, equipment and macerial, Managers and employees leatn to question the need for every work-sequence motion, for every item of in-process stock, for every second that people, material, or machines spenid idle, By eliminating waste in those-and other categories, companies concentrate resources on making and delivering only what che customer wants, only when the customer wants it, and only in che amount the customer want. Quality rises along with productivity when people learn to identify and elimi- nate waste. That is because a big part of eliminating waste consists of preventing defects, Defective products ental a grievous waste of human resources, equipment, and material. And! measures for eliminating waste by preventing defects are a definitive feature of the Toyota Production System. By identifying waste and eradicating it, companies can reduce their costs. Managers formerly regarded costs as a “given” that was largely beyond their con- trol and prices as a variable that they could adjust to accommodate fluctuations in costs. But in the intensely competitive global markets of today, buyers—rather than sellers—are the arbiters of price. The only way for companies to survive and to secure profits is to keep their costs lower than the prices chat customers are willing Co pay for their produets and services. Roots in Henry Ford's system ‘The Toyota Production System evolved from the historie manufacturing system developed by Henry Ford. Among the distinguishing elements of Ford's system, all cof which still can be seen today in any modern automobile plant, were. * a conveyor belt that moved cars through the assembly process. In other words, the work came to the workers, rather than vice versa. * adivision of labor in which workers each handled only a single step in the assembly sequence. Early automobile plants were “eraft” shops where individual ‘workers would puit together entire assemblies, such as engines, by themselves. Ford raised efficieacy by breaking down the assembly sequence into simple, repeti- tive tasks and arraying those tasks along a production line.1A The Toyota Production System provides far arranging all the processes from rave materials to finished praducts Ina singla, smooth tow. Employees and managers at ‘companies that employ the system laa ta idantiy and ‘alminate ary waste that ‘occurs in that flaw, + an integrated supply chain for parts and materials. Ford kept each process in the production sequence supplied with all the parts and materials needed in that process. He pioneered advances that reduced deviation in part dimensions and thereby ensured that parts would fit together properly. But with some new twists Henry Ford’s manufacturing system thus provided the historical and technological foundations for the Toyota Production System, But circumstances in Japan provided the opportunity for some crucial improvements on Ford!’s system. To begin with, produ with automotive output in the West. Those small production volumes did nor allow ‘on Volumes in postwar Japan were minuscule compared Japanese automakers the luxury of using specialized equipment for each model. Nor did they allow for stocking huge inventories of parts. Automakers in Japan thus needed to develop flexible methods for adapting the same machines to different vehicle models. And they needed to find ways to ensure reliable supplies of needed parts and materials without maintaining big inventories.4 Introduction Another Japanese factor that prompted a variation on Ford's system was che sit tion in labor-management relations. Severe recession buffeted Japan’s rebuilding effort in the early postwar years, Adverse economic conditions catalyzed an ugly cycle of strikes and lockout ‘Toyota experienced the same labor strife that was endemic in Japanese industry in the early 1950s. Ultimately, labor and management at Toyota came to an under- standing, Labor would cooperate with the drastic restructuring—including job cuts—that was necessary for the company’s survival. Management would guarantee lasting employment for the employees who remained. Together, they would refrain from increasing employment casually, even in good times; instead, they would try to find ways to accommodate upturns in demand with the smallest possible number of employees. Mutual trust between labor and management ar Toyota bas deepened over the years. Management has rewarded employees for productivity gains with improved compensation and working conditions. Employees have taken the initia- tive in activities for raising efficiency and otherwise enhancing the company’s competitiveness, ‘Trust has enabled management to delegate authority to the workplace. The peo- ple who run the Toyota Production System are the people on the line—the people ‘who can see problems when and where they occur and who can act immediately to resolve those problems. ‘Trust in the company encourages employees to acquire whatever skills are necessary to perform the work that needs to get done, By mastering a wide range of skills, chey equip themselves to help and fill in for each other as necessary. Employees also reinforce their job security by acquiring diverse skills. That's because the versatility of multiskilled employees allows for redeploying personne! flexibly in response to changes in demand. So, the Toyota Production System has inherited Henry Ford's practice of break- ing down work into simple steps and distributing those steps among employees along the line. But employees in the Toyota system are in charge of their own jobs. ‘Through their teams, they run their own worksites. They identify opportunities for making improvements and take che initiative in implementing those improvements in cooperation with management. And they share fully in the fruits of theit own labor. ye Yer another element of Ford's system that remains erucial in the Toyota Production System is the conveyor belt. At Toyota, Ford’s conveyor became a metaphor for the entire sequence of filling customer orders, The Toyota Production System itself is like @ vast: conveyor that starts with customer orders and culminates in deliveries of finished products, (In fact, the Toyota Production System can extend even beyond. product deliveries. It can-encompass such work as maintenance and repair activities, See Part IV of this booklet, which begins on page 35, for a bricf description of some recent developments in ways of implementing the system.) The Toyota Production System supports productivity gains by highlighting. waste. It engenders quality gains by illuminating problems when and where they ‘occur and by providing for taking measures to resolve the problems and prevent their recurrence. Companies achieve continuing gains in productivity and quality to the extent they can devise smoother, simpler flows in their operations and train employees to analyze, resolve, and prevent problems.A Biographical perspective ‘Three men figured especially prominently in creating the Toyota Production System: Sakichi Toyoda; his son, Kiichiro Toyoda; and f production engineer by the name of Talichi Ohno, Sakichi Toyoda was the inventor of automatic looms who founded the Toyota Group. He invented a loom in 1902 thar would stop automatically if any of the threads snapped. His invention opened the way for automated loomworks where a single operator could handle dozens of looms. Sakichi’s invention reduced defects and raised yields, since a loom would not go ‘on producing imperfect fabric and using up thread after a problem occurred. The principle of designing equipment to stop automatically and call attention to problems immediately is crucial to the Toyota Production System. It is evi dent on every production line at Toyota and at other companies that use the 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 system in operation. He returned with a strong grasp of Ford's conveyor system and an even stronger determination to adapt that system to the small production volumes of the Japanese market. Kiichiro’s solution was to provide the different processes in the assembly sequence with only the kinds and quantities of items that they needed and only when they needed them. In his system, each process produced only the kinds and quantities of items that the next process in the sequence needed and only when it needed them: Production and transport took place simultaneously and synchronously through- ‘out the production sequence—inside and between all the processes. Kiichiro thus laid the groundwork for just-in-time production, and he gets eredit for coining the term “just in time.” a Sakichi Toyoda Kiichiro Toyoda =Taiichi Ohno 6 Introduction ‘The man who did the most to structure the ‘Toyota Production System as an integrated framework was Taiichi Ohno. In the late 1940s, Obno—who later became an executive vice president at Toyota—was in charge of a machining shop. He experimented with various ways of setting up the equipment to produce needed items in a timely manner. But he got a whole new perspective on just-in-time pro- duction when he visited the United States in 1956 ‘Ohno went to the United States to visit auromobile plants, but his most impor: tant U.S. discovery was the supermarket. Japan did not have many self-service stores yet, and Ohno was impressed. He marveled at the way customers chose exact- Jy what they wanted and in the quantities char they wanted. Ohno admired the way the supermarkets supplied 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 fol- lowing line to choose from, like merchandise on supermarket shelves. Each line became the customer for the preceding line. And each line became a supermarket for the following line. The following line would come and choose the items it needed and only those items. And the preceding line would produce only che replacement items for the ones that the following line had selected. ‘This format, then, was @ pull system, driven by the needs of the following lines. Ir contrasted with conventional push systems, which were driven by the output of pre- ceding lines. Ohno developed a number of tools for operating his production format itva systematic framework. The best known of those tools is the kanban system, which provides for conveying information in and between processes on insteuction cards.Putting the System to work Companies around the world have demonstrated the value of the Toyota Production System in making automobiles and also in making other products. Some companies even have used the concepts of the system successfully in service sectors. The basic concepts of the Tayata Production System are unchanging. But companies implement those concepts differently. One of the great advantages of the Toyota Production System is its adaptability. Yet common threads are apparent in the expe rience of companies that have implemented the concepts of the system successfully To benefit from the Toyota Production system, companies must satisfy three basic conditions: 1, Top management must make a strong and visible commitment to the system, must participate directly in implementing the system, and must instruct middle level managers to do likewise. 2. All employees must participate in the system. 3. The companies must putin place a solid framework for cultivating capable eaders and for providing employe The commitment by top management is especially crucial. It is a beacon fo: everyone in the company—a clear and compelling mandate for change. The Toyota Prediuction System has proved useful i raising peo: ductivity and quality in settings around the world. Thet value is apparent at Toyota plants and a the plants of ether compa: ies that ave implomented the ceoncepts of the system,For Suppliers: Benefit or Burden? 8 Introduction Companies often dally with schemes for raising productivity and quality. But they rarely stick with demanding regimens unless they have to. Even inefficient companies can get by when husiness conditions are good. And all but the most inefficient companies can muddle through modest economic downturns. Ie usually takes a company-threatening crisis—a severe market slump, for exam ple, ora technological breakthrough by a competitor—ro put the fear of God into management and employees. Only in crisis do people awaken readily to the need for fundamental change. Once top executives recognize that corporate survival depends on fundamental change, they must lead thar change themselves. They must venture into the work- place. They must lot employees know what kind of change they envision and why. And they must put middle management on notice that managers’ jobs will hinge on ‘active cooperation in promoting change. Next, executives must translate their commitment into an organizational frame work. They should begin by establishing a task force under a capable leader co set upa showcase production line. That line becomes a staging area for disseminating the new production concepts throughout the company: members of the original task force supervise work in implementing the concepts on other production fines; they also lead teams that promote continuing improvements in the name of kaizen. ‘Companies also need to put in place organizations for training managers to operate and maintain their new production systems. The natural teachers are the people who have participated in the initial task force. They should impart cheirDirect involvement by top management is a prerequisite for implementing the Teyet Production Systery successfully skills to other managers and employees through classroom instruction and also through hands-on training sessions in the workplace The commitment by top management and the organizational framework for implementing the system help fulfill the second prerequisite for adopting the Toyota Production System: participation hy all employees. Full participation is essential because the Tayota Praduction System works by establishing a smooth, continuous flow 1 ough the entire production sequence For example, streamlining work and eliminating inventories at one worksite ‘mean little if work just piles up anew in the next stage of the production sequence: The Toyota Production System generates the greatest benefits for companies when they implement it throughout their production sequence. Those benefits become greater still when companies work together. Companies strengthen each other by developing smooth flows that extend nplier t 9For Employees: Stimulating or Stressful? TO IntroductionJust-in-Time Production O Doing It All for the Customer DO Leveled Production O Running a Pull System O Continuous-Flow Processing © Takt Time O Multiskilled Operators @ An Unlikely Candidate for FameDoing it All for the Customer Customers want the best possible products at the lowest possible prices. And they want them as soon as possible. The Toyota Production System provides for fulfilling customer demand efficiently and promptly by linking all production activity to sales in the marketplace. ‘A core element of the Toyota Production System is the concept of arranging all the processes in the production sequence in a single, smooth flow: Basically, each process artays items for the following process to withdraw and use when it needs them. Each process withdraws items from the preceding process only to make items to replace ones that the following process has withdrawn. Each process makes addi- tional items only to replace items that the following process has withdrawn, ‘The final process in the chain, of course, is the dealer who sells eats to cus- tomers. Our assembly plants make vehicles only in response to actual dealer orders Suppliers’ plants make parts and materials only in the kinds and cluantities needed to replace items our vehicle plants haye used. That is what we mean by “justi time” production: making only what is needed, only when it is needed, and only in the amount that is needed, Just-in-time production eliminates lots of kinds of waste. It eliminates the need for ‘maintaining large inventories, which reduces financing costs and storage costs. It climinates the waste that occurs when changes in specifications or shifts in demand render stocks of old items worthless. It also eliminates the waste that occurs when defects go undetected in the manufacturing of large batches. Just-in-time production, though simple in principle, requires dedication and careful, hard work to implement properly. Once managers and employees have mas- tered the basic concept, they learn to devise various tools and techniques for putting that concept into practice. Notably, they learn to «. « distribute the production of different kinds of items evenly through the day and week to allocate work evenly and thereby use resources optimally (leveled production); «link each process organically to the preceding and following processes {pull system); + make items literally one at a time wherever possible and emulate one-at-a-time processing in batch processing by reducing the size of batches {continuous-flow processing); and « establish a time frame for linking the pace of work in every process 10 the pace of sales in the marketplace (takt time). 12. Part |: Just in-Time ProductionLeveled production: You won’t be Happy without it {¥ Praducing diferent: mod! vanetions on the same be Making an even mix of items (7 production tne steadios tha work lead in al processes ‘and thereby uses resources optimal Just-in-time production can help companies achieve spectacular gains in productivity and in quality, But just-in-time production is impossible unless companies distribute work evenly by leveling production. Let's take look at how leveling works at Toyota. Our dealers provide us with information each month about the numbers and kinds ‘of vehicles they expect to sell in the following month, We pass that information on to our vehicle plants and to our suppliers to give them a rongh basis for production planning The dealers provide us with information every 10 days about actual orders they have received. Based on that information, our plants and our suppliers draft detailed, 10-day production plans. Our dealers also provide us with daily information about customer orders and requests, We can adjust our production plans up to three days before production to accommodate requests for changes in some specifications, such as body color. Based on the daily production plan, we decide the exact sequence of items to produce at our plants. They distribute different specifications evenly ove the day. When you visit a Toyota vehicle plant, you see a variety of body types moving along the same assembly line at the same time. We stagger the production of differ ent body types evenly over the course of the day. We do that to make efficient use of the basic factors of production: our people and our equipment, For example, we could spend all morning producing one item, all aftertioon pro ducing another, and all evening on a third. That might seem efficient, since it would enable us to run larger batches without changing paints and tools and dies. But it would distance the pattern of pro- duction from the pattern of sales in the marketplace. Worse, it would impose a disproportionate burden on one team at a time in the preceding proce: teams would be idle while others come were busy. And that would be an inefficient way to employ our resourees. So, we distribute production evenly in the assembly processes. That enables our suppliers to dis tribute production evenly in their ‘manufacturing processes. It there fore enables all of us to get by with 2 mini of and equipment.Conventional batch production concentrates work on sffferent. processes at different times. Leveled production distributes: work evenly among the steps in the production sequence at all times. Preceding process Unleveled Production Preceding process: Leveled Production Following process Boa 14 Part I: dustin-Time ProductionPull!!! (don’t push) (Customer damand is tha ‘dynamic thet dvs the Toyota Production System. All activity in the system necurs in ‘response ta real demand, 65 expressed by custimer orders. ‘The system thus contrasts with conventional, “push” systems, where processes make ams regardless of ‘scl end demand. ‘The most important feature of the Toyota Production System is the way it links all production activity to real demanc, Everything that hap- pens in the system happens only in the name of fulfilling actual orders from dealers. The system works that way because it is a pull system, in contrast with conventional “push” systems. In push systems, manufacturers produce goods and then try to find buyers far those products. Processes inside the manufacturers” plants turn out batch after batch of items and pass them on, regardless of the pace of work in the following processes. Inevitably, 2 lot of time and effort ends up wasted in push systems. Plants turn out streams of products without regard for the needs and wants of their intended customers, Semifinished goods pile up between processes inside the plants and between parts makers and assembly manufacturers. ‘We use a tool called the kanban ro operate our production system as a pull system. Kanban usually—though not always—are printed cards in clear plastic cases. Every item or box of items that flows through our production process carries its own kan= ban. Kanban come off of irems thar have been used or transported and go back to the preceding processes as orders for additional items, ‘The kanban cards bear lettering and bar codes that identify the items, the loca~ tions of the worksites where they are used, and the production line or supplier from which they come. We use rwo kinds of kanban at Toyota: parts withdrawal kanban and pro- duction instruction kanban, Withdrawal kanban are for communication between processes, Production instruction kanban are for communication inside processes, Operators remove withdrawal kanban from parts and materials they have used. We take those kanban hack to the preceding processes to withdraw additional items. Production instruction kanban come off of items that the following processes have withdrawn, They go back into their processes as instructions to make additional items to replace the ones that have been withdrawn, 45[An operster removes the The aparator deposits the Team feaders gather the land take them to a anbon froma new box at ‘Kanban that he or-she canterts of the kanben sorting mom. There, en imome when he or she uses removes from boxes of parts raiioxs ef prescribed saucomatic sorter places the rete om ram tre box ine Kanban mibox nearby. ees—severel times @ day— Kanban in separete OO¥0S tnd place them in eplection for the different supplies. bboxes. The kanban postman picks the kanben up from the collection boxes. The divers thet bring parts Back et the supplians’ ‘Awithdrawal kanben goes Then, the supplier daliers from the supaliers stop in — plants, the drivers deposit onto @ new box of parts the naw box of parts to the at the sorting room after the kaniuan in collection in place of the production _ plant indiested on its kann. inloading tier trucks end bokes Tor subsequent sorting. instruction kanban, The letfar pick up Kantian ta take back goes back into the plant as to thair plants. ‘a production order for @ tke ‘quantity of tha same part Hace is 0 witherowal kanban that we use with on outside Supplier. indicates the nama af the supply the receiving fero0 at our plant, the location in the plant where we vill use the tam, the part number, the gart name, and the quantity, ‘This kanban ato has 8 ber code label to permit sutomatic invoicing 16 Part I: Justn-Time ProductionKanban Flow: Example 2, Production Instruction Kanban -< Production at the suppl er proceeds in accordance with the production vuction kann (eroled) flaw back t manufacturing line. ‘4 Boxes of finished parts at this Toyota supplier go into @ rack to eweit pickup end deli the red arrows, They indicate which bosas to pick up first when more than one box of kind of pert are waiting delivery, This frstin, finst-out system avoids the colection of dust and ‘thar problems that can occur wien items st idle, Shipment orders. of course, are in the form of withdrawal Kanban, Thase kanban go anto the boxes in place of the production instrustian knban, ‘The production Instruction kenban go back inta the manufacturing line as production orders, 4 Kanban flaws echo each other throughout the pra ‘sequence, The materials that the operators use st this suppl ch carry their awn withdrawal kanbsn for ordering addi rials from the supplars’ suppliers. ‘4 Kanan needn't be printed cards. They ean be triangular metal places and color-coded washers, like the ones in the photos me processes st Toyota, stove. They even can be colored balls, ikNearly every part and assembly thet maves through the Toyota Production System carries 2 kentian. \We use various tools to run cur praduction format as a pul system. Bofore operators at the worksite ‘above use up a palleHload of body panels, trey push {3 butzon on an electric console (arrow), That lights a lamp on @ signboard an the other side of the piant. A forklift operatar (right photo} then gets @ new load of body panels from the stack arrayed by the preceding process and delves it to the assembly line 18 Part |: Justin-Time ProductionAn Unlikely Candidate for Fame Te homely kenban is an unlikely candidate for fame. Though its name means “signboard” in Japanese, the kanban is no marquee. Kenban at Toyota are usually no more than printed pieces of cardboard sandwiched between clear plastic covers. Yet thase nondescript itams have become the best-known element of the Toyate Production ‘Systemn. Some people even think that the kanben system is the Toyota Production System. ‘Actually, the kanban is @ tool that enables employees to operate the Toyota Production System by taking responsibility for managing their ‘own jobs. Envision an operator who removes Kanban from components before maunting them on vehicles. The operator sends the kanban back ta the preceding process as orders for additional components to replace the ones he or she has used, That operator is shouldering an important part of the "management: functian” of ordering parts and managing inventery Kanban help enforce an organic linkage between work in preceding processes and following processes. Empicyees maintain that linkage by handling the kanban properly and by abiding by the established work procedures for their work. Every lange assembly shop at Toyota has two or mare kanban stations, each of which processes about 10,000 kanban per shift. ‘Suppliers affix identifying kanban to the items they deliver. And they receive orders via kanban that they remove from boxes at the stations on their way out. The paperwork is minimal. The efficiency is maximal. ‘And the employees themselves ere completely in charge. 19Go with the Flow!!! (preferably one at a time) We talk about the Toyota Production System in terms of arranging work in a single, smoath flow. That means arranging work inside each process to flow smoothly from one step to the next. It means laying out plants so that work proceeds directly from one process to the next without any detours into storage. And it means devising logistics so that work moves smoothly and on schedule from raw materials plants through machining plants to assembly plants and on to distributors, dealers, and customers. Ideally, items should proceed one at a time through the production sequence. That is the fastest way to translate raw material into finished products. It minimizes the amount of material in processing at all stages of production. One-at dies, molds, or other tools to produce different items, as in forging, casting, stamp- sime production is impractical, however, in work where we change ing, and molding, In those kinds of work, we need to design processes in ways that emulate continuous-flow production. ‘A good first step toward emulating one-at-a-time production in batch processing is to use the smallest possible batches. Since changing dies or molds is time-consuming, manufacturers traditionally have favored large batches in batch-processing work. Large batches, however, result in large inventories at the batch-processing machines and also in the preceding stages of the production sequence. ‘We can reduce inventories and increase flexibility by using smaller batches. If ‘we need 1,000 units each of Parts A and B, we can produce them in four batches of '500 units rather than in two batches of 1,000 units. To do that without compromis- ing efficiency, we must find ways to shorten the changeover time for the dies, molds, "That is, we must ensure that the larger number of production runs does crease the aggregate time the machines are idle. cor whatev not greatly i Historically, advances in shortening changeover times have been an important dynamic of the Toyota Production System. Those advances are easy t0 achieve once ‘operators in the workplace recognize the importance of speeding changeovers and reducing batch sizes. The trick is to analyze the changeover work systematically. 20. Part [: Justin-Time ProductionSeparately Positioned Processing Continuous-Flow Processing In the figure above, Operators A, B, and C perform succes: ‘She steps in an assembly sequence. Work bari for each ‘operator inthe example at the night with recaiing bos af 100 semfniches assemblies from the preceding process. ‘Thay perform addtional work on wach ofthe assernblies ard then take their 100 assembles to the next operatar This approach ental insiciencies ofthe folowing kes ‘Each operator has 100 ims at a time, which results in ‘extremely lang lead times. ‘2.We oannat balance the distnbution of wrk The large amount of items per operator means extra han- ding on the workbench, ‘AF Operator B discovers an imoroperly assumbled Work- Piece, she canna determine exactly whan or how the problem occurred. She knows ony that happened same ‘ime during the processing of 100 items. ‘S.When production shits to a diferent ki of assembly ‘the operstors must remove all the parts forthe previous ascembly from the shakes to avoid mixing them wth the parts for the new nesarbh ‘We can avoid the problems that occur in the pracating fecmpl by deploying the operators next to each other 8 coctinuous flow [above and ty having each operator handle ‘ne assembly at 3 me. They perform their werk on an assarn- by anid hand it over ta the next operator before reaching for the next workpiece, This change, which requires ne inereace inthe number of operators for the same span of work yields the following ienproverents: 1.Tha number of tars on the line—from raw material to Finished peoduct—bocomes the same as the number of ‘operators on the lie 2.When Operator B diecovers 2 defective iter, she and (poratar A can determine the couse of the problem imme- lately, since tis the ter that Operate A has just handed ‘3.Operaters needs arrange and convey large numbers of pares on the workbench, 4 Dilerences in work loads between operators are ready ‘apparent, and we often can find ways to reduce our man power needs. ‘S.We ean switch production ta diferent teres without inter opting the production fon, Here i = look at the diferentes in lead time between nest ‘time processing and conventional batch processing. Ths ‘ample is of three consecutive processes, each of which requires ene second ts complete one item. Batch precess- ing entais proxiction lead ume oF 300 seconds. That's Large-Batch Production because the parts sit idle in the preceding processes while work is under way on whale batches inthe folowing processes. Cantinuouslow processing allows for completing 100 parts in 102 sneonde—just enough time to run al 100. parts, one at @ time, through the three processes in tur Processing Parts One at @ TimeTakt Time: the Pulse of the Toyota Production System links all production activity to actual customer demand, The language | As we emphasize throughout this book, the Tayota Production System of that linkage is takt time. Take is the German word for meter, as in masical meter. ln our production s take is the pace of sales in the marketplace, We quantify take in our plants as the quotient of daily working hours divided by the number of vehicle orders we need to fulfill each day. Here's how take works. Let's assume a plant operates with ewo shifts a day of 4460 minutes each, for a total of 920 minutes. If we need to fill orders for 400 vebi- cles per day, the take rime will be about 2.3 minutes per vehicle. If an increase in sales volume raises the daily requirement to 500 vehicles, the take rime will shrink to 1.84 minutes. ‘We work out takt times for all the items that we use. If the takt time for some vehicle model is 2 minutes, the take time for the engine also will be 2 minutes. The takt time for the 20 lock nuts used to mount che 4 wheels will be 6 seconds per nut (120 seconds/20 nurs = 6 seconds/nut). “Ihe tak ime on this assembly lina for aes i short: 1h this assembly line for adas, tha tak time is relatively 50, we assign a large nurrber of people tothe line, and lang; 60, we acsign just @ few paople to the tne, and each operator handles @ narrow range of work ‘each operator handles a broad range of work 22 Part |: Justin-Time ProductionMultiskilled operators: responding flexibly to Real Demand ‘Once we have determined a takt time, we determine the most efficient work flow and procedures, with due consideration to quality, safety, ‘quantity, and cost. We allocate work to maintain » steady, optimal work Joad for each operator and each machine. We never accommo- date changes in takt times by making substantial changes in the daily work loads for individual operators. ‘When the tak rime for a production line becomes shorter and more demanding, we streamline the flow of work and add operators as necessary. When the takt rime becomes longer, we assign fewer operators to the line. Assigning more people to a line means that each operator handles a narrow range of work. Assigning fewer people means that each operator handles a broader range of work, ‘That flexibility in allocating wark is possible because (1) people master a broad range of skills in the Toyota Production System and (2) we employ “multiprocess handling” instead of “multimachine handling This mutistiled operator har fos al the processes 2 vworkste by himsel. Those processes transform a rough sting into a fished gear for 8 dfferantal assem lower hata, far ri). Rough casting (right) ‘and shee gaar24 “Traditionally, manufacturers have assigned operators to multiple machines of the same kind. That is, a lathe operator might process five items on five lathes and then pass them on to a milling machine operator, who processes them on five milling machines. The items then might move on to drilling and to tapping in the same manner. Multimachine handling entails long lead times and excessive handling. The item that the lathe operator processes on the first lathe, for example, sits idle until the operator has finished processing the other items on the other four lathes. Overproduction occurs frequently, and feedback on quality problems is difficult to obrain. In multiprocess handling, an operator handles different kinds of machines to keep work moving in a continuous flow, The operator might use a lathe, a milling machine, a drill, and then a tapping machine on each item in sequence. ‘Multiskilled operators and multiprocess handling thus enable us to accommo- date changes in take times while maintaining short lead times with one-at-a-time production. In our example, we could accommodate an increase in demand by assigning two operators, instead of one, to the four processes. The First operator might narrow his or her scope of work to the lathe and milling machine, and the second operator would handle the drill and tapping machine. We would accommo- date a subsequent decline in demand by turning all four processes back over to one ‘operator. Multimachine Handling Multiprocess Handling yoatPan wet Pt ae eo a 8 © 0 waivers) 1[@ @ © @] wmeripes manus (@] @ @ © Mein 2? @ @ © @ nivorntd 2101 @ © @ mms @ @ 8 @ veri 210] @ © @ | mcwiacn 4 @ @ @ @ Fitton vernon +|@|@ @ © Cre pron nr ms ne pean eden prt, hi. Part |: dust-in-Time ProductionPart Il Jidoka O Building Quality into the Production Processes @ What's in a Name—JidokaBuilding Quality into the Production Processes A\big part of the Toyota Production System is traceable, as we have seen, to an automatic loom invented early in this century by Sakichi Toyoda. That loom was important because it stopped immediately whenever a thread snapped. The principle of stopping work immediately ‘when problems occur and preventing the production of defective items is basic to the Toyota Production System. We call that principle jicioka. In the Toyota Production System, we design equipment to detect abnormalities and to stop automatically whenever they occur. And we equip our operators with means of stopping the production flow whenever they note anything suspicious. ‘That mechanical and human jidoka prevents defective items from progressing into subsequent stages of production, and it prevents the waste that would result from producing a series of defective items ‘Another advantage of jidoka is that it illuminates the causes of problems by stopping the equipment exactly as it is when a problem first occurs and by calling attention to the problem immediately with a signal lamp or some other kind of indicator. The most fundamental effect of jidoka, though, is che way it changes the nature of line management: it eliminates the need for an operator or operators (0 watch over each machine continuously—since machines stop automatically when abnormalities occur—and therefore opens the way to major gains in productivity. Jidoka thus is a humanistic approach to configuring the human-machine interface. It liberates operators from the tyranny of the machine and leaves them free to concentrate on tasks that enable them to exercise skill and judgment. 26° Part I: JidokaOperators in the Tayota Production System can stop the produetion line whenaver they note anything suspicious. Along the conveyor on this assembly line, an operate (Photo 6} hes noted a part that doas not fit correctly. He pulls on the lne-stop core! (Photo b). That ight the andon lamp ard summons the operator's teem leader to have a look (Photo cl, The ine wil continue moving unt it reaches the next "xsd position’—the position where feech process an the lina has completed one work cycle. When the teem leader arrives, the operstor ‘expsins the problem. The toam leader discovers 6 fitting that has siaged out of plage and is able to resolve the problem [Photo @) before the ine reaches the fad positon, Ifthe leader required mare time to resolve the problem, the line would stop at the fixed position. ‘We mark the fixed position clearly for work in each process. Operators in the process assume responsibly far guaranteeing the quality ofall work up to that ine. ‘They end their equipment make sure no defective items frogrese bayand that line end into the next pracess. ‘When an operator signals @ prablam by puling on the lne-stop cord, the tne keeps moving unt reaches: the fixed postion. That givos the team laadar and opers- tor a chance to resolve the problem before the fine stops. Operators would be hestant to pul the line-stop cord if puling the cord stopped the line immediately they might be aubconsciousiy inclined to lt miner imper fections pass rather than take responsibility for stopping the line. Employees ere rrore incl to call attention t possible problems when they know that summoning hela ‘ull not stop the ine Immediately, That results in more rigorous quality control ‘We also have anather reasan for keeping the fine roving unt it reaches tha fixed position: stopping the lina ia the middle of @ work cycle would be disruptive ‘Skapping the line atthe fixed position ensures that all processes elong the line wal be benveen work cycles ‘when the stappage occurs. We thus avoid the errors, ‘and quaity problams ther happen all too easily when interruptions gecur in the midst of work.place and thus prevent costly refinish ing or even replacement, 28 Part I: JidokaBefore Kaizen Failsafe improvement ‘Work (in reverse} a Chuck 7 > Spindle Failsafe features for preventing human and mechanical error are valuable in implementing the jidoka principle of build- ing quality into the production processes. Here, a failsafe improvement prevents 8 workplace with a missing nut from progressing further in the production sequanca, After Kaizen This falisafe feature prevents operaters from mounting 8 part backwerds. Work {normal} Welder 1 + Lamy Up end e y dom | |, ADE Nut Height of rut + res Buzzer Work Every opsrator is an inspec: ton, responsible for the quality of his ar her-own work.What's in a Name— Jidoka 30 Part tl: JidokaPart Ill Standardized Work and Kaizen O Standardized Work: the Basis for Kaizen O Kaizen: the Lifeblood of Standardized WorkStandardized Work: the basis for Kaizen Standardized work is 2 tool for maintaining productivity, quality, and safety at high levels. It provides a consistent framework for perform- ing work at the designated takt time and for illuminating opportunities for making impravements in work procedures. We use three elements in structuring standardized work: + takt time, ‘* working sequence, and © standard in-process stock. ‘Takt time, as described earlier, is the pace of sales in the marketplace. The work- ing sequence is the series of steps that we determine is the best way to perform a task. Standard-in-process stock is the minimum number of workpieces that we need to have on hand in a process to maintain a smooth flow of work. Standardized work provides detailed, step-by-step guidelines for every job in the Toyota Production System. Team leaders determine the most efficient working sequence. With their team members, they make continuing improvements—kaizen— in that sequence. Kaizen thus begets new patterns of standardized work. Standard inpracess stock is the amount of material that 's flowing through a process vwhen work is proceeding smoothly. fis the minimum ‘amount of material needed to ‘maintain a smooth fay of poo. duction without accumulating irventories. 32 Part Ill; Standardized Work and KaizenThe operator in the saries of photos ab the right is abiding by 2 carefull designed working sequence, That sequence ‘appears in a standardized work chart at the worksita (botow) Standardized Work Chart Work | Homvemoral thames Aeseipton [To afachment of aun eT fx. | Ja. |v ess} Jz far saat] (vay eck | ety caution Tattime | oterine . + e ri rmKaizen: the lifeblood of Standardized Work Abiding carefully by standard. ized wark guidelines furnishas ‘a basis for kauzen, Here, the operator we saw previously (page 33} and his wear leader improve the discuss ways Standercized work at thei worksiva 34° Part Ill: Standai Kaizen furnishes the dynamism of continuing improvement and the very human motivation of encouraging individuals to take part in designing and managing their own jobs. Keizen improvements in standardized work help maximize productivity at every worksite. Because standardized work involves following procedures consistently, any inherent problems in the working sequence surface repeatedly and conspicuously. Team lead- ers and their team members therefore can identify the problems easily. And they can rectify problems promptly Similarly, monthly changes in production volumes require changes in the stan- dardized work. Team leaders and team members devise new standardized work procedures to accommodate monthly changes in production volumes. Kaizen activities include measures for improving equipment, as well as measures for improving work procedures. But work kaizen tends to be easier, faster, and less expensive than equipment Kaizen. So, we usually start with work kaizen when we are trying to resolve a problem. If modifying the working sequence is insufficient to resolve a problem, we consider possible solutions through equipment kaizen.Part IV The Continuing Evolution of the Toyota Production System Ol The System Is Alive O Case Study #1: North America O Case Study #2: Europe © Employee Satisfaction as the Key to Customer Satisfaction O Hands Across the Sea O Beyond Manufacturing O AfterwordThe System Is Alive 36 The basic goals of the Toyota Production System are eternal: customer satisfaction and corporate vitality. The scope of the Toyota Production System, however, is broadening steadily. The system is taking hold in nations around the world. And it is rendering service in industries besides automobiles and automotive parts. The tools and techniques of the Toyota Production System are changing, too. Technolo; vances are spawning new means of processing information. Globalization, meanwhile, means that companies must manage parts supplies and product distribution over much greater distances than ever before. Similarly, companies are exploring ways to implement the system further “upstecam”—in the processes that supply raw materials—and further downstream—in the realm of after-sales service. Part IV: The Continuing Evolution of the Teyata Production SystemCase Study #1: North America We opened the Toyota Supplier Support Genter in Kentucky in 1992 to work with companies that ask for help in adopting our production con- cepts. Toyota has benefited hugely from advances by such Americans as Henry Ford. And we wanted to repay some of that debt. Our local plants work with suppliers. But the Supplier Support Center lends a hand to companies whether or not they are doing business with Toyota. It even assists manufacturers in industries besides automotive parts. Several companies that have worked with our Supplier Support Center have demon- strated the effectiveness of the Toyota Production System in an American setting. A ood example is the automotive parts manufacturer Grand Haven Stamped Products ‘Company, in Michigan. That company makes floor-mounted transmission control systems, hood and deck lid hinges, and clutch, brake, and accelerator pedals, Grand Haven, which has been in business since 1924, has approximately 350 ‘employees and annual sales of about $72 million (1995). Its core competencies center on stamping, welding, and assembly. Gi ‘nd Haven supplies parts to General Motors, Ford, Toyota, New United Motor Manufacturing Ine. [a joint venture becween GM and Toyota), Honda, Mazda, Borg-Warner Automotive, New Venture Gear, Mitsubishi, Volkswagen, Mercedes-Benz, and Nissan. It began working with the Toyota Supplier Support Center in 1993, Luggage Arm Assembly , | Results of Implementing the Toyota Production System, {first two years) Produtiity Output/person 184% Overtime hours/week 100% Personnel needs on ine 45% Inventory fon production line) Work in process 99% Faw material 982% Finished goods Floor space 50% ual Customer complaints/month 100%Like most companies that adopt the Toyota Production System, Grand Haven began in one segment of its opera tions. It set up a continuous-flow line in a cell for assembling luggage arms. The improvements in productivity and quality were immediate and deamatic, and they have continued low The next step was to extend the continuous processing into the preceding process: stamping. Grand, Haven's Press Department traditionally had operated under the classic principles of mass production. The changeover times for the stamping machines were long. So, the depart ment processed large batches between die changeovers. The large batches resulted in big inventories. Stoppages occurred frequently in the following processes because of improper part mixes in the stampings. Grand Haven, with the assistance of engineers from the Toyota Supplier Support Center, discovered ways to short en the changeover times. Notably, it began doing a lot of the preparation and follow-up work for the changeovers “off-line” instead of “on-line. ‘The company formerly had stopped the stamping machines while bringing up and positioning the new dies for mounting, It had left the machines stopped while returning the old dies to their storage space. By revising its work procedures, Grand Haven was able to prepare the new dies while the stamping machines were still run- ning and to restart the stamping machines before putting away the old dies. Grand Haven standardized the changeover work systematically and trained operators to follow the standardized format faithfully. That allowed for using small batches on a continuing basis. The company thus succeeded in producing only the amounts of items actually needed and thereby secured lasting gains in productivity The company also streamlined its stamping work by implementing a signal kan~ ban system. Planning and prioritizing the jobs for each stamping machine had been difficult and subject to chronie confusion. The kanban eliminated the confusion by linking the job sequence to the needs of the following processes. Productivity gains were just as dramatic in the stamping work as in the assembly work, And Grand Haven since has introduced just-in-time prineiples in several other cells, Those cells include processes for serving clients besides Toyota. So, implement- ing the principles of the Toyota Production System has strengthened the company’s ‘overall competitiveness in developing business with diverse customers. ‘Stamping Work Results of Implementing the Toyota Production System (first two years) Die changeover ‘Average time required 24% Averege monthly changeovers 900% Inventory 22% | ouput 196% Grand Haven is strengthening its competitiveness Further by helping ies suppliers implement elements of just-in-time production. It is concentrating on setting up pull systems between its plant and its suppliers’ plants, 38 Part IV: The Continuing Evolution of the Toyota Production SystemCase Study #2: Europe Continuous aw processing has eliminated a great deal a inven tory on Brase's production line for electric vindaw regulstors, Ielso has eliminated a stap in the werehouse for the regula- tors en raute ta the Tayata U.K. plant: the assernbly ‘rocasses now array a variety Of finished work for the Toyota plant en withdraw directly. Drivers return frarn the “Toyota U.K. plant with kanbon for varieties of parts thet the plant has usad. They withdraw boxes of windaw reguatars ‘that correspond to the Kanban indications, And the Brose plant makes adeitional window regulators to replace the anes thet have been withdrawn, Our business with European manufacturers has expanded greatly since we opened a vehicle plant and engine plant in the United Kingdom in 1982. That business has been an opportunity to introduce European suppliers to the principles of the Toyota Production System, A good example of implementing the Toyota Production System in Europe is the window regulator line at the German manufacturer Brose’s U.K. plant. Regulators are the mechanisms—manual or electrie—for raising and lowering windows. Brose employs 3,100 people and operates six plants in Europe and Mexico. tts annual sales are about DM1,200 million (1995). The Brose plant in the United Kingdom makes seat latches and hinges and door systems as well as window regulators and other items. It supplies parts and assemblies to Ford, Jaguar, Honda, Rover, Mitsubishi, Peugeot, Renault, and Toyota, Engineers from Toyota Motor Manufacturing (UK) Ltd. worked with Brose to imple- ‘ment several improvements in a line that makes window regulators for Toyota's U.K, vehicle plant. Most of those improvements resulted directly or indirectly from incro- ducing the concept of takt time. Takt, as we have seen (page 22), is the pace of sales in the marketplace. Brose worked out the takt time for each step handled by each operator on the window regulator line. The takt time furnished a basis for standardizing the work in each step and for undertaking improvements. In addition, Brose converted the line to continuous-flow processing, Formerly, each operator had completed a whole box of items before passing them Before improvement Input input, Input nD production ction frcucton PENS Ban 0 1 person ee, Inventory 3 people ant: After improvement production foe noan Ba ‘person ne, 2 people 39‘A Brose operstors formeriy performed diferent work in the praduction sequence at widely separeted machines land workbenches. By bringing all the work tagether in a con- ‘huni fla, the company eliminated the inventory that formerly accumuloted between pacesses, it also hoe reduced personne! needs on the line on to the next operator. That resulted in large inventories between stages on the line and obscured the causes of defects. Brose eliminated those inventories and improved quality by having operators pass items on to the next operator one at a time. The switeh to one-at-a-time, continuous-flow processing focused attention on the layout of the line, Soldering machines, for example, had been on the opposite side of the room from the assembly line. That positioning necessitated long detours and extra inventories. Of course, it made continuous-flow processing all but impos- sible. So, Brose integrated all the work and equipment in a continuous line, That simplified the work flow and shortened the lead times. Along with adopting continuous-flow processing berween operators on the line, Brose reduced the size of the batches that che line handled as a whole. An automated testing machine was the primary bottleneck. Changing over the machine to test window regulators for different model variations involved long stoppages per changeover. Brose therefore had opted for very large batches. ‘The Toyota engineers and their counterparts at Brose found ways to cur the changeover time for the testing machine some 90%. That allowed for a reduction of four-fifths in batch size. In another improvement, the operators on the fine got rid of an automated ‘machine for fastening motors onto the window regulators. The possible benefits of doing without the machine became apparent when Brose implemented the concept of standardized work. Along with using standardized work, the operators began conducting kaizen activities to improve the standardized work. They soon discov ered that the bulky machine was a hindrance. ‘The operators and their supervisor tried a compact, manual mechanism for fas- tening the motors to the regulators. That mechanism proved just as fast and reliable as the automated machine had been. The operators and their supervisor made a fur- ther improvement by equipping the mechanism with a fail-safe feature for detecting missing parts. That increased reliability and reduced the occurrence of defects 4© Part IV: The Continuing Evolution of the Toyota Production SystemEmployee satisfaction as the key to Customer satisfaction Ubimate eesponsibily for raising qualty and productivity lias wth the peopl in the Workplace, fke these employ nein Chine ‘Success in implementing the “Toyota Production System hinges on earning thee trust ‘securing thelr active parti pation, and providing them With sufficient sls and under= standing to full their role fully 205 at a Toyota ple Customer satisfaction is a reflection of employee satisfaction. In that sense, the Toyota Production System has been successful in earning customer satisfaction because it provides employees with fulfilling work Measures for enhancing employees’ sense of job fulfillment are an important empha- sis in new ways we are implementing our production system. We have learned, for example, that work is more fulfilling when employees can take part in completing an entire product or assembly. Employees take more pride in their work when they can see their efforts take shape in a functional unit. Assigning a single small team to assemble a whole vehicle would be grossly inefficient. But we can arrange work so that teams can handle all the steps of assembling complete sys' al effort ems. And we have begun making a spe to arrange work that way when we build new production lines and when we reconfigure existing lines to make new vehicle models, For instance, we traditionally have installed electrical wiring a litle bit at a time at very different stages in the vehicle assembly sequence. That also has been the ease im installing exhaust systems and other important systems. Recently, we have begun concentrating the installation steps for such systems at single worksites. That heightens the sense of teamwork among the 20-or-so group members at each worksite. It reinforces their sense of accomplishment by enabling them to com- plete @ crucial and integrated part of each vehicle. 4rHands Across the Sea The Toyota Production System began as a framework for streamlining production and transport at plants that were a stone's throw from each other. Transport lead times were not much of a problem when the parts plant was next door to or just down the road from the vehi- cle assembly plant. But in recent years, Toyota has begun making large volumes of cars and trucks around the world. Plants outside Japan will be making more than 2 million Toyotas a year by 1998, So, Toyota has been developing techniques to manage long-listance logistics in a global context. It also has continued to refine its methods for managing long- distance logistics in Japan. The importance of those methods increased in the early 1990s as Toyota opened its first vehicle plant outside Aichi Prefecture—on Kyushu—and as it opened a large parts plant on the northern island of Hokkaido, ‘We minimize lead times in long-distance logistics by implementing just-in-time principles rigorously. That is, We. * transport parts in frequent shipments of small lots and + employ mixed loads of various parts from diverse suppliers to use every cubic inch of space in containers, trucks, and ships. Teucks make scheduled *milk runs” to pick up parts from multiple parts plants in the American Midwest, in Europe, in and around Toyota City, and in other regions around the world. They take the parts to collection depots for shipment by train or boat to distant plants. As far as the suppliers are concerned, global logistics are only ‘a matter of getting parts onto their shipping docks on time, Frequent shipments of small lots help shorten lead times in'the movement of parts and materials, But long-distance logistics also stretch out lead times in the circulation of kanban. We have trimmed those lead times by switching to electronic kanban and on-line communications links. That way, we can “return” a withdrawal kkanban to the parts plant as soon as a vehicle plant uses a shipment of parts—even if the vehicle plant is on the other side of the world This ship delivers parts and ‘matirais on a justantime basis to Toyota's vehicle plant on the southern sJlapanase istand of Kyushu. Trucks pick ‘up pares at suppliers and take them to a eallection depot in Toyota Cry, From there, trucks ‘carry mised loads in large con talnors to the Port of Nagaya for timely sea transport t> xyushu, That system suppores short lead times in suppiing the vehicle plant wth the parts it needs when it needs them. 42. Part IV: The Continuing Evolution of the Toyota Production SystemBeyond manufacturing 1¥ The Toyota Produation ‘System can elirinate invento ries in distribution work just a6 wel as & does in production. ‘Those phocos show the ship ping dock at a distribution enter for replacarnent parts before and after ineroducing justia tie principles Some of our mast dramatic gains in productivity over the next few years will occur outside the factory. They will happen in the ways we distribute replacement parts, in the ways our dealers provide after- sales service, and in the ways we distribute vehicles. Dealers around the world tend to order parts in larger quantities than they require for immediate needs. They do that because they want to be sure of having parts on hand to service customers’ vehicles promptly. But that “safety cushion” translates inro a huge volume of excess inventory around the world. We are persuading dealers to order replacement parts on a just-in-time basis. That is, we are persuading them to order parts only to replace items that they have actually used, We are winning over the dealers by guaranteeing delivery of needed parts within 24 hours. One way we are shortening lead times is by shifting to daily, from weekly, shipments at distribution centers. Another is by setting up on-line ‘communications links between the distribution centers and ear dealers to process orders. In maintenance and repair business, vehicle service centers are raising efficiency by introducing principles of standardized work, People in vehicle and parts plants have been analyzing work and refining procedures for years. Maintenance and repair shops, however, have been less systematic in designing work, Now, we are working with some of those shops co analyze common service procedures. We are helping develop standardized work procedures that result in faster service with fewer mistakes and omissions. Vehicle distribution also is becoming more efficient as we work with dealers to implement just-in-time principles more thoroughly. Larger dealerships have tend: «d, for example, to pass orders on to us in hatehes. We are developing proceduces for processing orders one vehicle ata time. That will shorten lead times in translat ing customer orders into deliveries of finished vehicles.Afterword The Toyota Production System thus is becoming more than a “produc: 1” system. People are learning to use just-in-time principles to raise efficiency and quality in an ever-broadening range of business and services. They are learning to apply those principles in chains of processes—including product development, manufacturing, transport, sales, and service—that girdle the earth. Clear and out 1¢ Toyota Production System works perfectly well 0: Japan. Bur it only works when companies invest the system with the ide the factory dynamism of human creativity and initiative. The Toyota Production System works because it gives people the chance to become as good as they can he. Ir puts people in charge of their own jobs, It encourages them to find herter ways to get their work done, Introducing the Toyota Production System can be a trying experience. The sys tem exposes waste mercilessly. People must be prepared to abandon familiar and longse ding practices. Top management must take part directly in clearing away obstacles and in implementing and maincaining the system. Middle-level managers, meanwhile, must provide worksite le: Production System inro practice lership in putting the concepts of the Toyota Everyone has a role to play. And everyone can benefit, But they have to begin by trusting each other. Management must demonstrate a readiness to share ncreases in profitability with the employees who generate those increases through productivity gains. Employees, too, must demonsteate good faith. They must recog. nize that their livelihoods depend on the competitiveness of their company. And they must take responsibility for honing that competitiveness through continuing advances in productiviey and in quality A good thing about trust is that it grows. Management and employees ean learn to trust each other, And once they do, they can work miracles together. 44 Part IV: The Continuing Evolution of the Toyota Production System