MF F418 Lean Manufacturing

BITS Pilani Dr. A. K. Digalwar

Department of Mechanical Engineering
Pilani Campus
 BITS Pilani
Pilani Campus

The 14 Principles of the Toyota Way

The 14 Principles of the Toyota Way: An Executive
Summary of the Culture Behind TPS

• Since Toyota’s founding we have adhered to the core

principle of contributing to society through the practice of
manufacturing high-quality products and services.
• Our business practices and activities based on this core
principle created values, beliefs and business methods
that over the years have become a source of competitive
advantage.
• These are the managerial values and business methods
that are known collectively as the Toyota Way.
• —Fujio Cho, President Toyota (from the Toyota Way
document, 2001)

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The Toyota Way Is More than
Tools and Techniques

• In the Toyota Way, it’s the people who bring the

system to life: working, communicating, resolving
issues, and growing together.
• From the first look at excellent companies in
Japan practicing lean manufacturing, it was clear
that the workers were active in making
improvement suggestions.
• But the Toyota Way goes well beyond this; it
encourages, supports, and in fact demands
employee involvement.

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• The Toyota Way means more dependence on people,
not less.
• It is a culture, even more than a set of efficiency and
improvement techniques.
• You depend upon the workers to reduce inventory,
identify hidden problems, and fix them.
• The workers have a sense of urgency, purpose, and
teamwork because if they don’t fix it there will be an
inventory outage.
• On a daily basis, engineers, skilled workers, quality
specialist, vendors, team leaders, and—most
importantly—operators are all involved in continuous
problem solving and improvement, which over time trains
everyone to become better problem solvers.
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14 principles that constitute
the Toyota Way
• The principles are organized in four broad
categories:
1) Long-Term Philosophy,
2) The Right Process Will Produce the Right
Results (this utilizes many of the TPS tools),
3) Add Value to the Organization by Developing
Your People, and
4) Continuously Solving Root Problems Drives
Organizational Learning

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• Principle 1. Base your management decisions on a
long-term philosophy, even at the expense of short-
term financial goals.
• Principle 2. Create continuous process flow to bring
problems to the surface.
• Principle 3. Use “pull” systems to avoid
overproduction.
• Principle 4. Level out the workload (heijunka). (Work
like the tortoise, not the hare.)
• Principle 5. Build a culture of stopping to fix
problems, to get quality right the first time.
• Principle 6. Standardized tasks are the foundation for
continuous improvement and employee
empowerment.
• Principle 7. Use visual control so no problems are
hidden.
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• Principle 8. Use only reliable, thoroughly tested
technology that serves your people and
processes.
• Principle 9. Grow leaders who thoroughly
understand the work, live the philosophy, and
teach it to others.
• Principle 10. Develop exceptional people and
teams who follow your company’s philosophy.
• Principle 11. Respect your extended network of
partners and suppliers by challenging them and
helping them improve.
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• Principle 12. Go and see for yourself to thoroughly
understand the situation (genchi genbutsu).
• Principle 13. Make decisions slowly by consensus,
thoroughly considering all options; implement decisions
rapidly (nemawashi).
• Principle 14. Become a learning organization through
relentless reflection (hansei) and continuous
improvement (kaizen).

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The 14 Toyota Way Principles
• 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.
• Most companies, especially in the west, have a very
short term focus, typically a quarter. This is because of
quarterly financial reports are a score card many
people use to assess the overall health of the
company
• Managers have learned how to “game the system”,
i.e., how to make themselves look good in the short
term. That is why they do not take any risks to
jeopardize the short term financial reports. The result
is that people move on to other jobs, or get promoted,
leaving a mess for other people to take care of.
The 14 Principles
• Principle 1 (contd)
• When management takes such a short term view,
decisions that have a long term impact on the company’s
future either get deferred or the wrong decision gets
taken
• A very big reason why a large number of companies
have not been able to apply any of the tools such as
TQM, Six Sigma, Lean, etc. is because management
does not have a long term view and patience to see a
project through to its logical conclusion

11
The 14 Principles
• Principle 1 (contd.)
• The people in the organization also lose faith in any new
initiative expecting management support and enthusiasm to
be short lived. That is where you have companies who jump
from one fad to another creating havoc in the organization
• Companies should have a long term vision and mission which
should guide the operations in the short term. The vision and
the mission should be real, and not mere vision and mission
statements.
• The organization needs to be aligned toward the vision and
mission of the organization. If people are acting in their
individual self –interest, in addition to the interest of the
company, their efforts will be sustained in the long run.
• The vision and the mission should focus on the generation of
value for the customer, society, and the economy. Every one
in the organization should evaluate his or her actions in the
context of this overall goal.
The 14 Principles

• Section II: The Right Process Will Produce the

Right Results
• Principle 2. Create continuous process flow to
bring problems to the surface.
• The common tendency in organizations is to hide
problems. The reason for this behavior is that
when a problem is seen, the question that is asked
is “Who did this?” rather than “Why did this
happen?”
• The result of such a culture is that people feel that
if they admit to a mistake, they will be blamed and
fired.
• This does not eliminate problems, but prevents the
recognition that they exist.
The 14 Principles

• Principle 2. (Contd.)
• Toyota believes that mistakes are a way to
learn. It is far more difficult to learn from a
success. So when a supervisor say that there
is no problem in his area, he is only admitting
that he does not know how to make
improvements in the area.
• Toyota strives to have smooth flow as
disruptions to the smooth flow are easy visual
cues to problems. By solving the problems,
the system is improved.
The 14 Principles

• Principle 3. Use “pull” systems to avoid

overproduction.
• Overproduction was fine during the time period
when the total production capacity was below the
demand. Companies were reasonably assured
that they would be able to sell whatever they
made, for a profit, sooner or later
• The entire concept of “pull” ties the production
very closely to the customer. It is an automatically
adjusting system to adapt to changes in
consumption as well as disruptions downstream
from an operation
• By pulling production, production can correctly
prioritize which products should be produced first.
The 14 Principles

• Principle 3. (Contd.)
• By pulling production, not only does
production avoid unnecessary WIP inventory,
but also, it alerts the planners to when
changes in demand and supply have
occurred
• By pulling production, the reliance on
computer generated schedules is minimized.
• It also allows the system to be more
responsive to changes in demand
The 14 Principles

• Principle 3. (Contd.)
• One sacred cow in modern production is
machine utilization. Machines should never
sit idle. The more expensive the machine, the
more is the “cost” of it sitting idle
• The entire idea of machine utilization comes
from cost accounting which attempts to
allocate the fixed cost of depreciation to
individual products and departments.
However, if a machine sits idle, no additional
out of pocket costs are incurred.
The 14 Principles

• Principle 4. Level out the workload (heijunka).

• Eliminating waste is just one-third of the equation
for making lean successful.
• Eliminating overburden to people and equipment
and eliminating unevenness in the production
schedule are just as important—yet generally not
understood at companies attempting to implement
lean principles.
• Work to level out the workload of all manufacturing
and service processes as an alternative to the
stop/start approach of working on projects in
batches that is typical at most companies.
The 14 Principles

• Principle 5. Build a culture of stopping to fix

problems, to get quality right the first time.
• Due to the fear of production loss due to machine
downtime, it is almost taboo to stop a machine to fix a
problem.
• By not stopping the machine to fix a problem, the culture
that gets ingrained is that permanent solutions are not
important (long term goals), short term fixes so that
machine down time is avoided, becomes the focus of
everyone.
• Problem solving has to become part of the company
culture, which requires that sufficient focus be placed on
stopping to take corrective and preventive measures
The 14 Principles
• Principle 6. Standardized tasks are the
foundation for continuous improvement and
employee empowerment.
• Stable, repeatable methods should be used
everywhere to maintain the predictability, regular
timing, and regular output of your processes. It is
the foundation for flow and pull.
• The accumulated learning about a process should
up to a point in time should be captured by
standardizing today’s best practices.
• Creative and individual expression is possible by
providing opportunities to improve upon the
standard; then incorporate it into the new standard
so that when a person moves on you can hand off
the learning to the next person.
The 14 Principles
• Principle 7. Use visual control so no problems are
hidden.
• We have created company cultures where there is over-
reliance on computers and computer generated data for
analysis and management.
• The problem with such an approach is that it relies on data,
whose validity and timeliness is suspect.
• Data can also be used to hide real problems
• People need to be able to judge whether there is a problem
by a quick visit to the place where a problem may have
occurred.
• Simple visual indicators help people determine immediately
whether they are in a standard condition or deviating from it.
• Reduce your reports to one piece of paper whenever
possible, even for your most important financial decisions.
The 14 Principles
• Principle 8. Use only reliable, thoroughly tested technology that
serves your people and processes.
• Often times, new technology/automation is used to
replace people. This strategy has never worked, except
in the simplest of situations. Most of the time automation
does not result in reduction in headcount
• Technology should be used to support people. The
Toyota mantra is that if a task is dirty, difficult, and
dangerous, then it should be automated.
• New technology is often unreliable and difficult to
standardize and therefore endangers “flow.” A proven
process that works generally takes precedence over new
and untested technology.
• Conduct actual tests before adopting new technology in
business processes, manufacturing systems, or
products.
The 14 Principles

• Principle 8. (Contd)
• Conduct actual tests before adopting new
technology in business processes,
manufacturing systems, or products.
• Technology should also be judged based on how
it impacts the work culture
• People should also be encouraged to consider
ways to use technology to improve processes,
but not from the perspective of replacing
workers, but to improve performance in terms of
quality, responsiveness, etc.
The 14 Principles
• Section III: Add Value to the Organization by Developing
Your People and Partners
• Principle 9. Grow leaders who thoroughly understand the
work, live the philosophy, and teach it to others.
• Most managers and supervisors are really not clear
what are their jobs. They view their jobs more like
policemen, ensuring there are no problems.
• However the role of managers is much broader
where they need to create the environment where
the Toyota culture can grow.
• Toyota tends to promote leaders from within the
organization.
• People who have been with the company for a long
time, understand the philosophy and help teach it to
newcomers
The 14 Principles

• Principle 9. (Contd)
• If a person has grown with the company, there is
a greater sense of aligning with long term goals.
It is very difficult to expect an outsider to imbibe
a company’s values very easily or quickly.
• Toyota managers also tend to be more hands-
on, with the result that they can teach their
subordinates based on knowledge regarding the
jobs, since they themselves are very adept at
accomplishing the task
• Workers also respect managers who know the
job at hand
The 14 Principles

• Principle 10. Develop exceptional people and teams

who follow your company’s philosophy.
• Toyota does not believe in hiring people only for their
work ability. Rather people need to learn how to work in
teams. If a person cannot work effectively as a team
member, he will not be effective as an individual.
• In addition to ability a person needs to be able to
understand and live the Toyota philosophy. If a person
cannot align himself/herself to the company philosophy,
he will not be able to advance to leadership positions in
the company.
• Toyota spends a long time in selecting workers in order
to ensure that they are aligned to the company vision
and mission
The 14 Principles

• Principle 10. (Contd.)

• Teamwork is essential for effective problem solving.
Therefore Toyota invests time and effort in ensuring team
players.
• Team players are not the same thing as yes-people.
Rather team members need to be able to work together
to achieve the company’s goals
• Once workers are comfortable and aligned with the
company vision, they can be empowered to do what is
required to solve problems and improve processes
The 14 Principles

• Principle 11. Respect your extended network of

partners and suppliers by challenging them and
helping them improve.
• Most companies purchase more than 50 percent of the
materials from outside suppliers
• The number of technologies required in modern products
has grown so large that companies cannot have the
expertise on all technologies in-house
• It becomes essential to involve outside suppliers and
treat them as partners in solving joint problems, rather
than consider them as adversaries.
The 14 Principles

• Section IV: Continuously Solving Root Problems

Drives Organizational Learning
• Principle 12. Go and see for yourself to thoroughly
understand the situation (genchi genbutsu).
• The Toyota culture is that a problem cannot be solved by
sitting and discussing the matter in a conference room.
Problem solving requires going to the “gemba.”
• It is only by going to the “gemba” that a person can
understand the context and circumstances under which
the problem has occurred.
• Also, all problems need to be solved using verifiable data
and not merely be based on the opinions of people.
The 14 Principles

• Principle 13. Make decisions slowly by consensus,

thoroughly considering all options; implement
decisions rapidly (nemawashi).
• Do not pick a single direction and go down that one path
until you have thoroughly considered alternatives. When
you have picked, move quickly but cautiously down the
path.
• Nemawashi is the process of discussing problems and
potential solutions with all of those affected, to collect
their ideas and get agreement on a path forward.
• This consensus process, though time-consuming, helps
broaden the search for solutions, and once a decision is
made, the stage is set for rapid implementation.
The 14 Principles
• Principle 14. Become a learning organization through relentless
reflection (hansei) and continuous improvement (kaizen).
• Once you have established a stable process, use continuous
improvement tools to determine the root cause of inefficiencies and
apply effective countermeasures.
• Design processes that require almost no inventory. This will make
wasted time and resources visible for all to see. Once waste is
exposed, have employees use a continuous improvement process
(kaizen) to eliminate it.
• Protect the organizational knowledge base by developing stable
personnel, slow promotion, and very careful succession systems.
• Use hansei (reflection) at key milestones and after you finish a
project to openly identify all the shortcomings of the project. Develop
countermeasures to avoid the same mistakes again.
• Learn by standardizing the best practices, rather than reinventing
the wheel with each new project and each new manager.