Katie Yakes Manufacturing Management Toyota Way Jeffrey Liker’s “The Toyota Way” explains the philosophy, behaviors

, and principles used by Toyota Motor Corporation to accomplish their worldwide success in producing high quality cars and a business organization. Toyota’s commitment to continuous improvement in their manufacturing process reflects its complete embracing of its philosophy, behaviors and principles is what Liker refers to as “the Toyota Way.” Toyota’s lean production approach, called the Toyota Production System (TPS), has achieved a reputation as setting a world class standard that other companies seek to achieve in their own operations. Liker uses Toyota’s TPS to explain in greater detail Toyota’s approach to lean production, along with the 14 principles that Toyota uses as the foundation for its performance and commitment to continuous improvement to achieve high levels of quality and excellence. The book is organized into four sections which follow the structure of the Toyota Way’s four key “P” categories: long- term philosophy, the right process will produce the right results, add value to the organization by developing your people, and continuously solving root problems drives organizational learning. Listed below is a summary of each of the 14 principles which drive Toyotas success. Section 1 of the Toyota Way consists of only one principle, “Base your management decisions on long-term philosophy, even at the expense of short-term financial goals.” Toyota’s commitment to its employees, as well as to bringing value to its customers and society as a whole, is the driving force and foundation for all other principles that Toyota follows. Toyota’s first focus is on long-term goals and actions that can bring the company’s products and performance to the next level of excellence. This means making decisions that are based on the longer term implications of the actions, not on what generates short term profitability. Toyota’s belief is to “work, grow and align the whole organization to work toward a goal that is bigger than making money” (37). That goal is to reinvest in the future to create a stronger and more efficient and dynamic business for the benefit of its employees, customers, shareholders, and society. Liker provides examples of Toyota incurring short-term financial losses resulting from actions that demonstrate a longer-term commitment to customer satisfaction and building trust among its employees. For example, the effect of certain import tax surcharge reversals resulted at one point in the same Toyota car being priced differently at 3 different dealerships. Toyota decided to pay the extra taxes on the cars in order to equalize the pricing to customers and dealers even though doing this had an adverse impact on Toyota’s short-term profits. An important part of the first principle is Toyota’s belief in

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“Flow” is at the heart of making a manufacturing process lean. trusting in our own abilities. “We strive to decide our own fate. Toyota supports the business philosophy of “let’s do it ourselves. Toyota supports its workers to also be self-reliant and responsible by continually challenging them to look for ways to improve themselves and the business processes and to participate as individuals and team members working together to help the company produce better products and thereby grow successfully. Toyota chose to create its own original luxury division. Understanding the concept of flow is very important to the success of lean improvement initiatives because many businesses do not realize that the amount of employee time spend on value-added processes is often 2 . Section II. and unused employee creativity (89). excess inventory. and a commitment to adding value to customers. “The right process will produce the right results. employees and society. unnecessary movement or transport. such as BMW. and then packaged and shipped in response to customer purchase orders. Optimizing “flow” means that shortening the elapsed time from raw materials to finished goods (or services) will lead to the best quality.” This section involves principles 2 through 8 which focus on how to use standardization and “flow” to eliminate wastes and non-value added activities throughout the manufacturing and business processes. producing. We act with self-reliance. and marketing a luxury car. quality defects. It did this in order to learn first hand what is entailed in designing. Toyota’s employee training programs are focused on instilling the philosophy that business success is the result of building long lasting customer satisfaction with Toyota and its products and that this is only achieved through hard work. Lexus. the second “P” of the Toyota Way is. continuous improvement of skills.the importance of self-reliance and taking responsibility for one’s own fate. A work environment focused on optimizing flow encourages employees to promptly identify inefficiencies as problems surface and motivates employees to develop solutions sooner rather than later because inadequate fixes will result in the process slowing or shutting down in the future. Instead of choosing an option of simply buying a luxury car manufacturer. The ultimate goal in the Toyota Way is to strive for continuous and problem/error-free movement of material and information so that there is no idle time between when required raw materials are sourced and converted into finished goods. Some examples of non-value wastes that Toyota (and any manufacturer) encounters and strives to eliminate are overproduction. over-processing. production line waiting. One example of living up to this principle is the way Toyota approached its decision to expand its product line to include a luxury car. lower cost. We accept responsibility for our conduct and for maintain and improving the skills that enable us to produce and add value” (37).” which means choosing a path of personal action rather than relying on other business partners to do things. Toyota’s philosophy about business self-reliance is summed up best in the quote. and shortest delivery time (88).

One lean production technique used to add value through continuous flow is reducing batch sizes.disproportionately small compared to the amount of time focused on wasteful. improved employee morale. Toyota created “small store parts (106)” to help minimize product work-in-process between operations. and highly effective in forcing improvement in the production system. because any amount of inventory is technically process “waste. Physically arranging the layout of equipment to follow the flow of materials is important to optimize flow. Toyota does not view it as an optimal system however.” Toyota uses the Kanban.” which has the goal of zero product inventory. between a one-piece flow and pull system. it also includes eliminating any 3 . improved safety. Positioning the layout of equipment in a continuous “U” or “L” allows material and information to move faster through the sequential processes. and in the amount they want. Principle 2 is “create a continuous process flow to bring problems to the surface. and reduced inventory costs. This is different from the concept of traditional mass production which Toyota opposes as being less efficient. without carrying lots of inventory. Misdirected focus is why businesses fail to achieve long term project improvement goals.” Toyota focuses on “one-piece flow. every piece produced is available just-in-time to be sold and therefore there is 100% demand for all products produced. Toyota uses clear and simple signals. This type of pull-replenishment system is known as a “Kanban system. because it reflects 100% demand and zero inventory. non-value activities. Principle 3 is to “use ‘pull’ systems to avoid overproduction. That is. when they want it. and fosters better communication among workers.” and the objective of one-piece flow is the elimination of waste. The goal is that only the amount of product that is needed is being produced. however. Toyota believes that the best form of pull is the one-piece flow.” Heijuka means “leveling of the production by both the volume and product mix” (116). facilitates linking processes and people together. The fourth principle is “level out the workload (heijunka). Proven benefits that result from striving for one-piece flow include higher productivity. As stated in principle 2. built-in quality. Toyota emphasizes that leveling cannot be solely achieved in a lean system by just eliminating waste alone (muda). called “kanban” in the form of empty bins or cans to indicate when parts need to be replenished. This system allows Toyota to focus on eliminating inventory rather than gaining it. Toyota believes that a pull system is much more effective than a push system because a pull system generates less inventory carrying costs and only produces or “pulls’ an item based on customer demand. This provides an easy way for Toyota to adjust its restocking needs based on the daily production needs and demand fluctuations. As a compromise. allows process problems to be more readily identified. as an inventory buffer because it is easy to use. This concept is also referred to just-in-timemanufacturing because it focuses on giving the customer what they want.

or music that alerts people on the production line that an issue that has been detected which needs to be addressed. to get quality right the first time. This device or signal is called an “Andon.” The system should also have a built-in mechanism to quickly solve problems and initiate countermeasures. use one-piece flow and andons to surface problems. A defect is discovered by looking for deviations from the standard. repeatable 4 . which are error proofing devices that make it hard for an operator to make a mistake. but uses a “changeto -order system” which focuses on the importance of a leveled production schedule. For example. The sixth principle is to embrace “standardized tasks and processes for continuous improvement and employee empowerment. The Toyota system does not focus on build-to-order systems as many companies use. and ask “why” 5 times. “That’s how we put responsibility for quality in the hands of our team members (129).” Toyota believes that quality drives the value proposition for its customers. Toyota is like the tortoise who uses a slower continuous process. If waste is not leveled.” It is important to understand that standardized work is built into quality. such as “poka-yoke” devices at every station. “work like the tortious not like the hare” (37). A change-to-order process can be described by the phrase. a stop/and start approach is comparable to the hare who at times speeds through the race (process) at record speed and at other times is waiting idle until something spurs him back into action and he then runs at high speed to make-up his lost time. Toyota uses four key tools or steps when quality issues arise: they go and see the situation. the production process will take on a stop/start approach which overworks employees and equipment because of continuous waste building up. analyze the situation. an alarm. flag. The fifth principle is “build a culture of stopping to fix problems. and (iv) smooth demand on upstream processes and the plant suppliers (118-119). there should be a simultaneous automated signal. Additionally. every Toyota factory employee has the ability to stop the production line at any time they see something that is out of standard. this principle involves equipment automation and requires building equipment that has features which provide a type of “intelligence” to detect defects when they occur and stop production “automatically” to that an employee can immediately fix the problem before the defect becomes a major issues or compromises the product or process as it progresses through further manufacturing steps. (iii) balanced use of labor and machinery. That is.overburden that equipment or a person might face during the process that results in unevenness in the production schedule (38). Toyota prides itself on the power of simplicity in addressing issues and solutions. The technique of “Judoka” is the foundation for building quality into the process. For example. (ii) reduced risk of unsold goods. According to Liker. It is important to use stable. leveling its workload through the change-to-order system and in the end proves to be the more efficient and successful winner. There are four main benefits of leveling production scheduling: (i) flexibility to make what the customer wants when they want it.

and the responsibility.” Toyota uses the Japanese “5s” program which comprises series of activities aimed at eliminating the wastes that contribute to errors. improve flow and support the pull process. if there is a filled bin sitting without a kanban card. For example. Toyota strongly believes that a proven process takes precedence over new technology. straighten. or interferes with flow. knowledge. If employees conclude after pilot testing that the technology interferes with any of Toyota’s core philosophies. and injuries in the workplace. no one group controls the whole process and individuals learn new skills and feel they are part of the process. then having employees test it in a controlled manner before implementing it directly into the production process.” Toyota does not haphazardly implement new technology. this is a sign of overproduction. Toyota emphasizes the importance of giving employees a significant role in piloting new technology and seeking their feedback on how the technology can add value to process flow. Toyota insists that everyone must be involved in the standardization of work and achievement of quality. For example. Toyota believes that a company cannot consistently achieve product quality without standard and consistent procedures. disrupts stability. to contribute their creative and individual skills to developing and reaching agreement on the final standardization of the product. when launching a new vehicle. Toyota will either reject or delay implementation regardless of the initial financial investment in the technology or its state-of-art feature. Toyota wants its employees to work with new technologies when considering ways to improve process flow. The seventh principle is “use visual controls so no problems are hidden. The 5s’ are: sort. A goal is to identify best practices drawn from a diverse ideas. Toyota supports employees reconsidering ideas and technologies that has been deferred or rejected if conditions later change and the idea or technology 5 . thoroughly tested technology that serves your people and processes. An important part of this principle is that visual controls are important to use to eliminate waste. Allowing individual participation on the pilot teams to rotate supports ongoing employee opportunities to share ideas that can lead to improvements to the standards and achievement of even greater quality. defects. however. shine. Simple visual indicators provide immediate feedback so employees know if they are performing the job right and how well they are doing. In this way. Toyota creates pilot teams in which every team member has the opportunity. Toyota uses the kanban card as a visual control so that managers can quickly determine if product replenishment and inventory is being managed correctly.methods throughout the process in order to maintain predictability and regular timing in output. As previously mentioned. standardize. and experiences. Toyota believes in first experimenting with a new technology. Visual controls “are communications used in their work place to tell us at a glance how work should be done and whether it is deviating from the standard” (152). Principle 8 is “use only reliable. reduces reliability or predictability. and sustain as a way to improve the work environment.

Toyotas strongly believes “if you make teamwork the foundation of the company. individuals will give their hearts and souls to make the company successful” (186).” That is. process flow. being a value added contributor to society. and able to teach the Toyota way to others by being effective role models. Toyota emphasizes the importance of developing leaders internally rather than recruiting them from outside organizations. not just any individual. Toyota identifies a number of traits that its leaders have in common: focus on longer-term purpose. The first of these principles. emphasizes the growth of leaders who are able to comprehensively understand the work that is being done. being a true leader is not just about having good communication skills and other business accomplishments. successfully working up through various detail-focused roles and having positioned themselves in the “gemba” where the real work was done. are fully committed to the Toyota philosophies.has a new potential for usefulness. and being able to observe and find opportunity’s to continuously teach. to do the job. Toyota emphasizes the importance of hiring employees who can succeed as individual worker as well as excel as a team player. Toyota uses a number of different motivational theories to motivate 6 . Essentially technology must meet the criteria of supporting people. never deviating from the Toyota principles and being a clear role model to its principles. The tenth principle emphasizes how a company can develop exceptional people and teams that allow the workers to proactively embrace the company’s philosophy in a way that individuals and the company achieve exceptional results. This is a critical component of Toyota’s corporate culture and referred to as “Genchi Genbutsu. train. Toyota develops and selects as its leaders people who are role models and “live and breathe” the Toyota principles. it is about demonstrating through actions a complete commitment to reflecting the Toyota Way philosophies and empowering others to embrace a commitment to Toyota’s philosophies and values. and mentor other employees in a way that fosters their own growth in the Toyota Way. principle 9. The Section III category of “add value to the organization by developing your people” consists of principles 9 through 11 which have an overall objective of focusing on how to create added value in an organization through its employees. This correlates back to the trust and support that Toyota develops and places in its employees as part of its core believes in Principle 1. Toyota believes is finding the right person.” which means “deeply observing the actual situation in detail (176). Toyota also emphasizes crossfunctional teams as the best way to continuously improve quality and productivity and solve difficult problems that affect the flow. but Toyota feels this is necessary because it wants individuals who have the ability to be cross-trained in a wide variety of technical skills to use themselves as well to empower other employees when working on teams. Toyota’s process for selecting employees is time consuming. and Toyota’s principles.

and delivery.employees. then Toyota cannot improve either.Toyota emphasis on identifying challenges and pushing its employees to continuously develop themselves and improve processes results in a culture of thinking creatively (“outside-the-box). Toyota believes that the term “Genchi Genbutsu” distinguishes the Toyota Way from any other management approach. also applies to Toyota’s suppliers. For Toyota. more fully teaching them the Toyota Way. you cannot fully understand the problem or situation unless you actually go and see it for yourself.” The twelfth principle is embodied by the term “Genchi Genbutsu. Toyota believes that team work is not something that comes naturally. Taylor’s Scientific Management. and finding ways to challenge them to grow and improve as well. The eleventh principle emphasizes respecting suppliers and partners as an extension of the business. Toyota believes in allowing their potential new suppliers to prove their loyalty and commitment to Toyota by meeting Toyotas high performance standards for quality. “Genchi Genbutsu” means sending experienced people to the place to see the actual situation for understanding (224).” which means that whether a problem surfaces in manufacturing. In the TPS system Toyota works with employees on projects and improvement opportunities to help them achieve Toyota’s challenging goals. such as Maslow’s Need Hierarchy and the Herzberg’s Job Enrichment Theory . and has resulted in many other suppliers eager to become part of this Toyota experience. Simply demanding cost reductions from suppliers is not part of TPS. Behavior Modification. Toyota believes that part of this respect means treating suppliers like employees from the perspective of empowering and helping suppliers learn and understand the Toyota Production System. and relying on firsthand 7 . product development. Toyota prides itself on obtaining a thorough understanding on all aspects of the situation. Toyota believes in the importance of collaborative learning because if the suppliers cannot find viable ways to achieve Toyota’s goals. Toyota will show its commitment to the supplier by awarding the supplier significant amounts of business. unless its suppliers can cut their own costs that go into building the material and components. In return. Toyota invokes learning through “learning by doing” processes (217). The overall philosophy in principles 12 through 14 in Section IV of the Toyota Way is that “continuously solving root problems drives organizational learning. For example if Toyota cannot cut its cost of sourcing raw material or component parts. cost. Toyota’s philosophy which emphasizes challenging people to continually improve themselves and finding ways to empower them. Goal Setting theories (195) . Toyota’s commitment to ensuring that suppliers who are part of its business family are continuing growing and improving themselves has earned them the respect of those suppliers. Respect to Toyota means “having high expectations for their suppliers and then treating them fairly” (202). but rather takes time to learn and follow. and treating them as an extension of the Toyota family by remaining a loyal customer of the supplier (202). or anywhere or with anything else.

analyze and observe the problem. but then added. Toyota also involves other parties in this decision process. rather than relying on theorizing on the basis what others have told you. identify the root cause of the problem. the decision can be implemented rapidly. a person will move continuously and quickly down the chosen path toward implantation. This involves taking the time and effort “to do it right the first time” and reflects a commitment to carefully identify and consider alternative solutions.” which means keeping in touch with what is going on (233). and encourages employees to consider “sets of alternative solutions” before deciding which solution or option to pick. The vice president acknowledged that the group leader could have handled the situation. it is important that they serve as role models and through their actions continuously demonstrate living the Toyota Way and staying involved at all levels so they can best maintain first hand understanding “of what’s happening. The belief is that this is the only way to best assure that the right decision is chosen and that time is not wasted choosing getting to the optimal solution.” The Thirteenth principle emphasizes the concept of making decisions slowly by consensus. all aspects have been agreed to and the approvals and final meeting are just a formality. This is why Toyota emphasizes the importance of choosing the right solution because once it is chosen. “I want to investigate it for myself. refining the plan. and with others propose an optimal solution. This expectation applies not only to the process employees. Particularly for high ranking Toyota executives. Toyota relies mainly on factual information from a knowledgeable person first hand observing and verifying the data themselves. or others believe (40). and finally building a consensus or agreement on one specific option. and is similar to “Genchi Genbutsu” if practiced correctly by executives. By the final stages of the process. but to high level managers and executives because they are expected to have a deep understanding of issues in order to effectively run the company and support the problem solving and decision making process.knowledge. Once the decision is made. 8 . thoroughly considering all options. Liker provided the following example: in the middle of a conversation Liker was having with a Toyota vice president of manufacturing. Toyota discourages employees from taking shortcuts. Liker asked why the executive felt that he had to attend. Toyota strongly believes that the way someone arrives at the decisions is just as important as the quality of the decision (236). Toyota strong belief to this term. the executive excused himself to leave for meeting addressing a particular team member’s concern. is further supported by their requirements that t employees have a very detailed understanding of the flow process in order to be able to critically evaluate. effectively and accurately communicate the root cause of the problem. This is called “nemawashi” (241). And I want them to see that this is important to me” (232). Toyota often describes this process using the example of a junior person building consensus by first developing a proposal and then presenting it to multiple managers to gather their opinions. For executives this concept is called “hourensou. and then rapidly implementing the chosen decision.

Toyota acknowledges that this process of building a consensus can be time consuming. For Toyota becoming a learning organization “means having the capacity to build on your past and move forward incrementally. The Toyota Way principles of respect for employees and employee empowerment are an important part of both hansei and kaizen. inventory. Toyota continually strives to achieve stable and standard processes that result in literally no. and then apply the proper countermeasures (40). After a stable and standardized process has been established that allows for the identification of waste and inefficiencies. The other important term of that is part of Toyota’s learning process is “hansei. Toyota’s one-piece flow process is designed to make any wasted time or resources readily visible. visual tools such as the kanban cards referred to in Principle 7 (which were likely inspired by prior kaizen initiatives) help alert employees to the expectation that they find ways or tools to effectively eliminate and improve the process. Employees are expected to use kaizen principles to continuously improve the flow process and eliminate waste and efficiencies. 9 . because inventory is an example of waste. and most importantly. and waste needs to be eliminated. Toyota views hansei not simply as a philosophical belief. but on identifying project weaknesses and shortcomings. or minimal.” The last and fourteenth principle is focused on the idea of becoming and remaining a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). if they are going to be affected somehow by the ultimate decision. When inventory waste occurs (either oveproduction or shortages). the team will be best able to develop and find corrective countermeasures that can be used in the next series of projects to avoid the same mistakes or shortcomings. however. Toyota strongly believes that kaizen is impossible without having hansei.” which means reflection.such as suppliers or an administrator. but as an indispensable tool for process improvement. For example “TTC holds formal and schedule hansei events at key milestones in a vehicle program as well as after it launches the vehicle and program ends”(259). a continuous improvement process (kaizen) provides the way to effectively learn form the situation (kaizen). can continuous improvement tools be effectively applied to help find the cause of wastes and inefficiencies. The expectation is that by reflecting on weaknesses and shortcomings while those features are fresh in the teams’ mind. Only when a stable process has been achieved. rather than starting over” (252). the decisions that are made are “right the first time. it believes that Toyota saves time in the long-run because it identifies all points of view that might otherwise have been overlooked. Dedication to continuous improvement is at the heart of the Toyota principles. This demonstrates Toyota’s commitment to continuously look for ways to improve itself in all aspect of its business. Toyota uses “hansei” at periodic stages during and after project completion to focus on not only what is going well or went well.

and sets goal for itself to be a successful organization.In the 300 pages of The Toyota Way. 10 . and how they interact as a whole. but the world community. He does this in an organized fashion which allows the reader to see the distinctions that apply to the various principles. behaviors and principles that serve as the foundation for how Toyota conducts its business. interacts with its employees and suppliers. is a useful approach for a better understanding of what not only Liker. Liker does a good job of summarizing the philosophies. Understanding the principles individually. recognizes as The Toyota Way.

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