TOYOTA’S SECRET

If you enter the lobby of Toyota’s headquarters in Japan, you will see two small portraits and one big one hanging there. The two small ones show the founder and the current chairman of the company. The large portrait shows an American. It is Dr. Edward Deming. Who is Edward Deming you might ask? And indeed who is he? But it’s a long story and one cannot explain who Edward Demings is without involving characters like the Japanese, the Americans and the Toyota Company. So here goes… Long Ago and Far Away… World War II had barely ended, the Japanese were left with a devastated country, ruins that were previously houses and a battered economy. But there was something left that helped them overcome all this destruction. They did not sit and lament their fates but began thinking…where do we go from here and to get there what do we need to do? Factories began production again firstly to supply all the basic necessities and after around 15 years when everyone had the basic goods they needed, they turned their energies towards overcoming the surplus of imports. Japan needed to offer something more in their goods if they had to succeed on foreign shores.... The Japanese car manufacturers namely Toyota wanted to start operations in America. That was all very well. But how could they make the Americans buy their cars rather than local ones. Enter Dr. Edward Demings and hey presto! They had the secret recipe! The man who according to his biographer Rafeel Agumayo(1) is the American who taught Japan what quality management is. Dr. Edwards Deming was a physicist specialized in the field of statistics and worked in United States Bureau of Census. His greatest contribution on the evaluation of statistical methods for ensuring the quality of census assessment established him as a leader in the field of Total Quality Management. In fact he is considered as the "Guru" of Total Quality Management. Deming also enunciated 14 principles for

quality management which include innovation, the philosophy of quality to be inculcated in all individuals, appropriate and complete supervision, absence of fear and openness, ensuring quality from design through to maintenance, work standards in production, training of every worker in statistical methods, retraining people to new skills and so on. The world saw Toyota take over America by storm, they offered better, faster, more comfortable and more efficient cars and Americans came to buy cars from them in droves. But America was not the only stop, in fact Toyota quickly became the largest car Manufacturer in the world. And there has been no looking back since.

(1). Rafeel Agumayo, Dr. Deming, the American Who Taught the Japanese About Quality, Carol Publishing Group, New York.

How Toyota Does It—Everyday Fewer man-hours. Less inventory. The highest quality cars with the fewest defects of any competing manufacturer. In factories around the globe, Toyota consistently raises the bar for manufacturing, product development, and process excellence. The result is an amazing business success story: steadily taking market share from price-cutting competitors, earning far more profit than any other automaker, and winning the praise of business leaders worldwide. How do they do it? One of their secrets that gives them an edge over other car Manufacturers is the ‘Toyota production System’. Toyota had discovered earlier on that the key to their success was Total Quality Management (TQM) . To make sure that they incorporated TQM in every stage from designing to car manufacturing to after sales service they developed the Toyota Production System (TPS). Initially developed in Japan, TPS or the Toyota Production System, was transplanted to the United States nearly two decades ago, when Toyota launched a joint venture with General Motors Corp., called New United Motor Manufacturing, Inc., or NUMMI, based in Fremont, Calif. One of the aspects of the Toyota Production System (TPS)

that tends to be overlooked--or is at least not mentioned as frequently as subjects such as kanban or kaizen--is the fact that there are people involved. Instead, TPS is discussed almost as though the practices are what's essential. But when you talk to a key practitioner of TPS, such as Mike DaPrile, vice president-Manufacturing, Toyota Motor Manufacturing-Kentucky, people come first. As in, "One of the things that we do for efficiency and lean manufacturing is putting responsibility in worker's hands. I know that sounds naive, but it is not." He adds, "I really believe in giving people responsibility. Efficiency comes from improving processes--from people kaizening their own processes." Of course, there is something else that must be taken into account: "There is little concern here about being laid off." Should a person improve him- or herself out of a position, they stay on their team for six months, then transition over to a kaizen team. According to DaPrile, there are several keys to lean manufacturing, all of which relate to the people who are actually doing the work. For example, there is never a situation where a machine is in control of a person; a person always controls the machine. The andon system--the cord that the worker can pull to stop the line--is an example of a person being in charge of an assembly line. (Contrast this to places where the speed of the line paces the worker, where it is up to the worker to keep up with the machine, where the machine keeps going regardless of the quality being produced. "The andon system allows the person to stop the line to incorporate good quality in the product.") Safe & Engaged. Further, DaPrile states with emphasis, "We feel strongly that safety is a top priority." And by creating a safe workplace, there is improvement in morale. And as morale rises, there are gains in both quality and productivity. This is not the proverbial double win (management and workers), but actually a triple win, in that the customer receives a better product (which explains, in large part, why the Camry is continuing a run on the top of the best-selling car in America list). To keep the people engaged in their work, they do a number of things at the Toyota plant in Georgetown, KY For example, they . level the production. This is a means by which there is assurance that people can get their jobs done in the amount of time available without having them waiting around. "People don't like

to wait," DaPrile says. "It's tiresome and boring." Also: "We also eliminate the muda"--the waste--"of conveyance and walking." Parts are delivered to line side; people don't have to travel far to do their jobs. And because there is a recognition that doing the same thing over and over and over again can be stultifying (which would have a deleterious effect on quality), they have people rotate to a different task within the processes every two hours. Everything has to be where it is needed when it is needed because part of TPS is just-in-time inventory, which means that are isn't a fleet of forklifts rolling through cavernous warehouses (and let's face it: Toyota Industrial Equipment builds forklifts, which they'd undoubtedly provide to its sister company at a discount, so a fleet would probably be comparatively economical). The Difference Here's a key difference between Toyota and others that says a lot about the importance of TPS: "We do the same amount of work as everyone else, but we do more added value by eliminating waste." Looked at another way: building a car is building a car, whether it is a Camry or something else--the same operations are required. How those operations are performed makes all the difference in terms of quality and efficiency. And the how has a whole lot to do with what the people who work in the plant do. "They set up their own processes--not engineers," he says. There isn't a situation where the people just load and unload equipment. The 8,000 people (all of whom are at least high school graduates) are given the opportunity to think. There is an actual measure of how much the people think: last year, DaPrile points out, there were more than 98,000 suggestions made to improve things--99% of which paid out (considering only one plant).Plenty of operations are driven by results, by the ends, not the means."We are very process oriented here," DaPrile says, "not results oriented. The results will come." Have good processes and then reap the rewards, attain the results. DaPrile talks about the importance of having enthusiasm. He thinks that it is essential. "One of the things we do to help keep the people enthused"--this in addition to ceremonies and the like--"is to keep them challenged. You can get bored, lackadaisical, and take things for granted if you do the same things over and over. We change things here." Sure, they use the

Toyota Production System, but system doesn't mean that you create a rut and stay in it: It is a process that allows you to change things. "We haven't been stable here for 13 years: We've had new products, growth, and new ideas," DaPrile says, adding, "Every day is a new day here." And the improvements are, well, continuous. Total Quality Management all they way…. The Secret that Spells Success With a market capitalization greater than the value of General Motors, Ford, and Chrysler combined, Toyota is also, (by far), the world's most profitable automaker. Another of Toyota's secret weapon is Lean production--the revolutionary approach to business processes that it invented in the 1950's and has spent decades perfecting. Today businesses around the world are implementing Toyota's radical system for speeding up processes, reducing waste, and improving quality. Toyota integrated TQM into lean production in 1960. Developed by Taichi Ohno, lean production aims to eliminate seven wastes or things that can go wrong, of which quality is one. Others include overproduction, waiting of any kind, and unnecessary motion of a worker.Lean production applies TQM to all seven wastes at the same time rather than tackling each problem individually, saving not only time but money and energy. Jeffrey K. Liker in his book, “The Toyota Way”, explains Toyota's unique approach to Lean Manufacturing--the 14 management principles and philosophy that drive Toyota's quality and efficiency-obsessed culture. Professor Jeffrey Liker who has been studying Toyota for twenty years, and was given unprecedented access to Toyota executives, employees and factories, both in Japan and the United States, for this landmark work. The book is full of examples of the 14 fundamental principles at work in the Toyota culture, and how these principles create a culture of continuous learning and improvement. You'll discover how the right combination of long-term philosophy, process, people, and problem solving has transformed Toyota Motor Corp. into a Lean, learning enterprise.

Case Study Toyota in Kentucky: The Best Plant in America With the U.S. new car market starting to slide, manufacturers are counting on every advantage they can muster to gain a competitive edge. There was a time when carmakers tended to ignore the impact of the assembly line, focusing on design, engineering or marketing. But they've come to realize that few things influence quality, reliability or cost as much as the plant in which a product is built. And when it comes to getting it right on the assembly line, nobody does it better than Toyota Motor Co. And no plant, in particular, does it as well as Toyota's sprawling operation in Georgetown, Ky., which produces an array of products, including the midsize Camry, America's best-selling passenger car for three years running. Since 1990, the $4.8 billion complex has pulled four Gold Plant Quality Awards-and a silver and two bronze medals-from J.D. Power and Associates. The award honors the plant that turns out the highest quality, based on customer feedback. Georgetown also scores consistently at the top of the Harbour Report, an annual study by Harbour and Associates, a Detroit consulting firm closely tracking auto manufacturing. To get the production process right isn't easy, stresses Director Ron Harbour. It "has to be part of the religion, a part of the fabric" of a successful automaker like Toyota. Harbour ranks North American auto plants according to a wide range of criteria, including productivity, quality and cost. The latest report gives many manufacturers cause for celebration. Ford Motor Co.'s Atlanta operations, for example, lead in labor productivity. Nissan Motor Co. is tops in overall productivity. And Honda Motor Co. is most efficient at stamping sheet metal. Not always number one While Georgetown snags a number of firsts in specific categoriessuch as powertrain production productivity-it doesn't always lead. It's a close third in terms of man-hours per vehicle, for example. It requires 17.56 hours of labor for every car to roll off the line, compared to 17.16 man-hours for the leader, Ford's Taurus plant in Atlanta. But for overall operations, Harbour says, few can come

close to Toyota, and Georgetown, in particular. The key to a successful manufacturing process, Harbour explains, is "consistency and predictability," all hallmarks of the Toyota Production System. Initially developed in Japan, TPS was transplanted to the United States nearly two decades ago, when Toyota launched a joint venture with General Motors Corp., called New United Motor Manufacturing, Inc., or NUMMI, based in Fremont, Calif. In 1985, Toyota announced plans to build an assembly line of its own in Georgetown, Ky. Repeatedly expanded since production began three years later, Georgetown assembles an array of products, including the Sienna minivan, the full-size Avalon, as well as the Camry. The quality of the products rolling out of the plant is a key factor in Camry's continued popularity, notes George Owens, manager of product research for California-based J.D. Power & Associates. "It's not enough just to be at the top," Owens says, "but year-toyear, they maintain a pace that sets the standard for the industry." What is it that makes Georgetown so special? Mike DaPrile, who manages the 1300-acre complex, agrees consistency is a fundamental starting point. Until relatively recently, Toyota was unique among automakers, establishing a corporate-wide production process echoed at every plant it operated. Compared to older domestic plants, Toyota operations are clean and well lit, with wide aisles that make it easy to move man and machinery. But blindly transported from one Toyota plant to another, you'd likely find it hard to tell the difference. The goal of the TPS system is to standardize everything from hand tools to stamping presses. The assembly operation itself is a by-thenumbers process. "We don't belong to the book-of-the-month club," DaPrile asserts. We start with a foundation and build on that foundation, yearafter year. Our skill set gets better and more competent." Flexibility, on occasion TPS isn't inflexible. The concept of "kaizen," or continuous improvement, is fundamental, and the Toyota Production System has evolved quite a bit since Toyota came to the U.S. "One of the big differences between Japanese and American culture is that Americans are more independent and that creates more variables. We try to keep the variables to a minimum," DaPrile adds, yet the 7800 "team members" at Georgetown are

encouraged to offer suggestions. And "if a team member comes up with a better idea," says DaPrile, "We incorporate it into the entire system." One of the more creative examples was suggested by a team member installing wiring harnesses. The process was tedious and difficult, involving a lot of bending, and created the potential for errors. The worker suggested using the power-operated seat from a bass boat, in which he could ride up-and-down while the car moved by. Toyota adopted the idea, improving ergonomics and reducing defects. Employees are an active part of the TPS process, empowered to make decisions previously unheard of on an assembly line. "You don't hide your mistakes," DaPrile explains, noting that if there's a problem, each team member is empowered to yank the socalled andon cord, bringing the line to a halt until repairs can be made. Another fundamental tenet, in which all Toyota employees are trained, is dubbed the "Five Whys." It is not enough to understand there's a problem, goes the mantra-like philosophy. One must dig down, repeatedly asking "why?" until you come up with the underlying answer. DaPrile learned that first hand, soon after joining the company as a floor manager. Somehow, water had gotten mixed in with the transmission fluid in a machine used to fill automatic transaxles. Why? Because a hose was leaking. But if he had simply replaced the hose, the problem would have recurred because the ring of the hose was worn. Asking why, again and again, DaPrile ultimately realized key specifications for the machine were wrong, and had to be corrected. It took four hours to troubleshoot, and the assembly line was down the entire time. When it started rolling again, DaPrile was told to report to the plant manager. Figuring he would lose his job, DaPrile stammered out an apology, but his Japanese boss cut him off and said, "This is a good day, you have learned." DaPrile got a promotion for his understanding of the Toyota Production System. The concepts behind TPS are slowly spreading. Ford has adopted the andon system in Atlanta. Both General Motors and the Chrysler side of DaimlerChrysler have developed corporate manufacturing systems. The newest GM factories, in Shanghai, Bangkok and Gliwice, Poland, are virtual clones, and generate some of the best numbers in the GM system. Of course, Harbour

notes, it helps GM to have direct insight into the Toyota Production System through its ongoing NUMMI joint venture. Across the board, "the gap (in manufacturing) is significantly narrower than it was five years ago," cautions Harbour. But it's not going to be easy to close the gap entirely. Toyota may have a consistent manufacturing process, but it isn't afraid to evolve. The competition will have to work hard to catch up, thanks to Total Quality Management..

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