THE TOYOTA WAY

14 MANAGEMENT PRINCIPLES
FROM THE WORLD’S GREATEST MANUFACTURER

JEFFREY K. LIKER

CHALLENGE EVERYTHING….
• “All elements to be practiced everyday in a very consistent manner, not in spurts”

PROBLEM SOLVING (Continuous Improvement and Learning) PEOPLE and PARTNERS (Respect, Challenge, and Grow Them) PROCESS (Eliminate Waste) PHILOSOPHY (Long- Term Thinking)

The Business of Principles- The TOYATA WAY

Organizational learning…
• • • • Philosophy Process right People and partners building Problem solving “operational excellence” as strategic weapon…

5 step ‘Lean Manufacturing’
1. 2. 3. 4. 5. Defining customer value Defining value stream Making it flow Pulling from the customer back Striving for excellence Cost, quality and service to be the BEST

Founders’ thoughts
• • • • King of inventors of Japan- Sakichi Toyoda Toyota way- genchi genbutsu (1926) Toyota conglomerate- Keiretsu Automation with a human touch and mistake proofing- Jidoka/ autonomation • Hard work, perseverance, discipline- James Watt • Management by Facts…

Kiichiro Toyoda
• “everyone should tackle some great project at least once in their life” • Education from Tokyo Imperial University • Learning by Doing • Pillars of the Toyota Production Systemjidoka, just-in-time • Creativity, challenge, courage, commitment and patience

Taichi Ohno
• • • • One piece flow Pull system Kanban “Shortening lead time by eliminating waste in each step of a process leads to best quality and lowest cost, while improving safety and morale” • Spirit of challenge- the acceptance of responsibility to meet the challenge

• “we accept challenges with a creative spirit and the courage to realize our own dreams without losing drive or energy. We approach our work vigorously, with optimism and a sincere belief in the value of our contribution” • “we strive to decide our own fate. We act with self reliance, trusting on our own abilities. We accept responsibility for our conduct and for maintaining and improving the skills that enable us to produce added value”

• Kaizen- change for the better • Kaikaiku- major revolutionary change • Walk the actual path- to construct the value stream • Takt- German word for ‘meter’ • Total Productive Maintenance- always a sense of urgency

Framework
• • • • • Quality Cost Delivery Safety Morale

BEST QUALITY- LOWEST COST- SHORTEST LEADTIME

PEOPLE & TEAMWORK

JIT
(JUST IN TIME)

CONTINUOUS IMPROVEMENT
• GENCHI GENBUTSU • 5 WHY’S •EYES FOR WASTE •PROBLEM SOLVING

JIDOKA
(IN STATION QUALITY)

LEVELED PRODUCTION (HEIJUNKA)-STABLE-STANDARDIZE PROCESS- VISUAL MANAGEMENT

TOYOTA WAY PHILOSOPHY

• Never be satisfied with inaction • Question and redefine your purpose to attain progress • 5S facilitates teamwork • Sensei- mentors • Total Budget Control System

• Muri- no value added beyond capability • Mura- unevenness “most businesses are 90% waste (muda) and 10% value added work”

Benefits of one piece flow
• • • • • • • Builds in quality Creates real flexibility Creates higher productivity Frees up floor space Improves safety Improves morale Reduces cost of inventory

TPS- Thinking Production System
• • • • • • • • Pull system Flow where you can pull, where you must Learning to see Heijunka- level out the workload Andon- light signaling system Jidoka- autonomation Standard work chart Fit customer demand into leveled schedule and establish standard times for delivering different types of service

4 tools
1. 2. 3. 4. Go and see Genchi genbutsu (refered as ‘Management by Walking Around’ Analyze situation first by Hewlett Packard) Use one piece flow and Andon Ask “why?” 5 times

• Kentou- study drawing • Kentouzu- plural of drawing

Standardized work
• Takt time • Sequence of process • Inventory required

Visual control (Management by Sight)
SOCIAL STRUCTURE TECHNICAL STRUCTURE

COERCIVE BUREACRACY

ENABLING

AUTOCRATIC

ORGANIC

A3 reports
• • • • • • State problem Document current situation Determine the root cause Suggest alternate solution Suggest recommended solution Cost-benefit analysis

TPS- Respect for Humanity System
• Recruiting is 96% employees, 92% employers, 84% yellow pages, 47% personal contact • Team development process (Blanchard)
1. 2. 3. 4. Orientation Dissatisfaction Integration Production

• Jishuken- voluntary study groups • Hoshin kanri- policy deployment • Horensu- to report, give updates periodically (a form of micro management) • Thorough consideration in decision making

• Nemawashi- decision making to all options and rapid implementation • Integrity and excellence • Kozokeikaku- structure plan (K4) “a picture is worth a thousand words”

“Meeting”
• • • • • Clear objectives prior to the meeting The right people at the meeting Prepared participants Effective use of visual aids Separate information sharing from problem solving • The meeting starts and ends on time

• Hansei (relentless reflection) + kaizen (continuous improvement)= learning organization • Pareto- the only statistical tool used in toyota technical center • Point of cause (POC)

• Toyota Practical Problem Solving Process (20% tools, 80% thinking)

3 types of measures at TOYOTA
• Global performance • Operational performance • Stretch improvement metrics “process orientation”

Hoshin kanri (policy deployment process) for stretching the improvement goals

Adapt-Develop-Sustain
• Value Stream Mapping- Material and Information Flow Diagram (Mike Rother and John Shook, 1999) • Project review events (Hansei) • Box- process, triangle- inventory • Task time- TT, Time in System- TIS, Value Ratio- VR • Core Value Stream

A Toyota leader’s view of the Toyota Production System

PEOPLE PHILOSOPHICAL

TOYOTA LEADERSHIP MODEL
Toyota Leaders
Bottom-Up (Development) Group Facilitator
“You’re empowered!”

Builder of Learning Organizations “Here is our purpose and direction- I will guide and coach”

Top-Down (Directives)

Bureaucratic Managers “Follow the rules!”

Task Master “Here is what to do and Howdo it!”

General Management Expertise

In-Depth understanding of Work

Supply chain need hierarchy
Learning Next Level of Improvement Enterprise

Enabling Systems Clear Expectations
Stability

Stable, Reliable Processes Fair and Honorable Business Relations

Alternative Toyota Decision making methods
Preferred
Group Consensus with Full Authority

Level of Involvement

Seek group Input, then decide and announce Seek Individual Input, then decide and announce Decide and Announce

Group Consensus, Management Approval

Fallback (if consensus not achieved )

Fallback (if consensus not achieved )

Time

1. Initial Problem Perception
(Large, Vague, complicated problem

2. Clarify the Problem

Grasp the Situation

The “Real” Problem 3. Locate Cause/ Point of Cause POC Basic Cause and Effect Investigation 4. 5- Whys? Investigation of Root Cause

--------------------------------Cause Investigation ---------------------------------

Root Cause
5. Countermeasure

6. Evaluate
7. Standardize

Toyota’s practical problem-solving process

Policy deployment process (hoshin kanri)
Targets for Organization Time Quality Cost Innovation Executive Staff

High-Level Plan

Improvement? Who? Method? Target? Time?
Manager/ Supervisor

Plan- Do Work Plan by item Action Measurement Countermeasure Work Team

Check Improvement? Method? Result? Countermeasure? Target & Time? All 3 Levels

Creating flow and PDCA
Create Flow (Act)

Evaluate Results (Check)

Eliminate Waste

Surface Problems (Plan)

Counter Measures (Do)

Kaizen workshops
• Phase I • Phase II • Phase III

Phase I- Preparation for the workshop
1. 2. 3. 4. 5. Clearly define the scope Set objectives Create preliminary current state map Collect all relevant documents Post a preliminary current state map in the team room

Phase II- The Kaizen Workshop
1. Who is the customer? 2. Analyze the current state
Valued added Non-Value added. What is pure waste? Non-Value added, but Required (incidental work)

3. Develop future state vision 4. Implementation 5. Evaluate: measuring performance

Phase III- After the workshop- Sustaining and Continuous Improvement
• Review the status of action items • Review process metrics • Discuss additional opportunities for improvements • Continue to improve the process

Factors influencing Top Leaders in Lean vision
1. 2. 3. 4. Ownership structure Promote from within Environmental pressures Experience with lean

Myth versus reality of TPS
What TPS is not
• A tangible recipe for success • A management project or program • A set of tools for implementation • A system for production floor only • Implementable in a short or midterm period

What TPS is
• A consistent way of thinking • A total management philosophy • Focus on total customer satisfaction • An environment of teamwork and improvement • A never ending search for a better way • Quality built in process • Organized, disciplined workplace • evolutionary

Why Changing Culture is so Difficult?
• Tip of the iceberg- Kanban, 5S, Charts, Teams,
Andon, Slogans, Value Stream Maps

• Immersed iceberg- Culture Change
(Involve people in continuous improvement to eliminate waste through the Toyota Way)

13 Tips for Transitioning Your Company to a Lean Enterprise
1. Start with action in the technical system; follow quickly with cultural change 2. Learn by doing first and training second 3. Start with value stream pilots to demonstrate lean as a system and provide a “go see” model 4. Use value stream mapping to develop future state visions and help “learn to see”

5. Use kaizen workshops to teach and make rapid changes 6. Organize around value streams 7. Make it mandatory 8. A crisis may prompt a lean movement, but may not be necessary to turn a company around 9. Be opportunistic in identifying opportunities for big financial impacts

10.Realign metrics with a value stream perspective 11.Build on your company’s roots to develop your own way 12.Hire or develop lean leaders and develop a succession system 13.Use experts for teaching and getting quick results

Thank you…..!

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