Lean Principles:

Toyota Production
System
CHAPTER 3
Toyota’s Philosophy

 Customer first
 People are the most
valuable resource
 Kaizen(continuous
improvement)
 Shop floor focus
Toyota Production System
• Quality, Cost, Delivery
• Shorten Production Flow by
Eliminating Waste
• Just In Time
• The Right Part at the Right Time in
the Right Amount
• Continuous Flow
• Pull Systems
• Level Production
• Built-In Quality
• Error Proofing – Poka Yoke
• Visual Controls
• Operational Stability 
• Standardized Work 
• Robust Products & Processes 
• Total Productive Maintenance 
• Supplier Involvement 
Company Crisis in 1950
 Large number of employees were laid off due to worst sales in its
history
 The founder/president of Toyota resigned

Kiichiro Toyoda
Founder of Toyota Motors
 Labor & Management Conflict
Mutual trust was lost
 Restoring Mutual Trust
One-on-onecommunication
between management and T/Ms

Taizo Ishida
2nd President of Toyota Motors
 Commitment from Labor &
Management
 Never to experience lay-
offs again
 Labor & Management to
work together to make the
company grow
  We protect our own castle:
 Products that consumers trust will sell
The Origin of  A company should operate with no-debt
TPS (Even a penny should not be spent if not
necessary)
Philosophy  Continuous cost reduction is the only way
for survival
The TPS Way of
Thinking
Traditional corporation
Price = Cost + Profit

Toyota Philosophy
Profit = Price – Cost
Eliminate the 3M’s

Overburden

Fluctuation

Waste
  Over Production
 Waiting

Eliminate The  Conveyance

 Processing
7 Types of  Inventory
MUDA  Motion
 Correction
The Origin of TPS Philosophy

 The foundation of a strong company is mutual trust of T/Ms and

management:
 Company’s success and T/Ms’ well-being are like left and right
wheels of a car
 T/Ms understand the company’s goals and are committed to
work toward accomplishing them
 Improve team members’ lives (Management with respect for
each T/M as an individual)
Our People

 Over 7000 team members

 Diverse workforce
 No previous manufacturing
experience
  Selected for success in TPS environment
Selection  People who can:
System  Learn new things
 Identify and solve problems
 Work well in teams
 Communicate
Toyota Production System
“The manufacturing system developed by
Toyota which pursues optimum
streamlining throughout the entire
system through the thorough elimination
of MUDA (non-value added) and aims to
build quality in at the manufacturing
process while recognizing the principle
of cost reduction.”
What Does TPS Do For Us?

 It ensures that we:

Produce our product in the most efficient
way
Produce only quality
products
Deliver the product to our customers
on-time
Toyota Philosophy

 Customer First!

 Respect for humanity

 Elimination of waste
TPS

Teamwork
In the group

In the team

In the whole
plant

In the shop
Standardization
The process of establishing the
repeatability and predictability of Man,
Material, Method and Machine in work
which, when properly maintained
forms the basis from which
improvement can be made.
  Standardized work
 You gain consistency, not quality
TPS  Consistency exposes the problems
 Kaizen the standard – find a better way
Lean vs Traditional Manufacturing

Half the investment

Half the hours of Half the product
in machinery, tools
engineering effort  development time 
and equipment 

Half the hours of Half the defects in Half the factory

human effort in the the finished space for the same
factory  product  output 

A tenth or less of
in-process
inventories
 99.9% Customer Schedule Attainment 

Defects of 15 PPM or less 

4-6 Inventory Days of Supply 

Lean vs 92%+ Operational Availability 
Traditional Leveled, Sequenced Production 
Manufacturing Order to Customer Use - Hours, not weeks 

Functioning Supplier Partnership 

Strong Production Control Function

 • Implementing Lean Can Be Difficult Because it is
Barriers to Counterintuitive from a Traditional Paradigm:
• Buying multiple small machines rather than one big
machine that offers economies of scale. 
Lean • Shutting down equipment when maximum
inventory levels are reached rather than running
flat out. 
• Using standards to continuously improve.
• There is no step-by-step cook book 
• There are some basic steps but the how-to varies
from organization to organization 
• Requires an assessment of the company in order to
map out the strategy 
• Company culture plays a big part in the how-to
Implementing
Lean
• Gain top Management “Buy In” and
Support 
• Perform overall company assessment
tied to company strategic, operational,
and marketing plans 
• Develop strategic lean deployment
plan 
• Integrate customized training with lean
to improve specific skill sets, leverage
training resources 
• Team Building, Communications,
Problem Solving, Change Management,
Lean Manufacturing Tools 
• Conduct “Kaizen blitz” high impact
events 
• 5S, Manufacturing Cell, Set-Up
Reductions, Inventory Reductions,
Work Standardization 
• Use an enterprise-wide approach to
help “Transform” a client’s culture and
the way they do business.
 Smaller lot sizes 
Progress
•
• Increased capacity / throughput 

towards lean •
•
Higher inventory turns 
More available floor space 
• Improved workplace organization 
• Improved quality : reduced scrap / re-
work 
• Reduced inventories : raw, WIP, FG 
• Reduced lead times 
• Greater gross margin 
• Improved participation & morale
Lean is a journey

The Journey never ends

Toyota estimates it is only 50% waste-free

Where can we begin?  Where can we improve?