Review of Toyota DNA Article

Toyota Production System (TPS) is a dynamic system with rigidly scripted activities, production and connections. The success of TPS lies not in the cultural roots but rather in rigid specifications. Rigid specification doesn’t mean inflexible. The irony is rigid specification makes flexible and adaptable system. TPS is following a scientific method, not a trail and error, to define any activity or make any improvements. The system encourages the scientific way of experiment at all level of the organization and that distinguishes it from other organizations. In this article, the implicit nature of Toyota production system was deciphered by four principles. 

Rule 1: Standardization 

The unstated rule of TPS is all the work must be highly specified as to content, timing, sequence and outcome. All the activities are split into series of small activities and outcome of each small activities are predicted. The actual outcome of each activity is compared with the expected and any deviation is immediately communicated. Standardization reduces the variation and in turn improves quality, productivity and reduces cost.

Rule 2: Communication.

While the rule 1 talks about differentiation of individual tasks, the next rule explains how to smoothly integrate individual activities. This rule states that every connection must be direct, standardized, and well-defined. Toyota uses tool like Kanban, Andon to form a direct communication between supplier-customer. 

Rule 3: Simple and direct flow

Third rule states that every product or service must follow the simple and specified path. On the contrary, each line can have multiple products. In TPS, the product or service is not simply passed down to the next available resource rather specified resource. Assigning a specific pathway to each product enables to conduct experimentation every time the product flows. 

Rule 4: Continues Improvement (CI)

Continuous improvement must be made in product or service pathways by scientific method at the lowest level of organization under the supervision of teachers. Toyota teaches their workers how to improve scientifically by conducting bona fide experiment. The frontline workers make the improvement and the supervisors provide assistance and direction. Problem solving and continuous learning occurs at all levels of the organization. 

TPS communicates the ideal notion to all employees and that translates into common goal and shared vision. The entire organization strives to achieve the ideal state – and anything less build a creative tension for CI. The authors believe that the rules help Toyota to stable and continuously improve at the same time. The authors conclude that it may take long time for any company to replicate the TPS but the dedication to apply all these rules will make it happen.

Obama Cites Lean Company as Example of How to Reinvent Manufacturing

Declaring that "we've started this year in the midst of a crisis unlike any we've seen in our lifetime," President-elect Barack Obama today urged leaders of both political parties to adopt an American Recovery and Reinvestment plan that will, he said, "immediately jumpstart job creation and long-term growth." Obama's comments were made on site at Cardinal Fastener & Specialty Co. Inc., a manufacturer of precision fasteners used in the construction of wind turbines.

As part of the recovery and reinvestment plan, the Obama Administration will commit to doubling the production of renewable energy over the next three years, the President-elect said, "and to modernize more than 75% of federal buildings and improve the energy efficiency of 2 million American homes. In the process, we'll put nearly half a million people to work building wind turbines and solar panels; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to new jobs, more savings and a cleaner, safer planet in the bargain."

Although Obama did not directly address lean manufacturing in his comments, Cardinal Fastener has instituted lean concepts based on the Toyota Production System since 1998. According to John Grabner, president of Cardinal Fastener as well as a consultant on lean thinking, Cardinal's lean initiative has led to increased efficiencies, decreased costs, and better and faster service to its customers.

Thanks to its adoption of lean principles, as well as increased interest in its products from the wind industry, Cardinal has become the largest manufacturer of American-made large-scale threaded fasteners. The fasteners are used to bolt the wind turbine towers to their foundations. Cardinal expects to add as many as 40 full-time employees in 2009, Grabner observed, a significant increase from its current roster of 65 employees. The company also forecasts a 50% increase in revenues in 2009, growing from $10 million to roughly $15 million.

Obama pointed to Cardinal Fastener as an example of how traditional U.S. manufacturers can reinvent themselves by focusing on the emerging alternative energy economy. "The story of this company, which began building wind turbine parts just two years ago and is now poised to make half its earnings that way, is that a renewable energy economy isn't some pie-in-the-sky, far-off future. It's happening all across America right now. It's providing alternatives to foreign oil now. It can create millions of additional jobs and entire new industries if we act right now."

According to statistics compiled by the American Wind Energy Association (AWEA), 80,000 U.S. workers are employed in the wind industry. The share of domestically manufactured wind turbine components, AWEA states, has roughly doubled in the past three years, from 25%-30% in 2005 to 50% in 2008.

While celebrating the accomplishments to date of U.S. entrepreneurs and researchers in developing clean energy, solar energy and bio-fuels, he sounded a note of caution, too, as he urged support for his recovery and reinvestment plan. "I'm told that if we don't act now, because of the economic downturn, half of the wind projects planned for 2009 could wind up being abandoned." He pointed to other countries, such as Spain, Germany and Japan, whose governments are aggressively investing in renewable energy projects, and suggested that if his plan does not receive the support he's seeking, then the United States will fall even further behind its global counterparts.

Source : Industry Week

How to Apply Lean Principles

By Norman Bodek


I have been reading a new book by Jeffrey K. Liker and Michael Hoseus Toyota Culture. It is excellent and worthy of your read but even though the information is great, how do you apply it in your company? What is the process to internalizing knowledge and applying it effectively on the job?

This has been an ongoing problem for me personally. I was the owner and publisher of Productivity Press and produced probably 300 books and training courses on Toyota and Japanese management. I would go to Japan often, 67 times to date, and see what was new at over a dozen Japanese business publishers, visit the top business bookstores in Tokyo: Junkudo, Kinokuniya, Yaesu, and others, and ask managers what they read. I cannot speak Japanese nor read Japanese, at all, so I had to rely on my intuition and the opinion of the people I met before I would invest $25,000 and up to translate and produce in English a Japanese book. My track record was pretty good for I only couldn’t publish maybe one of five books that I had translated to English. But, still the problem for me and my readers was how to apply what was in the book?

Reading the Toyota Culture could overwhelm you, for the book explains what has taken Toyota over fifty years to understand and apply. Is it possible to change your organizations culture and, if yes, where do you start? I will tell you what I do. When I read the book I underline the things that are important to me. (It is not sacrilegious to write in a book.) Then I go back and capture the things I underlined. I do this now using Dragon Natural Speaking version #9. I read to my computer what I underlined and it is automatically converted to Microsoft Word. I then take out the pertinent parts and develop a set of power point slides to allow me to teach others.

To change a culture in America is not easy. Most top managers here are glued to building profit, not understanding that it is in building people that builds profit. We are locked into a Top Down style and shifting to a Bottoms-up style is not easy. If you read my work before, you know that I love Quick and Easy Kaizen, for it is such an easy way to get started. Instead of waiting for senior managers to change, you simply ask all employees to identify and then solve very small problems within their own work area. The manager’s job is to ask everyone to submit two ideas per month and then to just listen to people’s ideas and support them to implement the ideas. It is not the old suggestion system where you come up with an idea for someone else to implement.

And the culture begins to change as people are now empowered to make decisions that apply to their own work. One of my earlier published books was 20 Million Ideas, 40 Years at Toyota. It was about how Toyota began to involve their employees in problem solving activities and it was the key to how they began to change their culture.

I recently took my new Dr. Shigeo Shingo book Kaizen and the Art of Creative Thinking, The Scientific Thinking Mechanism (STM) and read it for the fourth time, underlined the important points, summarized those points and created a set of power point slides. Now, I have to experiment and teach STM to others.

Dr. Shingo taught STM to over 3000 Toyota engineers and managers. In the book on pages 30 to 34 you will read how Dr. Shingo describes the distinction between Process and Operation. In fact, almost every Dr. Shingo book has this description. He was very proud of this discovery. It came to him in 1948 and was the foundation to the Toyota Production System – it clearly teaches that transportation, inspection, and waiting are non-value adding wastes. It became the heart of his future teaching and he used it in his daily consulting practice. While others focused on optimizing machines or workers with machines, Dr. Shingo could walk into a factory and immediately see the wastes and the opportunities to remove them.

Another great way to give you the power to get started is to come with me on a study mission to Japan. I am going from April 18th to the 26th. We will visit Hino, a Toyota truck and bus company, Lexus and some of the Toyota top tier suppliers, Canon and Hitachi. It will be intense but you will see with your own ideas and learn the subtle but very powerful things that the Japanese do. Once you see with your own eyes it becomes much easier to apply your experience back on the job.

I remember many years ago, I was working in Grenada, West Indies and we were challenged to do, what looked like an impossible job to do. I looked at our operators, lovely people, but I was unconvinced that we were able to do the work successfully. Then it occurred to me that the job was being done in Jamaica and in New York City. With that feeling I turned to our employees and said, “Look if they can do so can we.” And sure enough we were able to do it very successfully. It was only me, the real obstacle, to overcome my resistance.

Everyone really resists change for we have been taught to be afraid of making mistakes. Well, I recommend that you take from your book reading what you really like, gather a team around you, take a deep breath and like Dr. Shingo would always say, “DO IT!”

Norman Bodek - Author of Kaikaku The Power and Magic of Lean and The Idea Generator.

'Most Indian managers don't know what is possible'

Q&A with James P Womack, founder-chairman of Lean Enterprise Institute, a non-profit educational and research organisation.

What is Lean Management Institute’s scope in India?

The institute has been operational from January 15, 2008 and has so far conducted Lean Value Stream Manager Development programme for manufacturing industries. This was attended by 35 senior managers from companies such as — AMD, TVS Logistics, L&T, Visteon, WABCO-TVS, ECS Limited, TI Diamond Chain, Mando Brakes, Shriram Pistons, and so on. We are following up with the managers who attended as all of them are implementing Lean in their companies. It also did In-house Lean & Value Stream Mapping training for TESCO Hindustan Service Centre, a BPO serving TESCO’s back-end processes world-wide.

The implementation is in progress here in at least two major value streams. The gains are initially coming in reduced cycle time for processing, higher productivity and improved quality. The management summit, meanwhile, brought home the fact that Lean Management has moved beyond Lean Production, into the domain of Lean Solutions where the objective is to make the process of consumption hassle-free for end consumers. Lean Solutions are about delivering to customers exactly what they want, when they want, where they want and doing it profitably and in a sustained manner.

Several companies — including the big US car companies — have tried to emulate the Toyota Business Systems model. But have they been successful in organising their value chains efficiently?

No, but many companies have done very well copying parts of the five-part Toyota/lean business system which consists of product and process development, fulfillment (from customer order back to raw materials and through manufacturing to delivery), supplier management, customer support, and enterprise management. For example, Danaher, the most successful American manufacturing company of the past 35 years (far more successful than GE), has copied Toyota’s strategy deployment system.
And the American car companies have now created very competitive factories after such a long lag that they are drowning in high costs due to pension obligations and low prices due to a generation of designing and building truly awful products. And Tesco in the UK has done a truly brilliant job of copying Toyota’s fulfillment system from its suppliers through its stores to its customers.

One of the major issues with the Toyota Way is that it depends on an optimum infrastructure delivery environment, like in Japan, Europe or the US and, therefore, has less relevance for India. Do you agree?

I always find this argument very curious. I can’t help but suspect that some Indian managers are hoping it is true so they can say, “Thank goodness! Now we don’t have to change the way we manage!” All I would ask any Indian manager to do is to think through the Toyota/lean principle of supplying small amounts frequently to customers at every point along a value stream.
This is the sequence of value creating activities running from raw materials into the hands of the end customer. Does the fact that roads are clogged and often undependable mean that Indian firms should instead make enormous batches of items, build up enormous inventories of goods at every step, and ship infrequently in the largest possible vehicles?
Toyota/lean practitioners instead determine a “standard inventory” of items at every point along a value stream, designed to guard against upstream disruptions in supply and downstream surges in demand, and then ship small amounts frequently using multi-stop milk runs with smaller vehicles. The result is that the total lead time and inventory costs fall dramatically while the quality goes up, even though the value streams are not as ‘lean’ as they would be in Toyota City.

India has been innovating with variations of lean manufacturing for some years now — how do you assess these efforts?

On my last trip to India, I witnessed the best manufacturing operation I’ve seen in the world outside of Toyota City. It was at one of the TVS Group plants in the Chennai area. After talking with the management and the workforce I had to reject the hypothesis that Indian firms cannot implement and sustain “lean” systems. I only wish that every Indian manager knew this fact — there are no excuses due to special Indian conditions — and then decided to act on it in their own operations.

What impressed you at the TVS plant?

The team at WABCO-TVS (manufacturer of vehicle control systems) has done a brilliant job of scanning for lean knowledge, bringing a few experts for a short period and learning everything they knew, and then incorporating it into their business system, from policy deployment to factory operations to supplier development — an extremely impressive achievement.

The benefits of lean management are well documented, but what are the pitfalls when companies implement them?

The problems are never with the workforce. They are always with the management. And the greatest management barrier in India is simply that most managers don’t know what is possible. Indian managers could be changing their own working lives, the lives of their workforce, the prospects for their companies, and the standard of living for the whole country if they only understood the basic lean principles.
Some Indian managers seem to like theory in the conference room more than practice on the “gemba”, the place where value — in engineering, sales, production, purchasing or any other activity — is actually created. What was striking about the WABCO-TVS case was the amount of time the managers spent looking first hand at their core processes and engaging the workforce in taking action.

Source: http://www.business-standard.com/india/storypage.php?autono=332447

Lean Misconception-1

There are many misconceptions that relate to the lean approach and undertaking this approach to changing the design and operation of the firm implies certain choices. One of the common issues is the sense of urgency it creates among the workers. It is said to be that it creats so much of pressure that it could squeeze water from a dry towel. Is that true?

Nick Rich et al. explains this in their book "Lean Evolution: Lessons from the Workplace" as follows:

"The amount of stress that workers face is a reflection of the design of any system (a management responsibility) and is not typically associated with a lean working environment. The lean approach is to get the best out of people – not to flog them to death. The latter was the mass production and scientific management approach which was reinforced by ‘piece rate working’. Lean businesses are careful to develop and integrate their core workforce and to promote co-destiny of worker and business. Much of the HR systems of lean companies is devoted to the promotion of ‘harmony’ and ‘joint interest’ in managing the business. As you will see during the remainder of this book, most lean methods lower stress and improve morale, and need workers to be involved in the change process. That is not to say that the lean way is a utopia but that, typically workers are not ‘flogged’ or stressed to the point that they leave (a waste of training and development investment made by the company in problem solving and technical skills).

Further, if you are lucky enough to visit a company that is engaged in lean production, cellular working, housekeeping and problem-solving groups, ask these workers whether they would go back to their old ways of working. You will find that few will answer ‘yes’ and wish to return to the old days of being treated as a pair of hands that are unattached to a brain. But no matter what we write here, you can only judge for yourself by asking and studying some of the cases we will present in this book. For senior managers, the lean approach is based upon business growth and support for the flexible deployment of the core workforce throughout their working lives. It is silly to believe that lean companies would treat their workers, who have enjoyed high levels of lean awareness and training investments, as a variable cost that is simply employed and unemployed at will. Lean companies recognise their investments in people and therefore, to increase the competitive capability of the firm, seek new markets and new types of products to make. Such an approach is one of growth, not the meanness associated with ‘de-layering’, ‘downsizing’ and losing workers with highly valuable and transferable skill sets."

Excerpts from the book : Lean Evolution : Lessons from the Workplace ( Pg No : 20)

Lean Production Saves $300 Million

Manufacturing efficiencies from ongoing training and implementation of DaimlerChrysler Corp.'s lean-production system generated an estimated $300 million in favorable impact for the company in the last two years. As part of the company's continuous-improvement activities to reinforce the philosophy of "leading change" in its manufacturing facilities, it has conducted 55, three-week manufacturing leadership training (MLT) sessions at 54 facilities worldwide, since 1998. Each MLT activity is designed to improve quality and flexibility, while eliminating waste and excess cost, and yielded an estimated average of $500,000 in favorable impact for the company for each facility, or a total of $25 million-- all part of the company's $300 million efficiency gains.

"Continuous improvement in manufacturing never stops. We can never get to a point where we're satisfied or we stop learning, or we'll lose our competitive edge," says Gary Henson, executive vice president-- manufacturing. "Our challenge in manufacturing is how we continue to motivate and train all our people to look for opportunities to improve. MLT helps do that. Change is never easy, but we've got to be willing to find a way to raise the bar a little more every day."

The Joint Activity Operating Principles (JAOP), as the production system is referred to, represents both the philosophy, human infrastructure, and measurement tools the company uses to produce vehicles at its manufacturing facilities worldwide. After the operating principles were introduced and implemented in 1994, the company was faced with the challenge of reinforcing and training continuous improvement within its operations. DaimlerChrysler Corp. created this training to empower its workforce to not only accept change, but to lead change. The "leadership" aspect of the company's MLT activities sets its approach apart from other operating-system training.

"In our MLT activities, we have to demonstrate the tangible results of leading change at all levels of our manufacturing operations," says Theodora (Tedi) Casasanta, director of the continuous-improvement group. "If I'm an operator and I've been performing a process in a certain way for a long time, why would I want to change? We have to show better, more efficient, easier ways for operators to do their jobs. Whether it's workstation organization, error-proofing a process, visual management, or material handling, we have to look for the right reasons to want to change."

Based on the success of its MLT activities, many suppliers are now participating in similar training activities. In fact, other non-automotive-related organizations are benchmarking DaimlerChrysler Corp.'s operating principles for best practices to apply to their own operations.

Jefferson North

Similar to all of its manufacturing facilities, Jefferson North Assembly Plant-- home of the Jeep Grand Cherokee-- conducts its business using the operating principles. Rather than merely a way to assemble vehicles, they represent the way the company does business and maintains a lean "extended enterprise" system. It begins with core values and beliefs, the philosophical principles from which decisions are made. From there, the system analyzes the "how," identifying the enablers and subsystems needed to execute the work (like human infrastructure, balanced schedules, value-added activities, and robust processes). It then identifies ways to support those processes, tools for implementation, and standardized measurements to gauge effectiveness.

The operating principles give team members at the facilities the big-picture framework from which to operate, at the same time providing standardized methods and repeatable processes. The end result can be tracked and improved by focusing on safety, quality, delivery, cost, and morale, internal gauges to which each team member contributes. Because continuous improvement is one of the core beliefs, the process never stops.

All DaimlerChrysler's manufacturing facilities use the operating principles, evidenced in high-quality products, well-organized workstations, standardized processes, ability to use visual management, efficient material handling, flexibility, and commitment to training.

Synergies with Germany

During the PMI (post-merger integration) process, DaimlerChrysler began working to formalize a common production system, a set of rules and principles governing manufacturing operations worldwide. A common framework was put into place as the result of benchmarking production systems of the former Chrysler Corp. (Chrysler, Dodge and Jeep products) and the former Daimler-Benz (Mercedes-Benz and smart products).

Although the concepts of these systems are very similar, the terminology and nomenclature were different. In order to ensure consistent and accurate communication of terms and principles, the company began work to develop a common production system. The Chrysler group facilities use its "operating principles" to govern production, while the Mercedes-Benz plants use its own "Mercedes-Benz production system," and the differences in the two systems relate to specific conditions, cultures, and nuances in producing the different brands.

The framework of this production system was developed by benchmarking 250 best-practice manufacturing examples from individual facilities worldwide. A team of engineers, human resources representatives, union representatives, trainers, executives, and suppliers completed a worldwide benchmarking study of operating systems. At different operations worldwide, the company studied the areas of human infrastructure, standardization, quality focus, just-in-time delivery, and continuous improvement.

Source : http://www.sme.org/cgi-bin/get-press.pl?&&20002551&June

Lean Manufacturing Model

The search by manufacturers for solutions to the rigid rules mandated by their MRP systems has led many to the techniques of Lean manufacturing. Lean manufacturing methodologies are not new technologies for the millennium, but are, in fact, a compilation of many of the techniques manufacturers have used in the past and are familiar with. The difference is the consolidation of these techniques into one set of powerful methodologies and their application. Achieving Lean goals using one-piece Lean manufacturing methods is essentially a line-balancing methodology used in conjunction with a series of kanban material-handling techniques. Mathematical models are created and iterated until the optimum utilization of manufacturing resources is identified.

Specifically, the Lean manufacturing methodologies are a series of techniques that allow product to be produced one unit at a time, at a formulated rate, while eliminating nonvalue-adding wait time, queue time, or other delays. Product is pulled through the line, in response to actual demand as opposed to being pushed through by the launch of orders based on the output of a planning system. Thought of in terms of a pipeline, discrete product can be made to move through the manufacturing processes without stopping. If product can move without stopping, it can be thought of much like liquid through a pipeline. This metaphor of moving product through a pipe is the source for the term flow.

If only the actual touch work time required to produce a product through its various manufacturing processes were summed, that time is almost always shorter than the time required to route batches of products through a factory one department at a time . Typically, the sum of the times required to route product through manufacturing becomes the customer-quoted lead time. Often, this customer-quoted lead time becomes a self-fulfilling prophecy to the detriment of achieving customer satisfaction. The Lean manufacturing methodologies consider all the other times associated with moving "lot-sized" orders through manufacturing as "nonvalue-added" time. Lean seeks to eliminate this nonvalue-added time.

The goal of Lean manufacturing, then, is to establish and design a manufacturing line capable of producing multiple products, one at a time, using only the amount of time required to actually build the product. The techniques of Lean manufacturing seek to reduce the nonvalue-adding wait, scheduling, and queue times to zero. The resulting, often significant, reduction in manufacturing lead time is the basis for all the associated benefits of Lean manufacturing.

A Lean manufacturing line requires that a rate of flow through the pipeline be established. The rate at which work progresses through the factory is called a flow rate or Takt. The "flow" of a product is achieved by causing all of its work tasks to be grouped and balanced to a calculated formulated Takt time. Takt time establishes a relationship between volume and the time available to produce that volume.
Takt time, in most cases, is expressed in minutes or percentage of a minute.
Regardless of the total time necessary to produce a product, its total time is divided into elements of work equal to its Takt time. A single unit of work (a Takt time's worth) is performed by a person and/or a machine. The partially completed unit is then passed to the next resource down the line, where another "Takt" worth of work tasks is performed. The unit of work progresses sequentially through all the manufacturing processes until all of the required work has been completed

Lean manufacturers can choose to change the output of the line to closer match the mix and volume of customer requirements. With a line designed to produce products using a formulated Takt time, the Lean manufacturer has the ability to regulate the "rate" and, therefore, the output of the line. This rate must be determined every day based on that day's customer requirements.

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This ability to change output rate every day, driven by changes in customer order requirements, is a powerful tool for managing both work-in-process and finished goods inventories. With this capability, a manufacturer is no longer forced to commit its manufacturing resources to a schedule driven by a questionable forecast of future demand.

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excerpts from the book: LEAN Manufacturing Implementation: A Complete Execution Manual for Any Size Manufacturer
Author: Dennis P. Hobbs