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.

'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 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