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Toyota Production System

The Toyota Production System (TPS) is the philosophy which organizes manufacturing and logistics at Toyota, including the interaction with suppliers and customers. The TPS is a major part of the more generic ‘Lean manufacturing’. It was largely created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno; they drew heavily on the work of W. Edwards Deming and the writings of Henry Ford. When these men came to the United States to observe the assembly line and mass production that had made Ford rich, they were unimpressed. While shopping in a supermarket they observed the simple idea of an automatic drink resupplier; when the customer wants a drink, he takes one, and another replaces it. The main goals of the TPS are to design out overburden (muri), smooth production (mura) and eliminate waste (muda). There are 7 kinds of muda targeted in the TPS:

  1. Over-production
  2. Motion (of operator or machine)
  3. Waiting (of operator or machine)
  4. Conveyance
  5. Processing itself
  6. Inventory (raw material)
  7. Correction (rework and scrap)

Toyota was able to greatly reduce leadtime and cost using the TPS, while improving quality at the same time. This enabled it to become one of the ten largest companies in the world. It is currently as profitable as all the other car companies combined and became the largest car manufacturer in 2007. It has been proposed that the TPS is the most prominent example of the 'correlation', or middle, stage in a science, with material requirements planning and other data gathering systems representing the 'classification' or first stage. A science in this stage can see correlations between events and can propose some procedures that allow some predictions of the future. Due to this stellar success of the production philosophy's predictions many of these methods have been copied by other manufacturing companies.

Toyota has long been recognized as a leader in the automotive manufacturing and production industry. This system, more than any other part of the company, is responsible for having made Toyota the company it is today.

It may be surprising that Toyota received their inspiration for the production system in the United States, but not from its automotive production process. This occurred when a delegation from Toyota visited the United States to study its commercial enterprises. They first visited several Ford Motor Company automotive plants in Michigan, but despite Ford being the industry leader at that time, found the methods in use to be unappealing. They were mainly appalled by the large amounts of inventory on site and by how the amount of work being performed in various departments within the factory was uneven on most days. However, on their visit to an American supermarket, the delegation was inspired by how the supermarket only reordered and restocked goods once they’d been bought by customers.

Toyota applied the lesson by reducing the amount of inventory they would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This is highly representative of a Just-in-Time (JIT) inventory system.

While low inventory levels are a key outcome of the Toyota Production System, an important element of the philosophy behind its system is to work intelligently and eliminate waste so that inventory is no longer needed. Many American businesses, having observed Toyota's factories, set out to attack high inventory levels directly without understanding what made these reductions possible. The act of imitating without understanding the underlying concept or motivation may have led to the failure of those projects.

The Toyota production system has been compared to squeezing water from a dry towel. What this means is that it is a system for thorough waste elimination. Here, waste refers to anything which does not advance the process, everything that does not increase added value. Many people settle for eliminating the waste that everyone recognises as waste. But much remains that simply has not yet been recognised as waste or that people are willing to tolerate.

People had resigned themselves to certain problems, had become hostage to routine and abandoned the practice of problem-solving. This going back to basics, exposing the real significance of problems and then making fundamental improvements, can be witnessed throughout the Toyota Production System.

The right process will produce the right results:

  1. Create continuous process flow to bring problems to the surface
  2. Use the "pull" system to avoid overproduction
  3. Level out the workload (heijunka). Work like the tortoise, not the hare.
  4. Build a culture of stopping to fix problems, to get quality right the first time
  5. Standardized tasks are the foundation for continuous improvement and employee empowerment
  6. Use visual control so no problems are hidden
  7. Use only reliable, thoroughly tested technology that serves your people and processes.

Add value to the organization by developing your people and partners:

  1. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
  2. Develop exceptional people and teams who follow your company's philosophy
  3. Respect your extended network of partners and suppliers by challenging them and helping them improve.

Continuously solving root problems drives organizational learning:

  1. Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu)
  2. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly
  3. Become a learning organization through relentless reflection (Hansei) and continuous improvement (Kaizen)

The Toyota production system has been compared to squeezing water from a dry towel. What this means is that it is a system for thorough waste elimination. Here, waste refers to anything which does not advance the process, everything that does not increase added value. Many people settle for eliminating the waste that everyone recognises as waste. But much remains that simply has not yet been recognised as waste or that people are willing to tolerate.

People had resigned themselves to certain problems, had become hostage to routine and abandoned the practice of problem-solving. This going back to basics, exposing the real significance of problems and then making fundamental improvements, can be witnessed throughout the Toyota Production System.

Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

The 14 Principles of the Toyota Way is a management philosophy used by the Toyota corporation that includes the Toyota Production System. The main ideas are to base management decisions on a ‘philosophical sense of purpose’ and think long term, to have a process for solving problems, to add value to the organization by developing its people, and to recognize that continuously solving root problems drives organizational learning.

Toyota began to be recognized in the 1980s for the quality of its vehicles and its responsiveness to customers. The various Toyota and Lexus models are consistently ranked higher than other car makes in owner satisfaction surveys. For example, in 2004, seven out the fourteen highest ranked cars by owners in the annual Consumer Reports survey were Toyota or Lexus models. This pattern has been consistent for many years. According to Jeffrey Liker, a University of Michigan professor of industrial engineering, it is the way Toyotas are engineered and manufactured that makes them successful. Liker and other observers believe that the basis of Toyota's success stems from the business philosophy that underlies its production system.

The 14 principles of The Toyota Way are organized in four sections: 1) Long-Term Philosophy, 2) The Right Process Will Produce the Right Results, 3) Add Value to the Organization by Developing Your People, and 4) Continuously Solving Root Problems Drives Organizational Learning. The principles are set out and briefly described below:

Section I — Long-Term Philosophy

Principle 1

Section II — The Right Process Will Produce the Right Results

Principle 2

Work processes are redesigned to eliminate waste (muda) through the process of continuous improvement — kaizen. The eight types of muda are:

  1. Overproduction
  2. Waiting
  3. Unnecessary transport
  4. Overprocessing
  5. Excess inventory
  6. Unnecessary movement
  7. Defects
  8. Unused employee creativity

Principle 3

A method where a process signals its predecessor that more material is needed. The pull system produces only the required material after the subsequent operation signals a need for it. This process is necessary to reduce overproduction.

Principle 4

This helps achieve the goal of minimizing waste (muda), not overburdening people or the equipment (muri), and not creating uneven production levels (mura).

Principle 5

Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue.

Principle 6

Although Toyota has a bureaucratic system, the way that it is implemented allows for continuous improvement (kaizen) from the people affected by that system. It empowers the employee to aid in the growth and improvement of the company.

Principle 7

Included in this principle is the 5S Program - steps that are used to make all work spaces efficient and productive, help people share work stations, reduce time looking for needed tools and improve the work environment.

Principle 8

Technology is pulled by manufacturing, not pushed to manufacturing.

Section III — Add Value to the Organization by Developing Your People

Principle 9

Without constant attention, the principles will fade. The principles have to be engrained, it must be the way one thinks. Employees must be educated and trained: they have to maintain a learning organization.

Principle 10

Teams should consist of 4-5 people and numerous management tiers. Success is based on the team, not the individual.

Principle 11

Toyota treats suppliers much like they treat their employees, challenging them to do better and helping them to achieve it. Toyota provides cross functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.

Section IV: Continuously Solving Root Problems Drives Organizational Learning

Principle 12

Toyota managers are expected to ‘go-and-see’ operations. Without experiencing the situation firsthand, managers will not have an understanding of how it can be improved. Furthermore, managers use Tadashi Yamashima's (President, Toyota Technical Center) ten management principles as a guideline:

  1. Always keep the final target in mind.
  2. Clearly assign tasks to yourself and others.
  3. Think and speak on verified, proven information and data.
  4. Take full advantage of the wisdom and experiences of others to send, gather or discuss information.
  5. Share information with others in a timely fashion.
  6. Always report, inform and consult in a timely manner.
  7. Analyze and understand shortcomings in your capabilities in a measurable way.
  8. Relentlessly strive to conduct kaizen activities.
  9. Think ‘outside the box,’ or beyond common sense and standard rules.
  10. Always be mindful of protecting your safety and health.

Principle 13

The following are decision parameters:

  1. Find what is really going on (go-and-see) to test
  2. Determine the underlying cause
  3. Consider a broad range of alternatives
  4. Build consensus on the resolution
  5. Use efficient communication tools

Principle 14

The process of becoming a learning organization involves criticizing every aspect of what one does. The general problem solving technique to determine the root cause of a problem includes:

  1. Initial problem perception
  2. Clarify the problem
  3. Locate area/point of cause
  4. Investigate root cause (5 whys)
  5. Countermeasure
  6. Evaluate
  7. Standardize