Toyota Production Systems - Thesis Example

The Toyota Way Introduction Companies in the modern world operate in a way to achieve a multitude of objectives. Apart from making profits and generating adequate revenue, companies also strive tirelessly towards achieving this through the least effort by cutting down on the time, money and effort spent on the work done and the resources required to produce the requisite goods or services. In addition to minimizing the number of man hours, companies are also interested in maintain the least volume of inventories to reduce the effort needed to maintain and oversee them. The Toyota Corporation is the world’s largest automaker and the high quality ratings for its vehicles are a result of very few defects found in them in comparison to any other competitors. Across all its production facilities throughout the world, Toyota has been known to raise the bar for maintaining quality and efficiency in a consistent fashion thereby bringing in a sense of excellence into manufacturing, procedures and product development. The result of this management strategy has been its steady rise into amassing a market share and revenue margin to such an extent that saw it making a larger profit than every other major automaker in addition to gaining the respect, admiration and praise of every business leader and management expert around the world (Jeffrey Liker, 2004). The ‘Toyota way’ is a management philosophy that revolves around a set of management principles followed by Toyota that are known to have contributed to the enhancement of its reputation the world over in terms of reliability and quality. These management principles are collectively used under the ‘Toyota production system’ also known as ‘Lean production’ (Michael Hoseus, 2007). The purpose of such a production system is aimed at improving the speed with which business processes are executed, provide more quality in the product or service, reduce the cost of operation and management and achieve all this irrespective of the industry where such a management system has been adopted. The Toyota Production System is one of the foundational principles which is a part of the corporate culture within the Toyota group. Over the years, the system has evolved into a paradigm par excellence for the manufacturing world and has transformed the prospects for several industries. The approach has helped foster better involvement from the employees across all levels of the organization and has provided a tangible oversight over the seemingly visible different between the traditional approaches to improving a process and the lean method used by Toyota (Jay Arthus, 2006). As such, the current dissertation is aimed at discussing the principles of the Toyota system of management by way of elaborating and evaluating upon its 14 core principles or guidelines that are followed by companies worldwide. further, the discussion will throw light on why some companies assume that their strategic thinking sometimes leads them to believe that they are lean when it is evidently found that it is not the case. These 14 principles that are collectively referred to popularly as the ‘Toyota Way’ are aimed at creating the suitable environment within an industry or a factory where the lean principles and techniques can be implemented thereafter. In discussing these aspects, every key principle used under the Toyota way will be elaborated in a detailed fashion with the suitable examples. Literature Review The primary requirement for Toyota to consider devising an alternate strategy to managing things in a deviation from conventional principles was driven by a number of factors and issues that the company had been facing both within its assembly lines as well as within the management that was responsible for overseeing the functioning and performance of the company. Firstly, Toyota has always aspired to create an atmosphere that provides for the means to learn continuously through improvement and innovation. Traditional approaches do not encourage workers and managers to try new methods of doing things in a better manner. further, Toyota felt the need for a process flow where there was a possibility to unearth any problem along the way without disrupting production and thereby maintaining continuity. Irrespective of the problems faced during production, ensuring the total satisfaction of the customer was the primary standpoint of the company and there has always been a continuous drive towards eliminating wastes of all kinds at the same time. Leadership within Toyota has been a quality among employees that has been nurtured over time through an encouragement of commitment and involvement against the drive to purchase it. Further, quality is tantamount to the satisfaction both for the customer as well as the company and it is the sole criteria that fortified the reputation of the company in the market (James Morgan, 2006). As such, the Toyota way has always looked towards achieving the best quality right from the initial phase. All along, Toyota has looked towards mutual benefit of all partners that includes its suppliers and other collaborators who assist it in delivering the goods to the market. In the case of Toyota, the concept of lean or waste reduction is achieved by the use of ‘Kanban’. When translated into Japanese, ‘kanban’ translates to a signboard and is used as an effective tool for ‘Just-in-time’ production. Kanban was nurtured and developed by Taichi ochi, and works as a signaling system that is capable of triggering the appropriate action in response to an event. As the English translation of Kanban signifies, this concept of Kanban is achieved through the use of cards usually in the form of markers and balls. Using these small but significant elements, the production floor is monitored constantly to maintain the progress of all workflows and ensure that the supply chain of every workflow is progressing in an uninterrupted fashion. Kanban was developed into an effective system as Toyota was on the lookout for an innovative way to adjust the degree of improvements in its systems and gradually evolved into a significant tool that was capable of supporting the entire production lifecycle by looking at it as a single entity from a broader perspective (John Black, 2008). The Kanban system was very efficient in making the necessary improvements and the production system eventually relied so much on it that any reduction in the number of Kanban always meant the detection of problem in a specific area. As such, Kanban simply stands for a sign based system that is used to manage the production and flow of materials and components within the Toyota production system. Kanban makes use of an ‘andon’, which is a control device that notifies workers whenever any abnormalities in the working of equipment or any defects in the machines are detected. Further, problems with the infrastructure suich as the alarms, electrical circuits and alarms are also detected. Despite the presence of Kanban as an additional component in the production, no overheads have been experienced at the production floor (David Meier, 2007). In a traditional manufacturing environment, workers are merely contributing to the system that produces the required goods in a continuous manner thereby depriving themselves of any chance to improve their skills. However, the Toyota way to production emphasizes on empowering the people to put a sense of life into the system. all aspects pertaining to the operation, communication and the resolution of problems and issues are done in a collective fashion and in way that allows for constructive growth. Companies that are known to rely on lean manufacturing are known to excel owing to the active participation among workers in the process of improving the system and delivering any requisite suggestions. The Toyota production system goes a step further by demanding involvement on the part of the employee and aiding them in every possible way during such endeavors. As such, the Toyota production system (or TPS for short) is aimed at fabricated to deliver the tools that allow people at work to improve their work as part of a continuing process. as such, TPS relies on the people as one of the important parameters and sets a culture. Workers are entrusted the responsibilities to maintain the optimum levels of inventory and continue to work towards identifying problems and resolve them. Workers are always driven by a sense of urgency, without which problems are likely to arise in the inventory outage. As such, constant problem solving is a part of the work of every engineer, team leader, manager and operator at the floor whereby time is used a factor to train every individual to become better at their craft and at identifying and solving problems (Stephen Ruffa, 2008). A prominent lean tool that aids teamwork is known as the 5s where each ‘s’ stands for (Stephen Ruffa, 2008): Sort. Stabilize. Shine. Standardize. Sustain. This sequence of activities is used to eliminate wastes that are known factors in causing malfunctions, defects and errors in production. Among the 5 elements listed above, the task to ‘sustain’ is inarguably the most difficult and demanding stage to achieve as it directly influences the other 4 by signifying the relevance of training and improvisation apart from motivating workers to maintain and improve their procedures constantly. Such an effort therefore requires commitment, training and the establishment of a supporting culture. The next section will provide specific details of the 14 principles that make up the famous Toyota way. In defining and explaining these principles, the discussion can be divided broadly into four primary categories namely the philosophy in the long term, identifying and choosing the right process in order to obtain the right results, adding organizational value by the development of the personnel, solving the core issues that enhance the level of organizational learning. The 14 principles of the Toyota Way Section 1: Long term Philosophy Principle No. 1 Base your management decisions on a long term philosophy, even at the expense of a short term financial goals The first principle under the Toyota Way says that one must have a philosophical purpose that takes precedence over any urge to rely solely on defining goals for the short term and taking the related decisions. The management must work towards the growth and alignment of the organization along specific and common purposes that must not be limited to the issue of more revenues and profits. It is also important to understand the historical backdrop and perspective of the company and strive to help it evolve to higher levels. In this context, one’s philosophical mission must be directed towards the founding of any other principles that allow for the achievement of the same purposes (Michael Hitt, 2008). It is also important in the midst of working towards evolving the organization to keep an oversight over upholding and enhancing the customer value. Further, the interests of the economy and society must also be taken into consideration all along and these aspects should in fact serve as the standpoints for any set of related strategies. In line with the definition of the strategy above, the principle clearly emphasizes the need to rely on the use of strategies and lesser dependence on a tactical approach, wherein the former works for the achievement of goals in the long terms as against the latter which seeks to fulfill short term objectives. In the process of achieving the targets, there must be a constant process for evaluation of all the related processes, workflows and functions in a responsible manner. the people in the company must be aware and confident of their capabilities and act with a sense of determination and self reliance. Employees should be motivated to take up responsibilities and work towards improving their skill set thus contributing more to the organization. Section 2: Right process leads to the correct results Principle No. 2 Create a continuous process flow to bring the problems to the surface This principle precisely states that all work processes involved in production must be redesigned to provide for the achievement of a high value along a continuous flow. This can be realized by not allowing any project to be delayed or remain idle and people must not assume that someone else will take up the responsibility of doing that job. Workflows that facilitate the movement of information and material in a quick manner must assist in linking all organizational processes as well as the personnel involved, which can help in highlighting all underlying problems in a quick fashion. This can be further improved by aligning the workflow with the culture within the organization as it improves the pace of development of the people (Michael Hoseus, 2007). Principle No. 3 Utilize ‘pull’ systems to avoid overproduction Customers at the end of the production chain must be provided with the goods that they desire at the instant when they have a requirement for it. The principle adopted as part of the Just-in-time strategy helps provide for the replenishment of the product as soon as it is consumed at the customer end. Just-in-time minimizes the work required to maintain inventories and improves the warehousing operations by requiring the least effort to maintain them by relying on the optimum levels of raw materials and ensuring a re-stocking mechanism that replenishes only after the product is delivered to the customer (John Ettlie, 1995). In doing so, the Toyota way calls for the need to check the fluctuations in the demand and reschedule the inventory in a requisite manner without relying on a preset and configured workflow that is done using computer intensive systems. Additional systems must be used to keep track of any wastes in the inventory. Principle No. 4 Heijunka: Level out the workload This principle indirectly signifies that working towards leveling out any wastes is just a third of the entire effort required to implement and maintain an effective lean management system within the organization. The Toyota way further calls for the need to work like a tortoise and refrain from cruising ahead like a hare unmindful of the overburden. People in the workplace must be allowed to work without any unnecessary stress and the same applies to straining the equipment and preventing their overuse beyond their optimum capacities. This principle is often overlooked even by companies that are in the process of implementing a lean system in a bid to muster up more production out of the existing infrastructure. Projects should not be based on a start-stop rhythm whereby the work is done in batches. This conventional method must be substituted by an evenly distributed workload to all the manufacturing and service units within the organization (Donald Dinero, 2005). Principle No. 5 Nurture a culture of stopping to troubleshoot problems and get the right quality at the first instant Under the principle, the importance of value proposition and its direct correlation with the quality perceived by the customer are being stressed. In maintaining this correlation, the use of the best quality assurance techniques has been advocated. This can be achieved by helping build the capability to unearth problems within systems and provide the necessary control to them to be in a position to control stop production upon detecting a problem. In such an eventuality, there needs to be a visual system in place that can notify the concerned project leaders of such a discrepancy and request relevant assistance. The use of Jidoka or machines with artificial intelligence is the basis for inducing quality into the production infrastructure and is supplemented by support systems that are configured with the appropriate countermeasures for ever foreseeable issue (Irene Chow, 2004). The fifth principle further stresses that the culture within the organization must be prompt in stepping down the speed of production upon finding any defects until a point in time where such issues have been resolved. Tackling quality based issues right at the first instance is the best way to ensure unhindered and qualitative productivity in a long run basis. Principle No. 6 Standardized tasks and processes provide the foundation for ensuring continuous improvement along with employee empowerment By the use of repetitive and stable methods as a means to increase the probability or predicting and timing the production, a regular flow can be created for the outputs from such processes. This is the principal foundation for the concept of flow and pull and is enhanced through the use of accumulated learning from every component in the processes as also through the standardization of the best practices discovered. This allows the individual to be creative in such pursuits and improve such standards to a degree that allows them to be incorporated as part of the regular workflow. This allows for such benchmark processes to be handled by persons despite the gradual movement of personnel within the workplace (Matthew May, 2006). Principle No. 7 Utilize visual control so that no problems and issues can remain hidden Byu making use of convenient visual indicators, workers can be in a position to decide whether their contribution conforms to a specific standard or whether they are deviating from it. As far as possible, the use of systems such as computers must be avoided when it is believed that such an arrangement will distract the focus of the worker from their primary responsibilities (Michael Hitt, 2008). The visual systems used to highlight problems must be simple and must be installed at the very location where the work gets done in order to assist flow and pull. Further, any feedback or reporting of errors must be limited in content and should not extend beyond a page of information at the maximum irrespective of the seriousness of the problem or its extent of impact. Principle No. 8 Rely on the sole use of tested and reliable technology that serves the people and processes The technology used in production should be directed towards supporting the activities of the workers and should not serve as a means to replace them. In such a context, the decision to include technology into the production equation must be taken in account after working out the process in a manual fashion and evaluating whether adding the technological components in question would help improve the effort. Technology that is relatively new in the market is often vulnerable to early defects and often unreliable. Newly emerging technologies are also often deviating from established standards in a pursuit towards improvement and including any such components makes the system susceptible to a compromise on the standardization and degrades the efficiency of the flow (John Ettlie, 1995). In such cases, proven and tested technologies that have carved a niche for themselves over time should be relied upon against new technology that stands relatively untested. When contemplating the decision to include any new technologies, it is imperative that some tests are conducted beforehand that assesses the performance across all related processes, production systems and products. In any case whatsoever, any technology that downgrades the established culture, that disrupts the stability and predictability of the workflows should be disregarded for further consideration (Jeana Wirtenberg, 2008). Despite these risks, people should be encouraged to be on the lookout for better technologies that may provide alternative and better methods to do an existing piece of work. Any technology that has proved its capabilities in trials and has confirmed its ability to stay within the perspectives of the company’s workflows and culture can be included thereafter. Section 3: Adding value to the organization through personnel development Principle No. 9 Encourage and grow leaders who demonstrate the capability to understand the work, live the philosophy and teach the same to others Leaders are supposed to be nurtured and identified from within and should not be instead a result of procurement from outside the organization. One must not look at the responsibility of a leader merely as a role that looks to accomplish tasks apart from having good interpersonal skills. Instead, leaders are supposed to define the what and why of every perceived strategy of the company and by popularizing the philosophy that drives the workplace and defines the norms for doing business. A good leader possesses the quality to understand every detail of daily work and is capable of teaching its intricacies to people involved (Donald Dinero, 2005). Principle No. 10 Develop exceptional people and teams that follow the company’s philosophy In continuation with the proper way to nurture leadership in the organization, the Toyota Way further stresses on the need to create a stable and reliable culture that holds the values and traditions of the company in high esteem. Individuals who are found to be exceptional should be trained along with teams to achieve the targeted results and work along towards reinforcing the organization’s culture. Companies must utilize the services of cross functional teams in enhancing the quality of productivity and ensure that all technical problems are taken care of. Empowerment at the workplace can only be achieved when people are provided the environment and authority to affect any related changes (Matthew May, 2006). There must be an ongoing effort that helps in training the prospect of collective working within individuals towards a common set of goals. As such, teamwork is a culture that can only be constructed over time through constant learning. Principle No. 11 Respect the network of partners and suppliers by challenging them and helping them improve. the supply chain of a company’s production is heavily dependent on its collaboration with external partners and suppliers. Any deficiency or disruption from either of these important entities is bound to induce problems into the inventory levels and disrupt production rates. It is therefore absolutely necessary to respect the role played by partners and suppliers and consider them as an extended component of the business. Such business associates must be challenged constantly to improve and keep up with the value of the company (David Lipsky, 2008). This can be done by setting challenging benchmarks and targets and helping partners in their quest towards achieving them. Section 4: Continuously solving root problems drives organizational learning Principle No. 12 Genchi genbutsu - Go and see for yourself to thoroughly understand the situation Processes can be improved upon and problems can be solved only by examining the source and verifying the data pertaining to it rather than resorting to arriving at any perceived theories merely on the basis of opinion of various people or the information presented by computer bases feedback systems. In this respect, it is also important to understand the relevance and meaning of the data before proceeding to take a necessary action (David Lipsky, 2008). even in cases where the involvement of the high level management becomes necessary, it is essential for them to go to the source and examine the situation first hand without which they would end up having a superficial perception of the issue. Principle No. 13 Nemawashi: Take decisions slowly by consensus by considering all options thoroughly and implement decisions rapidly. It is not advisable to possess a single minded direction towards making a decision and one needs to drill down the path that is seen to be the best among the considered alternatives. Upon picking one of them, it is necessary to move along it quickly in order to effect the decision. Nemawashi or the task of discussing problems and assessing corresponding solutions along with all stakeholders is done through considering all their inputs and ideas and obtaining an agreement on the best way to move forward. Though such a process if often time consuming, it helps enhance the horizon for looking at all potential solutions and once a decision is made, it has been relied upon to such an extent that allows for its rapid implementation (Stephen Ruffa, 2008). Principle No 14 Evolve into a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). Upon having developed a stable and efficient process, it is necessary to resort to continuous improvement to underline the root causes for any inefficiency and develop the appropriate countermeasures. Processes must be designed with the idealistic view of not requiring the need to maintain an inventory. Such a starting point will help in projecting every wasted instant of time and piece of resources for every person involved to see. Every such exposed inefficiency is eliminated through the use of Kaizen or the process of continuous improvement (Irene Chow, 2004). The knowledge base of the organization can be driven towards maturity by maintaining a knowledge base of known and solved issues and also through the maintenance of stable personnel. The succession systems in place should provide for a gradual ascent along the corporate hierarchy. The use of Hansei or reflection will help in examining key milestones and shortcoming upon the conclusion of a project and develop measures to avoid repeated mistakes. All identified best practices must be standardized and the system must not be re-inventive for every new project or person. References 1. Jeffrey Liker (2004), The Toyota way: 14 management principles from the worlds greatest manufacturer. New York: McGraw Hill. 2. Michael Hoseus (2007), Toyota Culture: The Heart and Soul of the Toyota Way. New York: Prentice. 3. Jay Arthus (2006), Lean six sigma demystified. London: Routledge. 4. James Morgan (2006), The Toyota product development system: integrating people, process, and technology. Boston: Productivity Press. 5. John Black (2008), The Toyota Way to Healthcare Excellence: Increase Efficiency and Improve Quailty with Lean. New York: Health Administration Press. 6. David Meier (2007), Toyota Talent. New York: McGraw Hill. 7. Stephen Ruffa (2008), Going Lean: How the Best Companies Apply Lean Manufacturing Principles to Shatter Uncertainty, Drive, Innovation, and Maximize Profits. Michigan: AMACOM. 8. Michael Hitt (2008), Strategic management: competitiveness and globalization : concepts & cases. London: Cengage. 9. Matthew May (2006), The elegant solution: Toyotas formula for mastering innovation. London: Free Press. 10. Donald Dinero (2005), Training within industry: the foundation of lean. New York: Productivity. 11. John Ettlie (1995), Engineered in Japan: Japanese technology-management practices. Oxford University Press. 12. Jeana Wirtenberg (2008), The Sustainable Enterprise Fieldbook: When It All Comes Together. Michigan: AMACOM. 13. David Lipsky (2008), The Sustainable Enterprise Fieldbook: When It All Comes Together. San Francisco: AMACOM. 14. Irene Chow (2004), Business strategy: an Asia-Pacific focus. University of California. Read More