Forbes magazine recently published an article titled “What’s wrong with Toyota?” where the author describes that critics are wringing their hands that capacity was built too fast to capture the truck market in the US.
The article describes how even Toyota is not immune to the troubles facing the automotive industry and that, in spite of the short term impact this economy is having on Auto/Truck sales, critical questions are being raised. Should Toyota continue its aggressive pursuit of market share in the US truck market, or retrench and go back to basics with smaller cars?
Could Toyota, known for its long sightedness in a near sighted marketplace, have anticipated this recent economic downturn, which put a halt on consumer spending from electronics to automobiles? One could argue that if Toyota, with its Toyota Production System (TPS) which is known as the leanest and best manufacturing system in the world, if they cannot adequately detect and respond to sudden changes in the economic climate, what hope is there for any of us in manufacturing?
There are some clues in the TPS that tell us why Toyota can and will respond to these market changes and will continue to grow and dominate the automotive market. It has to do with the embedded culture of the Toyota Way. The first two principles of the Toyota Way :
- Base your management decisions on a long term philosophy, even at the expense of short term goals.
- The Right Process Will Produce the Right Results: Create a continuous process flow to bring problems to the surface.
One of the key elements of the TPS is Jidoka. Jidoka is the ability for anyone involved in the manufacturing process to see what’s going on and if necessary, stop the production line, bringing problems to the surface. Basic empowerment at all levels to ensure that errors that can cause defects (in materials, equipment, process) are monitored and detected right away in order to ensure they get passed on to the next operation.
In order for all employees to see what’s going on with the process, it seems like the traditional tools of management need to be shared with a larger audience. What manufacturing process wouldn’t benefit from having more eyes on it?
Not even Toyota has a crystal ball and can predict the future. But they do understand that by monitoring the critical process inputs and outputs, performed with the right tools in place, and coupled with the Jidoka mindset, the organization can learn, respond and re-engage.
In summary, Toyota can and will make mistakes like the rest of us, but the key differentiator is they have the tools to learn faster, and they take advantage of institutional knowledge, and empower all employees to think from a management and customer’s perspective. This strategic advantage will ensure Toyota remains in leadership of any market it enters.
The good news is that these principles and visibility tools to see what’s going on in the process are available for all manufacturers to leverage.
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Tags: Lean manufacturing, Supply chain flexibility, Supply chain visibility
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Several issues seem to be taking the wrong direction here. TPS is a manufacturing system, and not a market forecast system. TPS will respond to the market forecast and assemble to plant capacity the number of units required per week, month, or quarter.”
Empowering employees to think like management and customers is a goal which is difficult to obtain. We can all cite examples where we know of company managers that “think stovepipe” and not like managers with enterprise vision, let alone think like customers. Most employees have limited vision beyond their workplace and the process they control or contribute to.
Having non-marketing employees and functional managers involved in the marketing forecast would result in a consensus number which most everyone could agree on, but would not necessarily be a prudent number on which to plan the business.
There are a couple of issues confused here.
First, TPS is a manufacturing system but it has been adopted from the “Toyota Way”, which is a philosophy, a culture if you will, which has been nurtured since the time of its origins with the Toyoda Family and applied throughout the workforce. It has been incorrectly assumed in numerous cases in the West that it is a system or basket of methods to adopt and expect to be successful with. And arguably remains the main reason why lean and other similar principles do not work as well as the Toyota Way.
Secondly, I believe David’s article is referring more to the principles of the “Toyota Way” than the application of those principles through TPS into Toyota’s manufacturing. And it is thorugh belief in the principles and putting them into practice that offers Toyota the upper hand.
Toyota’s culture empowers employees to consider how best to improve, continuously seeking how to deliver better, and at the same time having respect for all involved, including suppliers and indeed customers. My experience is that it isn’t difficult to obtain this goal if the principle of respect for people is truly expereinced within the team or the organisation. True high performing teams experience this. And high performing teams have managers who realise their first customer is their team and that they are at the bottom of the ladder, merely a facilitator for the workforce.
Too frequently, we pick up sound bites of successful systems without first fully understanding them to properly adopt and find our own success.
I also disagree with the assertion in Robert’s response that employees have ‘limited vision beyond their workplace and the process they control or contribute to’. Is it not somewhat a damning and blinkered suggestion that employees are unable to provide a view beyond their own bubble of workspace. How can we hope to be successful with if we believe the workforce are incapable of understanding anything beyond their own work process. This is entirely why Toyota works and GM doesn’t.
The one issue I would take with David’s excellent article however is his summary, and in suggesting all is not lost as we all have access to these principles and visibility tools. Indeed we do, and have done for some 30 years. In fact Toyota has schools set up in the US and elsewhere to pass on their ‘Way’. The tools I would suggest are less important, the principles are however fundamental. And yet Toyota’s ‘Way’ will fail to deliver results for the same reason the principles of continuous improvement (Kaizen or Deming’s PDCA) and many performance management theories fail in practice. We are frequently too impatient and select the pieces of the process we want to be involved with. We develop many good ideas, plan their implementation, yet fail to follow through on their application sufficiently to understand the real impact upon the process or business cycle. Similarly, will we take choice elements of TPS methods without adopting the ethos of the Toyota Way?
It is not the tools that provide the differentiator, it is the culture and the belief. If Toyota can do it, what is it that we are doing differently?
In response of Kevin’s comment:
“Is it not somewhat a damning and blinkered suggestion that employees are unable to provide a view beyond their own bubble of workspace. How can we hope to be successful with if we believe the workforce are incapable of understanding anything beyond their own work process.”
concerning my observation:
“employees have ‘limited vision beyond their workplace and the process they control or contribute to’ ”
In a world class perfect company, “employees would have vision beyond their workplace and continuously provide suggestions to improve the process by eliminating waste, be responsive to their upstream and downstream customers while sustaining the production schedule, achieve Six Sigma in their productive effort, and be ISO 9000 certified in their work cycle and job knowledge”.
In a world class perfect company, “management and supervision would not think in ’stovepipes’ or ’silos’, have an enterprise mentality, listen to and implement valid employee suggestions to adopt Lean Practices in the workplace, have a vision beyond meeting todays production schedule and not sustain a culture based upon seniority and corporate memory”.
In a world class perfect company, “new or younger employees would be able to contribute skills and knowledge they have concerning IT processes and software applications, would not hold management ‘captive’ by making them dependent upon their process knowledge assuring job security, become contributing ‘team players’ and not silos of the new technology unwilling to share the benefit of their knowledge with business process smart teammates looking to apply the new technology”.
The greatest obstacle a company encouters in adopting Lean Sigma Practices as an Enterprise, is an all level of management committment to changing the company culture and leading the employees by example to adopt the mindset. Is this doable? Yes. Is it the “silver bullet” for success? Only if management continuously “reloads” to their committment and the Lean Philosophy becomes ingrained as the “new company culture”.
How many companies, other than Toyota, have we as a group of business process improvement professionals in the business, seen this culture change be successful over “the long haul”?
TOYOTA is a live company, so not immune to market changes.
An economic downturn like this could never be predicted. Your statement “they cannot adequately detect and respond to sudden changes in the economic climate” is very strange….. TPS is not a glass bulb, just an improvement method….
Please read the TPS basics at: http://www2.toyota.co.jp/en/vision/production_system/origin.html
Also refer to the financial support several Governments gave to eg. TOYOTA and General Motors….. there is a ratio to be seen…. this ratio shows which company is more immune.
Like TPS describes: “focus on the long run…… be predicitive not reactive”
Regards,
Hein Winkelaar
JIPM-certified instructor
Hm, Toyota knows what they should do and they are really among the best car builders of the world. I have no complains with them.