“The Toyota Way” is a book by Jeffrey Liker that describes Toyota’s unique approach to lean management. The book outlines the two pillars of the Toyota Way: respect for people and continuous improvement.
Liker explains how Toyota builds a learning enterprise and problem-solves on the spot to eliminate waste. In addition to outlining Toyota’s principles and practices, the book provides insights on how to apply them to any organization.
Principle 6: Build a culture of stopping to identify out-of-standard conditions and build in quality
The customer is the final arbiter of how well the company is doing. The voice of the customer must be driven through every process, from design to manufacturing.
Toyota’s famous “andon” system of stopping to fix problems is one of a number of ways to surface problems immediately so they can be solved quickly.
Designing for quality also applies to digital companies. The best companies have built processes for getting rapid feedback as code is being written and for running experiments with customers to get continual feedback to improve the software.
Quality is more than tools; it is a matter of creating a culture where even negative feedback is valued and used for continuous improvement from design through customer use.
Principle 7: Use Visual Control to Support People in Decision-Making and Problem Solving
Visual control should be used to support people in decision-making and problem-solving. Humans are naturally visual creatures and are more likely to recall and use information if it is presented visually. Visual control can help identify out-of-standard conditions and build in quality.
The Toyota Way is a management philosophy that emphasizes continuous improvement and respect for people. It is a living, organic system that relies on developed people to surface and solve problems.
The missing safety net means that problems show themselves very quickly and must be solved quickly. Built-in quality comes about as problems are effectively controlled as they occur.
Principle 12: Observe deeply and learn iteratively to meet each challenge
Observation and iterative learning are critical for organizational success in today’s rapidly changing environment. The concept of a learning organization must be translated into a mindset and behavior of scientific thinking, which is achieved through practice and coaching.
Mike Rother developed a non-Toyota-specific approach to developing scientific thinking based on his research into Toyota’s management system, using practical routines and corrective feedback. Covid-19 forced companies to quickly adapt and learn, but sustainable change must reach the C-suite’s thinking.
Value chain suppliers contd.
The first-tier suppliers of large component systems are engaged early in the cycle to design components, collaborating with Toyota engineers and working toward the same aggressive targets of cost, quality, weight, and functionality.
Toyota has a variety of ways to develop suppliers, including through regional supplier associations, direct support from knowledgeable professionals in purchasing, quality, and manufacturing, and model-line projects coached by master TPS trainers.
Despite the pressure of Toyota’s challenges and high standards, suppliers typically rate Toyota as their most trusted and respected customer.
Principle 2: connect people and processes through continuous process flow to bring problems to the surface
The core concept in Toyota’s just-in-time system is struggling toward the vision of a one-piece flow of value to the customer with zero waste.
We often think of a process as if it were a physical thing, but it is actually an ideal to strive for, not a tool to implement.
Mass production thinkers often have the mistaken impression that if they minimize the cycle time of individual processes, they will make the overall operation more efficient, but more often than not, they simply create mountains of waste, slow the speed of materials and information to the customer, and create a lot of confusion.
Continuous process flow contd.
Not only does one-piece flow increase productivity, but it can also lead to better quality, a shorter lead time, enhanced customer responsiveness, higher morale, and better safety.
While there are immediate benefits to shifting from process islands to a flow line, longer-term benefits come from surfacing problems so they can be addressed quickly, enhancing continuous improvement.
The companion to one-piece flow is developing in people at the worksite a scientific mindset to solve problems as they surface.
Principle 4: level out the workload, like the tortoise, not the hare (heijunka)
To get to lean flow, one must seek to eliminate the three Ms: muda (waste), mura (unevenness), and muri (overburden).
Eliminating muda alone when there are high levels of unevenness and overburden can actually reduce productivity and value-added flow.
Along with creating a leveled schedule, factories need to reduce setup time in order to quickly change over between products and build in small batches.
Sometimes it is best to hold extra inventory of high-volume finished goods as a buffer against fluctuations in customer demand and allow building to order low-volume product types while replenishing the inventory for high-volume items.
Principle 1: base your management decisions on long-term systems thinking, even at the expense of short-term financial goals
Toyota’s mission goes far beyond short-term profitability, and Toyota is willing to invest for the long term.
Toyota thinks of its organization as a living sociotechnical system rather than a collection of mechanical parts guided by simple and direct cause-and-effect relationships. Investing in developing people allows them to locally control complex system dynamics.
Principle 13: Focus the improvement energy of your people through aligned goals at all levels
Toyota’s Hoshin Kanri approach aligns goals and plans at all levels, using a planning period to lay out challenges and milestones for a step-by-step improvement process.
The A3 process summarizes plans, actions, and results on a single sheet of paper, and constant hansei (reflection) is used to identify weaknesses and prioritize areas for improvement.
Each level takes responsibility for its own business, planning and working to meet its goals, and causal reasoning is required for effective planning. Hoshin Kanri is more than a business tool; it develops people through coaching and problem-solving.
Systems thinking contd.
- Toyota is a model for the world in demonstrating how doing the right thing is a profitable business strategy.
- What drives Toyota forward are people who believe there is always a better way and trust the company to do right by them.
- The foundation of team member trust is job security, and Toyota goes to unusual lengths to protect the jobs of its employees.
- Toyota has a deliberate culture that is consistent across locations, levels, and times. Toyota walks the talk.
Principle 8: Adopt and adapt technology that supports your people and processes
Toyota has had bad experiences loading up plants with automated equipment only to find, in a business downturn, that the company had too much money tied up in fixed capital costs.
After several such experiences, including in the Great Recession, the mantra became “simple, slim, and flexible,” with the right balance of people and automation.
Kaizen does not end with automation, but rather continuous improvement of automated equipment can help organizations move closer to the lean vision of one-piece flow without interruption.
People at Toyota are still viewed as master craftsmen who use all their senses to understand the state of the process and can perform even automated processes manually.
Principle 9: Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others
Toyota has a history of great leaders who model the values of the Toyota Way, which can be traced back to its founder, Sakichi Toyoda.
The company’s core values include a commitment to quality, constant innovation, respect for the planet, and a philosophy of supporting sustainable mobility for all. The company’s success is attributed to its ability to create contradictions and paradoxes in many aspects of organizational life, which employees must navigate.
Principle 5: Work to establish standardized processes as the foundation for continuous improvement
Establish standardized processes as the foundation for continuous improvement. Toyota focused on work group-designed continuous improvement, using job instruction training to turn standardized work into a habitual way of working.
Standardized work can reduce stress and improve the customer experience in service businesses like Starbucks. When work groups own the standards, bureaucracy enables rather than coerces. Achieve standardized work through continuous improvement and rigorous training until it becomes a habit.
Principle 3: Use “pull” systems to avoid overproduction
To avoid overproduction, use “pull” systems instead of “push” systems. Traditional production scheduling based on demand forecasts and complex algorithms can lead to inventory banks, parts shortages, and missed shipments.
Toyota uses scheduled systems to create leveled schedules but prefers to schedule only at one point in the factory. When one-piece flow is not practical, Toyota pulls parts from small inventory buffers and replenishes them using kanban, a physical signal.
Kanban helps visualize the flow and reduce inventory to get closer to one-piece flow. Pull systems are also used in service environments to regulate material and information flow.
Principle 10: Develop exceptional people and teams who follow your company’s philosophy
Toyota’s culture embraces a growth mindset with servant leadership and value-added workers at the top. Work groups are developed to own their processes, with a structure consisting of a group leader and team leaders.
The team leader is responsible for supporting team members, ensuring standard work, responding to abnormalities, and leading kaizen. Developing effective leadership is an ongoing challenge for Toyota, and the company regularly experiments with new approaches to reenergize work groups.
Principle 11: Respect your value chain partners by challenging them and helping them improve
Toyota carries respect for people and continuous improvement to the value chain, challenging and developing its key outside partners.
From the customer’s perspective, it is a Toyota vehicle, and so all supplied parts have to be of the same quality of design and function as Toyota parts. Similarly, independent dealers are still viewed as Toyota by consumers, and they must reflect the Toyota brand.
Toyota challenges suppliers with perfect delivery of parts and aggressive cost targets.
Principle 14: Learn your way to the future through bold strategy some large leaps, and many small steps
Organizations need a well-planned strategy for success, based on their unique situation and environment. Tesla’s first-mover advantage with battery-electric vehicles gave them a competitive edge, while Toyota took a nuanced approach, offering various options, including hybrid and hydrogen fuel cell vehicles.
The Prius was a successful example of refining a bold idea through large leaps and steps. The small values model helps identify where a company needs to focus and how strategy relates to execution. Copying benchmarked companies can hinder creativity and set a company back.
