Book Review

The Toyota Way

July 2006 Author: Jeffery K. Liker Reviewed by: Karishma Kamboj

In this issue, corresponding with our cover story on Toyota and General Motors, we have reviewed
“The Toyota Way”, which is a work of good insight by Jeffery K. Liker, who takes his reader
through the success story of Toyota. The Toyota Way, along with the Toyota Production System,
make up Toyota’s ‘DNA’. This DNA was born with the founders of the Company and continues to
be developed and nurtured in its current and future leaders. The book assesses how and what
takes to form and nurture a great organisation and how conservatism combined with
modernisation can do wonders for it. It is a must read for aspiring and existing entrepreneurs, as
it is not only about the principles that Toyota followed in manufacturing high quality cars but also
about how the Company’s management achieved excellence that surpassed the major automakers
of the world.

The Toyota concept: In the 1980s, Toyota started making its mark, on the world highway, as a sturdy car that
lasted long and required less of maintenance than American cars. Today, the Company is the world’s most
profitable car manufacturer, consistently producing high-quality cars using fewer man-hours and less on-
hand inventories. To this day, Toyota continues to raise the bar in manufacturing, production development and
process excellence.

TPS and Lean Production: The Toyota Way explains the management principle and business philosophy behind
Toyota’s success. It narrates Toyota’s approach to Lean Production (known as the Toyota Production System –
TPS, which it invented in the 1940s and 50s) and the 14 principles that drive Toyota towards quality and
excellence. The book also explains how one can adopt the same principles to improve one’s business processes,
while cutting down on operations and production costs. Toyota invented Lean Production in the 1940s and 50s.
The Company focused on eliminating wasted time and material from every step of the production process (from
raw materials to finished goods). The result was a fast and flexible process that gives the customers what they
want, when they want it, of the highest quality and at most affordable cost. Toyota improved production by
eliminating wasted time and resources, building quality into workplace systems, finding low-cost and yet
reliable alternatives to expensive new technology, perfecting business processes and building a learning
culture for continuous improvement

The “4P” model of the Toyota Way

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 Book Review

How Toyota Became the World’s Best Manufacturer: After World War II. While Ford and GM used mass
production and economies of scale, Toyota faced very different business conditions. Toyota’s market was very
small but it had to produce a variety of vehicles on the same assembly line to satisfy customers. The solution:
making the operations flexible. This resulted in the birth of TPS.

TPS borrowed some of its ideas from the United States. The core idea of the Just in Time (JIT) system came
from the concept of the “pull-system”, which was inspired by the American supermarkets. In the pull system,
individual items are replenished as each item begins to run low on the shelf. Applied to Toyota, it means that the
first step in the process is not completed until the second step uses the materials or supplies from Step 1. At
Toyota, every step of the manufacturing process uses Kanban to signal to the previous step when its part
needs to be replenished. The Company was also inspired by W. Edwards Deming, who, aside from broadly
defining customers to include internal and external clients, also encouraged Toyota to adopt a systematic
approach to problem solving, which became a cornerstone for continuous improvement (known as Kaizen).

Eliminating Waste: The purpose of TPS is to minimise time spent on non-value adding activities by positioning
the materials and tools as close as possible to the point of assembly. The major types of non-value adding waste
in business or production process are overproduction, waiting or time on hand, unnecessary transport or
conveyance, over processing or incorrect processing, excess inventory, unnecessary movement, defects and
unused employee creativity.

14 Toyota Way Principles

1. Base your management decisions on a long-term philosophy, even at the expense of
short-term financial goals.
2. Create continuous process flow to bring problems to the surface.
3. Use “pull” systems to avoid overproduction.
4. Level out the workload (heijunka). (Work like the tortoise, not like the hare)
5. Build a culture of stopping to fix problems, to get the quality right the first time.
6. Standardised tasks are the foundation for continuous improvement and employee
empowerment.
7. Use visual control so no problems are hidden.
8. Use only a reliable, thoroughly tested technology that serves your people and
processes.
9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to
others.
10. Develop exceptional people and teams who follow your company’s philosophy.
11. Respect your extended network of partners and suppliers by challenging them and
helping them improve.
12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).
13. Make decisions slowly by consensus, thoroughly considering all options; implement
decisions rapidly.
14. Become a learning organisation through relentless reflection (hansei) and continuous
improvement (kaizen)

One of the keys to success of Toyota is that it lives by the philosophy of self-reliance and a “let us do it
ourselves” attitude. This can be best illustrated when it ventured into the luxury car industry. It did not buy a
company that already made luxury cars. Rather, it created its own luxury division - the Lexus - from scratch, in
order to learn and understand the essence of a luxury car.

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 Book Review

Another interesting thing that was observed in the book is that from the start to its last premise, emphasis has
been laid on the power of observation and then implementation of the same, and that with the achievement of
perfection, one’s world can turn around. Readers will time and again come across words like value added and non
value added, which basically reiterate that one should understand what is adding value to one’s work processes
and eliminate the links that are not required. The Toyota Plan gives the reader valuable insights that can be
applied to any business process or organisation.

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 Book Review

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