TOYOTA WAY
14 MANAGEMENT PRINCIPLES
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Lean Engineering / Manufacturing / Thinking / Enterprise /System is a: A Five Step Process Defining customer value (internal / external) Defining the Value Stream (Process) Making it Flow (Process) Pulling from the Customer back (Inventory) Striving for Excellence (Long term)
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Objectives of TPS
Eliminating wasted time and resources Building quality into workplace systems Finding low cost but reliable alternatives to expensive new technology Perfecting business processes Building learning cultures for continuous improvements
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Problem Solving
(Continuous Improvement and Learning)
+Go & see yourself. +Decision slowly by consensus and implement rapidly. +Grow leaders who live the philosophy. +Respect, develop and challenge people, teams and suppliers. +Create process flow to surface problems +Use pull system to avoid over production +Stop when there is a quality problem. (Jidoka) + Level out the workload. (heijunka) +Standardize tasks for continuous improvement. +Use visual control so no problems are hidden. +Use only reliable technology. +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
Process
(Eliminate Waste)
Philosophy
(Long Term Thinking)
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Principle 1 - Management Decisions on a LongTerm Philosophy, even at the expense of Short-Terms Financial Goals.
We wanted to break new ground in ride quality. To get that, our tire compounds were fairly soft. So even though the customer experienced a good ride and the tires were well within our specs, they did not last as long initially as many customers wished. 5-7% of the customers actually complained about tire life. For Toyota that is a big deal, as Toyota is used to dealing in complaint level far < 1%.
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Base Management Decisions on a LongTerm Philosophy, even at the expense of Short-Terms Financial Goals.
So Toyota sent the owner of every Lexus who had the specified batch of tires, a coupon they could redeem for $500 and apologised for inconveniency. Many of these customers had already sold their Lexus.
The way you treat your customer when you do not owe them anything, like how you treat somebody who can not fight back that is the ultimate test of character and long term
philosophy of values.
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Problem Solving
(Continuous Improvement and Learning)
+Go & see yourself. +Decision slowly by consensus and implement rapidly. +Grow leaders who live the philosophy. +Respect, develop and challenge people, teams and suppliers. +Create process flow to surface problems +Use pull system to avoid over production +Stop when there is a quality problem. (Jidoka) + Level out the workload. (heijunka) +Standardize tasks for continuous improvement. +Use visual control so no problems are hidden. +Use only reliable technology. +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
Process
(Eliminate Waste)
Philosophy
(Long Term Thinking)
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Flow is the heart of the Lean message that shortening the elapsed time from raw material to finished goods / service will lead to the best quality, lowest cost and shortest delivery time Flow means when a customer places an order, this triggers the process of obtaining raw material from suppliers, flow to production plant, assemble the order, transport to dealer and deliver to customer Flow also forces the implementation of other lean tools such as preventive maintenance, built-in quality (jidoka), continuous improvement (kaizan) and even production (heijunka)
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5. Excess / unavailable Inventory Extra inventory hides problems such as production imbalances, late deliveries, defects, downtime and long set up time
6. Unnecessary Movement Wasted motion like looking for, reaching for, stacking part, tools etc, even walking is a waste during production 7. Defects Production of defective parts and its correction, Repair or rework, replacement production and inspection
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Complete processing of first batch of 10 takes 30 minutes Transportation from Base to Monitor Dept is in batch of 10 First good computer ready in 21 minutes There are at least 21 sub-assemblies in process at a time
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First part is ready in 3 minutes 10 complete assembly ready in 12 minutes Only two sub-assembly in process at a time
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Avoid
The more inventory a company has, .....the less likely they will have what they need. Taiichi Ohno
Provide your down line customers in the production process with what they want, when they want it, and in the amount they want. Material replenishment initiated by consumption is the basic principle of just-in-time (JIT). It triggers at a customers orders of Toyota. Minimize your work in process (WIP) and warehousing of inventory by stocking small amounts of each product and frequently restocking based on what the customer actually takes away. Be responsive to the day-by-day shifts in customer demand rather than relying on computer schedules and systems to track wasteful inventory.
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Principle 4. Level out the Workload (heijunka) (Work like the tortoise not the hare)
Muri
Enabling Bureaucracy
+ Empowered Employees +Rules and procedures as enabling tools + Hierarchy supports + Org learning
Low Bureaucracy
Autocratic
+ Top down control +Minimum written rules and procedures + Hierarchy controls
Organic
+Empowered employees +Minimum rules and procedures +Little hierarchy
Coercive
Enabling
Sustain
Use regular management audits to stay disciplined (shitsuke)
Straighten (Orderliness)
A place for everything and everything in its place (seiton)
Standardize
Create rules to sustain the first 3 S (seiketsu)
Shine
Clean it (seiso)
Principle 8
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Problem Solving
(Continuous Improvement and Learning)
+Go & see yourself. +Decision slowly by consensus and implement rapidly. +Grow leaders who live the philosophy. +Respect, develop and challenge people, teams and suppliers. +Create process flow to surface problems +Use pull system to avoid over production +Stop when there is a quality problem. (Jidoka) + Level out the workload. (heijunka) +Standardize tasks for continuous improvement. +Use visual control so no problems are hidden. +Use only reliable technology. +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
Process
(Eliminate Waste)
Philosophy
(Long Term Thinking)
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Principle 9 Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others
The Automotive News recognized newsmakers in the auto industry. Direct quotes from the issue about these newsmakers: Bill Ford (Ford): Talks up revitalization, brings backs old guys, stars in TV commercial. Ford stock remains mired in the $10 range
Robert Lutz (GM): Former Marine pilot inspires GMs troops and simplifies product development, giving designers a bigger voice
Dieter Zetzsche (Chrysler): Turns the company around a year early with 3 Qtrs in the black
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Principle 9 Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others
Fujio Cho (Toyota): Toyota President presides over rise in operating profit to industry record. Take lead on hybrids. Grabs 10 point of US market. Joins with Peugeot for plants in Eastern Europe. Changing the culture each time a new leader comes into office necessarily means jerking the company about superficially, without developing any real depth or loyalty from the employees. The problem with the radical shifts in the culture is that organization will never learn it loses its ability to build on achievements, mistakes, or enduring principles. Deming, the Quality Guru terms it Constancy of Purpose.
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Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others +Growth
+Stability +JIT +Jidoka +Kaizan +Heijunka +Attention +Go & See +Problem solving +Presentation skills +Project Mgt +Supportive culture
PEOPLE
Long term assets Machinery depreciates People appreciates Learned skills Loses value continue to grow
PHILOSOPHY
Customer First People are most important asset Kaizan continuous improvement Go and See Give feedback Efficiency thinking True (vs. Apparent) condition Total (vs. Individual) team involvement
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Bureaucratic Manager
Task Manager
Here is what to do and how do it
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Develop Exceptional People and teams Who Follow Your Companys Philosophy
Internal Motivation Theories Toyota Approach
Maslows Need Satisfy lower level of Hierarchy needs and move employees up the hierarchy towards self actualization Herzbergs Job Eliminate dissatisfies Enrichment (hygiene factors) and Theory design work to create positive satisfiers (motivators)
Job security, good pay, safe working conditions satisfy lower level needs. Culture of continuous improvement supports growth towards self actualization. 5 S, ergonomics programs, visual management, HR policies address hygiene factors. Continuous improvement. Job rotation, and built-in feedback supports motivators.
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Taylors Scientifically select, Scientific design, standardize jobs, Management train, and reward with money performance relative to standards Behaviour Modification
All scientific management principles followed but at the group level other than individual learned based on employee involvement
Reinforce behaviour on Continuous flow and andon the spot when the creates short lead times for behaviour naturally occurs rapid feedback. Leaders constantly on the floor and providing reinforcement Set specific, measurable goals, achievable challenging goals and measure progress Set goals that meet these criteria through policy deployment. Continuous measurement of targets
Goal Setting
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Principle 11 Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve
Auto industry suppliers consistently report that TOYOTA is their best customer .and also their toughest. Have respect for your partners and suppliers and treat them as an extension of your business. Challenge your outside business partners to grow and develop. It shows that you value them. Set challenging targets and assist your partners in achieving them.
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Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve Toyota is very carefully when deciding what to outsource and what to do in house. Toyota outsource about 70% of the components. It still wants to maintain internal competency Even when Toyota chooses to outsource a key component, it does not want to lose internal capability As a general rule, Toyota wants to have at least two suppliers for every component Toyota is very bureaucratic in their dealings with suppliers, having extensive standards, auditing procedures, rules etc. But suppliers consider Toyota as their partner and Toyota is viewed as enabling customer who participate and solve their problems too.
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Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve
Reliable Partnership
Next Level of Improvement
Enabling Systems
Clear Expectations
Stability
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Problem Solving
(Continuous Improvement and Learning)
+Go & see yourself. +Decision slowly by consensus and implement rapidly. +Grow leaders who live the philosophy. +Respect, develop and challenge people, teams and suppliers. +Create process flow to surface problems +Use pull system to avoid over production +Stop when there is a quality problem. (Jidoka) + Level out the workload. (heijunka) +Standardize tasks for continuous improvement. +Use visual control so no problems are hidden. +Use only reliable technology. +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
Process
(Eliminate Waste)
Philosophy
(Long Term Thinking)
PROBLEM SOLVING
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PROBLEM SOLVING
GO and SEE to Thoroughly Understand the Situation (Genchi Genbutsu)
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Principle 12
Mr. Ohno at times made his supervisor / managers to draw a circle on the floor of a plant and they were told, Stand in that and watch the process and think for yourself, and then he did not even give you any kind of hint of what to watch for. This is the real essence of TPS.
Like Six Sigma quality improvement initiatives we collect data and run it through statistical analysis correlations, regressions, variance etc, some of the results we get are statistically significant. But do we really understand the context of what is going on or the nature of the problem?
PROBLEM SOLVING
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PROBLEM SOLVING
Principle 13
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Make Decisions Slowly by Consensus, Thoroughly Considering All Options; Implement Rapidly If there is a project supposed to be fully implemented in a year. A typical company anywhere would spend about three months on planning and begin to implement. But they encounter all sorts of problems after implementation and would spend rest of the year in correcting them Toyota will spend 10 months planning, building consensus, implement it in a small pilot production and fully implement at the end of year, with virtually no remaining problems
PROBLEM SOLVING
Principle 13
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Make Decisions Slowly by Consensus, Thoroughly Considering All Options; Implement Rapidly Preferred
Decision making is highly situational Philosophy is to seek maximum involvement for each situation
Seek group input, then decide and announce Group consensus with full authority
Level of Involvement
Fallback
Time
Get all the parties on board, iron out all the resistance, generate consensus, then implementing
PROBLEM SOLVING
Principle 14
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A Learning Org Through Relentless Reflection (Hansei) and Continuous Improvement (Kaizen)
We view errors as opportunities for learning. Rather than blaming individuals, the organisation takes corrective actions and distributes knowledge about each experience broadly. Learning is a continuous company-wide process as superiors motivates and train subordinates; as predecessors do the same for successors; and as a team subordinates at all levels share knowledge with one another. The Toyota Way Document 2001
Toyota has judiciously used stability and standardization to transfer individual and team innovations into organisational-wide learning. Standardisation punctured by innovation, gets translated into new standards (Kaizen) .
PROBLEM SOLVING
Principle 14
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Relentless Reflection (Hansei) and Continuous Improvement (Kaizen) 5 Whys is a method to pursue the deeper, systematic causes of a problem to find correspondingly deeper countermeasures Level of Problem There is a puddle of oil on the shop floor Because the machine is leaking oil Because the gasket has deteriorated Because we bought gasket made of inferior material Because we got a good price on those gaskets Because the purchase agent gets evaluated on short term cost savings Countermeasure Clean up the oil Fix the machine Replace the gasket Change gasket specifications Change purchasing policies Change the evaluation policy for purchasing agent
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Why Why
Basic Cause and Effect Investigation 4. Five Whys? Investigation of Root Cause
Cause Investigation
Root Cause
5. Countermeasure 6. Evaluate 7. Standardize
PROBLEM SOLVING
Principle 14
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Eliminate Waste
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One man did his part, and the other his, and neither even had to check to make sure both parts were getting done. Like the dance of atoms Alvin had imagined in his mind. He never realized it before, but people could be like those atoms, too. Most of the time people were all disorganized nobody knowing who anybody else was, nobody holding still long enough to trust or be trusted, just like Alvin imagined atoms might have been before God taught them who they were and gave them work to do. It was a miracle seeing how smooth they knew each others next move before the move was even begun. Alvin almost laughed out loud in the joy of seeing such a thing. Knowing it was possible, dreaming of what it might mean thousands of people knowing each other that well, moving to fit each other just right, working together. Who could stand in the way of such people? Orson Scott Card Prentice Alvin: The Tales of Alvin Maker
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It creates bonds among individual and patterns such that they move to fit together just right, working together towards a common goal. Creating a WHOLE much greater stronger than the SUM of the individuals and
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Thank You