THE TOYOTA WAY14 MANAGEMENT PRINCIPLES

FROM THE WORLD’S GREATEST MANUFACTURER

JEFFREY K. LIKER

CHALLENGE EVERYTHING….

• “All elements to be practiced everyday in a very consistent manner, not in spurts”

The Business of Principles- The TOYATA WAY

PROBLEM SOLVING(Continuous Improvement and Learning)

PEOPLE and PARTNERS(Respect, Challenge, and Grow Them)

PROCESS(Eliminate Waste)

PHILOSOPHY(Long- Term Thinking)

Organizational learning…

• Philosophy• Process right• People and partners building• Problem solving

“operational excellence” as strategic weapon…

5 step ‘Lean Manufacturing’

1. Defining customer value2. Defining value stream3. Making it flow4. Pulling from the customer back5. Striving for excellence

Cost, quality and service to be the BEST

Founders’ thoughts

• King of inventors of Japan- Sakichi Toyoda• Toyota way- genchi genbutsu (1926)• Toyota conglomerate- Keiretsu• Automation with a human touch and mistake

proofing- Jidoka/ autonomation• Hard work, perseverance, discipline- James

Watt• Management by Facts…

Kiichiro Toyoda

• “everyone should tackle some great project at least once in their life”

• Education from Tokyo Imperial University• Learning by Doing• Pillars of the Toyota Production System-

jidoka, just-in-time• Creativity, challenge, courage, commitment

and patience

Taichi Ohno

• One piece flow• Pull system• Kanban • “Shortening lead time by eliminating waste in

each step of a process leads to best quality and lowest cost, while improving safety and morale”

• Spirit of challenge- the acceptance of responsibility to meet the challenge

• “we accept challenges with a creative spirit and the courage to realize our own dreams without losing drive or energy. We approach our work vigorously, with optimism and a sincere belief in the value of our contribution”

• “we strive to decide our own fate. We act with self reliance, trusting on our own abilities. We accept responsibility for our conduct and for maintaining and improving the skills that enable us to produce added value”

• Kaizen- change for the better

• Kaikaiku- major revolutionary change

• Walk the actual path- to construct the value stream

• Takt- German word for ‘meter’

• Total Productive Maintenance- always a sense of urgency

Framework

• Quality• Cost• Delivery• Safety• Morale

JIT(JUST IN TIME)

PEOPLE & TEAMWORK

JIDOKA(IN STATION QUALITY)

CONTINUOUS IMPROVEMENT

• GENCHI GENBUTSU• 5 WHY’S•EYES FOR WASTE•PROBLEM SOLVING

TOYOTA WAY PHILOSOPHY

LEVELED PRODUCTION (HEIJUNKA)-STABLE-STANDARDIZE PROCESS- VISUAL MANAGEMENT

BEST QUALITY- LOWEST COST- SHORTEST LEADTIME

• Never be satisfied with inaction

• Question and redefine your purpose to attain progress

• 5S facilitates teamwork

• Sensei- mentors

• Total Budget Control System

• Muri- no value added beyond capability

• Mura- unevenness

“most businesses are 90% waste (muda) and 10% value added work”

Benefits of one piece flow

• Builds in quality• Creates real flexibility• Creates higher productivity• Frees up floor space• Improves safety• Improves morale• Reduces cost of inventory

TPS- Thinking Production System

• Pull system• Flow where you can pull, where you must• Learning to see• Heijunka- level out the workload• Andon- light signaling system• Jidoka- autonomation • Standard work chart• Fit customer demand into leveled schedule and

establish standard times for delivering different types of service

4 tools

1. Go and see2. Analyze situation3. Use one piece flow and Andon4. Ask “why?” 5 times

• Kentou- study drawing• Kentouzu- plural of drawing

Genchi genbutsu (refered as ‘Management by Walking Around’ first by Hewlett Packard)

Standardized work

• Takt time• Sequence of process• Inventory required

Visual control (Management by Sight)

AUTOCRATICTECH

NIC

AL S

TRU

CTU

REBU

REAC

RACY

COERCIVE ENABLING

ORGANIC

SOCIAL STRUCTURE

A3 reports

• State problem• Document current situation• Determine the root cause• Suggest alternate solution• Suggest recommended solution• Cost-benefit analysis

TPS- Respect for Humanity System

• Recruiting is 96% employees, 92% employers, 84% yellow pages, 47% personal contact

• Team development process (Blanchard)1. Orientation2. Dissatisfaction3. Integration4. Production

• Jishuken- voluntary study groups

• Hoshin kanri- policy deployment

• Horensu- to report, give updates periodically (a form of micro management)

• Thorough consideration in decision making

• Nemawashi- decision making to all options and rapid implementation

• Integrity and excellence

• Kozokeikaku- structure plan (K4)

“a picture is worth a thousand words”

“Meeting”

• Clear objectives prior to the meeting• The right people at the meeting• Prepared participants• Effective use of visual aids• Separate information sharing from problem

solving • The meeting starts and ends on time

• Hansei (relentless reflection) + kaizen (continuous improvement)= learning organization

• Pareto- the only statistical tool used in toyota technical center

• Point of cause (POC)

• Toyota Practical Problem Solving Process (20% tools, 80% thinking)

3 types of measures at TOYOTA

• Global performance• Operational performance• Stretch improvement metrics

“process orientation”

Hoshin kanri (policy deployment process) for stretching the improvement goals

Adapt-Develop-Sustain

• Value Stream Mapping- Material and Information Flow Diagram (Mike Rother and John Shook, 1999)

• Project review events (Hansei)

• Box- process, triangle- inventory

• Task time- TT, Time in System- TIS, Value Ratio- VR

• Core Value Stream

A Toyota leader’s view of the Toyota Production System

PEOPLE

TECH

NICAL

MANAGEM

ENT

PHILOSOPHICAL

TOYOTA LEADERSHIP MODEL

Group Facilitator

“You’re empowered!”

Builder of Learning Organizations

“Here is our purpose and direction- I will guide and

coach”

Bureaucratic Managers

“Follow the rules!”

Task Master

“Here is what to do and How- do it!”

Toyota LeadersBo

ttom

-Up

(Dev

elop

men

t)To

p-D

own

(Dire

ctive

s)

General Management Expertise

In-Depth understanding of Work

Supply chain need hierarchy

Learning Enterprise

Enabling Systems

Clear Expectations

Stable, Reliable Processes

Fair and Honorable Business Relations

Prog

ress

ing N

eed S

atisfa

ction

Regressing Need Satisfaction

Next Level of Improvement

Stability

Alternative Toyota Decision making methods

Time

Leve

l of I

nvol

vem

ent

Decide and Announce

Seek Individual Input,

then decide and announce

Seek group Input,

then decide and announce

Group Consensus, Management

Approval

Group Consensus with

Full Authority

Fallback (if consensus not achieved )

Preferred

Fallback (if consensus not achieved )

1. Initial Problem Perception(Large, Vague, complicated problem

2. Clarify the Problem

The “Real” Problem

3. Locate Cause/ Point of Cause

POC

4. 5- Whys? Investigation of Root Cause

Basic Cause and Effect Investigation

5. Countermeasure

6. Evaluate

7. Standardize

Toyota’s practical problem-solving process

Root Cause

---------------------------------

---------------------------------

Grasp the Situation

Cause Investigation

Policy deployment process (hoshin kanri)

Targets for Organization

TimeQualityCostInnovation

Executive Staff High-Level Plan

Improvement?Who?Method?Target?Time?

Manager/ Supervisor

Plan- Do

Work Plan by itemActionMeasurement Countermeasure

Work Team

Check

Improvement?Method?Result?Countermeasure?Target & Time?

All 3 Levels

Creating flow and PDCA

Create Flow(Act)

Counter Measures(Do)

Surface Problems(Plan)

Evaluate Results (Check)

Eliminate Waste

Kaizen workshops

• Phase I• Phase II• Phase III

Phase I- Preparation for the workshop

1. Clearly define the scope2. Set objectives3. Create preliminary current state map4. Collect all relevant documents5. Post a preliminary current state map in the

team room

Phase II- The Kaizen Workshop

1. Who is the customer?2. Analyze the current state

- Valued added- Non-Value added. What is pure waste?- Non-Value added, but Required (incidental work)

3. Develop future state vision4. Implementation 5. Evaluate: measuring performance

Phase III- After the workshop- Sustaining and Continuous Improvement

• Review the status of action items• Review process metrics• Discuss additional opportunities for

improvements• Continue to improve the process

Factors influencing Top Leaders in Lean vision

1. Ownership structure2. Promote from within3. Environmental pressures4. Experience with lean

Myth versus reality of TPS

What TPS is not

• A tangible recipe for success• A management project or

program• A set of tools for implementation• A system for production floor

only• Implementable in a short or mid-

term period

What TPS is• A consistent way of thinking• A total management philosophy• Focus on total customer

satisfaction• An environment of teamwork

and improvement• A never ending search for a

better way• Quality built in process• Organized, disciplined workplace • evolutionary

Why Changing Culture is so Difficult?

• Tip of the iceberg- Kanban, 5S, Charts, Teams, Andon, Slogans, Value Stream

Maps

• Immersed iceberg- Culture Change (Involve people in continuous improvement to eliminate waste

through the Toyota Way)

13 Tips for Transitioning Your Company to a

Lean Enterprise

1. Start with action in the technical system; follow quickly with cultural change

2. Learn by doing first and training second3. Start with value stream pilots to demonstrate

lean as a system and provide a “go see” model

4. Use value stream mapping to develop future state visions and help “learn to see”

5. Use kaizen workshops to teach and make rapid changes

6. Organize around value streams7. Make it mandatory8. A crisis may prompt a lean movement, but

may not be necessary to turn a company around

9. Be opportunistic in identifying opportunities for big financial impacts

10.Realign metrics with a value stream perspective

11.Build on your company’s roots to develop your own way

12.Hire or develop lean leaders and develop a succession system

13.Use experts for teaching and getting quick results

Thank you…..!