Toyota President Speaks to Toyota Production System - Part 2

Photo source: Toyota

Are you familiar with the Toyota Production System (TPS) and how it was central to the success Toyota still enjoys today?

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Toyota was one of the few auto makers to deliver a quarterly profit in 2020. Recently their President, Akio Toyoda, shared his view on the Toyota Production System and how that is what makes them Toyota.

In this 2-part series, we’ve summarized below Toyoda’s perspective of TPS as he kicked off a new TPS Leaders training program as shared in the Toyota Times.

Part 1 shared Akio’s thoughts on the meaning and history of TPS and the true purpose of process improvement focused on making someone’s work easier and safer. 

In part 2 below we’ll review how Akio sees concepts like Just-in-Time, achieving lead times, and Genba (place where work is done). Read more below.

4. How Akio sees Just-in-Time

During his presentation to Toyota employees, Akio shifted to explain the other pillar of TPS, Just-in-Time.

To illustrate this concept, Akio turned to Sakichi’s son, the founder of Toyota Motor Corporation, Kiichiro Toyoda, who introduced and implemented Just-In-Time. A phrase that is commonly associated with this concept is: “Provide what is needed, when needed, in the amount needed”. On this concept, Akio offered a unique explanation as demonstrated in his conversation with an employee below.

Akio: What comes to your mind when you think about Just-in-Time?

Participant C: Provide what is needed, when needed, in the amount needed.

Akio: That’s correct, but what is the practical meaning of it?

Participant C: Um…

Akio: Considering a “what is needed when needed” approach, to respond quickly to customer needs, there would need to be a lot of inventory, right?

Participant C: Normally, yes.

Akio: One finished vehicle consists of about 30,000 parts.

Participant C: Right…

Akio: So, it would follow that for a production line to flexibly produce orders quickly, a tremendous amount of inventory would need to be present, right?

Participant C: But if we know and can meet what customers want…

Akio: Who do you mean by “customers”?

Participant C: Each downstream process… or our final end users.

Akio: But we sell around 10 million new vehicles annually, and that means we have the same number of customers. How can we understand what is needed by each specific customer? It would be impossible to do. So what do we do? We have to have a lean operation in place to detect abnormalities right away and stop what is in the pipeline so that we can make improvements quickly.

And that’s why we need just in time. Granted that this is my way of understanding it, but I think the “tool” or “concept” that helps make this easier to understand is “lead time”

At Toyota, a common term for the next process, whether it be in manufacturing or in an office workflow, is “downstream process” or “Ato-Kotei” in Japanese. Those in the downstream are considered a “customer.” When thought of this way, those engaged in the work will try their best to avoid providing their downstream customers with defects. If this mindset is adopted and ensured in each process, the result is that there will be no chance that the final end users receive something defective.

In addition, the workers also start thinking about how they can contribute to making the work at the next process easier, making adjacent processes collaborate to make improvements. The result from those efforts is higher productivity, and how it should be achieved, according to TPS.

5. Achieving lead time at Sushi restaurants?

Next Akio shared an example related to Sushi restaurants, known for the freshness of their products and their ability to take orders and fulfill them quickly. At authentic Sushi restaurants the finished orders are not just waiting in front of the chef. After you place your order, the chef takes out a slice of the prepared raw fish, cuts it to size, combines with rice to make the sushi piece and delivers it to you. The point is they keep lead time as short as possible.

In Toyota world, it’s not possible to prepare every specification in advance for 10 million customers. The key then is trying to shorten lead time. Akio states, “Therefore, similar to the Sushi example, the ideal for Toyota would be to manufacture vehicles just after an order comes in from customers, by having preparing parts on hand to quickly assemble and then deliver to customers, but that is not realistically possible. That is why Toyota believes and places emphasis on continued efforts to shorten the lead time at each process.”

6. “Genba” (place where work is done) matters more than titles

After Akio completed his explanation, one participant raised his hand and shared a comment and below is Akio’s response.

Participant: Thank you very much for your time today. I’ve been at Toyota for 20 years now, and this was my first opportunity to be this close to you, so I’m pretty excited. When I had just joined the company, my general manager taught me that “work is about to making life easier for others.” Now, 20 years later, hearing your view on Jidoka, or looking to take unnecessary burdens from others around you, I feel like everything has come together in this moment.

Akio: I would often face challenges when doing kaizen activities together with dealer staff members.  Whenever there were issues, the mechanic or the sales staff at the frontline were bothered most by it. Though they would share issues with upper management through daily reports, often it was not really understood.

I asked them “Why didn’t you report the problem to the sales manager earlier?” To which, the sales manager replied: “You are definitely from Toyota -- that’s exactly what I said at the regularly held sales manager’s meeting!”

I replied “But the sales manager’s meeting is held once a week only, right?” Then, I met with a sales executive at the dealer, and asked the same thing – to which he replied “That’s exactly what I always request at the regular executive meeting!” But as you can imagine, that executive meeting is held only once a month.

So this is partly why I decided to abolish certain titles. When it comes to implementing just-in-time processes, the person in charge or subject matter expert is the most important. A daily report may be more beneficial than other reports or meetings. As a title gets higher, the frequent may be reduced to be weekly, monthly, and annually.

They say people with titles make decisions, but the speed of kaizen gets slowed down there…So please don’t take 20 years to figure it out (wink). Make it a daily basis. Think about how much more impact it will have.

In this way, Akio explained that abolishing certain titles in the hierarchy of Toyota, including executive vice presidents, aimed to speed up the kaizen process. Shortening lead time for customers, making existing work processes easier for colleagues, and improving the quality of the time spent for work for the sake of each member and the member’s family – that is what TPS is about.

As we saw in part 1 of this 2-part series, TPS was founded on the idea of “doing things for others”, an idea that was inherited early on in Toyota’s history and continues to be practiced today. When Akio talks about bringing back ‘what makes us Toyota’, he is really talking about this value of doing things for others, the true heart of TPS.

Looking for more information on the Toyota Production System? Join us in November to hear from Errette Dunn, Co-founder and CEO of Rever, Inc. on How Toyota really works and the secrets behind TPS based on his experience. More info below: