Toyota President Speaks to Toyota Production System (2 Part Series)

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

APICS Milwaukee Chapter serves the supply chain community with education and information needed to compete in today’s world. 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 will share 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. Read more below.

1. Sakichi Toyoda looked to ease his mother’s burdens.

The purpose of the training program is for Toyota’s management leaders who don’t work at manufacturing frontlines to gain a deeper understanding about TPS to help the company accelerate its efforts to bring back the essence of “what makes it Toyota” as it looks to completely redesign Toyota for the future.

Akio asked the group what were the two key concepts deeply rooted in Toyota since its foundation. The right answers were presented of “Just-in-Time” and “automation with a human touch”, or “Jidoka”. He shared a story to help the group understand Jidoka, by first showing the automatic loom invented by Sakichi Toyoda…

Sakichi was the son of a carpenter. It was said that he read various books and studied every day, thinking about ways he could make a contribution to society. Then, one thing came to mind while the young Sakichi was thinking about his mother, and how she toiled to weave fabrics every evening and late into the night. He wondered if there might be a way to ease her burden. That was the focus of young Sakichi’s attention.

It may be well known that Toyota started from the invention of a wooden hand loom, but the background of why Sakichi dared to invent such a machine may not be known as much.

Back when Sakichi developed his first automated loom, people had to use both hands to control the threads of warp and weft. His invention allowed for his mother to operate a loom using only one hand. His invention also helped improve the quality, increasing overall efficiency and dramatically improving productivity.

Often at Toyota, TPS is considered the process of making things efficient, but Akio said the purpose should be to make someone’s work easier.

2. Improving productivity was not the main purpose

Then Akio directed the participants to the next machine, called the “Type G automatic loom,” the machine that helped drive a drastic full model change of Toyota’s business. Automatic looms used back then were always monitored by one operator with a mindset of “one person, one machine”. People were the guard of each machine. This machine was able to detect such abnormalities at a time when there were no “sensors”.

With this automatic loom, Toyota was able to secure the capital required for it to shift its business model from an automatic loom manufacturer to a car manufacturer. This was enabled because a world-leading automatic loom company in the United Kingdom asked Toyota to sell this automatic loom technology to them.

An important point was that the old process created a lot of dust that often damaged workers lungs. The invention developed by Sakichi and his colleagues included a new feature that made it not only easier, but safer for the workers by automatically bringing thread end out on the pipe to where needed when the thread had been cut off.

When we say “invention”, it may sound like something very advanced, but it was actually the result of Sakichi simply exploring a desire to do something for his team members at the manufacturing frontlines who were suffering damage in their lungs. He aimed to create a system that would determine what the abnormalities were caused by and then coming up with ideas to prevent or stop such abnormalities. As a result, productivity improved. It’s not the other way around. It’s not that he did all this just to improve productivity.

3. How Akio sees Jidoka (automation with a human touch)

Akio shared that he sees Jidoka as being centered on people. It’s about thinking as if you were the one working there. You can’t just make orders to improve efficiency or reduce resources while you are in a safe zone and not at the frontline.

There’s also this idea about adjusting the work to match the full output of one manpower (pursuing Ichi-nin-ku in Japanese). This concept of “Ichi-nin-ku” means the amount of work, the workload or capacity, that one worker can or should accomplish in a day. Akio continued his explanation on this with the following example:

We all only have 24 hours in a day. You don’t get more hours, like 48 hours in a day, when you are busy.

This 24 hours is a condition equally applied to all. That time includes family and a private time, but a lot of it is devoted to work for a company.

Knowing this, supervisors must make the work being done by team members as meaningful as possible. That is what Toyota’s manufacturing frontlines have been pursuing.

In other words, increasing work that truly adds value while reducing work processes that are redundant or cause team members to wait.

So my personal take on TPS is that it is “centered on people,” and this is the mindset I would like for all of you to take with you.

One of the ideas embraced within TPS is an obsession to eliminate things deemed unnecessary or that interrupt work, such as waste, overburden, and unevenness. However, that might lead people to imagine harsh working conditions where no rest is allowed. But Akio shared that knowing that TPS originates in the idea of making work for someone like your own mother easier, people might come to form a different impression of what it is really about. Similar to what Sakichi pursued, it is about creating more free time for workers by eliminating waste in work processes to reduce overtime. When the value of a worker’s time is realized, work is adjusted to maximize the output possible from manpower.

In part 2 of this series we’ll share how Akio sees concepts like Just-in-Time, achieving lead times, Genba and overall doing things for others.

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:

Top Reasons to Choose a Supply Chain Career

Are you considering making a career move into the wonderful world of supply chain?

APICS Milwaukee Chapter serves the supply chain community with education and information needed to compete in today’s world. We’ve highlighted below the top reasons to consider making a career move into supply chain.  

What is Supply Chain? Our partner organization, The Association for Supply Chain Management (ASCM) recently shared that supply chain is, “A connected system of organizations, activities, information and resources designed to source, produce and move goods and services from origination to end customer. Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage.”

Top Reasons to Choose a Supply Chain Career

1. Career Openings in Supply Chain Management

Per SupplyChainGameChanger, “The talent and skills gap affects the manufacturing and supply chain industries more than almost any other occupation in the U.S. As more workers reach retirement age, the burden of the supply chain skills gap will undermine the future of supply chain management.”

Research from the Supply Chain Talent Academic Initiative found that demand for supply chain professionals exceeds supply by a 6 to 1 ratio, according to Nick Little, Assistant Director of Executive Development Programs at Michigan State University’s Eli Broad College of Business.

2. Variety of Positions within Supply Chain

Career choices within the supply chain field are spread across a large spectrum, leaving you with many different roles to choose. Places of employment may also vary. For example, you could choose to work for a big corporation, small business, local or federal government entity or a nonprofit organization. The possibilities are endless. Here’s a list of some possible career paths to choose from:

  • Supply Chain Manager

  • Strategic Sourcing Manager

  • Operations Manager

  • Buyer

  • Purchasing and Inventory Clerk

  • Procurement Manager/Specialist

  • Commodities Manager

  • Category Manager

  • Supply Chain Planner

  • Demand Planner

  • Production Planner

  • Capacity Planner

  • Logistics Manager

  • Transportation Manager

  • Reverse Logistics Manager

  • Inventory Controller

  • Warehouse Manager

3. Competitive Salaries and benefits in Supply Chain

ASCM’s 2020 Supply Chain Salary Survey Report showed:

SALARIES ARE SOLID: Supply chain professionals with a bachelor’s degree reported a median salary of $78,750, which is 24% higher than the national median salary. Those with an associate degree reported a median salary of $67,000, which is also much higher than the national median salary.

OPPORTUNITY FOR ADDITIONAL EARNINGS AND SIGNIFICANT RAISES: 91% of respondents received some form of additional cash compensation (bonus, profit sharing) to their salary. The average raise increase received in 2019 was 4.7%, which is higher than the national average of 3.5%.

GENDER GAP CONTINUES TO NARROW: For the 2nd year in a row, respondents under 30 reported the same median salary regardless of gender. Women 30-39 reported a median salary that is 93% of what men earn. Although still not acceptable, it’s higher than what women on average nationally earn which is 82% of what men earn.

BENEFITS ARE GOOD: Almost three quarters of supply chain professionals are offered paid family/medical leave and more than 80% receive three weeks or more of vacation time. The majority (79%) of respondents are satisfied with the quality of their benefits.

Overall supply chain professionals tend to be happy with their careers with nearly all (88%) reporting they have a positive outlook.

Looking for more information on supply chain careers and tools? Join us in October for expert led instructor Certified Production, Inventory and Management (CPIM) Part II classes for globally recognized certifications in in-person and virtual for CPIM Part II (Starts 10/19), Demand Driven Planner Certification Workshop (10/22 & 10/23), and a FREE webinar to learn more about the Port of Milwaukee on 10/22!

Foreign Trade Zones

Are you an importer or exporter looking for opportunities to better manage duty fees?

APICS Milwaukee Chapter serves the supply chain community with education and information needed to compete in today’s world. Foreign Trade Zones (FTZ) can provide benefits to help manage duty fees.

What is an FTZ?

FTZ’s are designated sites considered outside of U.S. Customs territory for specific purposes. Typically FTZ's are located within the warehousing or manufacturing facilities of organizations seeking FTZ advantages. Merchandise may be brought into an FTZ and stored or processed there without being subject to the customs laws of the United States and oversight of the zone operations is the responsibility of U.S. Customs & Border Protection (CBP).

FTZ’s are secure areas under CBP supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States' version of what are known internationally as free-trade zones. It is the intent of the U.S. foreign-trade zone program to stimulate economic growth and development in the United States. In an expanding global marketplace there is increased competition among nations for jobs, industry and capital. The FTZ program was designed to promote American competitiveness by encouraging companies to maintain and expand their operations in the United States.

Port Milwaukee outlines the following savings and benefits available through Port Milwaukee's FTZ program:

  • Overview & Benefits: Fundamentally, the FTZ designation provides the ability to defer, reduce, or eliminate Customs duties on imported goods admitted to a zone. Among a variety of other benefits, the highlights are:

  • Deferral of Duties: As a rule, Customs duties are paid when the merchandise enters into U.S. Customs territory. Since the FTZ is considered outside of Customs territory, the duties are delayed until the products exit the zone. This provides cash flow savings and allows companies to keep funds accessible for operational necessities while the merchandise remains in the zone. Unlike bonded warehouses, there is no time limit on the length of time that merchandise can remain.

  • Reduction of Duties: Operators of Foreign Trade Zones are allowed to elect the zone status of the merchandise upon admittance to the zone. This status determines the duty that will be applied to the foreign merchandise when it exits the zone. Operators may elect the duty rates that apply to either the foreign inputs or the finished product produced in the FTZ, whichever is lower.

  • Elimination of Duties - Exports & Scrap: For merchandise that is produced and re-exported or scrapped material that is wasted in production within the zone, the products never technically enter the U.S. market. Therefore, Customs duties are completely eliminated.

  • Weekly Entry: For companies that file a significant volume of Customs entries, a substantial way to save is through filing only one entry per week - rather than filing one entry for each shipment as is normally required by federal law. This results in a reduction in the overall amount due for Merchandise Processing Fees (MPF) owed for each entry.

To learn more about the FTZ program and possible benefits for your organization, please contact FTZ 41 Administrator Jazmine Jurkiewicz at 414-286-8133 or via email at [email protected].

APICS Milwaukee will also be hosting a FREE webinar to learn more about the Port Milwaukee on October 22nd from Noon-1:00 PM CST. Register today!

While the world around us is always changing, it’s imperative that supply chain managers keep learning and adapting to be successful. At APICS Milwaukee, we are here to help you with the education and information needed to remain competitive.

Smart Technology Needs Smart Supply Chains

Is your supply chain keeping up with technological improvements? Do you have a weak link that is impacting your overall delivery?

APICS Milwaukee Chapter serves the supply chain community with education and information needed to compete in today’s world. Supply chain managers need to ensure that their suppliers are able to adapt and adopt new technologies.

Manufacturers have been investing in increased automation and less dependence on human intervention, especially based on the impacts of the global pandemic disrupting production and supply chains.  As stated well by IOTTechNews, “The smart revolution may be happening more rapidly in manufacturing. However, it is important for supply chains to ensure that every moving part also keeps up with digitalization. There is little value in being able to manufacture products efficiently only to fail in the handling and delivery. The whole supply chain must step up.”

What can you do to ensure your supply chain can keep the pace with technology? Gartner shared their top 8 trends supply chain technology trends for 2020 summarized below.

  1. Hyperautomation: A framework to mix and match a vast array of technologies in the best possible way, such as historic legacy platforms with recently deployed tools and planned investments. The term means different things for different organizations, so supply chain leaders must first find their individual definition. If deployed correctly, hyperautomation can encourage broader collaboration across domains and act as an integrator for disparate and siloed functions.
  2. Digital supply chain twin (DSCT): DSCT is a digital representation of the physical supply chain. It is derived from all relevant data across the supply chain and its operating environment. That makes the DSCT the basis for all local and end-to-end decision making.
  3. Continuous intelligence: One of the biggest opportunities for supply chain leaders to accelerate their organizations’ digital transformation. It leverages a computer’s ability to process data at a much faster pace than people can. Supply chain leaders — or other systems — can look at the processed data, understand what is happening and take action immediately.
  4. Supply chain governance and security: This is an increasingly important macro trend, as global risk events are on the rise and security breaches impact companies on both the digital and physical levels. “Gartner anticipates a wave of new solutions to emerge for supply chain security and governance, especially in the fields of privacy as well as cyber and data security,” Titze says. “Think advanced track-and-trace solutions, smart packaging, and next-gen RFID and NFC capabilities.”
  5. Edge computing and analytics: The rise of edge computing, where data is processed and analyzed close to its collection point, coincides with the proliferation of Internet of Things (IoT) devices. It’s the technology needed when there is a demand for low-latency processing and real-time, automated decision making.
  6. Artificial intelligence (AI): AI in supply chain consists of a toolbox of technology options that help companies understand complex content, engage in natural dialogue with people, enhance human performance and take over routine tasks. Currently, AI helps supply chain leaders solve longstanding challenges around data silos and governance. Its capabilities allow for more visibility and integration across networks of stakeholders that were previously remote or disparate.
  7. 5G Networks: Compared to its predecessors, 5G is a massive step forward with regard to data speed and processing capabilities. The ubiquitous nature of 5G boosts its potential for supply chains. For example, running a 5G network in a factory can minimize latency and enhance real-time visibility and IoT capabilities.
  8. Immersive experience: Technology such as virtual, augmented and mixed reality has the potential to radically influence the trajectory of supply chain management. Those new interaction models amplify human capabilities, and companies already see the benefits in use cases like onboarding new workers through immersive on-the-job training in a safe, realistic virtual environment.

While the world around us is always changing, it’s imperative that supply chain managers keep learning and adapting to be successful. At APICS Milwaukee, we are here to help you with the education and information needed to remain competitive.

Looking for more information to improve your supply chain, logistics and distribution efforts? Join us in October for expert led instructor classes for globally recognized certifications in in-person and virtual for CPIM Part II (Starts 10/19), CSCP (Starts 10/7) and CLTD (Starts 10/7). Learn more…

Making Supply Chains Simple – Part 1

Author: Steve Christensen, CEO – North America, b2wise

Have you wasted time and money producing a forecast or trying to optimize your supply chain?

APICS Milwaukee Chapter is excited to share this 2-part article series from Steve Christensen, CEO for b2wise in North America. Steve is a certified trainer in Demand Driven methodology and he shares his thoughts on making supply chains simple in this 2-part article series.

Part 1 – Supply Chains Are Not Linear

Supply Chains are often described in linear terms.  Step 1, then step 2 and so on.  From vendor to plant to distribution to the customer.  Each of these steps are directly observable, measurable, timed and cost.  Just ask a cost accountant.

You can draw a line through each individual step and stop along the way that your vendors and employees take to create products that fulfill your customer's demand.

Simple.  Right?  No.  It is not that simple. 

Supply chains leaders experience first-hand the seemingly infinite number of things that can, and do, go wrong.  Daily.

Rarely, if ever, is a disruption caused by just one thing. Never does that disruption cause just one more problem.  Consequently, three immutable or unchanging laws of supply chain have evolved over the past 50+ years:

  1. Service levels are always too low,
  2. inventory is always too high and
  3. the forecast is always wrong.

Call ‘Em Like You See ‘Em

You’ve been in supply chain long enough to know just how complex it can be.  There are no simple answers when the problems are complex. 

But, did you know you’ve been using a linear solution, the exact opposite of what you require, to try and solve those complex problems?

To help you see why let’s review the differences between Linear and Complex Systems.

  • Linear systems can be understood by studying the individual part; the whole is the sum of its parts.

  • Complex systems can only be understood by mapping the dependencies and interconnections.

A supply chain is more than simply the sum of its parts.  A supply chain is obviously a complex system based upon the number of vendors, employees, steps, processes, SKU's, locations, and immeasurable variables, like your fickle customers, that impact your business every single day.

If you need proof of the fact that your supply chain isn’t linear; look no further than the results you always deliver that created the 3 immutable laws referenced above.

Your Customer, Vendors and Employees are Nuts: Stable v. Dynamic

Okay, probably not nuts; but certainly not stable.  Stable customers order the exact quantity at the exact time as foretold by your super-smart forecast.  Vendors would never deviate their quantity, quality, or timeliness of deliveries to you.  Employees, and even equipment, would never change their quality or rate/throughput.  Heck, even the weather would cooperate.

We know we don’t live in that world.  So, let’s compare the predictability of linear v. complex systems.

Linear systems can achieve a stable state because they are linear and the sum of their parts.

Complex systems are dynamic and no prediction remains valid for very long; our supply chain experience at a single point in time is the existing tension between the multitude of influencing factors. 

Reference the unstable cast of characters involved in your supply chain for a refresher on why your supply chain is clearly a Complex System.  You also probably just realized the amount of time you’ve spent working with and using forecasts to Predict your stable behavior.  Now your 3 immutable results have a little bit better perspective.  Don’t they?

Pinballs and Teeter Totters

When you solve a problem, you know that a relatively small change can make a huge difference.  That’s because you are operating in a Complex System.  The output of Linear v. Complex systems is like comparing Pinball machines to Teeter Totters.

The output of a linear system is proportional to its inputs.  The harder you pull the lever back and let it spring forward the faster you are going to propel the pinball into play.

The output of nonlinear system is governed by a few critical points – the lever point phenomena.  Thanks to 3rd Century BC scientist Archimedes we have the Law of the Lever.  Here, the longer the lever the lower amount of effort required to lift the same weight.

Therefore, your supply chain is neither a chain nor a linear system and the first step in making your supply chain simpler is to align your tools and process to realize your supply chain is a Complex System.  With the proper perspective and tools you will reverse the first two laws about Service and Inventory by replacing the law that relies upon a forecast.

In part two next week, we will examine how you can know the unknowable since although you can’t predict a complex system, you can focus on actual customer demand to synchronize the behavior of your supply chain. 

Looking to learn more about supply chains and developing a simpler Demand Driven approach? Join us on September 24th for a FREE webinar on the Basics on Demand Driven Adaptive Enterprises. For additional information, contact us via our website at: or via email at: [email protected].