Let’s talk about Kanban, the second pillar of TPS after JIT

The core of lean manufacturing, kanbans use the “pull” system to prevent waste by creating a cyclical relationship between the consumer, supplier, and manufacturer. The user of a material requests or “pulls” material from the supplier, as they need it. They do this using some form of notification.  Product consumption information is sent from the user upstream to the supplier so that consumed materials can be restocked as needed. Ultimately, this eliminates overproduction and waste from the previous unnecessary use of materials and machinery.

Roughly translated as “sign” or “visual card,” a kanban can be any device that communicates the need for an item. Kanbans ensure that only what is needed is ordered and in the proper amount.

The first kanbans, signboards, were used to transfer inventory information between production processes. Taiichi Ohno, former vice president of Toyota Motors, designed the concept in the mid 1950s after observing the operating system of an American supermarket. He was taken with the concept of only supplying what was needed, when it was needed, and how greatly this prevented unnecessary production and waste.

Considered one of the most price accessible means for inventory control, kanbans exist in manual and electronic forms (anything from a plastic container to a software program). It reduces unnecessary inventory, eliminate shortages, and cuts costs. Bringing improvements in price and quality, kanbans exists in three types: supplier, in-factory, and production.

• Supplier kanban: Alerts parts suppliers as to what specific production parts are needed and how many.
• In-factory parts-retrieval kanban: is used between factory processes to manage inventory.
• Production kanban: Indicates operating instructions for factory lines.

Successful implementation requires that four rules be followed:

• The production process works against the grain, starting with the consumer order and working it’s way back to manufacturing to eliminate any excess materials.
• Manufacturers must only produce what has been ordered in the exact order and quantity it received in the request.
• Products must remain 100-percent defect-free to continue down the production line.
• Kanbans should be gradually decreased over time to uncover and correct production areas needing improvement.

Check more in QualiPedia

Electronic Kanban Helps TRANE Stay Lean

More than 80 percent of the firm’s purchasing is done online using an electronic kanban system.

TRANE Residential Systems, is a lean organization that knows about growth through innovation. In 1931, TRANE came up with the radical idea of using technology to provide relief from the summer heat. The 1938 launch of the Turbovac, the industry’s first hermetic, centrifugal refrigeration machine, fundamentally changed the concept of air conditioning in large buildings. This was the beginning of a long chain of innovations that eventually led to TRANE’s current CenTraVac, the industry standard for large commercial air conditioning systems. This energy-efficient system with its superior performance in minimizing refrigerant emissions, has earned TRANE the “Best of the Best Stratospheric Ozone Protection Award” from the U.S. Environmental Protection Agency.

The lean metrics are impressive.

As part of a Six Sigma project, TRANE Residential identified Ultriva, a lean manufacturing software solution, as part of its control plan. TRANE has been using the software for more than a year, and the work-in-process (WIP) and the raw and in-process (RIP) inventory are down more than $4 million. More important, that improvement has been sustained. More than 80 percent of the firm’s purchasing is done online in real time with suppliers using Ultriva’s electronic kanban pull system.

“The company now has total visibility of what’s where—something I’ve never been able to do with any MRP [material requirement planning] system, and I’ve worked in many,” says John Young, materials and supply chain leader of TRANE Residential Systems in Vidalia, Georgia. “All parts that go from our warehouse are kanban pull with manufacturing lines, and our entire fabricating department, where we make lots of stampings, is run off of this system—giving us tools such as capacity management as well as kanban pull.”

TRANE’s lean initiative

The lean initiative at this particular plant has been in process for about two years, says Young. “However we’ve had deep roots for more than ten years in demand flow technology and going so far as to have true mixed model flow production assembly lines during that time,” he notes. “Our entire plant-level team is, by function, a lean leader, including the plant manager. From a corporate level within our division [TRANE Residential Systems]—it’s mimicked similarly in that all functions are expected to be the lean leaders of our initiative. From a higher level of Ingersoll-Rand, even our CEO participates in two kaizen events a year at different plants, so it’s becoming part of our culture for sure.”

In the past, TRANE used differing types of kanban systems with sporadic success across TRANE Residential locations. There was no standardization and in most cases the kanban systems would not run correctly. Cards were lost, there was no known way to resize efficiently, and there was no visibility of kanban being in process with suppliers. Ultriva became a solution because of the organization’s desire to implement kanban.

“I wanted some technology enablers to allow us management tools as well,”  explains Young. ”We came across Ultriva as a solution due to a Six Sigma project team I was helping lead on material planning improvements.”

Conditions needed improvement

TRANE was facing a variety of problems: there were too many stock outs, too much material, no parts visibility with suppliers, and no parts-in-transit visibility. There was also no ability to measure on-time delivery or have real-time receipts with suppliers.

“[TRANE Residential] needed poka-yoke on receiving processes and material control needs,” recalls Young. “We needed access to the data to address increases and decreases in demand for kanban systems, and there had to be a supplier portal to have visibility into our shop floor. All this was needed along with the ability to run MRP orders the same as kanban, but just as one-time orders.”

Several electronic kanban software programs were considered, including a home-written one that was being used for internal fabricated parts in the Tyler facility. “In the FMEA [failure mode effects analysis] of our Six Sigma project on material planning improvements, Ultriva was able to move almost all of our highest ranking issues to non-issues through poka-yoke or minimal issues through its superior methodology,” says Young.

In April 2008, TRANE Residential streamlined its purchasing system as well as its internal management of the fabrication department, which made capacity management more visual. The company officially moved to consumption-based replenishment purchasing using real-time bar-coded receipts with poka-yoke (to prevent double ordering or double receiving). The company now has total closed-loop procurement internally and externally through kanban systems, producing a much cleaner value-stream mapping process.

Specific benefits of consumption-based replenishment:

• $4.7 million in material savings through the successful implementation of the control plan for the companies Six Sigma project
• $243,000 savings in 90 days (pilot period)
• Increased turns from low single digits to 25+ and is on track to hit 33 by the year’s end (measured as COGS)
• Stock-outs with no visibility as to why its gone
• When there is a stock-out, the company sees it coming and is certain as to the root cause after only minutes of data analysis.
• On-time-delivery metrics for suppliers are now available, none previously existed.
• Transit lead time metrics (impossible in other systems)

“We have a Fab Supermarket, too, that we manage through our electronic kanban system,” notes Young. “These parts have been reduced more than 50 percent in the past year. We have a true way to measure supplier on-time delivery. We never really could before. And this can be for any kanban loop. So even internally we can measure and adjust. Based on our running a successful pilot here in Vidalia more than a year ago, we chose this to be a solution at all Trane RS [Residential Systems] plants, and the other three sites are in process of implementing now.”

Lean technology providing a competitive advantage

The electronic kanban system is utilized within the entire supply chain across the TRANE Residential division, and implemented in more than 85 percent of Vidalia’s spending. All sites within TRANE Residential are expected to be on the system within the next year and a half.

“This [system] provides a competitive advantage in that we are able to see down to very granular levels of details, what’s happening in our supply chain,” Young explains. “This analysis tool allows a manager to truly zero in on root cause and remove emotions from analysis, and drive data-driven decision making. Being able to have full visibility into our supply chain allows us to react to unforeseen circumstances better, react to demand shifts, minimize impact to our financial stakeholders, as well as give realistic expectations to internal and external customers.”

Ultimately, this lean technology solution has become a major pillar of TRANE’s rapid improvements, both in the supply chain and in internal processes. “The technology is an absolute enabler and makes improvement sustainable; and it allows us to more rapidly identify and execute on improvements, which of course is the key to lean: continuous improvement,” says Youn

From Thomas R. Cutler in Quality Digest

Because lots of you are looking for a new engine to power your expectations. The Scuderi Engine

The Scuderi Engine cleared another major development hurdle last week after engineers successfully fired the engine for the first time, achieving the split-cycle engine’s revolutionary concept of firing after top dead center.

(To listen to a podcast about the Scuderi Engine running on gasoline, visit www.ScuderiEngine.com)

Engineers at the independent laboratory building the engine will continue further testing and adjustments for the next several weeks in order to fine tune the engine so it can reach its maximum efficiency levels. Engine maps, test data and other performance measurements are being made available to the global automotive community under non-disclosure agreements.

The one-liter, naturally aspirated gasoline prototype potentially produces up to 80 percent fewer toxins than a typical internal combustion engine. When fully developed with its turbocharged and Air-Hybrid components, the engine is expected to achieve significant gains in fuel efficiency — the most since the inception of the Otto cycle over 130 years ago. The original Scuderi Engine was designed and invented by Carmelo Scuderi (1925-2002).

Scuderi split-cycle technology is significant because it gives automotive OEMs an immediate solution for complying with higher emissions and efficiency standards going into effect around the world — without having to make large investments to modify current production processes. The Scuderi Group expects further advancement of the technology once the greater engineering community begins working with the engine, making their own modifications that will most likely take the efficiency to even higher levels.

“This marks another great moment for the engine and our world-class team working on its development,” said Sal Scuderi, president of the Scuderi Group. “It’s great to be able to share this milestone with those who have been following our development and who have showed overwhelming interest since we first introduced this concept and design over three years ago. Now that we have reached this point, we strongly encourage automakers to take advantage of the opportunity that the Scuderi Engine presents to produce more fuel-efficient engines.”

The Scuderi Engine is a split-cycle design that divides the four strokes of a conventional combustion cycle over two paired cylinders: one intake/compression cylinder and one power/exhaust cylinder. By firing after top-dead center, it produces highly efficient, cleaner combustion with one cylinder and compressed air in the other. Unlike conventional engines that require two crankshaft revolutions to complete a single combustion cycle, the Scuderi Engine requires just one. Besides the improvements in efficiency and emissions, studies show that the Scuderi Engine is capable of producing more torque than conventional gasoline and diesel engines.

With the naturally aspirated engine up and running, the Scuderi Group and its independent laboratory continue to work on the next prototypes. Completion of the turbocharged Scuderi Engine and the Scuderi Air-Hybrid are expected in 2010.

About The Scuderi Group

Based in West Springfield, Mass., USA, with offices in Frankfurt, Germany, the Scuderi Group is a research and development company focused on proliferating its technology through R&D and licensing. Its revolutionary Scuderi Engine technology, when fully developed, is expected to be the most significant improvement in engine efficiency in over 130 years. The Scuderi Group’s global patent portfolio contains more than 200 patents including 72 issued in more than 50 countries. For more information call 1-413-439-0343 or visit www.ScuderiEngine.com.

Strategic Vision Inc. recognizes the efforts coming from Detroit

(Strategic Vision: San Diego) — Volkswagen of America and Ford Motor Corp. were recently announced as full-line corporate leaders in Strategic Vision Inc.’s (SVI) Total Quality Index (TQI). Across their various brands, both corporations are consistently producing vehicles judged high in perceived quality and emotional delight, resulting in models that customers can love. Volkswagen of America also had the greatest number of TQI leaders across the segments being measured than any other brand: Rabbit, Jetta, CC, New Beetle, Tiguan, and Audi A4. Ford has Focus as the leader in the popular Small Car segment.

The TQI asks buyers to rate all aspects of the ownership experience from buying and owning to performance and driving—much more than simply counting problems. Results from studies that measure the number of problems or the overall satisfaction of a vehicle do not measure the customers’ commitment to, advocacy for, or loyalty to their vehicles accurately. “In today’s difficult market, the difference between products that generate consideration, build brands, and increase sales versus those that do not is often how much delight and love the product generates with its customers,” says Darrel Edwards, Ph.D., chairman of Strategic Vision.

In a recently published survey conducted by another research company that only counted problems, MINI was rated the worst quality brand. However,  in Strategic Vision’s most recent research study, which examines the entire ownership experience and MINI owners’ perceptions of quality, from styling to performance, including what went wrong and what created delight, MINI is the highest rated brand in total quality in its price category. Therefore, it is not a surprise that MINI was one of the two brands to increase sales during last year’s start of the U.S. and automotive recession. “When you have a product worthy of love, customers will come,” says Alexander Edwards, president of SVI.

The past 12 months have been rough for domestic manufacturers as constant negative news is delivered, bankruptcies are filed, and the mantra, “Why won’t Detroit build quality vehicles that people want to buy?” is stated again and again. However, it is important to note that four of the top ten-selling vehicles in the first quarter of this year were domestics. Ford, General Motors, and Chrysler have all scored well with customers in total quality and in sales.

General Motors had four segment leaders: Pontiac G8, GMC Envoy, Yukon XL and the Chevrolet Corvette (which was the highest rated TQI of any vehicles this year). Customers report that these vehicles deliver what they want from each segment. These leaders have delightful interiors, performance, and styling, providing customers an added sense of security, confidence, fun and excitement. It’s also important to note that Saturn and Pontiac brands performed well in TQI across most of their models, with both brands tied for having the highest TQI scores in their price segment.

The Chrysler Group has increased in total quality from last year with the Dodge Ram leading the way with the highest Total Quality score of any truck in the history of the 15-year study. This is also the first time the Ram has achieved this honor since 1999 when it lost its title for the first time to competition. Customers specifically noted that the Ram has the best added storage capability along with the best truck interior ever rated by customers. “For truck buyers, the Dodge Ram has reclaimed its perceived leadership in innovation, a corporate hallmark,” says Edwards. “We have tracked innovation as a critical dimension in success since 1979 and have shown that it has been the single most powerful factor in success across categories, especially among automobiles.”

American Honda Motors, Nissan Motor Corp., and Toyota Motor Sales each led in two segments with strong positions in many others. The Nissan Maxima tied with the G8 in the large car segment while the Infiniti FX and EX, both competing in the near-luxury utility segment tied with each other. The FX and EX both delivered strong performance and exterior styling that led to a greater perception of quality leading to an enhanced sense of prestige and individuality for their owners.

For American Honda Motors, the Honda Ridgeline and Odyssey lead their segments with delightful capability and overall flexibility in each of the models. Both models show innovation that produces leadership. Odyssey became a leader among minivans when it offered the most innovative product in its segment years ago. Ridgeline burst onto the scene as Truck of the Year with innovation unmatched by competition in its segment. Although Ridgeline’s price has kept sales below that of competitors, those who buy it often report that they are delighted with almost every aspect. The innovation and delight delivered by each of these leaders cause owners to state that their next vehicle will be a Honda.

Toyota Motor Sales led with the all-new Toyota Venza and Toyota 4Runner. Both vehicles, as do most Toyota and Lexus products, delivered high levels of trust associated with the Toyota brand name and the brand’s attention to interior details. Customers reported that both of these vehicles showed increased thoughtfulness in their design. Few things-gone-wrong combined with higher expected durability and reliability provided a foundation for Toyota’s leadership position in these segments. With the added thoughtfulness and utility of the products, Toyota’s customers were truly delighted.

Having few problems (solid initial quality) can provide foundational assurance to customers, increasing brand trust and expected durability and reliability. As seen in similar studies, SVI found that the number of problems per vehicle found in the Lexus brand is statistically the lowest of all brands. Lexus’ goal should be to focus on enhanced products and communications to show customers that they are focused on delivering more than basic satisfaction as they build on their foundation.

Finally, in the Luxury categories the BMW X3 tied with the Infiniti FX and EX on Total Quality. The Mercedes S-Class has again defined luxury in its class, leading for the fourth time in the past six years. The Land Rover Range Rover is the leader in the Luxury utility segment. Many other Land Rover/Jaguar models also scored very well with models like the Range Rover Sport, Jaguar XF, and Jaguar XJ scoring just below top positions in their segments.

Buyers rated the following vehicles tops in their segments:

Segment	Winner(s)	TQI Score
Small Car	Ford Focus Sedan	877
Small Multi-Function	Volkswagen Rabbit	889
Mid-Size Car	Volkswagen Jetta Sedan	891
Large Car	Nissan Maxima Pontiac G8	900 899
Near-Luxury Car	Volkswagen CC Sedan Audi A4 Sedan	923 922
Luxury Car	Mercedes-Benz S-Class	934
Specialty Coupe	Volkswagen New Beetle	924
Premium Coupe	Chevrolet Corvette Coupe	938
Minivan	Honda Odyssey	865
Entry Utility	Volkswagen Tiguan	914
Mid-Size Crossover Utility	Toyota Venza	925
Mid-Size Traditional Utility	GMC Envoy Toyota 4Runner	859 858
Large Utility	GMC Yukon XL	899
Near-Luxury Utility	Infiniti FX Infiniti EX35 BMW X3	906 904 904
Luxury Utility	Land Rover Range Rover	920
Standard Pickup	Honda Ridgeline	874
Full-Size Pickup	Dodge Ram 1500	899

The TQI was calculated from 20,101 buyers who bought 2008 and 2009 models in September to December of 2008.

For more information please visit www.strategicvision.com.

GM leaves Nummi, the hot potato is in Toyota’s hands

DETROIT — General Motors said Monday that it was pulling out of its joint venture with Toyota, a longstanding partnership between two of the auto industry’s biggest rivals that exposed G.M. to more efficient Japanese manufacturing techniques and produced Toyota’s first American-made vehicles.

Roger B. Smith, right, former G.M. chairman, with Eiji Toyoda, the former chairman of Toyota, at the Nummi plant in 1985.

The joint venture, known as New United Motor Manufacturing Inc., or Nummi, has built more than six million vehicles at a plant in Fremont, Calif., since 1984. The plant builds two Toyota models, the Corolla sedan and Tacoma pickup truck, and a small crossover vehicle for G.M., the Pontiac Vibe.

G.M. is eliminating the Pontiac brand next year and plans to discontinue the Vibe in August. It said Monday that it was unable to reach an agreement with Toyota “on a future product plant that made sense for all parties” and that its stake in the Nummi plant would not be part of the company after emerging from bankruptcy later this summer.

“It’s the end of a remarkable educational experiment,” said James P. Womack, the chairman of the Lean Enterprise Institute, an organization in Cambridge, Mass., that promotes efficiency in manufacturing and commerce.

“The product was never the point at this plant,” Mr. Womack said. “It was a way for Toyota to figure out how to apply its system in the United States and for G.M. to try to figure out how Toyota was doing the things it was doing.”

G.M.’s withdrawal from the venture, which is half owned by each of the companies, creates an uncertain future for the Fremont plant, which has more than 4,700 employees in five million square feet of assembly space. It is the last auto plant operating in California and Toyota’s only plant represented by the United Automobile Workers.

Toyota said in a statement that it was sorry G.M. was pulling out and that it had not decided what to do with the plant.

“We will consider alternatives by taking into account various factors, including the current distressed market conditions, our overall North American manufacturing capacity, and the viability of the facility as a stand-alone operation without G.M. production,” the statement said.

Nummi has been running well below capacity for some time. Now, analysts say the deep industry downturn, coupled with G.M.’s decision to cut its ties, gives Toyota an opportunity to shut the plant. However, Toyota executives are sensitive to the American political climate, and the company could choose to keep the plant open in some fashion rather than risk the heat of shutting it down and eliminating jobs held by U.A.W. members.

Toyota recently denied reports that it might build its hybrid sedan, the Prius, at Nummi.

Both of the vehicles that Toyota builds in Fremont are also assembled elsewhere: the Corolla in Canada and the Tacoma in Mexico. (By producing the small Tacoma in California, Toyota avoids a tariff that the United States imposes on imported compact pickup trucks.)

When Nummi was formed, Toyota was a comparatively small but rapidly growing player in the United States while G.M. had a firm grip on its title as the world’s largest automaker. Toyota unseated G.M. at the industry’s pinnacle last year, aided by what it learned from Nummi.

G.M., meanwhile, was a slow learner and only recently began successfully applying the techniques it gained from working with Toyota, Mr. Womack said. Now, Nummi has outlived its usefulness for G.M. and is far away from all of the company’s other manufacturing locations.

“They learned a great deal in theory but nothing in practice for about 15 years,” he said. “G.M. has learned what they could and they don’t need that capacity anymore.”

By NICK BUNKLEY
Micheline Maynard contributed reporting.

Read the full story at New York Times

Highly automated plant in Spain

The QualliPedia definition of DMAIC

Define, measure, analyze, improve, control (DMAIC), developed by W. Edwards Deming in the 1950s, is a statistical and analytical method used to reduce defects by finding the root causes of defects, eliminating them, and sustaining that improvement level.

The roots of DMAIC are from the plan-do-check-act (PDCA) cycle, a method for learning and improvement, also referred to as the “Shewhart Cycle,” developed by Walter Shewhart, the statistician who developed statistical process control (SPC) while employed at Bell Laboratories during the 1930s.

Deming successfully applied the concept of PDCA to the management system processes of industrialized organizations during the 1950s and PDCA became known as the “Deming Wheel.” Deming developed DMAIC to guide quality projects of existing business processes in a continuous effort to reduce defects.

Read more about DMAIC in QulityDigest

A Lean revenge against mass production from ”The Economist” point of view. Part III

“… Only in the 1970s, after the first oil shock, did faults start to become visible. The finned and chromed V8-powered monsters beloved of Americans were replaced by dumpy, front-wheel-drive boxes designed to meet new rules (known as CAFE standards) limiting the average fuel economy of carmakers fleets and to compete with Japanese imports. As well as being dull to look at, the new cars were less reliable than equivalent Japanese models.

By the early 1980s it had begun to dawn on GM that the Japanese could not only make better cars but also do so far more efficiently. A joint venture with Toyota to manufacture cars in California was an eye-opener. It convinced GM’s management that “lean” manufacturing was of the highest importance. Unfortunately, that meant still less attention being paid to the quality of the cars GM was turning out. Most were indistinguishable, badge-engineered non-entities. As the appeal of its products sank, so did the prices GM could ask. New ways had to be found to cut costs further, making the cars still less attractive to buyers….”

Briefing. The bankruptcy of General Motors. A giant falls. The Economist. June 6th-12^th 2009. Pp 58-60. Ed. The Economist Newspaper Ltd.

A Lean revenge against mass production from ”The Economist” point of view. Part II

”…The foundation of blue-collar America have all crumbled. Global competition, first from Japan and now from almost everywhere, has transformed manufacturing. Even shop-floor workers are expected to work with their brains as well as their hands, as flexible production replaces mass production. …In fact, the golden age of blue-collar man was the product of a peculiar set of circumstances, when Europe and Japan were on their backs, mass-production ruled in the factories and a small number of companies could dominate the American economy.

… those blue-collar workers bear much of the responsibility for their own fate. This is particularly true in the car industry, which tended to set the pattern for much of the rest of the American economy. Trade unions frequently hampered their industries with rules that blocked more flexible and productivity-boosting manufacturing techniques…

… But there is still hope for blue-collar workers as long as they are willing to learn from the calamity that is General Motors. Plenty of manufacturing companies, even carmakers, have flourished at a time when General Motors has floundered…”

Lexington. Blue-collar America. The Economist. June 6th-12^th 2009. Pp 46. Ed. The Economist Newspaper Ltd.

A Lean revenge against mass production from ”The Economist” point of view. Part I

“…GM, Ford and Chrysler tried to improve: by 2006 they had almost caught up with Japanese standards of efficiency and even quality. But by then, GM’s share of American market had fallen go below a quarter. Rounds of closures and job cuts were difficult to negotiate with unions, and were always too little too late. Gradually the cars got better, but Americans had moved on. The younger generation of carbuyers stayed faithful to their Toyotas, Hondas or Mercedes assembled in the new cheaper factories below the Mason-Dixon line. GM and the other American firms were left with the older buyers who were, literally, dying out.

GM’s demise should not be read as a harbinger of doom for the car industry. All around the world people want wheels: a car tends to be the first big purchase a family makes once its income rises much above $5000 a year, in purchasing-power terms. At the same time as people in developing countries are getting richer, more efficient factories and better designs are making cars more affordable. That is why the IMF forecasts that the world will have nearly 3 billion cars in 2050…

… Yet although the long-term prospects for ales growth look excellent overall, the car industry has a problem: it needs to shrink dramatically. At present, there’s enough capacity globally to make 90m vehicles a year, but demand is little more than 60m in good economic times. Even as the big global manufacturers have been building new factories in emerging markets, governments in slow-growing rich-world markets have been bribing them to keep capacity open there.

Because the industry employs so many people and is a repository of high technology, governments are easily lured into the belief that car firms must be supported when times are tough. Hence Mr Obama’s $50 billion rescue of GM; and hence, too, the German government’s financial backing for the sale of Opel, GM’s European arm, to Magna, a Canadian parts maker backed by a Russian state-owned bank. German politicians have made it clear that they plan to keep German factories open even if others elsewhere in Europe have to close. At least the American rescue recognizes the need to remove capacity from the market: GM will, as a result of the deal, lose 14 factories, 29.000 workers and 2.400 dealers

It could still be a great business

For all its peculiarities, the car industry is no dinosaur-Toyota, for instance is a byword for manufacturing excellence. But the unevolved GM deserves extinction. Detroit employed so many people and figured so large in American culture that governments felt they had to protect it; but in doing so, they made it vulnerable to less-coddled competitors from abroad. By trying to keep their car industry big, America’s leaders ended up preventing it from becoming good. There is a lesson in that which all governments would do well to learn”

The decline and fall of General Motors. Detroitosaurus wrecks. The Economist. June 6th-12^th 2009. Pp 10. Ed. The Economist Newspaper Ltd.

The Toyota Way is more than Tools and Techniques

So you set up your kanban system (Kanban is the Japanese word for “card”, “ticket”, or “sign” and is a tool for managing the flow and production of materials in a Toyota-style “pull” production system.) You put in the andon, which is a visual control device in a production area that alerts workers to defects, equipment abnormalities, or other problems using signals such as lights, audible alarms, etc. Finally with these devices your workplace looks like a Toyota plant. Yet, over time your workspace reverts to operating like it did before. You call in a Toyota Production System (TPS) expert who shakes her head disapprovingly. What is wrong

The real work of implementing Lean has just begun. Your workers do not understand the culture behind TPS. They are not contributing to the continuous improvement of the system or improving themselves. In the Toyota Way, it is the people who bring the system to life: working, communicating, resolving issues and growing together. From the first look at excellent companies in Japan practicing lean manufacturing, it was clear that the workers were active in making improvement suggestions. But the Toyota Way goes well beyond this; it encourages, supports and in fact demands employee involvement

The more I have studied TPS and the Toyota Way, the more I understand that it is a system designed to provide the tools for people, not less. It is a culture, even more than a set of efficiency and improvement techniques. You depend upon the workers to reduce inventory, identify hidden problems, and fix them. The workers have a sense of urgency, purpose and teamwork because if they don’t fix it there will be an inventory outage. On a daily basis, engineers, skilled workers, quality specialists, vendors, team leaders, and -most importantly- operators are involved in continuous problem solving and improvement, which over time trains everyone to become better problem solvers

One lean tool that facilitates this teamwork is called 5S (sort, stabilize, shine, standardize and sustain), which is a series of activities for eliminating wastes that contribute to errors, defects and injuries. In this improvement method, the fifth S, sustain, is arguably the hardest. It’s the one that keeps the first for S’s going by emphasizing the necessary education, training, and continuously improve operating procedures and the workplace environment. This effort requires a combination of committed management, proper training, and a culture that makes sustaining improvement a habitual behavior for the shop floor to management.

This chapter provides a synopsis of the 14 principles that constitute the Toyota Way. The principles are organized in four broad categories: 1) Long-Term Philosophy. 2) The Right Process Will Produce the Right Results. 3) Add Value to the Organization by Developing Your People, and 4) Continuously Solving Root Problems Drives Organizational Learning.

Summary of the 14 Toyota Way Principles

1. Section I: Long-Term Philosophy.

   1. Principle 1: Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
2. Section II: The Right Process Will Produce the Right Results.
   1. Principle 2: Create continuous process flow to bring problems to the surface.
   2. Principle 3: Use “pull” systems to avoid overproduction.
   3. Principle 4: Level out the workload (heijunka). (Work like the tortoise, not the hare).
   4. Principle 5: Build a culture of stopping to fix problems, to get quality right the first time.
   5. Principle 6: Standardized tasks are the foundation for continuous improvement and employee empowerment.
   6. Principle 7:Use visual control so no problems are hidden.
   7. Principle 8: Use only reliable, throughly tested technology that serves your people and processes.
3. Section III: Add value to the Organization by Developing Your People and Partners
   1. Principle 9: Grow leaders who throughly understand the work, live the philosophy, and teach it to others.
   2. Principle 10: Develop exceptional people and teams who follow your company’s philosophy.
   3. Principle 11: Respect your extend network of partners and suppliers by challenging them and helping them improve.
4. Section IV: Continuously Solving Root Problems Drives Organizational Learning
   1. Principle 12: Go and see for yourself to throughly understand the situation (genchi genbutsu).
   2. Principle 13: Make decisions slowly by consensus, thoroughly considering all options implement decisions rapidly.
   3. Principle 14: Become a learning organization thorough relentless reflection (hansei) and continuous improvement (kaizen).

“How does TPS apply to my business? We do not make high volume cars; we make low-volume, specialized products” or “We are a professional service organization, so TPS does not apply to us”. This line of thinking tells they are missing the point. Lean is not about imitating the tools used by Toyota in a particular manufacturing process. Lean is about developing principles that are right for your organization and diligently practicing them to achieve high performance that continues to add value to customers and society. This, of course, means being competitive and profitable. Toyota’s principles are a great starting point. And Toyota practices these principles far beyond its high-volume assembly lines.

This text has been extracted from Jeffrey K. Liker (2004) The Toyota Way; 14 management principles from the world’s greatest manufacturer.  Ed. Mc Graw-Hill  2004 Find it on Amazon