By Gene Russell, Manex Consulting President & CEO
Founded in 1937, Toyota became the largest car manufacturer in the world in 2007. Today, Toyota is the most valuable and most reliable car and truck company worldwide. Considering there are 29 other car companies throughout the world, the Toyota corporation has become known as one of the best in the world to manufacture durable, safe and affordable cars and trucks.
With Toyota being so large of a company, they have still managed to maintain their strategy and continue to improve in any way possible. This culture has been coined the Toyota Production System (TPS). This helps Toyota create high-quality vehicles at the lowest cost and fastest pace. Toyota is successful in producing reliable cars and selling cars throughout the world for many reasons, including:
- Long-Term Planning
- Measured Speed
- Open Mindedness
- Obsession With Waste Reduction
- Humility (At Toyota, there are no superstars only teams.)
Long-term planning is a very big factor in Toyota’s success in the automobile industry. Other car companies respond to short term economic cycles, fads, and numbers, but Toyota thinks ahead to the future. For example, Toyota developed the Toyota Prius Hybrid in 2000 during a time of relative low gas prices. In addition, 40% of its vehicles are sold in the United States and Japan allowing for some of the highest price points among its competitors. In comparison, GM has some of its highest margins in the U.S. truck division but is unfortunately bogged down by lower pricing in China. Overall Toyota has high margins generating substantial cash flow, allowing for continued research and development (R&D) and long-term planning as well as stakes in other companies. Learning and observation are key cultural elements, as are experimentation for continuous improvement.
When one thinks of a global juggernaut, one generally precludes the Piggly Wiggly grocery store. However, on a trip to the United States to see the Ford corporation (as the Toyota founders relied heavily on the work of W. Edwards Deming and the writings of Henry Ford), they went into a Piggly Wiggly. The car manufacturers were less impressed by Ford’s workflow and more impressed by their experience at the local Piggly Wiggly. While shopping, they observed the simple idea of an automatic drink supplier. When a customer wanted a drink he or she took one, and it was automatically replaced with another drink. This idea was integrated into the TPS system, reducing the inventory they would hold, leading to the ubiquitous and famous just-in-time (JIT) inventory management system based on customer demand. Low inventory levels are a basic outcome of TPS, but in reality, the secret sauce is to continuously improve work flow and eliminate muda (or waste).
The TPS flow process is based on single flow as a pull process. The TPS pull process perfects a single flow and then enacts it down to a science with constant room for improvement. Decide on a streamlined process via plan–do–check–act (PDCA) and follow it thoroughly from start to finish while eliminating waste and error. These are the foundations of manufacturing excellence. You can implement these concepts in your business. It requires:
- Employee Involvement
- Continuous Improvement
- Standardizing Processes
- Reducing Waste
- Leveling Workflow
- Learning to Avoid Mistakes
Toyota is the gold standard of lean manufacturing. Lean is just one element of TPS, but it is an important one. After thousands of engagements, Manex knows the following:
- Do not attempt a cultural shift such as Lean management until you have a broad consensus on change.
- Ensure company-wide commitment to major shifts in business methods to achieve companywide success.
- Use vision boards to simulate the before and after of one-piece flow, JIT and PDCA.
- Train the trainer. When Manex completes a training, we leave one or more champions/trainers in place.
- Identify the root cause and initiate Lean tools.
- Employee involvement is crucial.
- Continuous improvement means continuous. Project management timelines should have no final end date. You may not get your next inspiration from a Piggly Wiggly, but you never know where or whom it may come from.
- Lean is a culture.
- Incorporate teamwork, Lean, and measurable production goals into your performance management system (PMS).
- Involve your human resources department in Lean training so they understand the culture shift required and its importance in the PMS.
About the Author
Gene Russell is President and CEO of Manex and has over 30 years of senior executive strategic planning, operational management, and consulting experience in the manufacturing and technology sectors. With his extensive knowledge of manufacturing operations, he has developed and implemented key strategic initiatives for companies, allowing them to improve performance and achieve profitable growth. He can be reached at email@example.com.