TOYOTA PRODUCTION

SYSTEM

ROOTS
Three men were especially prominent in creating the
Toyota Production System: Sakichi Toyoda; his son,
Kiichiro Toyoda; and a production engineer by the name
of Taiichi Ohno.
When the Toyota Group set up an automobilemanufacturing operation in the 1930s, Sakichi's son
Kiichiro headed the new venture. Kiichiro traveled to the
United States to study Henry Ford's system in operation.
He returned with a strong grasp of Ford's conveyor
system and an even stronger determination to adapt that
system to the small production volumes of the Japanese
market.

TAIICHI OHNO
In the late 1940s, Ohno who later became an executive vice president at
Toyota was in charge of a machining shop. He experimented with various
ways of setting up the equipment to produce needed items in a timely
manner. But he got a whole new perspective on just-in-time production when
he visited the United States in 1956.
Ohno went to the US to visit automobile plants, but his most important
discovery was the supermarket. Japan did not have many self-service stores
yet, and Ohno was impressed. He marveled at the way customers chose
exactly what they wanted and in the quantities that they wanted. Ohno
admired the way the supermarkets supplied merchandise in a simple,
efficient, and timely manner.
This format, then, was a pull system, driven by the needs of the following
lines. It contrasted with conventional push systems, which were driven by the
output of preceding lines. Ohno developed a number of tools for operating
his production format in a systematic framework. The best known of those
tools is the kanban system, which provides for conveying information in and
between processes on instruction cards.

PUSH VS PULL
Under a 'push' system, there is little opportunity for
workers to gain wisdom because they just produce
according to the instructions they are given.
In contrast, a 'pull' system asks the worker to use his or
her head to come up with a manufacturing process where
he or she alone must decide what needs to be made and
how quickly it needs to be made.
"An environment where people have to think brings with
it wisdom, and this wisdom brings with
it kaizen (continuous improvement).

THE OIL CRISIS

Ohno: The oil crisis in the fall of 1973, followed by a
recession, affected government, business, and society the
world over. By 1974, Japans economy had collapsed to
a state of zero growth and many companies were
suffering.
When rapid growth stopped, it became very obvious
that a business could not be profitable using the
conventional American mass production system that had
worked so well for so long.
For decades, America had cut costs by mass-producing
fewer types of cars. Our problem was how to cut costs
while producing small numbers of many types of cars.

OHNO (CONTINUED)
We have learned a lot from the US automobile empire
(quality control, total quality control, industrial engineering).
We kept reminding ourselves, however, that careless imitation
of the American system could be dangerous.
August 15, 1945, was the day Japan lost the war; it also
marked a new beginning for Toyota. Toyoda Kiichiro, then
the president of Toyota Motor Company, said, Catch up with
America in three years. Otherwise, the automobile industry of
Japan will not survive.
In 1937, the ratio between Japanese and American workers
was 1-to-9. It took nine Japanese to do the job of one
American worker. Surely, the Japanese were wasting
something.

AUTONOMATION
The basis of the Toyota system is the absolute
elimination of waste.
Two pillars:

Just-in-time
Autonomation

(automation with a human touch)

KANBAN (SIGN BOARD)

In auto production, material is machined into a part, the
part is then assembled with others into a unit part, and
this flows toward the final assembly line.
Lets look at the production flow in reverse: a later
process goes to an earlier process to pick up only the
right parts in the quantity needed at the exact time
needed.
In this way, the manufacturing process goes from
finished product back to the earliest materials-forming
department.
Kanban method is the means by which the Toyota
system moves smoothly.

SUPERMARKET

Ohno saw the relationship between the supermarket and its customer as an efficient
means of organizing production because a supermarket assures future stock while
only supplying what the consumer has immediately signaled that he or she needs.

Good old days: A clerk walks the aisles daily. From empty spaces he deduces what
sold and orders replacements. In modern supermarkets Kanban signals come from
checkout scanners. Signal goes to the supermarket's regional warehouse detailing
which items have sold.

KANBAN

A 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.)

It is a means to achieve JIT production. It works on the basis that each process on a
production line pulls just the number and type of components the process requires, at
just the right time. The mechanism used is a Kanban card. This is usually a physical
card but other devices can be used.

INDIVIDUAL SKILL & TEAMWORK

Autonomation eliminates overproduction and prevents
the production of defective products.
To accomplish this, standard work procedures,
corresponding to each workers ability, must be adhered to
all times.When abnormalities arise, special instruction must
be given to bring the worker back to normal. This is the
duty of the manager.
Visual control or management by sight is important in
this system.
Work and sports have many things in common. In Japan,
competition is traditionally individual, as in sumo and judo.
In these activities, the goal is not to compete but seek the
way and study it.

ROWING

THE SEVEN WASTES

1. Waste of overproduction
2. Waste of time on hand (waiting)
3. Waste in transportation and handling
4. Waste of process itself (inappropriate processing)
5. Waste of stock on hand (inventory)
6. Waste of movement (unnecessary or excess motion)
7. Waste of making defective products

LEAN PRODUCTION

Lean production combines the best features of mass production (speed, cost
per product) with those of craft production (flexibility, quality) to form a
new production concept.

Lean production includes several Japanese techniques of work organization:

teamwork;
kaizen or Continuous Improvement Process;
the Zero-Defect Principle;
the JIT Just in Time or Zero Buffer Time Principle;
customer orientation; efficient research and development;
an enterprise culture; integration of suppliers (prime cost reduction &
no stockpile)

HALF OF
Lean

production utilizes small quantities of

everything in comparison to mass production.
half

of the industrial workers,

half of the space for manufacturing,
half of the investment in tools,
half of the hours of planning to develop new goods in
half of the time.

WORK FLOW

JUST-IN-TIME

Delivering the exact quantity and defect-free quality of parts

just-in- time for each stage of production.
Requires flexibility in product and process + just-in-time
suppliers + TQM or zero-defect policy.
TQM is a set of management practices throughout the
organization, geared to ensure the organization consistently
meets or exceeds customer requirements, reduce errors
produced during the manufacturing or service process.

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate
processing
5.Unnecessary
inventory
6.Unnecessary / Excess
Motion
7.Defects

overproduction is to manufacture an item

before it is actually required.
schedule and produce only what can be
immediately sold and shipped and improve
machine changeover/set-up capability.

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate processing
5.Unnecessary inventory
6.Unnecessary or excess
motion
7.Defects

oWhenever goods are not moving or being

processed - waiting for the next operation;
o more than 99% of a product's life in
traditional batch-and-queue manufacture will be
spent waiting to be processed.
Why do materials wait? Because:
- material flow is poor,
- production runs are too long,
- distances between work centers are too great.
o Linking processes together so that one feeds
directly into the next can dramatically reduce
waiting.

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate
Processing
5.Unnecessary
Inventory
6.Unnecessary / Excess
Motion
7.Defects

Transporting product between processes

costly + adds no value to the product
- Excessive movement and handling quality
may deteriorate.
- Transportation can be difficult to reduce due
to the perceived costs of moving equipment
and processes closer together.
- All transportations may not be eliminated, but
they have to be kept to the very minimum.
- often hard to determine which processes
should be next to each other.

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate
Processing
5.Unnecessary Inventory
6.Unnecessary / Excess
Motion
7.Defects

using a sledgehammer to crack a nut,

-many organizations use expensive high
precision equipment
- invest in smaller, more flexible equipment
where possible
And/Or
- Procedures and work guides which are not
constantly updated are likely to let useless
operations be performed in the process.
- Old rules still remain even if the causes of
their creation disapeared a while ago. As long
as nobody will update the set of rules, everyone
will carry on, sticking to the olds with
application and discipline(!!).

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate Processing
5.Unnecessary Inventory
6.Unnecessary / Excess
Motion
7.Defects

Work in Process (WIP) is a direct result of

overproduction and waiting.
- Excess inventory increases wastes lead times,
consumes productive floor space, and delays
the identification of problems

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate Processing
5.Unnecessary Inventory
6.Unnecessary / Excess
Motion
7.Defects

-related to ergonomics
- seen in all instances of;
bending, stretching, walking, lifting, and
reaching.
- jobs with excessive motions should be
redesigned

THE SEVEN WASTES

1.Overproduction
2.Waiting
3.Transportation
4.Inappropriate Processing
5.Unnecessary Inventory
6.Unnecessary / Excess
Motion
7.Defects

- Quality defects resulting in rework or scrap

costly + leads to capacity loss + late
deliveries
- employee involvement is the key to reduce
defects Continuous Process Improvement
(CPI)

REPEATING WHY FIVE TIMES

Suppose a machine stopped functioning:
Why did the machine stop?

There

was an overload and the fuse blow.

Why was there an overload?

The

bearing was not sufficiently lubricated.

Why was the bearing was not sufficiently lubricated?
The

Why was it not pumping sufficiently?

The

lubrication pump was not pumping sufficiently.

shaft of the pump was worn and rattling.

Why was the shaft worn out?

The

was no strainer attached and metal scrap got in.

EMPLOYMENT RELATIONS AT TOYOTA

High-trust relationship between management and workers

Lifetime employment in exchange for the acceptance of
wage increases based on seniority and annual bonus
payments linked to company profitability
Workers have a greater emotional attachment to their
organization (commitment, loyalty & identification)
All organizational members are corporate citizens ;
strong corporate culture

FLEXI-WORKER/FLEXI-FIRM
Labor force adjustments under post-Fordism

functional flexibility (multi-skilling; multi-tasking; job rotation)

How firms assign employees to different tasks to meet changes in market
demand and customer requirements

numeric flexibility (part time, short-term, temporary work + outsourcing)

How firms adjust workforce size in relation to fluctuations in output
requirements and market demands by using employment agencies or nonstandard employment practices

wage flexibility (wage rate adjustments)

How firms adjust their wage costs to make savings by altering pay
structures or introducing performance-related pay

compensation frequently tied to the number of different tasks that a person can
perform

LABOR SYSTEM IN JAPAN

Core companies and their workers

Peripheral companies and their workers

Manufacturing involving committed" and

skilled workers (with higher wages and
rigid contracts)

Manufacturing involving Taylorized

workers (with lower wages and flexible
contracts)

They have relatively life-long working

guarantee

Poor working rights

High wages, but it is difficult to have work

in another company

Low wages, high turnover (that gives

flexibility to the companies)

Core workers can be member of factory

unions

Part-time/periheral company workers

cannot be members of factory unions
28

CORE AND PERIPHERY WORKERS

Core
Highly

skilled
Experts in their field
Essential to firm
Secure jobs
High wages
Good perks/benefits

Low

skilled
Easily replaceable
Low job security
Low wages
Few perks/benefits

Periphery

KEIRETSU

A keiretsu is a set of companies with interlocking business relationships and shareholdings. It

is a type of informal business group. The keiretsu maintained dominance over the Japanese
economy for the greater half of the 20th century. The member companies own small
portions of the shares in each other's companies, centered on a core bank; this system
helps insulate each company from stock market fluctuations and takeover attempts, thus
enabling long-term planning in innovative projects. It is a key element of the automotive
industry in Japan.

MORE ON THE TOYOTA WAY

Why were/are Japanese workers so committed?
Payments depend on

Seniority
Worker

evaluation by management
Loyalty and commitment of workers to the company

The difficulties of social and economic conditions push

them to work high.

MORE ON THE TOYOTA WAY

Workers have to finish daily work,
If they cannot finish, they will work overtime without
additional money,
If one of the worker did not come to work; others should
work more to reach the daily quota,
Total work hour is much higher than other countries,
Wages did not increase as productivity did;

As a result (for Japan), the success of lean production

depends on the long and dedicated work of workers.

THE OTHER SIDE OF FLEXIBILITY: SUMMARY

Some suggest that team-based work groups in lean production are more
sophisticated tools for labor control through peer pressure and extracting greater
work effort and intensifying work.

Multi-task increased workload + increased stress

Not really complex tasks (so, really multi-skilled?)

Increased worker control/autonomy over the work ? Debatable

Little room for workers to exercise discretion over how they work, how fast they work or
when they work?

Downsizing unemployment reserve army of labour lower wages (even

among the skilled labour)
Flexi hire/flexi fire

Workers can be substituted for one another

Simply a conflict between theory of & practice of lean production or?

OVERVIEW: POST-BUREAUCRACY

Post-bureaucracy is based on trust and empowerment,

but these potentially create new problems of loss of control, risk and unfairness

Critical approaches to post-bureaucracy see it as an extension of managerial

control over workers, rather than being an organisational form which will liberate
them.
Warhurst and Thompson (1998) argue that much of the talk about trust and
empowerment in post-bureaucratic organisations is more rhetoric than reality.

Post-bureaucracies rely on normative forms of control (e.g. organization culture)

rather than formal rules and there is a risk that if people are given more discretion
then more bad decisions will be made.

POPULAR BOOKS ON THE TOYOTA

WAY