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14 Management Principles from the

World¶s Greatest Manufacturer

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Ñ 1894 - Sakichi Toyoda, a tinkerer and inventor, begins making
manual looms.
Ñ 1926 ± Toyoda opens Toyoda Automatic Loom Works. He later
invents looms that stop automatically when thread breaks
(jidoka).
Ñ 1937 - Kiichiro Toyoda, an engineer, opens Toyota Motor
Company. Visits Ford and GM during the 30s.
Ñ 1945 - Toyoda challenges company to catch up to US in 3
years.
Ñ 1948 - Toyota¶s debt is 8 times its capital value.
Ñ 1950s ±Toyota studies US plants, including Ford, and
supermarkets during a 12 week study visit. They see little
improvement since his trip in the 30s but use supermarkets as a
model for just-in-time production.
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Continuously
solving root Principles 12-14
PROBLEMS
Add value to the
organization by Principles 9-11
developing your PEOPLE
and PARTNERS
The right PROCESS will Principles 2-8
produce the right results

Long Term PHILOSOPHY Principle 1

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1. Base your management decisions on a long term philosophy, even at the expense of short
term financial goals.
2. Create continuous process flow to bring problems to the surface.
3. Use ³pull´ systems to avoid overproduction.
4. Level out workload (heijunka).
5. Build a culture of stopping to fix problems, to get quality right the first time.
6. Standardized tasks are the foundation for continuous improvement and employee
empowerment
7. Use visual control so no problems are hidden.
8. Use only reliable thoroughly tested technology that serves your people and processes.
9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to
others
10. Develop exceptional people and teams who follow your company¶s philosophy
11. Respect you extended network of partners and suppliers by challenging them improve.
12. Go and see for yourself to thoroughly understand the situation.
13. Make decisions slowly by consensus, thoroughly considering all options; implement
decisions rapidly
14. Become a learning organization through relentless reflection (hansei) and continuous
improvement (kaizen)
  




  

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Ñ Have a sense of purpose that supercedes any short term

decision making. Work, grow, align the organization toward a
purpose greater than ³making money.´ Understand your place in
the history of the company and work to bring the company to the
next level.

Ñ Generate value for the customer, society and the economy.

Evaluate every function in the company in terms of its ability to
achieve this.

Ñ Be responsible. Strive to decide your own fate. Act with self

reliance and trust in your own abilities. Accept responsibility for
your conduct and maintain and improve the skills that enable
you to produce added value.
  
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Ñ Redesign processes to achieve high value added, continuous

flow.

Ñ Create flow to move material and information fast as well as to

link processes and people together so that problems surface
right away.

Ñ Make flow evident throughout your organizational culture.

Ñ Case Study ± Navy yard job summaries

Ñ Lead time reduced 63%
Ñ Distance paperwork traveled reduced 55-92%
Ñ Number of steps reduced by 67%
Ñ Handoffs reduced by 80%
  
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Ñ Provide your downstream customers in the process with what
they want, when they want it, and in the amount that they want.
Ñ Toyota studied US supermarkets in the 50¶s

Ñ Pull vs Push (Production Schedule)

Ñ Material replenishment initiated by consumption is the basis
for just-in-time.
Ñ Just-in Time - an organized system of inventory buffers.
Ñ Examples- filling your gas tank, office supplies.
Ñ å

- sign, signboard, doorplate, poster, billboard,
card«signal

Ñ ³Flow (one piece) where you can and pull where you must.´
- Rother and Shook in ³Learning to See´

Ñ Scheduling still happens, but keep it short (days vs months)

  

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Ñ Eliminating Muda is just one third of the equation for making

lean successful. Eliminating Muri and eliminating Mura in
production are just as important.
Ñ !
(waste)
Ñ Transportation, Inventory,Movement Waiting,
Overproduction, Overprocessing, Defects + Unused
employee abilities
Ñ !  (overwork), !  (inconsistency),
 venness)
Ñ AAABBBCCC to ABCABCABC
Ñ Case study- Gutter manufacturer
Ñ Lead time reduced by 40%
Ñ Changeover time reduced by 70%
Ñ WIP reduced by 40%
Ñ Inventory obsolescence reduced by 60%
  
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Ñ Ouality at the source
Ñ K
 ± autonomation
Ñ `


± signal for help
Ñ Yellow, then red
Ñ Team leader fix, figure, pull
Ñ Segmented assembly line with buffer inventory
Ñ ³Freshman job´ Takt = 57 Touch = 44.7
Ñ u ± ³get rid of mistakes´ mistake avoidance (example-cotter
pin/light curtain) (avoid easy mistakes)

Ñ Administrative approaches ±standardized work and checklists

(pilots) (engineering forced to consider alternatives)

Ñ Toyota¶s quality process

1. Go and see
2. Understand the situation
3. One piece flow or andon
4. Ask why 5 times
  
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Ñ Standardized work is not the end result, the ³one best way,´ it is the
beginning of improvement.

Ñ Use stable, repeatable methods everywhere to maintain the

predictability, timing, and regular output of your processes. (This also
helps to manage them). It is the foundation of flow and pull.

Ñ Standardized work consists of three elements-

Ñ Takt time
Ñ Sequence of the process
Ñ Amount of stock on hand

Ñ Capture the accumulated learning about a process by standardizing the

current best practices. Allow creative and individual expression to
improve upon the standard; then incorporate it into the new standard.
  
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Ñ Visual Control ± The ability to see abnormalities at a glance.
Ñ Example - Ask a coworker to see a specific document, item, or
something on their computer or the company¶s intranet.
Ñ 5S
Ñ Sort
Ñ Straighten
Ñ Shine
Ñ Standardize
Ñ Sustain
Ñ Example ± email audits

Ñ Process Control Boards (daily goals, takt rate, manpower, current

status throughout the day)

Ñ Reduce your reports to one piece of paper whenever possible.

Ñ E.g. A3 (11x17) Reports (Storyboards) A4 (8 ½ x 11)next!
  
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Ñ Use technology to support people, not to replace people.

Ñ Conduct actual tests before adopting new technology in

business processes, manufacturing systems, or products.

Ñ Reject technologies that conflict with your culture or that might

disrupt stability, reliability, and predictability.

Ñ Encourage your people to consider new technologies when

looking into new approaches to work. Ouickly implement a
thoroughly considered technology if it has been proven in trials
and it can improve the flow of your processes.
  
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Ñ Grow leaders from within rather than buying them from outside.
(This is an example of applying Heijunka)«or constancy of
purpose.

Ñ Leaders must be role models of the company¶s philosophy and

way of doing business.

Ñ A good leader must understand the daily work in great detail so

they can be the best teacher of your company¶s philosophy.

Ñ ³Before we make cars (monozukuri), we make people (hito-

zukuri).´
  
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Ñ Create a strong, stable culture in which company values and
beliefs are widely shared and lived out over a period of many
years.
Ñ Respect for Humanity system
Ñ Uses both intrinsic and extrinsic approaches to motivation

Ñ Train exceptional individuals and teams to work within the

corporate philosophy to achieve exceptional results.
Ñ Balance between teamwork and excellent individual work

Ñ Use cross functional teams to improve quality and productivity

and enhance flow by solving problems.

Ñ Make an ongoing effort to teach individuals how to work

together as team toward common goals. Teamwork is
something that has to be learned.
  
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Ñ Have respect for your partners and suppliers and
treat them as an extension of your company.

Ñ Challenge your partners to grow and develop. It

shows that you value them. Set challenging targets
and assist your partners in achieving them. (e.g. John
Deere, Harley Davidson)
  
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Ñ 

 (actual location) 
  (actual material or product)«also known as
going to the gemba.

Ñ Example-Siena chief engineer drives in 50 states, 13 provinces and territories

and Mexico
Ñ Improvements include turning radius, wind stability, drift, cup holders and trays

Ñ ³Common sense will tell you the answer, but collecting data (and then
understanding the facts) will tell you whether your common sense was correct.´

Ñ The Ohno circle ± He asked an engineer to stand and observe an operation«for

8 hours!

Ñ ³The Geography of Thought: How Asians and Westerners Think Differently and
Why´ by Richard Nisbett
Ñ Westerners see things
Ñ Easterners see things and relationships
Ñ Language?

Ñ  
 - to report, to update periodically, to consult or advise

Ñ Genchi genbutsu for executives (coordinated reporting)
  
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Ñ Given a year to implement a project«
Ñ Western ± typically 3 months planning, 9 months implementing and correcting
Ñ (Tedd¶s example-in a class exercise, I assign 15 min. to ³plan´ and 45 minutes
to ³do.´ Participants never use the full 15 minutes, even since I¶ve reinforced
the importance of this time.)
Ñ Toyota ± typically 10 months planning, pilot, implement flawlessly

Ñ Toyota decision making

1. Find out what is really going on, including genchi genbutsu
2. Understanding underlying causes that explain surface appearances ± asking
³Why?´ five times
3. Broadly considering alternative solutions and developing a detailed rationale
for the preferred solution.
± What alternatives have you considered?
± How does this solution compare with those alternatives?
4. Building consensus within the team, including employees and outside
partners.
± ˜  
 ±the process of discussing problems and potential solutions with
all those affected, to collect their ideas and get agreement on a path forward.
e.g. tollgate review
5. Using very efficient communication vehicles to do 1-4, preferably one side of
one page (e.g. one page 7 step storyboards)
  



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³Many people are surprised when I give talks and tell them that Toyota
doesn¶t have a Six Sigma program. Six Sigma is based on complex
statistical analysis tools. People want to know how Toyota achieves
such high levels of quality without the quality tools of Six Sigma. You
can find an example of every Six Sigma tool in use somewhere in
Toyota at some time. Yet most problems do not call for complex
statistical analysis, but instead require painstaking, detailed problem
solving. This requires a level of detailed thinking and analysis that is all
too absent from most companies in day-to-day activity. It is a matter of
discipline, attitude, and culture.´
Jeffrey Liker
  



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Ñ 7 step problem solving method
Ñ Problem solving is 20% tools and 80% thinking.
Ñ 
 ± loosely ³reflection´ or lessons learned
Ñ ³Please do the Hansei.´
1. Feel sorry.
2. Create a plan to solve the problem.
3. Sincerely believe you will not make this mistake
again.
Ñ Without Hansei, it is impossible to have kaizen.
Ñ 
  ± reflection meetings
Ñ e.g. DMAIC tollgates
Ñ No magic metrics
Ñ Policy Deployment
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³We place the highest value on actual

implementation and taking action.´
Fujio Cho
President,
Toyota Motor
Corporation
2002