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Toyota Way and Operation Management


In the early 1980's Dr. Robert Hall led a group of academicians and manufacturing experts to Japan to see if they could uncover the secret to Japan's success in producing high quality, low cost products. This mission was funded by APICS (The American Production and Inventory Control Society). It was this mission that first brought back to the US what came to be known as JIT (just-in-time). Hall published a book detailing the findings of the group in 1983 (Zero Inventories, Dow Jones-Irwin, ISBN 0-87094-461-4). This book is a classic and should be read by anyone interested in JIT. I had dinner with Dr. Hall in 1988 and he told me that the biggest mistake he made was the title of the book. He said that since APICS had sponsored his trip he figured he needed to put the word "inventory" in the title. The unintended consequence of this title is the misconception that JIT (more correctly the Toyota Production System) is an inventory reduction/control technique. Inventory reduction is one result of JIT, not the impetus for the program.

Very succinctly, JIT is the elimination of waste where:

"Waste is anything other than the minimum amount of equipment, materials, parts, space, and workers time, which are absolutely essential to add value to the product." - Shoichiro Toyoda. (This isn't a typo but the transliteration of his name which became "Toyota".) In other words, if an activity does not add value to the product or service being offered then that activity is a waste an the organization should strive to eliminate it. Since the only activities that add value are those that impact the product all others are a waste. Carried to it's logical extreme this means that all support functions (accounting, human resources, scheduling, management, etc) are a waste and should be eliminated. However, JIT is a journey, not a destination so you don't eliminate waste just for the sake of eliminating it. It needs to be done on a measured path. In the twelve or so years* it took Toyota to develop their production system they developed a list of "Seven Wastes" which need to be eliminated:

-For some reason US companies believe that JIT can be "dropped" in. If it took Toyota twelve years to refine their system it'll take a number of years before it will function effectively elsewhere. Patience, perseverance and plodding are the keys to success.

The seven wastes are:

1.) Overproduction

Make only what's needed when needed. This applies not only to finished goods but also to work in process. Only produce what your customer wants and when they want it. In JIT terms the customer is not the end user but the next department or individual to whom you supply work. It was because of this definition of a waste that the "pull" system of production was devised. Traditionally material was pushed through the system with no consideration as to whether the next department needed the material or not. JIT, through a series of signals called "kanban" only authorizes a "supplier" (the feeding department) to produce what the "customer" (department receiving the material) needs. These signals are visual so that the supplier can tell by looking when additional product is needed. Just in case you think this is great for manufacturing only consider an office where work is passed from person to person. Under the push system each individual passes on his or her completed work to the next station without regard as to whether or not that station is ready for it. JIT in the office would allow work to be passed on only when the next person is ready for it. There are a couple of obvious benefits to this. First, the "customer" is not overwhelmed with a pile of work. Second, if there's a problem in the flow it is detected immediately. Sally's not signaling for more work so Ben can't pass on what he's finished. Instead of telling Ben to keep working (traditional management) investigate why Sally's in trouble. Do root cause analysis on the problem, eliminate it and continue the process.

2.) Waiting

Waiting for material(or information) when you need it is a waste. Waiting for a machine to be setup is a waste. Waiting for a machine to be repaired is a waste. All waiting is a waste. Do not confuse waiting with the need for no work to be done. If your customer does not need you to be producing then you are not waiting. Under JIT when your customers demand is satisfied the "idle" time is spent on training, clean up, basic maintenance, etc. By identifying waiting as a waste Toyota developed rapid setups on equipment (see Shingo's excellent book The Single Minute Exchange of Dies for an example of what can be done). Toyota also balanced the workload across the processes so bottlenecks were eliminated thus precluding specific operations waiting for work. The biggest contribution from this waste was the concept of Total Productive Maintenance. Rather than waiting for a machine to breakdown statistics are applied to life expectancies of components. When the statistics indicate a looming failure the part(s) is replaced on a planned basis - before it breaks. Having processes idle because of breakdowns or lack of needed material is a waste. Eliminate the potential for equipment failure by aggressive maintenance. Eliminate inconsistent material supply through vendor development for purchased materials and process improvements internally. Move from a pull to a push system of manufacturing.

3.) Transportation

Any time items are moved from one place to another cost is added without a requisite increase in value. All transportation is a waste. Internally, moving material from one workstation to another or from a receiving dock to a workstation adds no value. Reduce or eliminate all material handling.

4.) Inefficient Processing

This wastes time and creates the need for overproduction and inventory.

5.) Inventory

Inventory is the key indicator that the other wastes exist. Inventory is used to cover problems and can also be used to uncover them. Planned, incremental reductions will expose the underlying problem that needs to be solved. JIT equates inventory with a river and the problems as rocks. When the water level is high enough the rocks are submerged and everything flows smoothly. If the water level drops then navigation becomes difficult or impossible. You are now confronted with two choices - pump in more water or eliminate the rocks. JIT advocates destroying the rocks. Slowly lower inventory levels until a problem emerges. Do a root cause analysis on the problem, implement the solution and the need for inventory at that level vanishes. Continue to do this until you reach the ideal state of needing no inventory. Impossible to attain? Yes! But a worthwhile goal as it keeps you striving continuously, never letting you rest on your laurels. This is the portion of JIT that is most misunderstood. Inventory is not reduced for the sake of just reducing it but rather as a way of finding problems. Most organizations mandate inventory reduction without the requisite problem solving and then decree that JIT won't work. This is a very disciplined, measured approach to prioritizing problem solving.

6.) Unnecessary Motion

Set up your workstations so each worker uses the minimum of motion to accomplish each task. This is just a logical extension of the work first done by the Gilbreaths* in the first part of the 20th century. Eliminate all motion that is not absolutely needed.

7.) Product Defects

If you have to do it over it's a waste. If you have to repair it it's a waste. It was from this waste that TQM evolved.

That's JIT in a nutshell. Not an inventory control program but a forced method of continuous improvement. Since I opened with a quote form Toyoda, let me close with one. When asked how he conceptualized the Toyota Production System he replied, "Everything I know I learned from Henry Ford".

* Frank and Lillian Gilbreath were pioneers in time and motion studies. For a quick look at how possessed they were rent and watch a copy of the movie "Cheaper by the Dozen". That is the original with Clifton Webb not the later one starring Steve Martin.
1. What do you think about the book TOYOTA WAY?
2.What Principle(s) struck you as particularly noteworthy or particularly peculiar?

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1. I think that the book Toyota Way, is a very informative book on the methodologies that allow a corporation to become very successful within its industry. This book provides a path to success for any business or organization that seeks to ensure that the products that it manufactures are of the highest quality, and that the people that work for the organization have access to avenues of continuous self improvement and self actualization. I think that this book provides key insight into the importance of the concept of continuously improving an organization's overall processes and procedures, due to the fact that many organizations tend to stall in their development, or become lethargic in regards to continuously upgrading and seeking methods by which to improve their organization's processes and procedures. This book consistently reiterates the philosophical as well as the real ...