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The Toyotatoyota Wayway (The Company That Invented Lean Production) TheThe ToyotaToyota WayWay (The Company that invented Lean Production) 1414 ManagementManagement PrinciplesPrinciples fromfrom thethe World’sWorld’s GreatestGreatest Manufacturer Manufacturer By: Jeffrey K. Liker (Paperback,330p,ISBN 0-07-058747-7,Rs. 250) (Tata McGraw-Hill) Why to read this book ? •• You’ll learn how Toyota creates an ideal environment for implementing Lean techniques & tools by :: -Fostering an atmosphere of continuous improvement and learning -Satisfying customers (and eliminating waste at the same time) -Getting quality right the first time -Grooming leaders from within rather than recruiting them from the outside -Teaching all employees to become problem solver -Growing together with suppliers and partners for mutual benefits About Toyota •• Market capitalization over $ 105 billion; 2,40,000 employees •• 3rd Largest auto manufacturer in the world; behind GM & Ford •• Global Vehicle sale of over 6 million per year in 170 countries •• Big Brands like Corolla, Camry, Lexus •• Annual Profit margin: 8.3 times higher than industry average Contents… •• DevelopmentDevelopment ofof ToyotaToyota ProductionProduction SystemSystem “TPS”“TPS” (5-9)(5-9) •• FundamentalsFundamentals ofof TPSTPS (10-15)(10-15) •• TheThe ToyotaToyota PrinciplesPrinciples (16-19)(16-19) •• WhatWhat cancan bebe learntlearnt fromfrom ToyotaToyota (20-28)(20-28) •• HowHow toto adoptadopt TPSTPS (29-32)(29-32) DevelopmentDevelopment ofof ToyotaToyota ProductionProduction SystemSystem (TPS)(TPS) •• Toyota customer requirement was in small lots & different verities unlike Ford & GM using ‘mass production’ concepts •• These requirement is to be met with same assembly line •• Toyota was having cash crunch and there was no stable supply chain •• Toyota studied that ‘mass production’ concepts cannot be feasible in Japan. Ford & GM were facing many issues due to same. LeanLean ManufacturingManufacturing oror TPSTPS To be a lean manufacturer requires a way of thinking that focuses on making the product flow through value-adding processes without interruption (one piece flow), a ‘Pull’ system that cascades back from customer demand by replenishing only what the next operation takes away at short intervals, and a culture in which everyone is striving continuously to improve Five Step process • Defining Customer Value • Defining the value stream • Making it ‘Flow’ • ‘Pulling’ from the customer back • Striving for excellence ‘‘Pull’Pull’ SystemSystem •• Same as ‘Supermarket’ where replenishment depends on consumption •• It means at shop floor, step 1 in a process should not make parts until the next process (step 2) uses up its original supply •• Small safety stock is kept to raise alarm •• This is same as we get signal from fuel tank of our vehicle for re-fuelling •• This can be termed as ‘JIT’ or ‘Single Piece’ flow ToyotaToyota ProductionProduction SystemSystem Best Quality - Lowest Cost - Shortest Lead Time - Best Safety - High Morale (QCDSM) through shortening the production flow by eliminating waste Just - in - Time People & Teamwork Just - in - Time Right Part, Right Selection JoiJoint decision (In-station quality)) Amount, RightTime Common making Make Problem goals Cross-trained Visible Take time planning CContinous flow Automatic stops Pull system Andon Quick changeover Continuous Improvement Person-machine IIntegrated logisticss seperation EErrrror proofing Waste Reduction IIn-station quality control Go & See EEyes for w aste Solve root cause Problem of of problemss 5 Why's solving (5 Why's) Leveled Production Stable and Standardized Processes Visual Managementnt Toyota Way Philosophy TheThe "4"4 P"P" modelmodel andand wherewhere mostmost companiescompanies areare u u s s i i t t h h u u c c b b Continual organizational learning through Kaizen n n n n e e e e Go see for yourself to thoroughly understand the G G Problem Where most Solving situation (Genchi Genbutsu) "lean" (Continuous Make decisions slowly by consensus, thoroughly Improvement and considering all options; implement rapidly (Nemawashi). companies Learning) are d d n n n n k k Grow leaders who live the philosophy e e a a r r People and Partners i i z z t t o o a a c c w w Respect, develop, and challenge your people and teams. K K e e m m (Respect, Challenge, p p a a s s e e Respect, challenge, and help your suppliers e e T T and Grow Them) R Create process "flow" to surface problems Use pull systems to avoid overproduction Process Level out the workload (Heijunka) (Eliminate Stop when there is a quality problem ((jidoka) Waste) Standardize taks for continuous improvement Use visual control so no problems are hidden. Use only reliable, thoroughly tested technology e e g g n n e e Philosophy l l Base management decisions on a long-term philosophy, a a h h (Long-Term Thinking) C even at the expense of short-term financial goals. FundamentalsFundamentals ofof TPSTPS The basics of TPS refers to elimination of 3 M (ie Muda, Muri & Mura) • Muda-Non-value-added. The most familiar M includes the eight wastes. These are wasteful activities that lengthen lead times, cause extra movement to get parts or tools, create excess inventory, or result in any type of waiting. WasteWaste (Anything(Anything whichwhich isis notnot addingadding anyany valuevalue oror customer customer dodo notnot wantwant toto paypay forfor that)that) •• Overproduction.. Producing items for which there are no orders, which generates such wastes as overstaffing and storage and transportation costs because of excess inventory. •• Waiting (time on hand).. Workers merely serving to watch an automated machine or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of stock outs, lot processing delays, equipment downtime, and capacity bottlenecks. •• Unnecessary transport or conveyance. Carrying work in process (WIP) long distances, creating inefficient transport, or moving materials, parts, or finished goods into or out of storage or between processes Waste…Waste… •• Over processing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher- quality products than is necessary •• Excess inventory. Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times •• Unnecessary movement. Any wasted motion employees have to perform during the course of their work, such as looking for, reaching for, or stacking parts, tools, etc. Also, walking is waste. Waste…Waste… •• Defects. Production of defective parts or correction. Repair or rework, scrap, replacement production, and inspection mean wasteful handling, time, and effort. •• Unused employee creativity. Losing time, ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees. FundamentalsFundamentals ofof TPS….TPS…. • Mura-Unevenness. Unevenness results from an irregular production schedule or fluctuating production volumes due to internal problems, like downtime or missing parts or defects. FundamentalsFundamentals ofof TPS….TPS…. • Muri-Overburdening people or equipment. This is in some respect on the opposite end of the spectrum from muda. Muri if pushing a machine or person beyond natural limits. Overburdening people results in safety and quality problems. Overburdening equipment causes breakdowns and defects ToyotaToyota PrinciplesPrinciples • Section I : Long-Term Philosophy • Principle 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals. • Section II: The Right Process Will Produce the Right Results • Principle 2. Create continuous process flow to bring problems to the surface. • Principle 3. Use “pull” systems to avoid overproduction. • Principle 4. Level out the workload (Work like the tortoise, not the hare.) ToyotaToyota Principles…Principles… • Principle 5. Build a culture of stopping to fix problems, to get quality right the first time. • Principle 6. Standardized tasks are the foundation for continuous improvement and employee empowerment. • Principle 7. Use visual control so no problems are hidden. • Principle 8. Use only reliable, thoroughly tested technology that serves your people and processes. ToyotaToyota Principles…Principles… • Section III: Add Value to the Organization by Developing Your People and Partners • Principle 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. • Principle 10. Develop exceptional people and teams who follow your company’s philosophy • Principle 11. Respect your extended network of partners and suppliers by challenging them and helping them improve. ToyotaToyota Principles…Principles… • Section IV: Continuously Solving Root Problems Drives organizational Learning • Principle 12. Go and see for yourself to thoroughly understand the situation (genchi genbustu). • Principle 13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly ((nemawashi ). • Principle 14. Become a learning organization though relentless reflection (hansei ) and continuous improvement (kaizen). WhatWhat cancan bebe learntlearnt fromfrom Toyota?Toyota? 1.1. SimplicitySimplicity At Toyota they keep things simple
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