Really long and comprehensive article in Baseline on Toyota -- What's
Nice piece, actually. I don't know where to begin
since so many bits in the article interest me. How about starting with
some basic business assumptions and how the Toyota Production System is
defined. To quote the article:
The engine behind its success, say
insiders and outsiders alike, is the Toyota Production System (TPS), a
set of principles, philosophies and business processes to enable the
And behind TPS is information technology -- supporting and enabling the
business processes that help Toyota eliminate waste, operate with
virtually no inventory and continually improve production.
Technology does not drive business processes at Toyota. The Toyota
Production System does. However, technology plays a critical role by
supporting, enabling and bringing to life on a mass scale the processes
derived by adhering to TPS.
"What strikes me about Toyota is, if you were to ask them if they have
a technology strategy, they would probably say no, we have a business
strategy," says Philip Evans, a senior vice president at the Boston
Consulting Group who has studied Toyota. "They have a very clear
understanding of the role technology plays in supporting the business."
This strikes me, too, because I'm so used to focusing on the technology
that the business case sometimes gets lose or the technology ends up
driving the business case or obfuscating the business case. The
sequence, however, seems quite clear at Toyota. But reading only this
far, I thought for sure that this TPS thing must certainly be based on
Toyota proprietary IP, right? It appears not. Later in the article
you'll find this:
Unlike the formulas to blend Coca-Cola
or the latest blockbuster drug, there is no veil of secrecy behind the
Toyota Production System. In fact, Toyota openly invites general
visitors and competitors alike into its plants to observe its
operations and manufacturing techniques.
In 1992, it opened the Toyota Supplier Support Center in Erlanger, Ky.,
about an hour's drive north of the Georgetown plant, to teach other
companies the principles and concepts behind TPS and to help implement
TPS in their own operations. To date, it has worked with more than 100
companies as varied as office furniture maker Herman Miller, seat
manufacturer Trim Masters and several hospitals. The supplier center
now operates as an independent consulting firm.
It even created a joint venture with GM in 1982, taking a plant that
was to be closed in Fremont, Calif., and reengineering it into a lean
manufacturing facility based on TPS. That plant, renamed New United
Motor Manufacturing Inc. (NUMMI), quickly surpassed all of GM's plants
in North America in productivity, quality and inventory turns. NUMMI
became a living laboratory for hundreds of GM executives and now
manufactures Corollas, Tacoma pickup trucks and the Pontiac Vibe.
Toyota is open with the strategy behind TPS because it wants to raise
its North American suppliers up to its own level of efficiency and
quality, Liker says. At the same time, it can afford to be open with
its competitors because Toyota is constantly raising the bar. By the
time they copy its current processes, Toyota will have moved on.
So, the business model comes first at Toyota, and technology supports
the business model -- not the other way around. Then both are packaged
and implemented via the TPS, which is open and enables others to
benefit while Toyota profits and drives its thinking deeper into the
market. And Toyota is not worried about opening up its production
processes because the company is confident it can out innovate
competitors and, actually, the company would like suppliers to come up
to its standards. Talk about confidence. My goodness. I think I'm going
to cite this example the next time someone is worried about opening
their code. This has an open community dynamic to it of sharing as well
The article goes on to explain the core elements of the TPS:
Just-in-Time, Jidoka, Kaizen, Andons, Poka Yokes, and Genchi Genbutsu.
To me, that last one in the list is the most interesting. According to
The literal translation of this term
is, "Go and see for yourself." Rather than hear about a problem, Toyota
requires its workers, team leaders and executives to go and see a
problem directly and to work collectively on a solution.
Interesting. So, there seems to be a community dynamic occurring
internally as well as externally. There are several other examples of
this in the article. If Toyota were a software company, I bet they'd
participate in open source, don't you think?
Back to the article ...
Together, the elements of TPS form the
basis for a system of
business process management that allows Toyota to continuously look for
ways to optimize its operations and put thought into action. Sounds
simple, but it requires a basic cultural change in an organization, and
that, according to Gary Convis, can be the most difficult challenge.
Convis, chairman of Toyota Motor Manufacturing Kentucky, oversees the
company's manufacturing plant in Georgetown, Ky.
By the way, after his promotion, this guy Convis moved his office from
administrative building to the factory floor. The chairman. On the
So, why can't the American car companies tap into a system like this?
It obviously works pretty well since Toyota just picked off Ford and is
on its way to taking down GM. Why are those guys doing so poorly while
Honda as well) are doing so well? Especially, when at least Toyota
processes? I think I'm just now beginning to understand what the
answer is and why Toyota isn't afraid of opening those processes. Ok,
the answer is obviously massively complex -- especially when you
consider American union, health care, pension issues, and missing
market shifts - but perhaps a few of these elements are involved as
well: (1) openness can help build markets, (2) those who open some of
their stuff end up leading within those markets, (3) and the culture of
pervasive quality is almost impossible to copy because it leads to
unique value every time it's implemented. And by "culture" I don't
necessarily mean Japanese vs American. Yes, I think the Japanese notion
of quality and service is somewhat higher than what most Americans can
even imagine, but it doesn't have to be that way and it wasn't always
this way in the past.
Now, the article is not all rosy for Toyota. In fact, the company has
actually had some tough times lately with re-calls and quality issues.
But most analysts feel that things are turning around, they have
confidence in the company, and they still put Toyota quality way above
that of their competitors. Nevertheless, "[a]t a news conference in
July, Toyota president Katsuaki Watanabe bowed deeply and apologized
for the recall troubles. 'I take this seriously and see it as a
crisis,' Watanabe said at the conference. 'I want to apologize deeply
for the troubles we have caused.'"
Bowed deeply and apologized. So, perhaps I should add a touch of
humility to my little list of elements to consider.