CHAPTER

1 The Toyota Way: Using Operational Excellence as a Strategic Weapon

The Toyota Way

TOYOTA

W A S S P E C I A L , even among other Japanese automakers, because of its unbelievable consistency in its products and

processes. They designed autos faster, with more reliability, yet at competitive costs (while paying relatively high wages for workers). Every time an apparent weakness emerged, Toyota fixed the problem and came back even stronger.
This is backed up by its consistent performance; statistics indicate that Toyota is the most profitable of auto makers, with return assets 8 times that of the industry average. In the U.S., it topped and replaced Chrysler in the Big 3 by 2003. Globally, Toyota has been an influential model for lean production, or TPS, triggering a global transformation to Toyotas manufacturing and supply chain philosophy/methods in many industries.

WHY DOES TOYOTA PERFORM THIS WELL?

Is it because of its operational excellence?

Toyota prioritized flexibility when it first developed the Toyota Production System after World War II; this was meant to cater to customer demand. As the focus in meeting such demands intensified (flow), operational excellence emerged. o Fast, flexible processes give customers what they want, when they want it, at the highest quality and affordable cost. However, even deeper than operational excellence, it is Toyotas deep-rooted philosophy that results in their successan understanding of people, human motivation that gives them the ability to cultivate leadership, teams, and culture, to devise strategy, build deep supplier relationships, and to maintain a continuously learning organization.

This is where many companies fail. Many attempts to implement lean are fairly superficial. Lean is an entire system that must permeate an organizations culture.

First, what is lean enterprise?

Lean enterprise is the end result of applying the Toyota Production System, TPS, to all areas of your business. A lean manufacturer focuses on making the product flow through value-adding processes without any interruptions (one-piece flow). Additionally, a pull system must be in place; it should cascade back from customer demand by replenishing only what the next operation takes away (at short intervals). o Lean manufacturing consists of: 1) defining customer value, 2) defining the value stream, 3) making it flow, 4) pulling back from the customer, and 5) striving for excellence/continuous improvement. o Look at a time line from the moment a customer orders and when you get the cash. Reduce that timeline by removing non- value added wastes. Target the manner in which raw material is transformed into a saleable commodity.

Lean enterprise vs. Mass Production

Despite being designed to remove non-value added waste, there are several counter-intuitive truths about non-value-added waste in terms of TPS. o 1) At times, the best thing you can do is stop a machine from producing parts. Overproduction is a fundamental waste in TPS. o 2) Heijunka is the practice of leveling out the production schedule. In contrast to producing according to actual fluctuation of demand, heijunka better serves the flow and pull system for minimizing inventory. o 3) People are the most flexible resource you have. Selectively use information technology. Have workers produce parts at the rate of customer demand. Working faster just for the sake of getting the most out of your workers is another form of overproduction.

Why Companies Often Think They Are LeanBut Arent

The power behind TPS is a companys management commitment to continuously invest in its people. The tools used for the flowing and pulling of TPSquick equipment changeovers, error proofing, just-in-timeare essential but not key to TPS. Dont mistaken lean tools for deep lean thinking. o Lean Company X, a company widely regarded as a best-practice example of lean manufacturing, saw drastic differences in the one production line TSSC worked with. What does this indicate?

Part One |

The World-Class Power of the Toyota Way

CHAPTER 1 The Toyota Way: Using Operational Excellence as a Strategic Weapon

The Toyota Way

U.S. companies have embraced lean tools, but do not understand what makes them work in a system. Because they dabble at one level (Process), they continue to lag behind companies with a true culture of continuous improvement.

Part One |

The World-Class Power of the Toyota Way