Toyota Production System 14 Management Principles
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Friends, I would recomend you to first refer the bibliography slide at the end of it. Read the book.

Friends, I would recomend you to first refer the bibliography slide at the end of it. Read the book.
deshiva at gmail dot com

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Toyota Production System 14 Management Principles Presentation Transcript

  • 1. THE
    TOYOTA WAY
    14 MANAGEMENT PRINCIPLES FROM THE WORLD’S
    GREATEST MANUFACTURER
    By Wg Cdr DK Sharma
  • 2. THE TOYOTA WAY
    02/49
    Toyota Production System
    (TPS)
    Also called The Toyota Way
  • 3. THE TOYOTA WAY
    03/49
    Toyota Production System
    14 Principles
    • Philosophy (01 principle)
    • 4. Process (07 principles)
    • 5. People / Partners (03 principles)
    • 6. Problem Solving (03 principles)
  • THE TOYOTA WAY
    04/49
    • Lean Engineering / Manufacturing / Thinking / Enterprise /System is a: -
    A Five Step Process
    • Defining customer value (internal / external)
    • 7. Defining the Value Stream (Process)
    • 8. Making it Flow (Process)
    • 9. “Pulling” from the Customer back (Inventory)
    • 10. Striving for Excellence (Long term)
  • THE TOYOTA WAY
    05/49
    Objectives of TPS
    • Eliminating wasted time and resources
    • 11. Building quality into workplace systems
    • 12. Finding low cost but reliable alternatives to expensive new technology
    • 13. Perfecting business processes
    • 14. Building learning cultures for continuous improvements
  • THE TOYOTA WAY
    06/49
    +Continual org learning.
    +Go & see yourself.
    +Decision slowly by consensus and implement rapidly.
    +Grow leaders who live the philosophy.
    +Respect, develop and challenge people, teams and suppliers.
    +Create process flow to surface problems
    +Use pull system to avoid over production
    +Stop when there is a quality problem. (Jidoka)
    + Level out the workload. (heijunka)
    +Standardize tasks for continuous improvement.
    +Use visual control so no problems are hidden.
    +Use only reliable technology.
    +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
    “4 P” MODEL OF THE TOYOTA WAY
  • 15. THE TOYOTA WAY
    07/49
    Principle 1 - Management Decisions on a Long–Term Philosophy, even at the expense of Short-Terms Financial Goals.
    • We wanted to break new ground in ride quality. To get that, our tire compounds were fairly soft. So even though the customer experienced a good ride and the tires were well within our specs, they did not last as long initially as many customers wished. 5-7% of the customers actually complained about tire life. For Toyota that is a big deal, as Toyota is used to dealing in complaint level far < 1%.
  • THE TOYOTA WAY
    08/49
    Base Management Decisions on a Long–Term Philosophy, even at the expense of Short-Terms Financial Goals.
    • So Toyota sent the owner of every Lexus who had the specified batch of tires, a coupon they could redeem for $500 and apologised for inconveniency. Many of these customers had already sold their Lexus.
    • 16. The way you treat your customer when you do not owe them anything, like how you treat somebody who can not fight back – that is the ultimate test of character and long term philosophy of values.
  • THE TOYOTA WAY
    09/49
    +Continual org learning.
    +Go & see yourself.
    +Decision slowly by consensus and implement rapidly.
    +Grow leaders who live the philosophy.
    +Respect, develop and challenge people, teams and suppliers.
    +Create process flow to surface problems
    +Use pull system to avoid over production
    +Stop when there is a quality problem. (Jidoka)
    + Level out the workload. (heijunka)
    +Standardize tasks for continuous improvement.
    +Use visual control so no problems are hidden.
    +Use only reliable technology.
    +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
    “4 P” MODEL OF THE TOYOTA WAY
  • 17. THE TOYOTA WAY
    10/49
    Principle 2. Create Continuous Process Flow to Bring Problems to the Surface
    • Flow is the heart of the Lean message that shortening the elapsed time from raw material to finished goods / service will lead to the best quality, lowest cost and shortest delivery time
    • 18. Flow means when a customer places an order, this triggers the process of obtaining raw material from suppliers, flow to production plant, assemble the order, transport to dealer and deliver to customer
    • 19. Flow also forces the implementation of other lean tools such as preventive maintenance, built-in quality (jidoka), continuous improvement (kaizan) and even production (heijunka)
  • THE TOYOTA WAY
    11/49
    Principle 2. Create Continuous Process Flow to Bring Problems to the Surface
    Toyota Identified 7 Major Non-Value Adding Waste
    1. Overproduction – Producing items for which there are no orders
    2. Waiting (time on hand)– Worker waiting for a preceding process to be over, tool, part, lot processing, capacity bottlenecks
    3. Unnecessary transport or conveyance – Carrying work-in-progress (WIP) long distance
  • 20. THE TOYOTA WAY
    12/49
    Principle 2. Create Continuous Process Flow to Bring Problems to the Surface
    4. Over / incorrect processing - Inefficient process due to poor tooling or production design
    5. Excess / unavailable Inventory– Extra inventory hides problems such as production imbalances, late deliveries, defects, downtime and long set up time
    6. Unnecessary Movement – Wasted motion like looking for, reaching for, stacking part, tools etc, even walking is a waste during production
    7. Defects – Production of defective parts and its correction, Repair or rework, replacement production and inspection
  • 21. THE TOYOTA WAY
    13/49
    Computer Base Dept (1 min each)
    Computer Monitor Dept (1 min each)
    Computer Test Dept (1 min each)
    • Complete processing of first batch of 10 takes 30 minutes
    • 22. Transportation from Base to Monitor Dept is in batch of 10
    • 23. First good computer ready in 21 minutes
    • 24. There are at least 21 sub-assemblies in process at a time
    Batch Processing Example
  • 25. THE TOYOTA WAY
    14/49
    Computer Base Dept
    Product requires three processes that takes one minute each
    (One Piece Flow Production Cell)
    Lean Thinking – Batch size - ONE
    Computer Monitor Dept
    Computer Test Dept
    • First part is ready in 3 minutes
    • 26. 10 complete assembly ready in 12 minutes
    • 27. Only two sub-assembly in process at a time
    Continuous Flow Example
  • 28. Process – Eliminate Waste
    15/49
    Principle 3. Use “Pull” Systems to Avoid Overproduction
    “The more inventory a company has, .....the less likely they will have what they need.” TaiichiOhno
    • Provide your down line customers in the production process with what they want, when they want it, and in the amount they want. Material replenishment initiated by consumption is the basic principle of just-in-time (JIT). It triggers at a customer’s orders of Toyota.
     
    • Minimize your work in process (WIP) and warehousing of inventory by stocking small amounts of each product and frequently restocking based on what the customer actually takes away.
     
    • Be responsive to the day-by-day shifts in customer demand rather than relying on computer schedules and systems to track wasteful inventory.
  • Process – Eliminate Waste
    16/49
    Principle 4. Level out the Workload (heijunka)
    (Work like the tortoise not the hare)
    • Eliminating waste is just one-third of the equation for making lean successful. Eliminating overburden to people and equipment and eliminating unevenness in the production schedule are just as important
     
    • The slower and consistent tortoise causes less waste and is much more desirable than the speedy hare that races ahead and then stops occasionally to doze. The TPS can be realised only when all move at the speed of tortoise.
  • Process – Eliminate Waste
    17/49
    Principle 4. Level out the Workload (heijunka)
    (Work like the tortoise not the hare)
    Elimination
  • 29. Process – Eliminate Waste
    18/49
    Principle 5.Build a Culture of Stopping to Fix Problems, to Get Quality Right the First Time
    • GM followed the golden rule of automotive engine production: do not shut down the assy plant! At GM, managers were judged by their ability to deliver the numbers, Get the job done no matter what – and that meant getting the assy plant to keep it running.
    • 30. How Toyota Reacted – If you are not shutting down the assy plant, it means that you have no problem. All mfg plants have problems. So you must be hiding your problems. It is better to shut down the plant and work on quality and continue to solve your problems.
  • Process – Eliminate Waste
    19/49
    Principle 5. Keep Quality Controls Simple and Involve Team Members
    Things like ISO-9000, an industrial quality standard that calls for all kinds of detailed SOPs, for whatever good they have done, have made companies believe that if they put together detailed rule books the rules will be followed. Quality planning dept are armed with reams of data analyzed using most sophisticated statistical analysis methods. Six Sigma has brought us roving bands of black belts who attack major quality problems with a vengeance, armed with an arsenal of sophisticated technical methods. But at Toyota........................
  • 31. Process – Eliminate Waste
    20/49
    Principle 5. Keep Quality Controls Simple and Involve Team Members
    ..........they keep things simple and use very few complex statistical tools, the quality team have just four key rules (power of simplicity): -
    • Go and See
    • 32. Analyze the situation
    • 33. Use one piece flow and andon (cord to stop production) to surface problems
    • 34. Ask “Why?” Five times to get to the root of problem
    Quality for customer drives your value proposition, because adding value to customer is what keeps you in business and allow you to make money.
  • 35. Process – Eliminate Waste
    21/49
    Principle 6. Standardized Tasks are the Foundation for Continuous Improvement and Employee Empowerment (Kaizan)
    • It is impossible to improve any process until it is standardized.
    • 36. Standardization, stabilize the process before continuous improvements can be made.
    • 37. Until you have the fundamental skill needed to swing the club consistently, there is no hope of improving your golf game.
    • 38. Standardization is to find that balance between providing employees with RIGID procedures to follow and providing the freedom to INNOVATE and be creative.
  • Process – Eliminate Waste
    22/49
    Principle 6
    Coercive Vs Enabling Systems and Standards
    High Bureaucracy
    Low Bureaucracy
    Coercive
    Enabling
  • 39. Process – Eliminate Waste
    23/49
    Principle 7
    Use Visual Controls so No Problems Are Hidden
    • Traffic signals tend to be well-designed visual controls. Good traffic signs don’t require you to study them: their meaning is immediately clear
    • 40. The visual aspect means being able to look at the process, a piece of equipment, inventory, or information or at worker performing a job and immediately see the standards being used to perform the task and if there is a deviation from standards
    • 41. Visual management complements humans because we are visual, touch and audio oriented
  • Process – Eliminate Waste
    24/49
    Principle 7
    Clean It Up and Make It Visual – 5 S
  • 42. Process – Eliminate Waste
    25/49
    Principle 8
    Use Only Reliable, Thoroughly Tested Technology That Serves Your People, Processes and Values
    “Society has reached the point where one can push a button and be immediately deluged with technical and managerial information. This is all very convenient, of course, but if one is not careful there is a danger of losing the ability to think. We must remember that in the end it is the individual human being who must solve the problems”
    Eiji Toyoda
    Any information technology must meet the acid test of supporting people and processes and prove it adds value before it is implemented broadly.
    First work out the manual system and then automate it
  • 43. THE TOYOTA WAY
    26/49
    +Continual org learning.
    +Go & see yourself.
    +Decision slowly by consensus and implement rapidly.
    +Grow leaders who live the philosophy.
    +Respect, develop and challenge people, teams and suppliers.
    +Create process flow to surface problems
    +Use pull system to avoid over production
    +Stop when there is a quality problem. (Jidoka)
    + Level out the workload. (heijunka)
    +Standardize tasks for continuous improvement.
    +Use visual control so no problems are hidden.
    +Use only reliable technology.
    +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
    “4 P” MODEL OF THE TOYOTA WAY
  • 44. PEOPLE & PARTNERS
    27/49
    Principle 9
    Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others
    The Automotive News recognized newsmakers in the auto industry. Direct quotes from the issue about these newsmakers: -
    Bill Ford (Ford): Talks up revitalization, brings backs old guys, stars in TV commercial. Ford stock remains mired in the $10 range
    Robert Lutz (GM):Former Marine pilot inspires GM’s troops and simplifies product development, giving designers a bigger voice
    Dieter Zetzsche (Chrysler): Turns the company around a year early with 3 Qtrs in the black
  • 45. PEOPLE & PARTNERS
    28/49
    Principle 9
    Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others
    Fujio Cho (Toyota):Toyota President presides over rise in operating profit to industry record. Take lead on hybrids. Grabs 10 point of US market. Joins with Peugeot for plants in Eastern Europe.
    Changing the culture each time a new leader comes into office necessarily means jerking the company about superficially, without developing any real depth or loyalty from the employees. The problem with the radical shifts in the culture is that organization will never learn – it loses its ability to build on achievements, mistakes, or enduring principles.
    Deming, the Quality Guru terms it “Constancy of Purpose”.
  • 46. PEOPLE & PARTNERS
    29/49
    Principle 9
    Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others
    +Growth
    +Attention
    +Go & See
    +Problem solving
    +Presentation skills
    +Project Mgt
    +Supportive culture
    +Stability
    +JIT
    +Jidoka
    +Kaizan
    +Heijunka
    Long term assets Learned skills
    Machinery depreciatesLoses value
    People appreciates continue to grow
    PHILOSOPHY
    Customer First
    People are most important asset
    Kaizan – continuous improvement
    Go and See – Give feedback
    Efficiency thinking
    True (vs. Apparent) condition
    Total (vs. Individual) team involvement
    PEOPLE
    MANAGEMENT
    TECHN I CAL
    Toyota Leader’s view of the TPS
  • 47. PEOPLE & PARTNERS
    30/49
    Principle 9
    TOYOTA LEADERSHIP MODEL
    Bottom-Up (Development)
    Top Down
    (Directional)
    General Management Expertise
    In-depth Understanding
    of Work
  • 48. PEOPLE & PARTNERS
    31/49
    Principle 10
    Develop Exceptional People and teams Who Follow Your Company’s Philosophy
  • 49. PEOPLE & PARTNERS
    32/49
    Principle 10
  • 50. PEOPLE & PARTNERS
    33/49
    Principle 11
    Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve
    Auto industry suppliers consistently report that TOYOTA is their best customer ….and also their toughest.
    Have respect for your partners and suppliers and treat them as an extension of your business.
    Challenge your outside business partners to grow and develop.
    It shows that you value them.
    Set challenging targets and assist your partners in achieving them.
  • 51. PEOPLE & PARTNERS
    34/49
    Principle 11
    Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve
    • Toyota is very carefully when deciding what to outsource and what to do in house. Toyota outsource about 70% of the components. It still wants to maintain internal competency
    • 52. Even when Toyota chooses to outsource a key component, it does not want to lose internal capability
    • 53. As a general rule, Toyota wants to have at least two suppliers for every component
    • 54. Toyota is very bureaucratic in their dealings with suppliers, having extensive standards, auditing procedures, rules etc. But suppliers consider Toyota as their partner and Toyota is viewed as enabling customer who participate and solve their problems too.
  • PEOPLE & PARTNERS
    35/49
    Principle 11
    Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve
    Progressing Need Satisfaction
    Regressing Need Satisfaction
    Next Level of Improvement
    Stability
    Supply Chain Need Hierarchy
  • 55. THE TOYOTA WAY
    36/49
    +Continual org learning.
    +Go & see yourself.
    +Decision slowly by consensus and implement rapidly.
    +Grow leaders who live the philosophy.
    +Respect, develop and challenge people, teams and suppliers.
    +Create process flow to surface problems
    +Use pull system to avoid over production
    +Stop when there is a quality problem. (Jidoka)
    + Level out the workload. (heijunka)
    +Standardize tasks for continuous improvement.
    +Use visual control so no problems are hidden.
    +Use only reliable technology.
    +Base management decisions on a long term philosophy, even at the expense of short term financial gains.
    “4 P” MODEL OF THE TOYOTA WAY
  • 56. PROBLEM SOLVING
    37/49
    Principle 12
    GO and SEE to Thoroughly Understand
    the Situation (GenchiGenbutsu)
    “Observe the production floor without preconceptions and with a blank mind. Repeat “why” five times to every matter.”
    TaiichiOhno(as quoted in the Toyota Way document)
    It is more than going and seeing. “What happened? What did you see? What are the issues? What are the problems?” At the root of all of that, we try to make decisions based on factual information, not based on theory, statistics and number contribute to the facts, but it is more than that. Some time we get accused of spending too much time doing all the analysis. Some will say, “Common sense will tell you. I know what the problem is.” But collecting data and analysis will tell you if your common sense is right.
  • 57. PROBLEM SOLVING
    38/49
    Principle 12
    GO and SEE to Thoroughly Understand
    the Situation (GenchiGenbutsu)
    Mr. Ohno at times made his supervisor / managers to draw a circle on the floor of a plant and they were told, “Stand in that and watch the process and think for yourself”, and then he did not even give you any kind of hint of what to watch for. This is the real essence of TPS.
    The Power of Deep Observation
    To Question, Analyze and Evaluate
    • We often depend upon computers to analyze and evaluate data
    • 58. Like Six Sigma quality improvement initiatives – we collect data and run it through statistical analysis – correlations, regressions, variance etc, some of the results we get are statistically significant. But do we really understand the context of what is going on or the nature of the problem?
  • PROBLEM SOLVING
    39/49
    Principle 12
    GO and SEE to Thoroughly Understand
    the Situation (GenchiGenbutsu)
    • Data is of course important in manufacturing, but place greatest emphasis on facts – go and see
    • 59. Think and speak based on personally verified data
    • 60. See America, then design for America – to design Sienna minivan in 2004, the Chief Engineer of D&D drove extensively in US, Canada and Mexico to get a feel of what people wants in a minivan
    • 61. You can not expect to do your job without getting your hands dirty
  • PROBLEM SOLVING
    40/49
    Principle 13
    Make Decisions Slowly by Consensus, Thoroughly Considering All Options; Implement Rapidly
    If there is a project supposed to be fully implemented in a year. A typical company anywhere would spend about three months on planning and begin to implement. But they encounter all sorts of problems after implementation and would spend rest of the year in correcting them
    Toyota will spend 10 months planning, building consensus, implement it in a small pilot production – and fully implement at the end of year, with virtually no remaining problems
    Nothing is assumed. Every thing is verified
  • 62. PROBLEM SOLVING
    41/49
    Principle 13
    Make Decisions Slowly by Consensus, Thoroughly Considering All Options; Implement Rapidly
    Preferred
    Group consensus with full authority
    Level of Involvement
    • Decision making is highly situational
    • 63. Philosophy is to seek maximum involvement for each situation
    Group consensus, Management Approval
    Get all the parties on board, iron out all the resistance, generate consensus, then implementing
    Seek group input, then decide and announce
    Fallback
    If consensus not achieved
    Seek individual input, then Decide and Announce
    Fallback
    Decide and Announce
    Time
  • 64. PROBLEM SOLVING
    42/49
    Principle 14
    A Learning Org Through Relentless Reflection (Hansei)
    and Continuous Improvement (Kaizen)
    We view errors as opportunities for learning. Rather than blaming individuals, the organisation takes corrective actions and distributes knowledge about each experience broadly. Learning is a continuous company-wide process as superiors motivates and train subordinates; as predecessors do the same for successors; and as a team subordinates at all levels share knowledge with one another.
    The Toyota Way Document 2001
    Toyota has judiciously used stability and standardization to transfer individual and team innovations into organisational-wide learning. Standardisation punctured by innovation, gets translated into new standards (Kaizen) .
  • 65. PROBLEM SOLVING
    43/49
    Principle 14
    Relentless Reflection (Hansei) and Continuous Improvement (Kaizen)
    5 Whys is a method to pursue the deeper, systematic causes of a problem to find correspondingly deeper countermeasures
    Why
    Why
    Why
    Why
    Why
  • 66. 44/49
    3. Locate Area / Point of Cause
    Grasp the Situation
    Basic Cause and Effect Investigation
    Direct Cause
    Why
    Why
    Cause
    Cause Investigation
    Why
    Cause
    4. Five Whys?
    Investigation of Root Cause
    Why
    Cause
    Why
    Cause
    Root Cause
    5. Countermeasure
    6. Evaluate
    7. Standardize
    Toyota’s Practical Problem Solving Process
  • 67. PROBLEM SOLVING
    45/49
    Principle 14
    Relentless Reflection (Hansei) and Continuous Improvement (Kaizen)
    Eliminate
    Waste
    Deming Circle of Quality (PDCA)
  • 68. THE TOYOTA WAY
    46/49
    One man did his part, and the other his, and neither even had to check to make sure both parts were getting done. Like the dance of atoms Alvin had imagined in his mind. He never realized it before, but people could be like those atoms, too. Most of the time people were all disorganized nobody knowing who anybody else was, nobody holding still long enough to trust or be trusted, just like Alvin imagined atoms might have been before God taught them who they were and gave them work to do.
    It was a miracle seeing how smooth they knew each other’s next move before the move was even begun. Alvin almost laughed out loud in the joy of seeing such a thing. Knowing it was possible, dreaming of what it might mean – thousands of people knowing each other that well, moving to fit each other just right, working together. Who could stand in the way of such people?
    Orson Scott Card
    Prentice Alvin: The Tales of Alvin Maker
  • 69. THE TOYOTA WAY
    47/49
    The Lessons and
    Secrets of Toyota way
    It creates bonds among individual and patterns such that they “move to fit together just right, working together” towards a common goal.
    Creating a WHOLE much greater and stronger than the SUM of the individuals
  • 70. THE TOYOTA WAY
    48/49
    Bibliography &
    Recommended Readings
    The Toyota Way – Jeffery K. Liker
    The Machine that Changed the World – Womack, Jones & Ross
    Lean Thinking – Womack & Jones
  • 71. THE TOYOTA WAY
    49/49
    Thank You