TOYOTA PS

TOYOTA PRODUCTION
SYSTEM (TPS)
Management Principles from the
World’s greatest manufacturer

Role of Management at Toyota
• Explaining what the goal is - Vision, Mission
• A path to achieve it - Strategy and Programs
• Sharing the path - Communication, Training
• Motivating people to take the journey with you
• Assisting people by removing obstacles

Why learn Toyota Production System ?
• Insight into working of World’s greatest manufacturer
• To develop participants as “Change Agents” who’ll
apply learning to their own processes
• Contribute to achieve PPAP vision
• Add value to PPAP

The road to continual learning ...
Disseminating
Knowledge
Apply
in PPAP
Benefit
PPAP,
Morale
Acquiring
Knowledge
Continual
Learning

Toyota’s Evolution
• Toyoda - a family of inventors, learnt by doing
• Believed in contributing to the society
• Relentless
• Challenges with Creative spirit and Courage
• Led by example
• Self reliant, trusted in own abilities
• Accepted responsibility
• Improved skills for added value
• Taiichi Ohno, founder of TPS, put these Principles
on shop floor which through years of trial and error,
emerged as TPS.

What Toyota achieved with TPS
• Annual profits more than the combined earning of GM, Chrysler,
Ford in 2002-3.
• Japan’s No.1 automaker
• World No.2 in automotive business and may eventually become
No.1
• World’s Largest selling models have come from TOYOTA - Camry
and Corolla
• Lexus outsold Benz, BMW and Cadillac in the US for 3
consecutive years
• Fastest product development process - New models take less than a
year
• Benchmarked for Quality, Productivity, manufacturing speed and
flexibility by peers and competitors, the world over

The TPS benefits
• Eliminated waste time and resources
• ‘Built in’ quality at the workplace
• Low cost, reliable alternatives to expensive
technology
• Perfect Business Processes
• Learning culture for continuous improvement

… more than anything else
• A learning company that can meet challenges
posed by rapid business environmental changes
The TPS benefits

What is a Process ?
Group of activities that converts input into output
using resources like time, machines, men, energy...
Input
- Raw
material
Output -
Saleable
Good
Inter related activities
Machine, Men,
consumables, energy
Consumes time
Start End
Examples of Process :
•Customer requirement to drawing
•Raw material to Saleable good
•Training
Waste

Improvement ?
A
B
C
Time
Parameter

Activities
• Value adding - for which the customer is
actually paying e.g. roll forming, flocking,...
• Non Value adding but necessary e.g. inspection,
security, WIP, ...
• Waste - inventory, idle time, overproduction,
overprocessing, transportation, walking, human
creativity, ...

Myth – What TPS is not Reality – What TPS is
-A tangible recipe for success -A consistent way of thinking
-A management project or
program
-A total management
philosophy
-A set of tools for
implementation
-Focus on total customer
satisfaction
-A system for production shop
floor
-Teamwork and improvement
-Implementable in a short or mid
term period
-Never ending search for
better way, quality built in
process, Organized,
disciplined workplace
-Evolutionary
The Toyota way

Reducing the time consumed
from receiving customer’s order to
collecting cash by removing
non value added wastes
The TOYOTA Way
‘Essence’ of TPS

Toyota Production System
‘Models’

Continuous Improvement
through
kaizen, problem solving and
challenging everything
Respect for People
Creating an environment
of
continuous learning
and
embracing change,
employment security
and
team participation
The Toyota way
‘Pillar’ Model
TPS

Best Quality,
Lowest cost , Shortest lead time- Best Safety - High Morale
Toyota way philosophy
Visual Management
Stable and standardized processes
Leveled Production
Just in Time
Right Part,
right amount,
right time
Jidoka
In-station Quality
Andon,
Error Proofing,
Problem solving
- Root causesWaste reduction
People and Team work
Continuous Improvement
The Toyota way
‘House’ Model

The Toyota way
‘Iceberg’ Model
Kanban, Cells, 5 S,
Charts, Andon, Slogans,
Value stream maps, Teams
Culture
Involve people in continuous
improvement to eliminate waste
through the Toyota way
Invisible
(under Water)
Visible

The Toyota way
‘Triangle’ model
Technical
• Stability
•JIT
•jidoka
•Kaizen
•Heijunka
Management
•True North
•Tools to focus
management attention
•Go and See
•Problem solving
•Presentation skills
•Project management
•Supportive culture
Philosophical
•Customers first
•People are most important asset
•Kaizen
•Go and See - Focus on Floor
•Give feedback to team members and earn respect
•Efficiency thinking - True(vs. apparent condition,
•Total (vs. individual) team involvement
People
•Long Term asset -
learned skills
•Machinery
depreciates - loses
value
•People appreciate
- continue to grow
People
Management
Philosophical
Technical

The TOYOTA Way
‘4 P’ Model - Current
Long Term Philosophy
Process
People and Partners
Problem Solving
Most ‘lean’ companies
are here as they only
try to eliminate process
waste

The 14 Toyota Way Principles
(based on ‘4P’ model)

• Do the Right thing for the company, its
employees, the customer and society as a whole.
Mission is greater than earning profit alone.
• The purpose of money is to be able to reinvest in
the future to help society and to help the
community and contribute back to the community
• Don’t let business decisions undermine trust and
mutual respect - Instead of laying off 600 workers,
TOYOTA gave responsibility for additional work
at its NUMMI plant in the US.
Principle 1. Base Management Decisions on a long term
philosophy even at the expense of short term financial goals
The Toyota way
Philosophy - Long Term

• As an American company,contribute to the
economic growth of the community and the United
States.
• As an independent company, contribute to the
stability and well being of team members.
• As a Toyota group company,contribute to the
overall growth of Toyota by adding value to our
customers.
The Toyota way
Mission Statement of TOYOTA, NORTH AMERICA

• Honor the language and spirit of the law of every nation, become a
good corporate citizen
• Respect the culture and customs of every nation and contribute to
economic and social development of communities
• Dedicate to providing clean and safe products and to enhancing quality
of life everywhere
• Create and develop advanced technologies and provide outstanding
products and services that fulfil the customer needs worldwide.
• Foster a culture that enhances individual creativity and teamwork
value, honoring mutual trust between labor and management
• Pursue growth with innovative management
• Work with business partners to achieve stable, long term growth and
mutual benefits
The Toyota way

Principle 2 .Create continuous flow to bring problems to
the surface
• Continuous flow Vs. Batch processing
• Takt time - German word for rhythm or
meter, is the rate of customer demand, all
processes to match this rate - Time/piece
• One Piece flow builds in quality, creates
flexibility, higher productivity, saves floor
space, improves safety, improves morale,
reduces cost of inventory
The Toyota way
Process - Eliminate Waste

Creating flow with PDCA
Create Flow
(Act)
Counter measures
(Do)
Surface Problems
(Plan)
Evaluate Results
(Check) Eliminate Waste
The Toyota way

Tightly linked Processes - Problems get surfaced
Process 2 Process 4Process 3Process 1
Problems are hidden here
WIP
The Toyota way

Rolling and Extrusion mill Notching Drilling
Cleaning
& Inspection
Packing
Continuous flow Batch Flow
Principle 2 . Example of continuous and batch flow at PPAP
The Toyota way
WIPWIP
WIP
WIP

• KANBAN - Cards, Signboard, doorplate, poster etc. - a
signal to send the specific number of parts as per
customer demand - manages flow in a Just in Time
production system
• Customer Pull and Replenishment - Filling of Petrol in
car when fuel reaches a particular level.
Principle 3 . Use ‘Pull’ system to avoid overproduction
The Toyota way
Station 1- Produces
only when Station 2 demands
Station 2 -
Produces as per customer demand

• GRADUALLY REDUCE THE KANBAN CARDS IN
CIRCULATION TO REDUCE INVENTORY
• FORCE THE TEAMS TO COME UP WITH
PROCESS IMPROVEMENTS
• MAKE THINGS VISUAL
Principle 3 . Use ‘Pull’ system to avoid overproduction
The Toyota way

1 1 1 1 2 2 2
1 1 1 12 2 2
Uneven Production Schedule
Level Production Schedule
Principle 4 . Level out the workload (heijunka)
The Toyota way
Car Jeep Conveyor

Principle 4 . Advantages of leveled work load
• Flexibility to make what the customers want, when
they want it
•Reduced risk of unsold goods
•Balanced use of labor and machines
•Smooth demand on upstream processes and suppliers
The Toyota way

Principle 4 . Reduce 3 Ms.
Mura
Unevenness
Muda
Waste
Non Value added
Muri
Overburden
Pushing
beyond
normal
limits
Irregular
schedule or
fluctuating
volume
Level workload eliminates mura which eliminates muri and muda
The Toyota way

Principle 5 . Stop line to fix problems, to get quality right first
time (Jidoka)
• Jidoka or ‘Autonomation’ means equipment
endowed with human intelligence to stop itself
when there is a problem e.g. power loom stops
automatically if thread breaks.
• ‘In-station’ quality is much more effective and
less costly than inspecting and repairing quality
problem after the fact.
• Bring problems to the surface, make them visible
and go to work immediately on countermeasures.
The Toyota way

Conveyor Line Section 1
1
2
3 5
4 6
And On
system
Buffer Conveyor Line Section 2
And On
system
Team Leader
takes a decision
8 1210
7 9 11
Principle 5 . ‘Andon’ system as enabler of Jidoka
Problem
Operator
presses ‘Andon’ button
Light
comes up
Note defect,
off line
repair
Repair
on line
Team Leader is given training on how to attend the line problems
The Toyota way

Principle 5. What Quality specialists do at Toyota
• Go and See
• Analyze the situation
• Use one piece flow and ‘Andon’ to surface problem
• Ask why 5 times and take countermeasures
The Toyota way

• Today’s standardization is … the necessary foundation
on which tomorrow’s improvement will be based.
• If you think of “standardization’ as the best you know
today, but which is to be improved tomorrow - you get
somewhere. But if you think standards as confining, then
progress stops.
Principle 6 . Standardized tasks - the foundations of
continuous improvement and employee empowerment.
The Toyota way

Principle 6. Standardized tasks - Foundations of
continuous improvement and employee empowerment.
Standardized Work
Takt Time
Time to
complete 1 job
at the rate of
customer demand
Sequence
of
processes
to be done
Stock on hand
needed
to
accomplish
the
standard work
The Toyota way

Principle 6 . Standardized tasks
• Including processes such as engineering,
purchasing
• It is impossible to improve any process until it
is standardized
• Without standardization, an improvement
becomes a variation that is occasionally used and
mostly ignored.
The Toyota way

Principle 6 . How to achieve Zero Defects the TOYOTA way
Watch the worker
Go through the standardized work sheet
Look for deviations of actual work with std. Work sheet. Correct deviations
If defects still occur, modify the work standard
The Toyota way

• At TOYOTA, the standard work is posted outward,
away from the operator
• The operator is trained using standard work sheet
• Team leaders and group leaders audit and see whether
the Standardized work is being performed by the
operator.
• Toyota way is to enable those doing the work to design
and build in quality by writing the standardized work
procedures themselves - It empowers them
• At TOYOTA, worker is the most valuable resource, an
analyst and a problem solver
The Toyota way

Work
Standard
OperatorTeam Leader
Posted away from operator
If there is proper training, worker does not need work standard
in front of him !
The Toyota way

Principle 6 . Employee empowerment with Enabling
Bureaucracy
Coercive Bureaucracy
•Rigid rule enforcement
•Extensive written rules and procedures
•Hierarchy controls
Enabling Bureaucracy
•Empowered Employees
•Rules and Procedures as enablers
•Hierarchy supports org. learning
Autocratic
•Top down control
•Minimum written rules and procedures
•Hierarchy controls
Organic
•Empowered Employees
•Minimum Rules and Procedures
•Little Hierarchy
Coercive Enabling
H
I
G
H
L
o
w
Social Structure
Te
ch
nic
al
Str
uct
ur
e
The Toyota way
Toyota Way

• What is Visual control ??
• Being able by looking at a process, equipment,
inventory or information, or a worker
performing a job and at the standard being
used to perform the work, deviation can be
found immediately.
• Example - Shadow tool boards in PPAP
Principle 7. Use visual controls so that no problems are
hidden.
The Toyota way

Principle 7. 5-S Programs
Sort
Clear out rarely used items by red tagging
Straighten
Organize
&
label
a place for everything
Shine
Clean it
Standardise
Create rules to sustain
the first 3 S’s
Sustain
Use regular management
audits
to stay disciplined
ELIMINATE
WASTE
(It can contribute to
errors, defects and
injuries)
The Toyota way

• Internet - Convenient .. Ok. Danger of losing the ability to
think ??
• Individual human solves the problems
• Adoption of new technology must support your people, process
and values
• People do the work, computers move the information
• First work out the manual process and then automate it. Try to
build into the system as much flexibility as you possible can so
you can continue Kaizen the process as your business change.
And always supplement the system information with “go look,
go see.”
Principle 8. Use only reliable, thoroughly tested technology
that serves your people and processes
The Toyota way

The Toyota way
• TOYOTA’s “Blue Sky System” or “Global body line”
in Body Shop
• To vary the product mix of Camry and Avalon, instead
of the car body riding on a customized pallet, it is being
held in place by programmable fixtures using robots
that can be planned for each car body.
• It was not as tall as the old system and allowed for
more “Blue sky” in the body shop, which used to be
dark and dingy.
Principle 8. Role of Technology

• When an outsider leads radical shift in the culture the
organization will never ‘learns’ it - losing the ability to
build on achievements, mistakes or enduring Principles.
• Leaders must be the role models of the company’s
philosophy and way of doing business.
• TOYOTAs’ leadership culture is driven by values,
personalities and experiences
Principle 9. Grow leaders who thoroughly understand the
work, live the philosophy and teach it to others
The Toyota way
People and Partners (Respect, grow and Challenge them)

• Managers are not just managing technology or
tasks ; they are promoting the culture.
• 1st lesson of Management - Put customer first.
• Formal Authority is one level up from
responsibility - Forcing the person responsible to
defend his ideas, work through other people and
convince the person with formal authority that the
ideas are correct.
Principle 9. Grow leaders who thoroughly understand the
work, live the philosophy and teach it to others
The Toyota way

• Focused on long term purpose of value contributor to
society
• Followed the Toyota way DNA, lived and modeled
themselves around this for all to see.
• Worked their way up doing the detailed work and
continued to go to gemba- the actual place where the
real value added work is done
• Saw problems as opportunities to train and coach their
people.
Common Traits of TOYOTA leaders
The Toyota way

Group facilitator
“You’re empowered ”
Builder
of Learning organizations
“Here is our purpose and direction.
I will guide and coach.”
Bureaucratic Manager
“Follow the rules”
Task Master
“Here is what to do and
how - do it !”
General Management
Expertise
In depth understanding of work
Bottom
up
Top
Down
The Toyota way
Principle 9. Common Themes of leadership at Toyota
Toyota Leaders

The Toyota way
Principle 9. Matrix Organization structure for vehicle
development Programs
GM- Body GM- Engine GM- Elect. GM-
Brakes
Chief
Engr.
Car1
Chief
Engr.
Car2
GMs assign project to different engineers
Chief engineer is responsible for the results of vehicle program,
not the people who work on the project

The Toyota way
Principle 9. The Chief Engineer - Critical link to Innovation,
Leadership and Customer Satisfaction
•Blessed by top executives at Toyota
•Controls the vehicle development program
•Leads the program
•An exceptional engineer
•It is a critical link between Engg and customer satisfaction.

• Teams do not add value, individuals do.
• Teams coordinate the work, motivate and learn from
each other
• A balance is to be established between individual and
group work, individual excellence and team
effectiveness
• Excellent individual performers are required to make
teams that excel.
• In Toyota, shop floor work groups are the focal points
for problem solving
Principle 10. Develop exceptional people and teams who
follow your company’s philosophy
The Toyota way

Principle 10. Work groups are the focal points for problem
solving
Team Members
5-8
Team Leader
3-4
Group Leader
5-8
Asst. Manager
4-10
Manager
The Toyota way
Work group

Team Member Team Leader Group Leader
Perform work to
current standard
Process start up and control,
Ensure parts, material supply
Manpower scheduling,
monthly production plan
Maintain 5 S Meet Production goals Policy, attendance,
corrective actions
Perform routine
maintenance
Respond to Andon calls,
Facilitate small group activities
Hoshin kanri (Policy
Deployment) planning
Team Morale, safety
Look for
continuous
improvement
opportunities
Confirm quality, Cover
absenteeism, continuous
improvement projects
Confirm routine quality
and Tolerance level
checks, cover TL absence
Support problem
solving small
group activities
Training and cross training, quick
maintenance
Shift to shift coordination,
Process trials, model
changes
Endure standardized work is
followed
TM development and
cross trg
The Toyota way
Principle 10. Roles and Responsibilities

Principle 10. Employee motivation
The Toyota way
•Job Security, good pay, safe working conditions satisfy lower level
needs
•Culture of continuous improvement supports growth towards self
actualization
•5-S, ergonomics, programs, visual management, human resource
policies address hygiene factors.
•Continuous improvement, job rotation and built in feedback
support motivators
•Standardized jobs, training and reward of money relative to
standards at group level rather than individual level and based on
employee involvement
•Continuous flow and Andon creates short lead times for rapid
feedback, leaders on shop floor provide reinforcement
•Set goals through hoshin kanri (Policy Deployment), continuous
measurement relative to targets.

• Helps suppliers by leveling production
• Trained suppliers’ employees
• Helped in cost reduction
• Helped achieve JIT by Cross Docking - Taking delivery
of supplier’s parts a few times in a day, reconfiguring
them into different product mixes, shipping them as
mixed truckloads for the right number of parts for 1-2
hours of production
• Partnered with suppliers while maintaining internal
capability
Principle 11. Respect your extended network of partners
and suppliers by challenging them and helping them
improve.
The Toyota way

Principle 11. Supply Chain need hierarchy
The Toyota way
Fair and Honorable Business Relations
Stable, Reliable Processes
Clear expectations
Enabling systems
Learning
EnterpriseNext level of Improvement
Stability
Satisfaction
level

• Solve problems and improve processes by going to the
source and personally observing and verifying data
rather than theorizing on the basis of what other people
or the computer screen tell you.
• Think and speak on the basis of personally verified
data.
• Even high level managers and executives should go and
see things for them selves ; so they will have more than
a superficial understanding of the situation.
• Hourensou - Rapid genchi genbutsu for the executives -
report, give updates periodically, and consult or advise.
Principle 12. Go and See for yourself (Genchi Genbutsu)
and hourensou
The Toyota way
Solving root problems drives organizational learning

Principle 12. President’s management philosophies
The Toyota way
• Keep the final target in mind
• Clearly assign tasks to yourself and to others
• Thinks and speak on verified, proven information and data - Go and
confirm the facts for yourself( gench genbutsu), you are responsible for
the information your are reporting to others.
• Take full advantage of the wisdom and experiences of others to send,
gather or discuss information
• Share your information with others in a timely manner
• Always report, inform and consult in a timely manner
• Analyze and understand shortcomings in your capabilities in a
measurable way
• Relentless strive to conduct kaizen activities
• Think outside the box, or beyond common sense and standard rules
• Always be mindful of protecting your safety and health.

• Do not pick a single direction and go down that path
until you have thoroughly considered alternatives.
When you have picked, move quickly but cautiously
down the path.
• Nemawashi is the process of discussing problems and
potential solutions with all of those affected. This
consensus process, though time consuming, helps
broaden the search for solutions and once the decision
is made, the stage is set for rapid implementation.
Principle 13. Nemawashi - Make decisions slowly by
consensus, thoroughly considering all options;implement
decisions rapidly.
The Toyota way

• Finding out what is going on, including genchi genbutsu
• Understanding underlying causes that explain surface
appearances - asking Why 5 times
• Broadly considering alternate solutions and developing a
rationale for the preferred solution
• Building consensus within the team, including Toyota
employees and outside partners
• Using very efficient communication vehicles to do one
through four, preferably one side of one sheet of paper.
Principle 13. ‘Thorough consideration’ means
The Toyota way

• Once you have established a process, use continuous improvement
tools to determine the root cause of inefficiencies and apply
effective countermeasures.
• Design processes that require almost no inventory. This will make
wasted time and resources visible for all to see. Once wastage is
exposed, have employees use a continuous improvement process to
eliminate it.
• Protect the organizational knowledge base by developing stable
personnel, and very careful succession systems.
• Use (hansei) reflection at key milestones and after you finish a
project openly identify shortcomings of the project. Develop
countermeasures to avoid the same mistakes again.
• Learn by standardizing the best practices, rather than reinventing
the wheel with each new project and each new manager.
Principle 14. Become a learning organization through relentless
reflection (hansei) and continuous improvement (Kaizen).
The Toyota way

Step Problem Countermeasure
Oil on shop floor Clean up the oil
Why1 Because the machine is
leaking oil
Fix the machine
Why2 Because the gasket has
deteriorated
Replace the gasket
Why3 Because gasket of inferior
material were bought
Change gasket
specs
Why4 Because we get a good price
on those gaskets
Change purchase
policies
Why5 Because the purchase agent
gets evaluated on short term
cost savings
Change the
evaluation policy
for purchasing
agent
The Toyota way

Principle 14. Toyota’s ‘Practical Problem Solving’ in 7 steps
The Toyota way
Root Cause
WHY
WHY
WHY
WHY
WHY
The ‘Real’ Problem
3.Locate Point of Cause (POC)
Point of
Cause
(POC)
5. Countermeasure
6. Evaluate
7. Standardize
Basic Cause and effect
Investigation
4. 5-Why? Investigation of Root Cause
2.Clarify the problem
1. Initial Problem perception- large, vague, complicated problem

Principle 14. Hansei - Responsibility, Self Reflection and
Organizational Learning
The Toyota way
• “Please do the Hansei” !! The person must feel sorry and
improve his or her attitude - everything is included, spirit
and attitude.
• Once the child is told to “hansei”, he understands almost
everything about what the mother and father told him to
do.

Principle 14. Process Vs. Results Orientation : The Role of
Metrics
The Toyota way
• 3 Types of measures at TOYOTA
• Global - How is the company doing ?
• Operational - How is the plant or department doing ?
• Stretch Improvement metrics - How is the project or
work group doing ?
Company
goal
Business Unit Work Group
Hoshin-Kanri - Policy Deployment

The Toyota way
How to transform the organization culture
Start from the Top
Involve Bottom up
Use middle managers as Change Agents
• It takes time to develop people who really understand and live the philosophy
• Culture change is ‘extremely difficult’

The Toyota way
Tips on transforming a company into lean enterprise
1. Act on ‘Process’ layer, follow cultural change by developing leaders
2. Corporate Training followed by immediately doing
3. Create a Pilot Lean area within the Company so that others can ‘go and see’
4. Use Value stream mapping to develop future state vision to product families
that will be immediately transformed by using cross functional group of managers
5. Use Kaizen work shops to teach and make rapid changes

The Toyota way
6. Organize around value streams, have managers who are responsible for the
entire value stream, Using Matrix organization structures
7. Make it mandatory
8. A crisis may prompt a lean movement, but may not be necessary to turnaround
9. Be opportunist in identifying opportunities for big financial impacts
10. Realign metrics with a value stream perspective

The Toyota way
11. Build on your company’s roots to develop your own way
12. Hire or develop lean leaders an develop a succession system
13. Use experts for teaching and getting quick results

•Process Flow measurement
•Work Standardization
•Kaizen and suggestion
scheme
The Toyota way
Improvement points at PPAP

• Is the customer paying for it ?
• Does it transform raw material into final
product ?
• Can the product be made without doing this ?
The Toyota way
Improvement points at PPAP
How to identify wasteful activities ??

TOYOTA PS

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TOYOTA PS