The Unshared Toyota Way

THE UNSHARED TOYOTA WAY
By: George Zafra Gonzales, DPA

Toyota Motor Corporation, commonly known as Toyota is the world largest automaker with sales of 7.8 million cars in 2009. In the Philippines, Toyota has 33% market share followed by Mitsubishi Motors and Honda. In the US, Toyota has 18.4% market share next to General Motors.

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father’s Toyota Industries to create automobile. Now, Toyota is headed by Kiichiro Grandson – Akio Toyoda. Toyota first caught the world’s attention in 1980(s) when consumers noticing that Toyota cars lasted longer and required fewer repairs compare to American cars – Ford and General Motors. Toyota raised the bar for manufacturing, production line development and continuous process improvements. And today, it is the world’s most profitable car manufacturer consistently producing high-quality cars using fewer man hours and less on spare parts inventories.
Because of its lean production, a book entitled “Toyota Way” written by Jeffrey K. Liker was published in 2004 which direct the readers to the 14 Management Principles from the World’s Greatest manufactuer. The Toyota Way explains the management principle and business philosophy behind its success. It narrates Toyota’s approach to Lean Production and the 14 principles that drive Toyota towards quality and excellence. The book also explains how we can adopt the same principles to improve business processes, while cutting down on operations and production costs and material wastages.
The World Class Power of the Toyota Way
The Toyota Way: Using Operational Excellence as a Strategic Weapon
The Toyota Production System (TPS) and Lean Production
Toyota invented Lean Production in the 1940s and 50s. The company focused on eliminating wasted time and material from every step of the production process (from raw materials to finished goods).
The result was a fast and flexible process that gives the customers what they want, when they want it, at the highest quality and most affordable cost. Toyota improved production by:
1. Eliminating wasted time and resources.
2. Building quality into workplace systems
3. Finding low-cost and yet reliable alternatives to expensive new technology.
4. Perfecting business processes.
5. Building a learning culture for continuous improvement.

The “4P” model of the Toyota Way



How Toyota Became the World’s Best Manufacturer
Toyota developed the Toyota Production System (TPS) after World War II. While Ford and GM used mass production and economies of scale, Toyota faced very different business conditions. Toyota’s market was very small but it had to produce a variety of vehicles on the same assembly line to satisfy customers. The solution: making the operations flexible. This resulted in the birth of TPS.
TPS borrowed some of its ideas from the United States. The core idea of the Just in Time (JIT) system came from the concept of the “pull-system”, which was inspired by the American supermarkets. In the pull system, individual items are replenished as each item begins to run low on the shelf.
Applied to Toyota, it means that the first step in the process is not completed until the second step uses the materials or supplies from Step 1. At Toyota, every step of the manufacturing process uses Kanban to signal to the previous step when its part needs to be replenished.
The company was also inspired by W. Edwards Deming. Aside from broadly defining customers to include internal and external clients, he also encouraged Toyota to adopt a systematic approach to problem solving, which became a cornerstone for continuous improvement (known as Kaizen).
The Heart of the Toyota Production System: Eliminating Waste
The point of the TPS is to minimize time spent on non-value adding activities by positioning the materials and tools as close as possible to the point of assembly.
The Major types of non-value adding waste in business or production process are:
1. Overproduction.
2. Waiting or time on hand.
3. Unnecessary transport or conveyance.
4. Over processing or incorrect processing.
5. Excess inventory.
6. Unnecessary movement.
7. Defects.
8. Unused employee creativity.

A Shared Toyota Way. In April 2001 the Toyota Motor Corporation adopted the “Toyota Way 2001,” an expression of values and conduct guidelines that all Toyota employees should embrace. In order to promote the development of a global Toyota and the transfer of authority to the local level, this philosophy, which had been implicit in Toyota’s tradition, was published internally.
Under the two headings, or "pillars," of Respect for People and Continuous Improvement, Toyota sums up the values and conduct guidelines with the following five principles:
• Challenge
• Kaizen (improvement)
• Genchi Genbutsu (go and see)
• Respect
• Teamwork
The Business Principles of the Toyota Way
Principle 1: Base your management decision on a long-term philosophy, even at the expense of short-term financial goals.
The Toyota message is consistent: Do the right thing for the company, its employees, the customer and the society as a whole. This long-term philosophy is the guiding post of the company in its continuous quest to offer the best in quality and service to its customers, employees and stockholders.
Long-term goal should supersede short-term decision making or goals.
Develop, work, grow and align the company towards a common goal that is bigger than making money. Your philosophical mission is and should be the foundation of all your other principles.
Principle 2: Create a continuous process flow to bring problems to the surface.

Work processes are redesigned to eliminate waste (muda) through the process of continuous improvement — kaizen. The seven types of muda are:
1. Overproduction
2. Waiting (time on hand)
3. Unnecessary transport or conveyance
4. Incorrect processing
5. Excess inventory
6. Motion
Principle 3: Use PULL systems to avoid overproduction.
A method where a process signals its predecessors that more material is needed, the PULL system produces only the required materials after the subsequent operation signal a need for it. This process is necessary to reduce over production.
Principle 4: Level out the workload.
This helps achieve the goal of minimizing waste (muda), not over loading the people and/or equipment and not creating uneven production level (mura).
Principle 5: Build a culture of stopping to fix problems, to get quality right the first time.

Quality takes precedence (Jidoka). Any employee in the Toyota Production System has the authority to stop the process to signal a quality issue.
Principle 6: Standardize task and processes are the foundation for continuous improvement and employee empowerment.
It allows continuous improvement (kaizen) from the people affected by the system. It empowers employee to aid in the growth and improvement of the company.
Principle 7: Use Visual control so no problems are hidden.
Included in this principle is the 5S Program - steps that are used to make all work spaces efficient and production, help people share work stations, reduce time looking for needed tools and improve the work environment.
1st S – Sort: Sort out un-needed items
2nd S - Straighten: Have a place for everything
3rd S - Shine: Keep the area clean
4th S - Standardize: Create rules and standard operating procedures
5th S - Sustain: Maintain the system and continue to improve it




Principle 8: Use only reliable, thoroughly tested technology that serves your people and process.

Technology is pulled by manufacturing, not pushed to manufacturing.


Principle 9: Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Without constant attention, the principles will fade. The principles have to be ingrained, it must be the way one thinks. Employees must be educated and trained; they have to maintain a learning organization.

Principle 10: Develop exceptional people and teams who follow your company’s philosophy.

Teams should consist of 4 – 5 people and numerous management tiers. Success is based on team, and not on the individual.

Principle 11: Respect your extended network of partners and suppliers by challenging them and helping them improve.

Suppliers must be treated like employees, challenging them to do better and helping them to achieve it. We must provide cross functional teams to help suppliers discover and fix problems so that they can become a stronger and better supplier.

Principle 12: Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).

Toyota managers are expected to "go-and-see" operations. Without experiencing the situation firsthand, managers will not have an understanding of how it can be improved. Furthermore, managers use Tadashi Yamashima's (President, Toyota Technical Center (TTC)) ten management principles as a guideline:
1. Always keep the final target in mind.
2. Clearly assign tasks to yourself and others.
3. Think and speak on verified, proven information and data.
4. Take full advantage of the wisdom and experiences of others to send, gather or discuss information.
5. Share information with others in a timely fashion.
6. Always report, inform and consult in a timely manner.
7. Analyze and understand shortcomings in your capabilities in a measurable way.
8. Relentlessly strive to conduct kaizen activities.
9. Think "outside the box," or beyond common sense and standard rules.
10. Always be mindful of protecting your safety and health.


Principle 13: Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi).
The following are decision parameters:
1. Find what is really going on (go-and-see) to test
2. Determine the underlying cause
3. Consider a broad range of alternatives
4. Build consensus on the resolution
5. Use efficient communication tools
Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).
The process of becoming a learning organization involves criticizing every aspect of what one does. The general problem solving technique to determine the root cause of a problem includes:
1. Initial problem perception
2. Clarify the problem
3. Locate area/point of cause
4. Investigate root cause (5 whys)
5. Countermeasure
6. Evaluate
7. Standardize

Driving to be Number 1
The growth of Toyota is significant from the time they market their first brand – Toyopet in 1958 in the US. As the market share of GM decreases from 1980’s to 2009 at 45% to 19.6% respectively, the market share of Toyota increases from 5% to 16.7% on the same period. In 2000, Toyota produces 5.2 million cars and 2009 it has a plant capacity of 10 million cars. The production sites of Toyota increases from 58 to 75 to accommodate the market demand. The rapid expansion of the company needs the ability to transmit the know-how and technology over long distances and across different cultures.

2009 – 2010 Vehicle Recalls
In January 2010, Toyota announced recalling up to 1.8 million cars across Europe, including about 220,000 in the UK, following an accelerator problem.
The US Transportation Department has opened an investigation into brake problems in Toyota vehicles. This is after the department received 124 reports from drivers about the issue, including four involving crashes.
The company said its recall could cost the company up to US$2 billion in lost output and sales. Toyota later recalled the Prius model after problems were found in the ABS system. Many Toyota models were involved, covering 2007-2010 model years.
The U.S. Sales Chief, James Lentz, was questioned by the United States Congress committees on Oversight and Investigations on February 23, 2010, as a result of recent recalls.
Akio Toyoda, the grandson of corporations Founder – Sakichi Toyoda taking the requisite deep bow of disgraced and telling the congress that “I apologize from the bottom of my heart for all the concern that we have given to so many of our customer.
According to Time Magazine, there was a reported spike in the reported of inintended acceleration incidents in some Toyota vehicles in 2002 which is about the same time they introduced its electronic throttle control. In 2003, there were also small investigations on the same incident. Toyota has small recall in 2005 and 2007 but the number of accidents mounted and last November (2009) the company had to take the biggest recall of 3.8 million vehicles in the US.
Toyota initially blamed the floor mat and manner the driver was placing it then to the supplier of the defective pedal – CTS Corporation but its President mentioned that his company follows the engineering specifications of Toyota and the issue on the acceleration problem started in 2002 and CTS become a Toyota supplier only in 2005. Then came, the horrifying 911 call from a passenger of Lexus ES 350 in California, who happened to be a Filipino-American who mentioned on the phone that the accelerator was jammed and they cannot stop the vehicle. As a result, all passenger four people were killed in this crash.
Questions:
1. Was the incident happened in 2002 sends a strong signal to Toyota management?
2. Does these incidents are the result of Toyota’s reinventing the wheel of production?
3. What can Toyota do to repair its relationship with the consumers?
4. What can you say about the characteristic and culture of Japanese in handling this kind of situation?
5. How can Toyota re-build their brand?
6. Could it be possible that US government has a hand on this for they have bail out GM and the only way to be back on track is to eliminate its competitor?