People: Team Members or Costs

Inside TPS at Toyota, Georgetown, Kentucky by Ralph Rio:

Toyota believes people need to be intimately involved with the process to understand how to improve it. The team member writes the standardized work they use because the person performing the work is the true expert. People are trusted to understand the process and improve it.

Automation is used but is seen as a tool for helping people manage the process. This can be contrasted with the effort by GM in the 1990’s to spend billions of dollars on robots to save personnel costs.

Both Toyota and GM seek to use technology to improve but Toyota sees the technology as useful to help people to be more efficient, eliminate menial repetitive tasks, eliminate tasks that cause injury… and it seems to me GM saw technology as a way to eliminate people. The action showed a company that viewed people as a cost to be eliminated. GM did not act as though people were their “most important assets” as we so often hear, but see so little evidence of in the action of companies.

Toyota does try to reduce overall costs (including labor costs) by continually improving and making cars more and more efficiently (so they can produce cars using fewer hours of labor in the future than they need today). Trying to become more efficient by engaging everyone in the effort is a part of the system of management at Toyota. The current Toyota employees are an important part of the system and are not viewed as a cost to eliminate. The management used by many other companies seems to view employees as just a marginal costs to be eliminated whenever possible.

Reinventing the Industrial Giant by Nitin Nohria, Davis Dyer and Frederick Dalzell:

There are many skeptics who believe that GM will not be able to successfully reinvent itself. Its recent history suggests that GM has had difficulties accomplishing this in the past. In the 1980s, under the leadership of Roger Smith, GM tried to transform itself into the “21st Century Corporation.” The plan was to revamp all of the assembly plants and replace workers with robots and other forms of computerization. The company was to spend $40 billion on this project. However, this project was a failure.

Can’t Run Robots Without People by Hedrick Smith:

You literally can order in Japan a Toyota car and within two weeks get the car and they literally make it from your order.

Now Roger Smith’s response to that in the early 1980s was classic. American technology, we’re going to automate. We’re going to robotize. We’re going to do everything we can to make this the most modern company in the world.

I talked with Harry Pierce, who was executive vice president of the new team at General Motors, and he said, “We had this view that we could literally leapfrog the competition by taking technology and literally replacing people overnight. We went on a great buying spree. We loaded up plants with robotics.”

You can’t run robots without people. You can’t run robots unless you have people who can program and can fix them.