Tag Archives: Toyota Production System (TPS)

Toyota’s Journey to Lean Software Development

Toyota’s journey from Waterfall to Lean software development by Henrik Kniberg

Toyota builds cars (duh). In the past that didn’t involve much software, and the little software that was needed was mostly developed by suppliers and embedded in isolated components. Toyota assembled them and didn’t much care about the software inside. But “The importance of automatic electronic control system has been increasing dramatically year by year” said Ishii-san.

A modern car is pretty much a computer on wheels! In a hybrid car about half of the development cost is software, it contains millions of lines of code as all the different subsystems have to integrate with each other. He mentioned that a Lexus contains 14 million lines of code, comparable to banking and airplane software systems. Ishi-san concluded that “Therefore Toyota needs to become an IT company”.

Most of Toyota’s ideas about how to do Lean software development resonated well with me. My feeling was that they are on the right track.

One thing bothered me though – the extreme focus on detailed metrics. I agree with the value of visualization, standardization, and data-driven process improvement – but only if used at a high level. My feeling was that Toyota was going to far. They say engineer motivation is critical, but how motivating is it to work in an organization that plans and measures everything you do – every line of code, every hour, every defect, how many minutes it takes to do an estimate, etc?

via: Justin Hunter

Related: Toyota IT OverviewToyota Canada CIO on Genchi Genbutsu and KaizenLean Software DevelopmentMy First Trip to Japan by Peter ScholtesToyota IT for Kaizen

Management Improvement Carnival #87

The Curious Cat Management Improvement Carnival provides links to recent articles to help managers improve the performance organization.

  • Lean in Sweden: Tools < Thinking by Mark Graban – “Tools have some value, but only in context of lean thinking and the lean management philosophy. Tools aren’t value-less, but thinking is better.”
  • Manufacturing starts to come home by Dan Markovitz – “NCR sees domestic manufacturing as key to increasing sales as well. It enables them to make higher value-added products that their customers want.”
  • Correlation or Causation? Interceptions and the Playoffs by Jeff Hajek – “this is a classic case of confusing correlation with causation. If this data truly was a cause and effect relationship, meaning interceptions caused losses, fixing the problem would be simple… If you never threw the ball, you could win nearly four out of five times.”
  • Learning from Toyota’s Stumble by Steven Spear – “But as we are now sadly seeing, the capacity for developing people can be overstretched. It was not recognizing this and succumbing to the temptation to make growth its first priority that led to Toyota’s current problems.”
  • When in doubt, timebox it by Mark Imbriaco – “If we can solve the compatibility problems in those 30 minutes, it will be a nice win and we can make use of the plugin that we want to. On the flip side, we already have a known solution to the problem.”
  • Be Proactive – Prevent your problems! by Sonja Hughes – “Monitoring process performance through statistical process control or other performance measures allows us to detect changes or trends so we can take appropriate action before problems occur.”
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Toyota Stops Lines – Lots of Lines

The practice of stopping (either the machine automatically detecting a problem and stopping or a person stopping) the line when a problem is detected is part of Jidoka. Jidoka is also highlighting and making problems visible. Jidoka and Just in Time are the two pillars of the Toyota Production System. Today Toyota practiced Jidoka on a large scale: Toyota Halts Sales of Eight Models After Recall

Toyota Motor, still struggling to resolve a problem with accelerator pedals, said Tuesday it would temporarily stop selling and building eight models in the American market, including the popular Camry and Corolla sedans

“This action is necessary until a remedy is finalized,” Robert S. Carter, a Toyota group vice president, said in a statement. “We’re making every effort to address this situation for our customers as quickly as possible.”

Toyota said it would immediately stop selling the Camry, Corolla and Avalon sedans, Matrix wagon, RAV4 crossover, Tundra pickup, and Highlander and Sequoia sport utility vehicles. It will also stop building those models the week of Feb. 1. All of the vehicles are assembled in the United States or Canada, at a total of five plants.

The models affected accounted for more than a million sales in 2009, 57 percent of Toyota’s American total for the year.

The most recent recalls follow what Toyota insisted was a companywide effort to improve quality that was started by Katsuaki Watanabe, who served as its president before he was replaced last year by Akio Toyoda, grandson of the company’s founder.

My guess is there are quite a few people in Toyota that are getting a frustrated that they continue to have problems that they have been unable to successfully address. This strikes is as the kind of action initiated near the top of the organization chart to remind the organization that problems must be addressed immediately. It is not ok to continue business as usually when problems have not been addressed in the Toyota Production System. Toyota is capable of failing to live up to the principles of lean manufacturing. But they also seem to understand this risk and continue to strive to improve. To succeed though they need to improve results – intentions alone are not enough.

Related: Cease Mass Inspection for QualityRecalls at Toyota and SonyReacting to Product ProblemsWorkplace Management by Taiichi Ohno

Don’t Hide Problems in Computers

Making things visible is a key to effective management. And data in computers can be easy to ignore. Don’t forget to make data visible. Paul Levy, CEO of Beth Israel Deaconess Medical Center in Boston recently hosted Hideshi Yokoi, president of the Toyota Production System Support Center and wrote this blog post:

Together, we visited gemba and observed several hospital processes in action, looking for ways to reduce waste and reorganize work. It was fascinating to have such experts here and see things through their eyes. Mr. Yokoi’s thoughts and observations are very, very clear, notwithstanding a command of English that is still a work in progress.

The highlight? At one point, we pointed out a new information system that we were thinking of putting into place to monitor and control the flow of certain inventory. Mr. Yokoi’s wise response, suggesting otherwise, was:

“When you put problem in computer, box hide answer. Problem must be visible!”

The mission of the Toyota Production System Support Center to share Toyota Production System know-how with North American organizations that have a true desire to learn and adopt TPS.

Related: The Importance of Making Problems VisibleGreat Visual Instruction ExampleHealth Care the Toyota Way

Lean Manufacturing Webcast from India

This lean thinking webcast from India actually does a pretty decent job of providing an overview (for a business TV channel) even if they get some things a bit confused. The discuss TQM in India preceding lean which is an accurate view in my opinion – quality management shared many lean principles. They even talk of lean at Ford doing lean first. But they get the decades for that a bit off. They seem to mash together the “quality is job one” refocus on quality lead by Dr. Deming in the 1980’s with Henry Ford in the early 1900’s.

The webcast includes Jim Womack discussing lean thinking. He mentions the misunderstanding of lean as primarily cost cutting.

Related: Curious Cat Lean Management Resources2008 Deming Prize: Tata SteelLean management in IndiaTVS Group Director on India, Manufacturing and the Economy

Akio Toyoda’s Message Shows Real Leadership

Speech by Akio Toyoda

Since the birth of Toyota, the company’s philosophy has always been to “contribute to society.”

“Contributing to society” at Toyota means two things. First, it means, “to manufacture automobiles that meet the needs of society and enrich people’s lives.” And second, “to take root in the communities we serve by creating jobs, earning profits and paying taxes, thereby enriching the local economies where we operate.”

Toyota has overcome many challenges during its seven decades of business. What has made this possible is the way we make our cars under our “customer first” and “genchi genbutsu” principles

Rather than asking, “How many cars will we sell?” or, “How much money will we make by selling these cars?” we need to ask ourselves, “What kind of cars will make people happy?” as well as, “What pricing will attract them in each region?” Then we must make those cars.

Through these processes, I would like to make Toyota’s product development and product lineup more region-focused. We will change our policy from achieving “a full lineup everywhere” to “a lineup necessary to meet the needs of each region”. We will also launch new vehicles that anticipate consumer needs and are exciting to drive.

At the press conference in January, I talked about my desire to become “a president who is closest to the frontlines, or gemba.” I believe that the essence of management lies in the gemba, and Toyota employees play a vital role there.

Once again Toyota shows they are the type of management I want to invest in. In my last post I discussed another: Jeff Bezos at Amazon. Google management is another management system I am glad to invest in. Toyota, Amazon and Google are 3 of my 12 stocks for 10 year portfolio.

Toyota continues to show they are an exceptional company that doesn’t waver due to short term pressures. They know the management system they have in place is excellent. They always try to improve. And they react to evidence that shows they have room to improve. They then access the situation and move forward.

via: Toyoda on Toyota: A New Regime, A New Future

Related: New Toyota CEO’s Views (2005)Interview with Toyota President (2006)Deming Companies“2007 has been a difficult year for Toyota”No Excessive Senior Executive Pay at ToyotaWebcast on the Toyota Development Process

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Toyota Develops Thought-controlled Wheelchair

Toyota has developed a thought-controlled wheelchair (along with Japanese government research institute, RIKEN, and Genesis Research Institute). Honda has also developed a system that allows a person to control a robot through thoughts. Both companies continue to invest in innovation and science and engineering. The story of a bad economy and bad sales for a year or two is what you read in most newspapers. In my opinion the more important story is why Toyota and Honda will be dominant companies 20 years from now. And that story is based on their superior management and focus on long term success instead of short term quarterly results.

Yes Toyota can improve their performance, based on the last few years. Does management understand what they need to do? I think so. Does management understand that the system needs to be improved rather than the numbers on the spreadsheets of various managers have to be made better? I think so. Do I think most companies today, with bad results, understand the difference between bad numbers on spreadsheets that are used to judge various managers and a system that needs to be improved? No.

I do not believe the bad earnings for the last year for Toyota are indicative of a failed system. The results do show a weakness in the Toyota system that allowed them to perform this poorly during this credit crisis. The risk to Toyota’s future is that they become too focused on short term results, mistakenly thinking the problem to be fixed in the bad quarterly results recently. They need to focus on improving the system for the long term. And the recent experience likely shows some areas that need to be improved. But in no way do the fundamental tenants of the management system need to be changed. For many other companies today, changing fundamental aspects of their management is what is needed.

Related: Toyota as HomebuilderHonda’s Robolegs Help People WalkHonda has Never had Layoffs and has been Profitable Every YearToyota’s Partner RobotNUMMI, and GM’s Failure to Manage EffectivelyToyota iUnitInvest in New Management Methods Not a Failing Company by William Hunter, 1986
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Toyota Posts Loss of $6.9 Billion in Last Quarter

Toyota Posts Loss of $6.9 Billion in Last Quarter

For January-March, Toyota booked a $6.9 billion loss, in line with consensus estimates, and cut its annual dividend nearly 30 percent — the first cut since at least 1994, when it changed its reporting period.

Toyota President Katsuaki Watanabe was more downbeat, stopping short of predicting when sales would pick up in major markets, or when the company would return to profitability as it remains saddled with excess capacity. “Of course the external environment doesn’t help, but we were lacking in the scope and speed of dealing with various problems and issues, and for that I am sorry,” he told a news conference.

For the year to next March, the maker of the Prius hybrid forecast an operating loss of 850 billion yen, more than double the average forecast in a survey of 20 analysts by Thomson Reuters. It sees an annual net loss of 550 billion yen based on the dollar and euro averaging 95 yen and 125 yen.

The bleak forecasts prompted ratings agency Standard & Poor’s to downgrade Toyota’s long-term debt ratings to AA from AA+, with a negative outlook.

To return to profit, Toyota must sell more cars or cut costs further, Watanabe said. But he predicted the U.S. market would be around 10 million vehicles industrywide at best this year, down from more than 13 million in 2008.

Toyota is bleeding overhead costs, with about a third of its global assembly lines working on single shifts. It will slash capital spending by more than a third this year to 830 billion yen as it puts expansion projects on hold, but it said it was not thinking of closing any production lines for good.

In my opinion these negative results are a sign of Toyota’s strength not weakness. The credit crisis and economic downturn has resulted in a poor economic environment. Toyota has managed to sustain the blow and hold firm to their principles and likely will come out of this downturn stronger as a company (mainly re-enforcing the importance of planning for bad economic conditions and not getting too excited about growth potential versus risks of growing too fast) and in a better position compared to their competitors. I continue to be an owner of Toyota stock and happily so.

Related: Idle Workers Busy at ToyotaFinancial Market Meltdown (Oct 2008)“2007 has been a difficult year for Toyota”New Toyota CEO’s Views (2005)Jim Press, Toyota N. American President, Moves to Chrysler

NUMMI, and GM’s Failure to Manage Effectively

Gipsie Ranney recently sent me an article on her thoughts on NUMMI and the current problems with the Big Three car makers to post to the Curious Cat Management Improvement Library. NUMMI is the plant that Toyota and General Motors run together as a joint venture. The article is excellent.

The answer to a question asked by someone else on the tour was stunning to me. The person asked what kind of computerized inventory system they had at NUMMI. The leader of the tour at the time – a materials management person – responded, “we don’t have one; the Japanese say that computerized inventory systems lie.”

The most remarkable insight I gained at NUMMI came as an answer to a question from a member of the touring group. The person asked what had been learned about the reasons that management/labor conflict had been reduced so much. The tour guide answered, “The answer we get from members of the labor force is that the Japanese do what they say they will do.” This was the same labor force that had held the record for most grievances filed per year in an assembly plant in the U.S.

The Big Three are responsible for managing their organizations wisely. I think that will take more than money. It will take a different culture and a different mind.

I agree. The problem is that management fails to manage well and has been failing to do so for decades. They have improved over the last few decades but not nearly fast or consistently enough. Gipsie worked closely with Dr. Deming and serves on the W. Edwards Deming Institute Board of Trustees.

Related: Could Toyota Fix GM (2005)At Ford, Quality Was Our Motto in the 1980sBig Failed Three, Meet the Successful EightWhy Fix the Escalator?Invest in New Management Methods Not a Failing Company (AMC) by William Hunter, 1986 – Ford and Managing the Supplier RelationshipNo Excessive Senior Executive Pay at Toyota

Invest in New Management Methods Not a Failing Company, 1986

Invest in New Management Methods Not a Failing Company by William Hunter, 1986

I predict American Motors will stop making cars in Wisconsin in the near future, whether or not the state’s money is used for a temporary propping-up operation.

These competitors are beginning to understand how essential it is to take a long-term view of their businesses. Toyota, for example, took its top 40 managers on a two-day retreat to ponder what their corporation will look like in the 21st century. They are studying totally new methods of management [20 years later large portions of these “new” methods are still ignored by many – John]. These methods take continuous quality improvement as a central, guiding principle.

Investing in American Motors now, in any form, is a mistake. If Wisconsin is to become a trend-setter in economic development, we need some long-term thinking in forming wise, creative policies.
It is difficult, I know, for legislators and other elected officials to take a long-term view when the tangible reward is re-election and elections come around quite frequently.
Our founding fathers are remembered for their long-term vision. We need to change the way our democracy works so that long-term visions is an integral part of all important discussions on economic development on the local, state and national level.

Don’t reward shortsightedness by James Cook

In 1985 I assumed the role of plant manager of one of the world’s foremost automotive tool manufacturers in a small northern Iowa town. It was then that I was introduced to W. Edwards Deming. At the time, the company had a greater market share than any of its individual domestic or foreign competitors, but ominous and encroaching signs from abroad began to threaten its pre-eminence in the automotive aftermarket. So steps had to be taken to arrest this incursion that could mean the end of its reign.

It was then, as I began my tenure at the company, that we began with Deming’s concept of Statistical Process Control, later changed to Quality Control, and the practice of Toyota’s kanban cell manufacturing techniques that would enhance the already high-quality standards that had defined the company for decades.

If we had listened, if we had followed him, if we had incorporated his thinking not only in the automobile industry but in government, in the ubiquitous economy collapsing around us and in our private lives, we would now be far better for it.

Related: At Ford, Quality Was Our Motto in the 1980sFord’s Wrong TurnCould Toyota Fix GM (2005)Ford and Managing the Supplier RelationshipNo Excessive Senior Executive Pay at ToyotaCreating Jobs