Category Archives: Toyota Production System (TPS)

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

Helping Employees Improve

One aspect of managing people is to provide positive feedback and show appreciation. Doing so is important. People benefit from encouragement and reinforcement. In addition to just telling them, take action to show your appreciation.

The Dilbert workplace is alive and well. And even in above average management systems there is plenty of resistance faced by those looking to improve systems. For those employees that are making the attempt to improve the organization go beyond saying thanks: actually demonstrate your appreciation. Do what you can to help them achieve.

A manager should be enabling their employees to perform. That means taking positive steps that help them perform. This is even more appreciated than saying thanks. And has the added benefit of helping the organization by helping along their good idea. It is win, win, win. They win, you win and the organization wins.

Thoughts on: Rewards and Recognition

Related: Keeping Good EmployeesRespect for People Requires Understanding PsychologyPeople are Our Most Important AssetMotivationIncentive Programs are Ineffective

Idle Workers Busy at Toyota

Idle Workers Busy at Toyota

Instead of sending the workers home, as the Detroit makers often do, Toyota is keeping them at the plants, though. The employees spend their days in training sessions designed to sharpen their job skills and find better ways to assemble vehicles.

At its Princeton plant, by contrast, Toyota is using the down time to hone its workers’ quality-control and productivity skills. The company has pledged never to lay off any of its full-time employees, who are nonunion.

Jim Lentz, president of Toyota Motor Sales, the company’s U.S. sales unit, said the company believes keeping employees on the payroll and using the time to improve their capabilities is the best move in the long run. “It would have been crazy for us to lose people for 90 days and [then] to rehire and retrain people and hope that we have a smooth ramp-up coming back in,” Mr. Lentz said.

In Princeton, senior plant manager Norm Bafunno said he can already see the benefits of the training. Mr. Bafunno cites a Teflon ring designed by an assembly worker during the down time that helps prevent paint damage when employees install an electrical switch on the edge of a vehicle’s door.

Mr. Mason, a 40-year-old former firefighter, added: “One of the major things that everyone is grateful for is that they thought enough of us to keep us here.”

Toyota continues to show intelligence, long term thinking, respect for people… in their management decisions. I worry they may capitulate and make explanations about how the economy forced them to abandon their principles. I hope they prove that cynical fear in me to be wrong, in their case.

Related: Bad Management Results in LayoffsToyota Management Not Close to Being DuplicatedToyota’s Commitment to CustomersPeople are Our Most Important AssetJim Press, Toyota N. American President, Moves to Chrysler

Financial Market Meltdown

The financial market meltdown has grown to the point where it has profound ramifications for everyone. The common wisdom for financial market variation, for most of us, is just to focus on the long term and don’t worry about short term fluctuations. That is good advice. This panic is threatening to override that wisdom however. There are at least 2 areas to consider: personal finance and business prospects (how managers need to take this crisis into account).

On personal finance I still believe the same smart personal financial decisions last year, or five years ago are wise today: avoid credit card debt, have an emergency fund of 6 months of expenses, save for retirement, have proper health insurance, don’t buy what you don’t need and can’t afford… The biggest change I see is that the risks of failing to do these things (and the risks of failing to have done them in the past) are increasing greatly.

One of the challenges with personal financial matters is they are by nature long term issues. What you did over the last 5 years cannot be fixed in a few weeks, most likely it takes years. For more details follow the links in the paragraph above (to posts on the Curious Cat Investing and Economics Blog). You can’t make much progress quickly on these matters if you failed to do so over the last 5 years. However, you can at the very least start doing so now and you can even go a bit further if you were doing well (I am seriously considering raising my retirement contributions to take advantage of low stock prices).

On the impact to management area, this crisis has reached the point at many companies that managers not involved in finance have already been dealing much more with the importance of cash flow. And all indications indicate the risks related to manage cash flow are increasing dramatically. The expected sources of cash to provide for long term investments, for medium term investments and even short term cash flow needs are disappearing in a way I don’t think anyone predicted was possible.

What will happen in the next 1-6 months is very hard to predict. Most likely the credit markets will recover some (it is hard to imagine they could stay this broken). But to what extent is hard to say. And the real business risks of almost unimaginable (anytime the last 70 years anyway) problems raising cash, require managers to evaluate how to react today based on these risks. Even a month ago, for most businesses (outside of the financial industry or those with extremely heavy financing needs) this was not likely a consideration.
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Webcast on the Toyota Development Process

Kenji Hiranabe talks about Toyota’s development process (webcast). Kenji shares a presentation he attended earlier this year by Nobuaki Katayama, a former Chief Engineer at Toyota, and the lessons he learned from him.

The webcast takes awhile to get going. If you are impatient you might want to start at the 6 minute mark. Some thoughts from the talk:

  • Voice of the Customer is diffuse. A strong concept (for a project – new car for example) is very important to focus thought, listening to voice of the customer is important but must use strong concept to avoid losing focus (due to diffuse customer feedback).
  • Honest face to face communication is important. Bad news first – present bad news first [don’t try to hide bad news – my thoughts in brackets, John Hunter].
  • Everyone must think about cost reduction, many efforts add up to big impact [the importance of reducing waste everywhere].
  • benchmark, not to copy others, but to learn from what others do well.

The webcast includes a nice (though short) discussion of agile management in software development and lean manufacturing (the different situation of manufacturing versus software development). Kenji Hiranabe has also translated several agile and lean books into Japanese including Implementing Lean Software Development.

Related: Kenji Hiranabe’s blogMarissa Mayer Webcast on Google InnovationArticles and webcasts by Mary PoppendieckFuture Directions for Agile ManagementInterview with Toyota President

New Management Truths Sometimes Started as Heresies

‘New’ management truths sometimes started as heresies by Cecil Johnson

“The most effective management ideas follow a life cycle — from heresy to outlier (championed by a small group of people) to ingrained practice to conventional wisdom,” Kleiner writes. “In the process, if they are genuinely powerful management ideas, they distinguish the organizations that adopt them.”

One of the management heresies focused upon by Kleiner that has morphed into accepted management wisdom of the highest order is the Toyota Production System, which embraces much of the thinking of heretical quality advocate W. Edwards Deming. That system, Kleiner reminds the reader, entrusts teams at each station in the assembly process to control their local operations. Performance is not evaluated on a predetermined numeral basis.

I agree with this idea except the implication that these ideas are accepted now. To the extent they are excepted it is only a surface understanding of a couple of tools and concepts. The true power of the new ideas are still adopted in a very small number of organizations. Thankfully small initial steps are being made but there is much more to be done, before we can think of these ideas as accepted.

Which of Dr. Deming’s seven deadly diseases of western management have been effectively addressed in several decades? My opinion? Zero. Granted 2 are probably closer to economic failures (political issues that management could have spent time trying to fix but not really in the control of a single company): excessive medical costs and excessive legal damage awards.

Excessive legal damage awards was the one disease most business school graduates would have agreed was a disease decades ago, and they still do. They have spent a great deal of effort to reform the legal system, but have not been effective. Many now agree the health care system is broken. But I would say less than 50% understand this, even decades later, even after the situation has deteriorated much further. And certainly little effective effort at improving the health care system has been made. At least in the last 5 years some real efforts are being made by senior executives as some companies.

And I strongly believe Dr. Deming would see the current unjustified taking of companies resources by CEOs for their own use, in ludicrous pay packages, as a new disease. If these “new” (the system of management ideas are at least 30 years old, as a system, and it has been 60 years since Dr. Deming present them in Japan after World War II) management ideas were common, such horrible behavior as we continue to see would not be tolerated.

Related: Deming CompaniesToyota Execution Not Close to Being CopiedManagement Advice FailuresPurpose of an OrganizationNew Rules for Management? No!

Toyota Winglet – Personal Transportation Assistance

Winglet Personal Mobility Device from Toyota

Toyota has a long term vision. The population of Japan is aging rapidly. Toyota has invested in personal transportation and personal robotic assistance for quite some time. I must admit this new Winglet doesn’t seem like an incredible breakthrough to me (their earlier iUnit seems much better to me – though I am sure much more expensive too). The interest to me is in their continued focus on this market which I think is a smart move. The aging population worldwide (and others) will benefit greatly from improved personal mechanical assistance.

The Winglet is one of Toyota’s people-assisting Toyota Partner Robots. Designed to contribute to society by helping people enjoy a safe and fully mobile life, the Winglet is a compact (you stand just above the wheels and it reaches about the level of your knees) next-generation everyday transport tool that offers advanced ease of use and expands the user’s range of mobility.

The Winglet consists of a body that houses an electric motor, two wheels and internal sensors that constantly monitor the user’s position and make adjustments in power to ensure stability. Meanwhile, a unique parallel link mechanism allows the rider to go forward, backward and turn simply by shifting body weight, making the vehicle safe and useful even in tight spaces or crowded environments.

Toyota plans various technical and consumer trials to gain feedback during the Winglet’s lead-up to practical use. Practical tests of its utility as a mobility tool are planned to begin in Autumn 2008 at Central Japan International Airport (Centrair) near Nagoya, and Laguna Gamagori, a seaside marine resort complex in Aichi Prefecture. Testing of its usefulness in crowded and other conditions, and how non-users react to the device, is to be carried out in 2009 at the Tressa Yokohama shopping complex in Yokohama City.

Toyota is pursuing sustainability in research and development, manufacturing and social contribution as part of its concept to realize “sustainability in three areas” and to help contribute to the health and comfort of future society. Toyota Partner Robot development is being carried out with this in mind and applies Toyota’s approach to monozukuri (“making things”), which includes its mobility, production and other technologies.

Toyota aims to realize the practical use of Toyota Partner Robots in the early 2010s.

On a personal note, I bought some more Toyota stock two weeks ago. The stock had declined a bit recently. Toyota is one of the companies in my 12 stocks for 10 years portfolio.

Related: Toyota Develops Personal Transport Assistance Robot ‘Winglet’No Excessive Senior Executive Pay at ToyotaMore on Non-Auto Toyota

How to Develop Thinking People

Toyota’s Top Engineer on How to Develop Thinking People

Hayashi says, “Developing people requires physical endurance.” Frequent follow up is necessary, in person. It is not acceptable to give an assignment and follow up or scold only after three months, during a progress report meeting. Specific actions and detailed follow up are necessary.

Excellent advice.

Also, when we are required to deliver results with speed, we only give our subordinates small projects so that even if they fail they have time to recover. In the end, we give them the solution. We must firmly carry on the practice of developing thinking people. Mr. Ohno often said to us, “Don’t look with your, look with your feet. Don’t think with you head, think with your hands.” He also taught us, “People who can’t understand numbers are useless. The gemba where numbers are not visible is also bad. However, people who only look at the numbers are the worst of all.”

And more wisdom. Great stuff from Taiichi Ohno, Nanpachi Hayashi and Jon Miller’s translation and great blog.

Related: Respect for People and Taiichi OhnoToyota IT for KaizenManagement ImprovementWorkplace Management by Taiichi OhnoPosts on Respect for People

Drucker’s Ideas at Toyota

The Drucker difference and Toyota’s success [the broken link was removed] by Ira A. Jackson, dean of the Peter F. Drucker Graduate School of Management, the business school of the Claremont Colleges.

Because of this core belief in the power of people, Toyota invests in people. And at the same time, the company has come to realize that when people grapple with opposing views

Embrace contradictions as a way of life. Sticking to old practices can lead to rigidity. Be fluid.

Develop routines to resolve contradictions. As the authors note, “Unless companies teach employees how to deal with problems rigorously and systematically, they won’t be able to harness the power of contradictions.” Toyota has a number of tools including the well-known ask-why-five-times practice and the Plan-Do-Check-Act model.

Encourage employees to voice their opinions even if they are contrary. The people in top management must be open to hearing critical comments from employees and listening to opposing views if they want to engender new ideas and new ways of doing things.

Related: Drucker Opinion Essays from the WSJDeming and ToyotaManagement Pioneer Peter DruckerThe Contradictions That Drive Toyota’s SuccessExtreme Toyota: Radical Contradictions That Drive Success at the World’s Best Manufacturer

The Contradictions That Drive Toyota’s Success

An interesting article in this month’s Harvard Business Review looks at the seeming contradictions at Toyota – The Contradictions That Drive Toyota’s Success by Hirotaka Takeuchi, Emi Osono, and Norihiko Shimizu

Many of Toyota’s goals are purposely vague, allowing employees to channel their energies in different directions and forcing specialists from different functions to collaborate across the rigid silos in which they usually work. For example, Watanabe has said that his goal is to build a car that makes the air cleaner, prevents accidents, makes people healthier and happier when they drive it, and gets you from coast to coast on one tank of gas… Zenji Yasuda, a former Toyota senior managing director, points out the wisdom of painting with broad strokes. “If he makes [the goal] more concrete, employees won’t be able to exercise their full potential. The vague nature of this goal confers freedom to researchers to open new avenues of exploration; procurement to look for new and unknown suppliers who possess needed technology; and sales to consider the next steps needed to sell such products.”

A good explanation of how Toyota avoids the trap of arbitrary numerical goals (Innovation at Toyota).

Toyota’s eagerness to experiment helps it clear the hurdles that stand in the way of achieving near-impossible goals. People test hypotheses and learn from the consequent successes and failures. By encouraging employees to experiment, Toyota moves out of its comfort zone and into uncharted territory.

This is another key point often overlooked. Experimentation is key to gaining knowledge and improving. And they have steadily improved their method of experimentation building on the PDSA/PDCA cycle:

Toyota organizes experiments using strict routines, as is widely known. It has refined Plan-Do-Check-Act (PDCA), the continuous-improvement process used throughout the business world, into the Toyota Business Practices (TBP) process. The eight-step TBP lays out a path for employees to challenge the status quo: clarify the problem; break down the problem; set a target; analyze the root cause; develop countermeasures; see countermeasures through; monitor both results and processes; and standardize successful processes. Similarly, the A3 report… forces employees to capture the most essential information needed to solve a problem on a single sheet that they can disseminate widely.

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