Tag Archives: Toyota

Jun 1 2012

Hospitals look to Toyota automaker for efficient operating rooms

See on Scoop.it – lean manufacturing

More about TPS in health care in Canada, this time about SMED applied to operating room turnarounds. This is not the first time manufacturing techniques cross over to surgery: 100 years ago, through motion studies in operating rooms, industrial engineers Frank and Lillian Gilbreth developed the method by which nurses make tools immediately available to surgeons.

“Surgeons are using Toyota management techniques to cut time between surgeries and halve overtime hours…”

See on www.thestar.com

May 21 2012

The OSKKK Methodology

See on Scoop.it – lean manufacturing

The author of this PDF document, Greg Lane, “learned this simple method while working for Toyota. There is nothing profound in these simple ideas…”

OSKKK stands for the following:

  1. Observe
  2. Standardize materials, motions, tasks and management.
  3. Kaizen 1 – Improve information and materials flow and process
  4. Kaizen 2 – Improve equipment
  5. Kaizen 3 – Improve layout

See on www.jobshoplean.org

Apr 26 2012

Leanness, value curves, and profit margins versus volumes

Long flights are opportunities to whittle down my stack of books to read about Lean. The one I took from San Francisco to Shanghai this time made heavy use of what the author calls a “value curve,” but I have to admit that it was a bit much for my jet-lagged brain. As I couldn’t quite make sense of this curve, it made me want to explore in more detail exactly what it is, what can be learned from it, and what actions it may support.

It plots parameters the author calls “Value available” and “Value required” against volume for a set of yearly data about a company. The author claims that companies that are not Lean have U-shaped profiles of “value required” that make them profitable only in the vicinity of an optimal volume of activity, while Lean companies have flatter value-required profiles that allow them to prosper under a broader range of volumes.

Following is the example he uses to introduce the value curve:

Figure 3.2 is about GM from 1926 to 1936, and, the parameter on the x-axis is a common measure of automobile industry volume, albeit one that commingles everything with wheels and an engine that goes on the road, from cars to trucks and buses.

Since the word “value” appears seven times on the chart, I had to check what the author meant by it. In the book’s glossary, he defines it as “A product or service that satisfies a customer need or desire even as it changes over time.” Since service organizations call their offerings “products,”  products are always intended for customers, and products are upgraded over time, I can’t see any difference between Value and Product, but why not? The next time I buy a haircut or a fish, I will know I should call them values rather than products. On the chart, however, replacing “Value” with “Product”  doesn’t makes it easier to understand, as seen below, so I must still be missing something:

I was also puzzled by the use of the expression “Behind the Value Curve” inside a chart called “Value Curve,” making the chart refer to itself. Clearly, it was not as simple as I hoped it would be. Looking further in the Glossary, I found the following:

  • “Value Available” actually doesn’t mean “Product available”. Instead, it has its own paragraph-long definition, from which I understood that is means Sales.
  • Likewise “Value Margin” is Net Income, as lifted from the company’s Operating Statement, and Value Required = Sales – Net Income. It is therefore a measure of costs that includes depreciation and taxes.

But Value Available is a flat curve on the chart, and therefore it can’t mean Sales, because GM’s sales were anything but flat between 1926 and 1936. The author explains that he makes it flat to show “the relationship between value available and value required.” Another way of saying this is that he wants to show the ratio of Net Income to Sales, usually known as Profit Margin. It seems that the unit on the y-axis should be “%,” as befits a ratio, rather than “Dollars.” It really doesn’t matter whether Sales and Net Income are reported in Dollars or Yens.

In the book’s appendix, the author provides the data he used to generate his chart, and I used them to plot profit margin as a function of volume. I also labeled each point by year so that we could follow the company’s trajectory on the plane of Profit Margin versus Vehicles Produced. To see if this chart supported the author’s assertion, I also retrieved and plotted the corresponding data for Toyota between 2000 and 2011, with the following results:

These charts clearly tell stories. The first shows GM through the growth of the twenties and the great depression; the second, Toyota through its 2001-2008 boom, followed by the financial crisis, the mass recalls of 2010, and the Fukushima earthquake and Thailand floods of 2011. It also shows how the economics of the auto industry changed in 80 years. In good times, today’s mature automobile industry yields profit margins that are barely 1/3 of what they used to be, on volumes that are many times higher. In the worst year of the great depression, 1932, GM made only 28% as many vehicles as in 1929. If the worst of the current crisis was in 2009-2010, Toyota’s drop in volume, while similar in absolute terms to GM’s in the great depression, was much smaller in relative terms, at barely 15% off from the 2008 peak.

But do these curves support the author’s assertion that Lean companies are better at coping with volume changes? I don’t see it. I happen to think it’s true, but I don’t see these particular charts as making this point.

Feb 2 2012

How do you build cars in a country with a market of 170,000 cars/year?

Via Scoop.it – lean manufacturing

This is news from the Philippines, where the largest car plant is Toyota’s in Santa Rosa, producing only 30,000 units/year. The article’s author sat in a panel of judges that gave Toyota the Employer of the Year award for 2011. This is what he says about the plant: “When we visited their Sta Rosa plant, the Japanese managers were full of praises for the quality of work of their Filipino workers. Our workers have adapted well to their Kaizen work ethic. We were told that the Sta Rosa plant, which assembles the Vios and the Innova, is one of their most productive plants in the Toyota worldwide network.”
Via www.philstar.com

Jan 25 2012

Toyota lays off 350 Australians

Via Scoop.it – lean manufacturing

Toyota Australia today announced plans to cut 350 jobs at its Altona manufacturing plant, in what it is referring to as a “response to operating conditions.”

Toyota is an ordinary company, after all… In 2010, they mishandled a quality problem; today, they are laying off people. In 1950, when Kiichiro Toyoda laid off Toyota employees, he resigned as CEO. The article here does not suggest in any way that the CEO of Toyota Australia is likewise falling on his sword.

Another reason to call what we do Lean rather than TPS is that we have some control over how Lean evolves.
Via www.themotorreport.com.au

Lean versus Toyota
Jan 24 2012

Lean versus the Toyota Production System

Is there a difference between Lean and the Toyota Production System (TPS)? This is a recurring question. The short answer is yes, but, when you look deeper, it is an issue of packaging as well as of substance.

If you are working in a car company, you cannot openly say that you are using Toyota‘s production system. How could you borrow such things from a competitor, especially if you have been in the business 50 years longer? It is embarrassing to employees, and a weak marketing message. So, regardless of how much you actually use from TPS, you must call it your own “Production Way” or “Operating System,” or…

It is even worse if you are not in car manufacturing. If you maintain aircraft for an airline, applying tools from car production will not appear to make any sense. And, likewise, patients in a hospital may not take kindly to the idea that they are treated like cars on an assembly line.
Company-specific names serve a purpose, but we also need a generic name around which to organize literature, public training, professional conferences, blogs, etc. Several were tried in the early 1980s, such as Just-In-Time, Demand Flow Technology, or World Class Manufacturing, but John Krafcik’s Lean Production, introduced in the late 1980s by the book The Machine that Changed the World, swept all aside and, to my astonishment, is still current after more than 20 years.

A generic name like Lean clearly has many practical advantages over TPS. This being said, the minute Lean branched out from Toyota, divergence was to be expected. Major tools of Lean, like Value-Stream Mapping or Kaizen Events are either minor or non-existent in TPS, while the jidoka column of TPS is largely ignored or misunderstood in Lean. See Art Smalley’s presentation at the 2006 Shingo Prize conference, or Working with Machines. The combination of Lean with Six Sigma is also popular in the US, even though Toyota evaluated and passed on Six Sigma.

The umbilical cord, however, was never broken, and the promoters of Lean still use Toyota as a reference. Clearly, nobody would be interested in Lean if it weren’t backed up by the Toyota story, and this raises the question of how far Lean can drift from TPS and still retain this vital link.

The following two comments in the Leadership and Lean The Top 5% discussion group on LinkedIn, highlight the issues. This is what Allison Corabatir has to say, based on her experience at Magna:

There is a lot in a name…. When one says they are implementing TPS, it usually means they are taking a cookie cutter approach and assuming what worked well for Toyota would work well for them too. Obviously, there is no denying that their tools are great and we should learn from Toyota, but in reality, some of the tools need to be tailored to the culture and operation of the company we are working for. [...] some tools like VSM does not get enough attention with TPS ( I am a big fan of VSM) and some approaches are totally missing (We put a lot of importance to employee recognisition and rewards). I prefer using the term “lean” and making the system our own.

Who would argue with that?  Anna Johnson,  on the other hand, describes a very different experience:

My experience with TPS has been that there is a greater emphasis on retention, and lowering of costs through collaboration and teamwork and attrition, whereas while lean equally emphasizes cost cutting, headcount reduction seems more acceptable through RIFs…

When Anna says that Lean “emphasizes cost cutting, headcount reduction,” she describes a 180-degrees turn away from TPS. This version of “Lean” isn’t just a watering down but a betrayal. It is taking the approach with which financial managers have hurt US Manufacturing from the 50s to the 70s, and calling it Lean to mislead audiences into believing that it is Toyota’s approach.

Anybody can slap the Lean label on anything, and it is only a matter of time until this free-for-all makes it worthless. It results in implementations that are best described as L.A.M.E. (Lean As Mistakenly Excecuted) or L.I.N.O (Lean In Name Only). To avoid this, you have to start from the underlying principles of TPS and deploy them in an context-appropriate fashion, but it is easier said than done, because Toyota didn’t do a great job of articulating these principles and we have to reverse-engineer them from TPS.

Lists of principles can be long, abstract, vague and toothless like the UN’s Universal Declaration of Human Rights, or short, specific, and actionable, like the US Bill of Rights. In The Toyota Way, Jeffrey Liker spells out specific and actionable principles, but there are 14 of them, which is too many to remember. The Lean Enterprise Institute has 5 principles,  easier to remember but focused exclusively on the flow of materials. They say nothing, for example about human resources. You could claim to follow these principles while practicing yo-yo staffing, hiring massively in boom times and laying off in recessions.

The HBR article on Lean Knowledge Work summarizes Lean principles as follows:

  1. Relentless attention to detail
  2. Commitment to data-driven experimentation
  3. Charging workers with the ongoing task of increasing efficiency and eliminating waste in their jobs.
This is short and specific, and covers ground that the LEI list omits, but it includes no mention of flow.
Following is my own, manufacturing-centric list:
  1. Focus on people are the main driver of performance.
  2. Look for profits in the details of shop floor operations.
  3. All manufacturing is repetitive at some level, even where it doesn’t appear to be.
  4. Make materials, information, and people flow.
  5. Make it easy to do what you do often.
  6. Improve, don’t optimize. Optimization comes to a full stop; improvements never end.

There are good reasons to use the word Lean rather than TPS to designate what we do. Lean evolves in many different directions as it inspires people in different industries to pursue improvement in ways that work in their context, and it is healthy that they should do so. But there will always be bandwagon jumpers just using the label to sell products or services.

Jan 24 2012

Lean Knowledge Work

Via Scoop.it – lean manufacturing

Attempts to apply lean approaches to knowledge work have proved frustratingly difficult. Most in the business world believe that knowledge work does not lend itself to lean principles, because, unlike car assembly, it is not repetitive and can’t be unambiguously defined. Consider a bank officer deciding whether to make a loan, an engineer developing a new product, and a social worker ruling on whether a child’s environment is safe: In each instance the work involves expertise and judgment that depend heavily on tacit knowledge—knowledge locked inside the worker’s head.

However, our research in IT, financial, engineering, and legal services reveals that such work can in fact benefit from the principles of the Toyota Production System.

‘Knowledge management’ issues: often just an inability to effectively capture a process.
Via hbr.org