The Toyota Way

The 14 Principles of the Toyota Way is a management philosophy used by the Toyota corporation that includes the Toyota Production System. The main ideas are to base management decisions on a "philosophical sense of purpose", to think long term, to have a process for solving problems, to add value to the organization by developing its people, and to recognize that continuously solving root problems drives organizational learning.

Since the 1980s, Toyota and Lexus vehicles have been recognized for their quality and are consistently ranked higher than other car makers in owner satisfaction surveys, due in large part (according to Jeffrey Liker, a University of Michigan professor of industrial engineering) to the business philosophy that underlies its system of production.



The 14 Principles
The Toyota Way has been called "a system designed to provide the tools for people to continually improve their work"[1] The 14 principles of The Toyota Way are organized in four sections: I) Long-Term Philosophy, II) The Right Process Will Produce the Right Results, III) Add Value to the Organization by Developing Your People, and IV) Continuously Solving Root Problems Drives Organizational Learning. The principles are set out and briefly described below:

Section I — Long-Term Philosophy

Principle 1
Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
People need purpose to find motivation and establish goals.

Section II — The Right Process Will Produce the Right Results

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 eight types of muda are:

Overproduction
Waiting (time on hand)
Unnecessary transport or conveyance
Overprocessing or incorrect processing
Excess inventory
Motion
Defects
Unused employee creativity

Principle 3
Use "pull" systems to avoid overproduction.
A method where a process signals its predecessor that more material is needed. The pull system produces only the required material after the subsequent operation signals a need for it. This process is necessary to reduce overproduction.

Principle 4
Level out the workload (heijunka). (Work like the tortoise, not the hare).
This helps achieve the goal of minimizing waste (muda), not overburdening people or the equipment (muri), and not creating uneven production levels (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
Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.
Although Toyota has a bureaucratic system, the way that it is implemented allows for continuous improvement (kaizen) from the people affected by that system. It empowers the 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 productive, help people share work stations, reduce time looking for needed tools and improve the work environment.

Sort: Sort out unneeded items
Straighten: Have a place for everything
Shine: Keep the area clean
Standardize: Create rules and standard operating procedures
Sustain: Maintain the system and continue to improve it
Safety

Principle 8
Use only reliable, thoroughly tested technology that serves your people and processes.
Technology is pulled by manufacturing, not pushed to manufacturing.

Section III — Add Value to the Organization by Developing Your People

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 the team, not the individual.

Principle 11
Respect your extended network of partners and suppliers by challenging them and helping them improve.
Toyota treats suppliers much like they treat their employees, challenging them to do better and helping them to achieve it. Toyota provides cross functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.
Section IV: Continuously Solving Root Problems Drives Organizational Learning

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:

Always keep the final target in mind.
Clearly assign tasks to yourself and others.
Think and speak on verified, proven information and data.
Take full advantage of the wisdom and experiences of others to send, gather or discuss information.
Share information with others in a timely fashion.
Always report, inform and consult in a timely manner.
Analyze and understand shortcomings in your capabilities in a measurable way.
Relentlessly strive to conduct kaizen activities.
Think "outside the box," or beyond common sense and standard rules.
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:

Find what is really going on (go-and-see) to test
Determine the underlying cause
Consider a broad range of alternatives
Build consensus on the resolution
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:

Initial problem perception
Clarify the problem
Locate area/point of cause
Investigate root cause (5 whys)
Countermeasure
Evaluate
Standardize

Translating the principles
There is a question of uptake of the principles now that Toyota has production operations in many different countries around the world. As a New York Times article notes, while the corporate culture may have been easily disseminated by word of mouth when Toyota manufacturing was only in Japan, with worldwide production, many different cultures must be taken into account. Concepts such as “mutual ownership of problems,” or “genchi genbutsu,” (solving problems at the source instead of behind desks), and the “kaizen mind,” (an unending sense of crisis behind the company’s constant drive to improve), may be unfamiliar to North Americans and people of other cultures. A recent increase in vehicle recalls may be due, in part, to "a failure by Toyota to spread its obsession for craftsmanship among its growing ranks of overseas factory workers and managers." Toyota is attempting to address these needs by establishing training institutes in the United States and in Thailand.

Principles

The underlying principles, called "The Toyota Way" are outlined as follows:

Long-term philosophy
Main article: The Toyota Way
Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

The right process will produce the right results
Create continuous process flow to bring problems to the surface
Use the "pull" system to avoid overproduction
Level out the workload (heijunka). (Work like the tortoise, not the hare.)
Build a culture of stopping to fix problems, to get quality right from the first
Standardized tasks are the foundation for continuous improvement and employee empowerment
Use visual control so no problems are hidden
Use only reliable, thoroughly tested technology that serves your people and processes.

Add value to the organization by developing your people and partners
Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
Develop exceptional people and teams who follow your company's philosophy.
Respect your extended network of partners and suppliers by challenging them and helping them improve.

Continuously solving root problems drives organizational learning
Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu, 現地現物);
Make decisions slowly by consensus, thoroughly considering all options (Nemawashi, 根回し); implement decisions rapidly;
Become a learning organization through relentless reflection (Hansei, 反省) and continuous improvement (Kaizen, 改善).

The Toyota production system has been compared to squeezing water from a dry towel. What this means is that it is a system for thorough waste elimination. Here, waste refers to anything which does not advance the process, everything that does not increase added value. Many people settle for eliminating the waste that everyone recognizes as waste. But much remains that simply has not yet been recognized as waste or that people are willing to tolerate.

People had resigned themselves to certain problems, had become hostage to routine and abandoned the practice of problem-solving. This going back to basics, exposing the real significance of problems and then making fundamental improvements, can be witnessed throughout the Toyota Production System.

Results
Toyota was able to greatly reduce leadtime and cost using the TPS, while improving quality. This enabled it to become one of the ten largest companies in the world. It is currently as profitable as all the other car companies combined and became the largest car manufacturer in 2007. It has been proposed that the TPS is the most prominent example of the 'correlation', or middle, stage in a science, with material requirements planning and other data gathering systems representing the 'classification' or first stage. A science in this stage can see correlations between events and can propose some procedures that allow some predictions of the future. Due to the success of the production philosophy's predictions many of these methods have been copied by other manufacturing companies, although mostly unsuccessfully.

Commonly used terminology
Andon (行灯) (English: Signboard)
Genchi Genbutsu (現地現物) (English: Go and see for yourself)
Hansei (反省) (English: Self-reflection)
Heijunka (平準化) (English: Production Smoothing)
Jidoka (自働化) (English: Autonomation - automation with human intelligence)
Just In Time (ジャストインタイム) (JIT)
Kaizen (改善) (English: Continuous Improvement)
Kanban (看板, also かんばん) (English: Sign, Index Card)
Manufacturing supermarket where all components are available to be withdrawn by a process
Muda (無駄, also ムダ) (English: Waste)
Mura (斑 or ムラ) (English: Unevenness)
Muri (無理) (English: Overburden)
Nemawashi (根回し) (English: Laying the groundwork, literally: Going around the roots)
Poka-yoke (ポカヨケ) (English: fail-safing - to avoid (yokeru) inadvertent errors (poka))

Toyota Production System

The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic "Lean manufacturing." Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975.

Originally called "Just In Time Production," it builds on the approach created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno. The founders of Toyota drew heavily on the work of W. Edwards Deming and the writings of Henry Ford. When these men came to the United States to observe the assembly line and mass production that had made Ford rich, they were unimpressed. While shopping in a supermarket they observed the simple idea of an automatic drink resupplier; when the customer wants a drink, he takes one, and another replaces it. The principles underlying the TPS are embodied in The Toyota Way.

Goals
The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out "mura" (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or "muri" (overburden) since this generates "muda" (waste). Finally the tactical improvements of waste reduction or the elimination of muda are very valuable.

There are seven kinds of muda that are addressed in the TPS:

over-production
motion (of operator or machine)
waiting (of operator or machine)
conveyance
processing itself
inventory (raw material)
correction (rework and scrap)

The elimination of muda has come to dominate the thinking of many when they look at the effects of the TPS because it is the most familiar of the three to implement. In the TPS many initiatives are triggered by mura or muri reduction which drives out muda without specific focus on its reduction.

Origins
This system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota has long been recognized as a leader in the automotive manufacturing and production industry.

Toyota received their inspiration for the system, not from the American automotive industry (at that time the world's largest by far), but from visiting a supermarket. This occurred when a delegation from Toyota (led by Ohno) visited the United States in the 1950s. The delegation first visited several Ford Motor Company automotive plants in Michigan but, despite Ford being the industry leader at that time, found many of the methods in use to be not very effective. They were mainly appalled by the large amounts of inventory on site, by how the amount of work being performed in various departments within the factory was uneven on most days, and the large amount of rework at the end of the process.

However, on a subsequent visit to a Piggly Wiggly, the delegation was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory they would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous Just-in-Time (JIT) inventory system.

While low inventory levels are a key outcome of the Toyota Production System, an important element of the philosophy behind its system is to work intelligently and eliminate waste so that inventory is no longer needed. Many American businesses, having observed Toyota's factories, set out to attack high inventory levels directly without understanding what made these reductions possible. The act of imitating without understanding the underlying concept or motivation may have led to the failure of those projects.