Toyota Production System, Beyond Large-Scale Production by Taiichi Ohno
Recommendation
Taiichi Ohno wrote this seminal book in 1978. As one of Toyota Motor Company’s first mechanical engineers, he was inspired by the principles developed by Toyota’s founder Toyoda Kiichir?. Part manual and part philosophical treatise on efficiency, Ohno’s guide honors the Japanese automotive pioneer’s innovations in manufacturing. This 1988 edition translates the original Japanese version into English. Its overview of the Toyota manufacturing process will appeal to historians and to all those interested in the “just-in-time” ethos that now dominates the globalized economy.
Take-Aways
- The Toyota Motor Company changed Ford’s assembly-line concept to include “just-in-time” production.
- Toyoda Kiichir? created “Toyotaism” in the 1930s, setting the standard for Japanese automobile manufacturing.
- American supermarkets inspired Toyota’s innovative, just-in-time production system.
- The kanban – or signboard – is a set of instructions that determine the flow of just-in-time production.
- “Production leveling” reduces the “mountains and valleys” that contribute to inefficiency.
- At first, workers resisted changing from “one operator, one machine” to “one operator, many machines in different processes.”
- The just-in-time system aims to eliminate waste at every stage of production.
- Using a standard “work sheet” helps managers run the Toyota production system.
- The just-in-time perspective encourages managers, supervisors and workers to embrace flexibility.
Toyota Production System Book Summary
The Toyota Motor Company changed Ford’s assembly-line concept to include “just-in-time” production.
The automotive industry uses many different production systems, but they all began with Henry Ford’s 1910 invention of the assembly line. Ford realized that it was far more efficient to bring the car to the parts than to bring the parts to the car. His first chassis traveled along a trolley. He and his partners fitted the parts into the chassis along its path. Workers built the engine separately and then put it in place.
Later, Ford made the parts using dies or molds that could punch out pieces in large quantities. The cost per unit dropped when Ford manufactured cars in large quantities, but in giving birth to mass production, the company had to store, label and catalog each part.
Toyoda Kiichir? created “Toyotaism” in the 1930s, setting the standard for Japanese automobile manufacturing.
Toyoda Kiichir? adopted Ford’s manufacturing process when he founded the Toyota Motor Company in 1933. Kiichir?, who had already automated his textile manufacturing business, decided to use a similar strategy to bring cars to market in Japan. To get started, he invested one million yen that he’d earned selling a patent for a loom.
But Kiichir?’s customer base wasn’t the same as Ford’s. Japanese customers wanted more variety, and that meant less demand for mass production. Kiichir? innovated the “just-in-time” production system, which relies on reducing waste as its guiding principle. It stands on two pillars:
- Just-in-time – This process creates a manufacturing flow, where necessary parts are available when needed and in the quantity required.
- “Autonomation,” or “automation with a human touch” – Toyota uses machines that can prevent defects in the final product. The machines shut down when an “abnormal” event or manufacturing problem occurs.
Kiichir? adapted United States-style manufacturing to the Japanese market. He set five objectives: 1) supplying automobiles to the public, 2) making the industry better, 3) selling cars at an affordable price, 4) acknowledging the crucial role of sales and 5) establishing a “basic material industry” in light of the importance of high quality materials. He also invested in the best equipment.
It took three years to roll out the first Toyota car. Shareholders worried, but Kiichir? wouldn’t compromise on quality. When Japanese government enacted price controls and protectionist policies in 1936, he saw the problems of noncompetition. Kiichir? knew that he couldn’t exploit Japanese pride to force customers to buy poor-quality, expensive domestic vehicles.
“It is easier to operate a tried and true business that uses known methods and will clearly make money. Starting a difficult business that no one else will touch is a challenge.” (Toyoda Kiichir?)
Japanese businesses studied US manufacturing, particularly industrial engineering (IE). An industrial engineer focuses on systematic improvement by studying work methods, time and capital investment. Toyota expanded IE to create MIE – profit-making industrial engineering. The company regarded IE as meaningless unless it generated increased profits.
American supermarkets inspired Toyota’s innovative, just-in-time production system.
Author Taiichi Ohno joined Toyota Motor Company in 1943. Soon after, during a visit to the United States, he went to a supermarket. He observed that it operated on a just-in-time basis. He was familiar with grocery shopping in Japan, where – before the 1950s – vendors either hawked staple items on the streets or sold them door-to-door. He saw that the clerks at US markets didn’t bring products to the customers; instead, the customers went to the products.
“Industrial society must develop the courage, or rather the common sense, to procure only what is needed when it is needed in the amount needed.”
Ohno also observed that supermarkets carried only as much merchandise as they needed to have on hand. They purchased most items from suppliers who operated warehouses. The system wasn’t fully efficient, but it saved labor costs, and it was predictable and convenient.
The kanban – or signboard – is a set of instructions that determine the flow of just-in-time production.
Toyota developed the kanban to monitor the just-in-time movement of parts. A kanban is a set of instructions on a piece of paper in a vinyl envelope. It has three categories:
- Pickup information – Location, quantity and sequence.
- Transfer information – Quantity, time, destination, storage point, equipment and container.
- Production information – Quantity, time, method and sequence.
This information moves within the plant and between Toyota and its partner firms. It puts the “just” in just-in-time by making the flow of inventory visible and manageable. Vendors deliver parts only when Toyota needs them, so the factory doesn’t have to hire extra workers to handle any overflow.
“Kanban is a tool for realizing just-in-time. For this tool to work fairly well, the production processes must be managed to flow as much as possible.”
Kanban helps workers and supervisors plan their tasks, develop their flow and assign overtime. It identifies waste and defective components. However, it requires diligent handling and maintenance. Kanban is the “autonomic nerve” in the production system that controls Toyota’s multibillion dollar operation.
It took 20 years – until 1963 – for Toyota to refine the kanban to work for outside suppliers and to convince vendors that stockpiling inventory is inefficient. Now, most of Toyota’s suppliers also use a kanban-based production process.
“Production leveling” reduces the “mountains and valleys” that contribute to inefficiency.
Reducing the ebbs and flows in production requires diligence and skill. If later processes take unevenly from earlier ones, the earlier processes need more labor and equipment to fulfill demand. Fluctuation can have a ripple effect, creating problems down the line. The Japanese market for Toyota cars is diverse and features low-quantity demands compared with US auto sales. Toyota needs to maintain a nimble response to uncertain demand.
“Improvement is eternal and infinite.”
Toyota created production leveling – that is, a kind of “load smoothing.” For example, at its Tsutsumi plant, Toyota has two production lines that produce the Corona, Carina and Celica automobile models. To build 10,000 Coronas in 20 working days a month – including 5,000 sedans, 2,500 hardtops and 2,500 wagons – daily production would be 250 sedans, 125 hardtops and 125 wagons. The daily flow of the production line would sequentially create one sedan, one hardtop, another sedan and then a wagon. Alternating this way among the three models eliminates fluctuations in output.
However, this process faced a major obstacle: the demands on the die presses. The dies had to be changed often, and each change took up to three hours. Over the course of 20 years, Toyota reduced the three hours to just three minutes – an improvement that required innovative ideas and special training. While diversification makes production leveling more difficult, Toyota strives for constant improvement.
At first, workers resisted changing from “one operator, one machine” to “one operator, many machines in different processes.”
American manufacturing uses a planned mass production system, in which each process makes many parts and passes them along to the next process. Each worker learns only one process. Ohno changed this in Japan in 1950, when the Korean War brought an increased demand for Toyota vehicles. He created a production line in which one worker operates several machines in different processes. This generated an improved production flow that provided better information for a system of just-in-time production.
“Unless all sources of waste are detected and crushed, success will always be just a dream.”
Multi-skilled workers became the new normal, facilitating a flexible work environment. Japan lacks the function-oriented unions that exist in the United States and Europe. Japanese operators have a spectrum of skills and can participate across the total production system. This contributes to the ways that workers find value in their jobs.
Toyota has a saying: “Do not make isolated islands.” Workers can’t be too spread out because teamwork is important. Toyota wants employees to develop their own work standards, but all manufacturing is teamwork. How many parts a worker drills isn’t as meaningful as how many products the team produces.
The just-in-time system aims to eliminate waste at every stage of the production process.
True economy calls for reducing work hours and costs, in that fewer hours result in lower costs. Worker activities should harmonize with the flow of production. The greatest waste is excess inventory which generates expenses in managing, storing, moving and tracking. Eliminating waste improves operating efficiency.
Any manufacturing process can be geared to reducing waste. For example, companies can view employee movements in two categories. The first involves waste. It’s made up of needless, repetitive tasks, time on hand, stockpiling intermediate products, changing hands and transporting goods to a place other than their final destination. The second category involves work, which also falls into two subcategories:
- “Non-value-added work” – This is waste, but it remains necessary. It includes such tasks as removing packaging, walking to retrieve parts and handling push buttons.
- “Value-added work” – This encompasses any processing, because processing adds value. It includes assembling parts, forging raw materials, welding, tempering gears and painting auto bodies.
Using a standard “work sheet” helps managers run the Toyota production system.
Making only the number of cars needed frees up excess manpower, but managers must be careful to calibrate their hiring in line with demand. It isn’t good practice to hire people when production is high only to lay them off later. Workers value meaningful work, and they don’t want to do nothing.
“The standard work sheet is a ‘means of visual control,’ which is how the Toyota production system is managed.”
Standard work sheets help people eliminate waste, and they’re useful when examining resources, rearranging machines, improving processes, installing autonomous systems, improving tools, overseeing transportation methods and optimizing materials for machine processes. Workers use standard work sheets to support the “plant-first principle.” Work sheets prevent defects, mistakes and accidents, and they’re adaptable so managers can incorporate workers’ ideas.
With the standard work sheet as a guide, Toyota created the “standard work procedure,” which has three elements:
- “Cycle time” – This is the amount of time it takes to make one piece or unit. Compute this figure by dividing operating hours by the quantity of units required each day.
- Work sequence – This is the sequence of operations that a worker performs.
- Standard inventory – This refers to the minimum amount of material needed to keep the operation moving.
A business resembles the human body and its autonomic nervous system, which responds instantly to stimulation. For example, autonomation determines the sequence employed in making parts and when overtime is necessary. It knows when to stop production in the event of a fault.
“Elasticity is important…Sticking to a plan once it is set up is like putting the human body in a cast. It is not healthy.”
The production control department sends out directives, which the production line must be able to adopt easily. Directives are the backbone of the organization. Plans change, and the survival of a business depends on its flexibility.
The just-in-time perspective encourages managers, supervisors and workers to embrace flexibility.
Japan experienced a high-growth period from 1955 to 1973, the time span during which Kanban came into being. Yet as Japanese businesses adopted American mass-production system and consumerism, they temporarily lost sight of the Japanese way of life. Automation was everywhere. Toyota built machines equipped with “autonomation” so they could stop themselves in the event of a problem. However, workers have to supervise the machines. Expensive equipment that required having more workers present led to less efficiency.
During the 1983 oil crisis, production fell. Toyota realized that its autonomated machines required operators whether they were deployed at full capacity or only half. Slow-growth periods are inevitable, and they teach companies valuable lessons about how to improve their operations. Toyota continues to use employee input and its legacy of process innovation to pursue continual improvement.
About the Author
Taiichi Ohno joined the Toyota Motor Company in 1943. He worked as a shop-floor supervisor in the engine manufacturing department and rose to become executive vice president in 1975.