We tend to associate the concept of "lean production" with the Japanese - and with Toyota, in particular. Indeed, a chief production engineer at Toyota, Taiichi Ohno, is credited with having, over twenty-five laborious years, synthesized lean production ideas into a single, comprehensive scheme which has often been dubbed the "Toyota Production System."
At its heart is the elimination of waste to provide customers with well-made products in a timely manner, through intelligent automation ("jidoka") and "Just-in-Time" manufacturing. The ideas of "Just-in-Time" parts delivery, flexible production lines, empowered production-line workers, and reduced waste gave the Japanese a leg up on Detroit when hard times hit the auto industry in the gas crisis of 1973.
But back in 1950, it seemed impossible that Toyota would ever rise to challenge the American automakers. In devastated Japan, the Japanese company, which had made cars and trucks before the war, was virtually broke. Manpower had dwindled and automobiles had fallen to an all-time low on consumers' priority lists. Production dropped by more than half, forcing manufacturers to produce anything they could sell, including tools, kitchenware, farm equipment, and food.
One of Toyota's plants switched production to flour and bread, to feed its workers. Another made clothing, chinaware, and even fish paste.
In the hope of striking a deal with Ford Motor Company, Toyota sales director Shotaro Kamiya made the long journey to the United States.
Kamiya, writes Jonathan Mantle in Car Wars, was desperate. "Toyota was selling fewer than three hundred trucks a month, and it had stopped making cars altogether.
"If he failed to line up a deal with Ford, Toyota would fail."
Ford, however, was not interested. The Defense Department, too, opposed this kind of deal on the grounds that it would distract from domestic American production.
A disappointed Kamiya returned to Japan to find that the Korean War had broken out. Japan's proximity to Korea made it an ally of America in the war against Communist China. Kamiya was greeted with an order from the Pentagon for 1,500 trucks per month. Toyota production leapt by forty percent.
Many decades later, Japanese journalists would write how "even today, Japanese businessmen shudder at the thought of what would have happened if there had been no war in Korea."
Mantle recalls that the governor of the Bank of Japan would go so far as to describe the Special Procurements program as "divine aid."
Ultimately, the war would save Toyota and many other Japanese companies. Kamiya and Toyota managing director Eiji Toyoda, a descendant of Toyota's founder, could again contemplate making cars.
Toyoda had been given a directive by his late cousin, Kiichiro: make Toyota's productivity the equal of the American automakers' within three years.
That was a tall order. U.S. automakers were eight times as productive as their Japanese counterparts, and Toyota was short of equipment and capital. It needed to find a way of improving productivity without spending itself into bankruptcy. Two men would prove key to this task: W. Edwards Deming, and Taiichi Ohno.
American scientist W. Edwards Deming had come to Japan in 1947 as part of General Douglas MacArthur's six-year occupational government. Deming's task was to assess the state of Japan's industry and identify its immediate needs. His approach was, according to many, gentle and understanding. As Andrea Gabor wrote in her book, The Man Who Discovered Quality: How W. Edwards Deming Brought the Quality Revolution to America: "When he stood before the recently vanquished enemy of the United States, Deming spoke not as a conqueror but as a man who had grown up poor, the son of Wyoming pioneers, and who understood the hardships involved in building something from nothing."
The Deming philosophy was broken down into a fourteen-point system, the most essential of those being the ongoing training and education of employees; a system of performance ratings; statistical process control; understanding variation, and incisive market research. "Quality," said Deming, "has no meaning except as defined by the desires and needs of customers."
The Japanese filled university halls to attend his seminars, even compiling a book from them. When Deming was offered the royalties from the sale of this book, he declined the money. The Japanese Union of Scientists took those funds and created the Deming Prize in 1951.
One man who took note of Deming's teachings was Taiichi Ohno, Toyota's chief production engineer. Ohno accompanied Eiji Toyoda and several associates for a second trip to America.
Henry Ford II had little time for the team from the little Japanese automaker. The grandson of Ford's famous founder was grappling with a surging domestic market for which Ford had been ill prepared. The company which had famously sold a million copies of Model T in "any color you want, so long as it's black," now faced a public which wanted rather more. In the aftermath of World War II, people had money to spend. They wanted new cars; not warmed-over versions of models which had last seen the light of day in 1941, before Detroit had given itself to war production.
Toyoda and his team were, however, given a tour of Ford's Rouge River plant in Detroit. The former home of the Model T and Model A was the heartland of the American automobile industry.
Plant foremen were quite surprised when their Japanese guests began taking photos of not only the production lines, but the garbage bins as well.
That was a hint as to Ohno's focus: the elimination of "muda" (waste). This, together with designing out overburden ("muri") and inconsistency ("mura") would be the three basic goals of the Toyota Production System.
Ford's expansive way of making cars, the team from Toyota realized, was entirely unsuited to Japan. Toyota could not afford new machinery and new technology, and would instead be forced to make the most of its aging equipment. It could not afford keep in stock the huge quantities of parts it had seen stored at Rouge River. Equally, it could not pile up unsold cars at the end of the line. And it had not the resources or the space to allow for a production line for each model it made.
Needing to speed up production capabilities without spending money to do so, Ohno launched into a complete rethink of the production line. He was given full confidence by Eiji Toyoda, who defined Toyota's priorities: the customer would be number one, followed by dealers, and finally, the company itself.
Under this set of priorities, "muda" or waste was defined not as trash, but as anything that did not add value to the customer. If a specific action did not change the function of the product; if it was not done right the first time, or if the customer did not care about that process or was not willing to pay for that, it was considered waste.
But the breakthrough came with "Just-in-Time" production and the "kanban" system. With these concepts, Ohno changed the system that fed the assembly line itself.
At the Rouge, he'd seen many different parts - doors, fenders, and so on - "pushed" up in big numbers and tiled until they were needed. This was Henry Ford's method. "If we'd done that in postwar Japan, we would have gone bankrupt straight away," Ohno would later recall. "Goods needed to be turned into money as quickly as possible. So we really needed to keep our stocks to the bare minimum."
In order to tie up less money in capital, Ohno realized that the parts and assembly lines had to run at the same rate. Parts would only be made and called to the assembly line in the quantity needed. The Japanese called it the "Just-in-Time" method.
At its essence, "Just-in-Time" is a "pull" system focused on making what is needed, when it is needed, in the right amount. In theory, this provides stable pricing for the customer and keeps overhead costs in check. In practice, it does not tolerate error and can be extraordinarily difficult to implement.
In traditional manufacturing, processes delivered parts to the following processes regardless of what was actually needed. In Ohno's system, each process was a customer of the preceding process. Processes used "kanban" cards, removed from parts they had consumed, to withdraw parts from the preceding processes. They became instructions to make additional parts. The "kanban" flow ensured the processes made parts only to replace parts actually consumed by the following processes.
One of the bottlenecks that Ohno's "Just-in-Time" goal faced was the changing of dies in the large presses which made parts. In Detroit, this process could take up to three hours. Time spent waiting for a machine to complete a process was clearly waste; yet Toyota could not afford to buy more presses than the second-hand American ones it had obtained. Presses are notoriously the most expensive aspect of an automobile factory. By placing a priority on the die-change process, Ohno eventually got it down to several minutes. Out of sheer necessity - space and cost - Toyota had found a way to change, at short notice, the machinery on the production line.
Machines, too, did not escape Ohno's eye. Intelligent automation - "jidoka" - meant that a machine safely stopped when normal processing was completed. It also required that when a quality or equipment problem arose, the machine detected the problem on its own and stopped, preventing defective products from ever being produced. As a result, only products satisfying the quality standards would be passed on to the next step on the production line. When a machine stopped itself, this was communicated to the human operators via the "andon" (problem display board). Operators then identified the cause of the problem to prevent it from happening again.
The Ohno revolution to get the most from labor and machines was extended to suppliers. Productivity increased fourfold in ten years.
So revolutionary were these concepts that, when in 1973 the gas crisis severely crippled automakers across the globe, Toyota was still showing a profit on its balance sheets. Assuming it was fraud, the other Japanese automakers called for an investigation. The Japanese government, investigated Toyota's factories. Toyota was finally forced to show its production system to outsiders. The officials left satisfied that Toyota's documents were, in fact, truthful. On that day, the mystique that has surrounded the Toyota Production System for decades was born.
Mind you, it wasn't easy. People were initially reluctant to give up their old ways of doing things. But, supported by management, primarily Eiji Toyoda, Ohno took the initiative in teaching people how to use the new system.
Ohno was also famous for requesting the impossible in his efforts to make the maximum use of human labor. "If I found a job was being done efficiently, I would say, 'Try doing it with half the number of people,'" he explained. "And after a time, when they had come back and said that they'd done that, I'd say, ok, halve the number again."
However, he won the hearts of the workers in implementing Deming's suggestions regarding empowerment. For one thing, Ohno would often give employees a goal without instructions on how to accomplish it. He expected them to use their creative problem-solving skills to meet his directives, thereby increasing their ability to think for themselves.
And, in contrary to Detroit practice, Ohno gave every worker the power to stop the line. American production lines were often characterized by hundreds of defective cars at their end, being pored over by inspectors who had not built in the defect and so often took precious minutes and even hours to find its source. Many defective cars left the factory, the trouble to be discovered by irate customers and hopefully corrected by the dealer at a later date. Detroit lived by the adage that the lines must run, no matter what.
Ohno's system, as Mantle recalls, encouraged workers to "form self-sufficient teams and to be their own supervisors, technicians, quality controllers, and cleaners.
"If they saw a car going down the line with a part missing or defectively installed, they were empowered to stop the line by pulling a cord so that the fault could be corrected.
"At first, the result was chaos. The line kept stopping whenever somebody thought they spotted a defect or ran out of parts, and pulled the cord. But soon the line began to run more smoothly, and with miraculous results. Not only did the individual workers began to experience greater self-respect, but they functioned as a self-sufficient team on and off the production line.
"The teams took pride in their work, and it showed in the lower cost and higher quality of the cars that came off the production line. Soon other Japanese automakers, such as Datsun, were following Toyota's example.
"They called it the Toyota Production System. Many years later, Westerners christened it 'lean production.'"
As Mantle points out, by that time, many Westerners made the pilgrimage to Nagoya, but few Japanese made the pilgrimage to Detroit in return.
The Toyota Production System has gained a worldwide following, and now covers eight basic elements: Transportation (the process by which the product reaches the customer), Inventory Management, Motion Control (ergonomics), Waiting Times (including waiting for manager approval), Over-Production, Over-Processing and Non-Value-Added Processing, and Defect Reduction. Skill Management was added in the late '90s by Canon, and this eighth aspect of managing waste - placing employees in positions where they can reach their maximum - is regarded with equal importance.