Erwin's Reviews > The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer

The Toyota Way by Jeffrey K. Liker
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Toyota Industries Corporation was a Japanese maker of automatic looms (device used to weave cloth) when Kiichiro (eldest son of the founder) established the Toyota Motor Corporation. Toyota had was capital poor, resource poor, and the Japanese car market was small. Kiichiro devised a strategy of Operational Excellence, along the lines of Sam Walton's strategy for Wall Mart. Eventually, the strategy of operational excellence (elimination of waste) allowed resource poor Toyota to dominate it's resource rich western rivals. Ironically, Kiichiro was inspired by Henry Ford's book, which many Ford Motor Company managers and executives have not read.

Kiichiro's critical insight is similar to Eliyahu M. Goldratt's Theory of Constraints with it's focus on optimisation, especially as related to the factory floor. Typically factories want to keep all of their capital equipment busy, so that they can make good use of their investment. Each machine creates small piles of partially finished goods.

Kiichiro realised that more important than the capital and labor (opportunity cost) tied up in this work in process, the bigger problem is that all of these bits of intermediate inventory HIDE PROBLEMS. As if you've poured lots of grease into an engine. Even if the parts don't fit together and operate precisely, the engine will still work because it's heavily lubricated. Like the early days of Sam Walton, Kiichiro was capital poor, he couldn't compete using the same strategy as his advisories. By draining all of the lubrication (intermediate stages of inventory) out of the system, problems would constantly come to the surface. Each time a problem was located, it was corrected. The result was a machine that was built to constantly improve.

Kiichiro's strategy can be applied to more than just the assembly line. The crux of the issue is as simple as Obvious Adams - focus on your customer and see the world from their perspective. Fortunately, Kiichiro's strategy is more rigorous, offering specific tactics and tools.

Toyota has developed a set of concepts that dominate much of the manufacturing world. The core of the Toyota way is the focus on elimination of WASTE. Waste is typically represented as inventory. The entire product/service production/development system must be focused on the end consumer of the product, and from that consumer work backward to what must be produced. The result is Lean Manufacturing, or ultimately the Lean Enterprise. It's also the foundation for The Lean Startup and Lean Government.

Core principles of the Toyota Way (Lean) are:
* 現地現物 Genchi Benbutsu. Go and See. Managers must go to the source of the problem and see it with their own eyes, not trust the verbal or written reports of their subordinates.
* 改善 Kaizen. Improvement. No matter how good the process is, it can always be made more perfect. Build a system where problems easily come to the surface, and fix them quickly.
* 看板 Kanban. Signboard. Kanbans put a cap on the maximum amount of each type of inventory at a given time. Because kanbans represent inventory, and inventory is waste, a lean enterprise starts with Kanban's but eventually works to minimize and eliminate them.
* 無駄. Without Waste. Remove all Transportation, Inventory, Motion, Waiting, Over Processing, Over Production and Defects from your production process. Also, not taking advantage of your employees latent skill is also a form of waste.
* 平準化. Heijunka. Production levelling. Peaks and troughs in production create waste. Sometimes you're idle. Sometimes everybody is working overtime. Enlist the sales and marketing team to help equalise demand. From sourcing of materials to sales of finished goods, ideally you want the process to work like a metronome. Constant.
* 行灯. Andon. Something like a Stop Sign that allows any employee to stop the system anytime that a production defect is located. It is always cheaper to fix a defect at the source than to allow the defect to progress through production and find it during QA. The power to stop the system also shows trust in employees and empowers them, helping them to be emotionally committed to the process.

That said, I think that any sort of "miracle elixir" that points out the "one true way" must be eyed skeptically. Toyota's success just as much the result of Japanese economic policy and luck as it is the "inevitable result" of Toyota's philosophy and discipline. If you're going to implement "The Toyota Way" in your own enterprise, I recommend that you read The Black Swan in parallel.

I think that this methodology is not suitable to every manufacturing company, but only to companies where the entire management and even a large percentage of the employees are really willing to strive for perfectionism over the long term. One Amazon reviewer from North Carolina recently wrote that: 'If you want your company to crash and burn then this is the book for you. Within a year of our company implement Jeffrey Liker's "Toyota Way" our company started losing customers and money. Now hundreds of people are out of work - all thanks to the "Toyota Way".'
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October 25, 2012 – Shelved
October 25, 2012 – Finished Reading

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