Gemba Panta Rei

Toyota has revamped their website area explaining TPS. The thinking and origin of TPS including kanban, just in time and jidoka are explained in simple terms using diagrams to make it easy to understand. It's a pity they don't spend more time on their creative idea suggestion system and standard work but it's a good start.

On the Just-in-Time page, the kanban diagram should help clarify the misconceptions commonly held about what kanban are and what they do. The flow of the parts retrieval (withdrawal) kanban and the production instruction (production) kanban are made very clear.

There is also what you might call a high-level material and information flow diagram explaining the production flow. Make sure you scroll all the way down so you can view the explanatory text that appears as part of the Flash animation.

The videos of TPS in action (about 4 minutes) follows a part from truck to assembly line and then tracks a kanban card through electronic processing, the heijunka post, the attachment and picking of parts. There are also some brief close ups of u-shaped chaku-chaku lines. Awesome!

On the same area the Jidoka video (about 4 minutes) explores "intelligent automation' and its origins with the invention of the automatic loom. It ends rather abruptly. The Just-in-Time video (about 7 minutes) is more about the history of Toyota than the details of takt time, one piece flow and downstream pull. These two videos are not instructional but rather the PR videos they display at their exhibition center.

Make sure to check out the Jidoka and Just-in-Time tabs on the video page. You can select specific short clips from the longer version of the videos, introducing individual examples of kanban, jidoka, etc. Let's see that heijunka box again!

There's a short quiz about TPS that you can take, I missed a question. Doh!

Toyota gives a nod to both the popularization of the "Toyota Way" term as well as the evolving and adapting nature of the Toyota Production System:

Nowadays, the "Toyota spirit of making things" is referred to as the "Toyota Way." It has been adopted, not only by companies inside Japan and within the automotive industry, but in production activities worldwide, and continues to evolve globally.

There you have it, the Toyota Production System straight from the horse's mouth.

Posted by Jon Miller at 5:38 PM | Permalink | Comments (0) | TrackBacks (0)

True story. Not too long ago I was with another one of our consultants teaching Just in Time principles to a group of newly minted Lean facilitators at one of our client's factories.

During one of the breaks one of the engineers motions me over. "Hey, do you wanna see one piece flow? I'll show you one piece flow. Come on. It'll just take 5 minutes."

So we quickly put on the PPE and walked out to the factory. I had been in this factory before and I was curious to see where he was going to take me, but I kept quiet. We stopped in front of a packing line.

"They aren’t doing it right! I helped design this. There was one piece flow here before." Walking back to the training room he said, almost as an excuse, "I haven’t been to this factory in 2 years." He was angry at first, then embarrassed, then humbled. I didn't have to say anything. It was a good experience for him.

This engineer is now a Lean leader for this company, visiting their factories around the world and promoting a common and standardized understanding of what Lean manufacturing means to their company.

Genchi gembutsu. These two Japanese words are the quickest way to say "get out to the place where the real work happens and see what's really happening with your product and processes today".

The lesson is, if you’re going to take a Gemba guy to the gemba to show him one-piece flow, make sure you’ve been there recently.

Posted by Jon Miller at 10:03 PM | Permalink | Comments (1) | TrackBacks (0)

There have been several articles over the last year pointing out the challenge Toyota is facing as they expand overseas to find good people. The Toyota’s Challenge: Growing the Talent points out that Toyota is growing faster than they can develop people to fill the senior management ranks.

Racism?

Bill Waddell, author of Rebirth of American Industry and blogger at Evolving Excellence likes to say what he thinks. More often than not, what he says makes me think. I think Bill is way off base in labeling the “ignorance of racism” as the Achilles’ heel of Toyota in his article on March 24.

There is a difference between racism (which is decision based on ethnicity) and decision based on shared culture, value and beliefs. When you make hiring or promotion choices based on ethnicity this is called racism. When you choose not to hire or promote someone because of incompatible work-related values or practices it is called “sound judgment”.

Diversity

In America we have been taught to believe that diversity is a virtue. This idea (which could be called an assumption or theory) may be true in America. This idea is not shared in every country and culture. With diversity, as in any idea we want to sell to others, we need to first demonstrate the benefit. Once we show why having a diverse group at the executive level is good for business and good for people, we can begin to persuade.

But before persuading perhaps we should listen and attempt to learn the other perspective. It’s a somewhat culturally arrogant of Americans to judge Toyota or anyone else based on how many nationalities are represented on their board without first understanding their reasons for it. If we see evidence of a lack of diversity and cry “racism!” we are not doing root cause analysis on the process, we are blaming operator error.

I personally believe that diversity in a team is helpful in problem solving or decision making. Here is a related article. But I wouldn’t impose the value of diversity on our office in Japan or in any other country simply because as an American I thought diversity was good, without first attempting an understanding their culture. As much as Americans value diversity and inclusion, Japanese value other things.

Shared Views

Nowhere in the article is it implied that Toyota attributes the problem of a lack of non-Japanese senior managers to the fact that they are not Japanese. Rather than write off the Japanese executives at Toyota as racists because of their statements in this article and the composition of their board, I think it would be more interesting to delve into why this is.

"Getting overseas staff to share our views on management and quality is very difficult. But that task is urgent," says Toyota spokesman Kinoshita.

There are two ways to read the above statement from the article. The first to read “Overseas staff don’t get it” and the second is to read “Toyota is having a tough time getting overseas staff to get it”. The former is critical of the overseas staff while the latter is self-critical. Based on everything I know about Toyota and it’s culture of kaizen and respect for people, I will say that the latter is correct.

On the surface it may seem easy to have shared views about quality or management. It’s probably safe to say that no one openly disagrees with “zero defects”, “safety first” or “kaizen everyday” at Toyota. It is something quite different to hold the underlying set of beliefs that result in actions supporting these things. I’m not saying that there is something uniquely Japanese to these beliefs. It’s more that there is something uniquely Toyota. But there are differences between Japan and America.

Abundance vs. Scarcity

There has been a fundamental difference in perspective between US and Japan in the past 60 years of industrial development. The 200 year history of America’s expansion Westward on the depopulated continent, and Japan’s development of landmass of limited natural and agricultural resources, has had the effect of making Americans think in terms of abundance and Japanese in terms of scarcity. I would argue that the former is more suited to the invention of the automobile while the latter is more suited to kaizen of the automobile.

This difference in position of abundance vs. scarcity was acute after Japan’s defeat in World War II. The writings of Ohno and Shingo when reflecting on Japan’s culture and history and crediting the development of TPS and kaizen were in part to this assumption of scarcity but also because the spoke no English and were probably puzzled themselves in genuine puzzlement “How did we manage to come up with a manufacturing system better than the Americans?” Culture, humility and a willingness to learn after the defeat in World War II, the economic engine of the Korean War, trade barriers keeping a captive domestic market that guaranteed a degree of demand stability, and culture –all of these things played a role.

Japanese companies did develop an effective system of manufacturing management. They listened and put into practice the teachings of Deming, Juran, Drucker, Ford and others while many US firms did not listen to these men. Facing scarcity the Japanese were eager to listen and learn. Toyota took it further than any other company. Why?

Nagoya Business Style

The culture at Toyota is a product of the business culture of the Nagoya area. There was a good Wall Street Journal article in 2005 about the character of the people and culture of the Aichi Prefecture (home to Toyota). They are tightwads. The article contained statistics on spending and savings to back up anecdotes.

In Japan today books about “Nagoya business style” are in vogue, thanks to booming Toyota and Toyota-related companies around Nagoya. There are television programs on the subject. There is also saying is that goes like this:

Three businessmen go out to dinner. The one from Tokyo thinks, “How can I pay for all three dinners politely?”

The one from Osaka thinks, “How can I pay for only myself and not the others?”

The one from Nagoya thinks, “How do I get them to pay for me?”

These differences probably exist in every country. You could replace Tokyo, Nagoya and Osaka with regions or cities in your country and make this story work. The point is that a fierce frugality and focus on cost reduction is what has made Toyota successful. They do not want to dilute this by bringing in anyone at their executive level who does not share the same values.

Remote Control from Japan

"We're afraid of slipping, so we can't help but interfere" says Kinoshita, and concludes however that this can not go on much longer.

In some ways Toyota is a family business. One of the things about a family business is that they tend to have very strong characteristics influenced by the founders. Family businesses can also be slower to let people from the “outside” run the company, since the perception is that those not in the “family” don’t share the same values as strongly. The Japanese are unique in wanting to run things by remote control from overseas. The Toyota culture, if we accept from the moment that it is a product of a family business from the provincial Nagoya area is compulsively frugal. If they are like the rest of us, the people at Toyota probably don’t understand why people in other countries aren’t like themselves.

Based on my experience working with Japanese stationed in the US, the 20 years of experience developing and getting factories up and running is not always matched with 20 years of learning about the culture and mindset of local people. After all, the Japanese company knows what works for them and wants to see that replicated. They come from completely different religious, educational, and social backgrounds and typically do not have social anthropologists on staff to help them bridge the gap. Developing shared values beyond the “Values” section of a company’s brochure is essential but not easy.

It’s one thing if Toyota was micro-managing operations from across the ocean. TPS runs on visual management, problem response systems, built-in quality and just in time to insure high levels of quality, safety and productivity. So they don’t need to micromanage operations, once TPS is in place as a way of thinking.

It’s more likely that they are constantly auditing standard work, adherence to the spirit and practice of kaizen, and doing OJT with their non-Japanese counterparts. It’s how they learned and it’s how they teach. In other words making sure that through practice they are learning the values and beliefs of Toyota. Lean manufacturing is easy, Lean thinking is not so easy.

Employee Turnover

Toyota recognizes that in their overseas operations people are more mobile and able to go to work for another company. This in my view is their biggest challenge and one that may cause them to slow their growth or erode their quality and profitability. The Japanese tend to identify more strongly with the group and make long-term commitments to a company than people in America do, keeping turnover low. As an aside, employee turnover in Chinese companies is completely out of control and has similar implications for growth, quality and profitability.

Diversity vs. Harmony

Toyota is doing very well. They have no reason to do as Sony or Nissan and bring in a foreigner at a very high level of their management team to shake things up. Toyota wants to change (in the direction of better or kaizen) but Toyota does not want to be changed. They want the people that rise to senior executive levels to have the values that made Toyota successful. This is not something that you can articulate in a memo and check off of a checklist.

Which is easier? Developing non-Japanese to be more like the “ideal” Toyota senior executive, or changing the definition of “ideal” to include experiences, values and perspectives that non-Japanese executives bring? What would you do if you were Toyota?

The Japanese believe that homogeneity (genuine or not) is a virtue because it promotes harmony. For Toyota as a global company their first challenge is to find or develop people who also share their values, including harmony. Form follows function, and what an executive team that promotes this type of harmony looks like in terms of national and ethnic composition remains to be seen.

Posted by Jon Miller at 1:08 PM | Permalink | Comments (5) | TrackBacks (0)

I really enjoyed this chapter for a couple of reasons. First, Ohno uses the old-fashioned honorific for “grandpa” or “old man” when referring to Sakichi Toyoda in the title. There’s a certain warmth there and a reminder that born in 1912, Taiichi Ohno had the sensibilities and values of an earlier era.

Second, Ohno spends a paragraph talking about his schooling and early days working at Toyoda Boshoku (textiles) making thread, and later in the chapter how he came to first work at Toyota Motor Company. Of his first years out of school, he says “In these days they made you work for three years on the shop floor” before they would give you a job as a section manager. He’s actually complaining (!) though probably in fond memory, about being a trained engineer who was sent to work out on the gemba. This experience must have been formative for Ohno.

He tells of how he joined Toyoda Boshoku (thread manufacturing) after graduating from an industrial high school (equivalent of a polytechnic school) in mechanical engineering. Toyoda Boshoku was located next to Toyoda Loom Works. Ohno says he became aware later what a significant invention the automatic loom (the origin of jidoka) was, admitting that at the time he was young and did not realize it.

Taiichi Ohno is surprisingly critical of how jidoka was used at Toyoda Loom Works, but for good reason. “People took this great invention and misused it.” He says that just like the conveyor belt at Ford the automatic loom improved productivity tremendously by automating work that was done previously by hands and feet.

The most important difference between automation and Sakichi Toyoda’s jidoka (autonomation) was that the machine ran automatically and stopped when the thread broke or ran out. The key is that this prevents the automatic loom from producing defects. This concept of built-in quality is what made this invention unique.

However, people at Toyoda Loom Works saw only that this made it easier to make people run to the machines that were stopped so they could get them running again, improving productivity. The same was true for machines with built-in jidoka mechanisms at Toyoda Boshoku. Their main goal was to increase output.

In Taiichi Ohno’s thinking they should have used the opportunity to learn why the thread broke and stopped the machine so that they could prevent this defect in the future. Taiichi Ohno concludes that in those early days Grandpa Sakichi’s jidoka idea was misused to make people work harder so that performance would improve.

Toyoda Boshoku was merged into Toyota Motor Corporation during World War II and then spun off again after the war. “I didn’t make automotive parts during the war. I made airplane parts.” Says Ohno. He spent a year making brass pipes used to cool oil in airplanes. He was made Section Manager of final assembly in the main automobile factory in February 1945.

Taiichi Ohno explains how Grandpa Sakichi’s jidoka idea affected him by saying, “The way Toyota produced automobiles was the same [as Loom Works] and very labor-intensive. I realized we needed to use jidoka better and to think of ways to produce more with the people we had.” Andon lamps, pull chords and the culture of “stop and fix” to build in quality at Toyota today are all evidence that Taiichi Ohno succeeded in this.

Posted by Jon Miller at 5:09 PM | Permalink | Comments (2) | TrackBacks (0)

"I know where everything is." How many times have you heard (or given) this rejoinder to "please 5S your desk"? It's hard to argue the logic of "cluttered desk, cluttered mind" when a desk is an emotionally charged personal space, too often nearly a shrine adorned with family photos, sports team paraphernalia, and toy mythical creatures.

"Being in control of your office space saves time" says this article and offers some interesting statistics to back it up.

A 2005 study commissioned by DYMO of Connecticut (a maker of office labeling systems and not exactly a disinterested and objective third party) identified that:

- More than half of managers in America consider desk cleanliness when conducting salary reviews
- 51% of those surveyed identified a link between desk tidiness and productivity
- Each lost document costs the company $120

The same study found the following spread in the degree of desk tidiness:

- 49% are "professional but relaxed" with a few small, neat stacks
- 31% are "organized chaos"
- 13% are "creative type" or very messy
- 7% are "prim and proper"

So only 7% of the desk in American offices have anything resembling proper 5S... that explais a lot of things. Since 5S makes waste and abnormality visible, there's a lot of hidden waste waiting to be uncovered and eliminated by office kaizen activity at 93% of American offices (assuming the spread above is evenly distributed across companies).

In the same article professional office organizer Janet Nusbaum identifies e-mail as a source of disorganization and wasted time. Essentially she recommends not letting e-mail set the agenda for your day, and preparing at the end of the day for the next day's priorities. The Lean parallels would be one-piece flow of office work and not allowing interruptions (e-mails) to create WIP (half-finished tasks) while you answer e-mails, and also the idea of external preparation from SMED to know in advance what you need to start your next day. We've seen again and again that when you keep the work flowing one at a time you minimize clutter and make 5S upkeep much easier.

Citing the 80/20 rule (Pareto principle) that only 20% of what comes across your desk you will really need, another professional office organizer Julie Mahan espouses "when it doubt, throw it out" just as in Sorting with 5S. She is quoted:

The physics of clutter is that it will come into your office without your assistance but will not go away without your assistance.

This is true. The second law of thermodynamics states that if no energy enters or leaves the system then the potential energy of the state will always be less than that of the initial state in all energy exchanges, and entropy (the degree of disorder in the system) increases. You do work (organize) to increase the potential energy again. But when you transfer energy by doing work some energy is lost as heat and this increases the entropy of the overall system.

For example when you wind a clock the energy it take to wind it is transferred to the wound clock spring as potential energy, and some energy is lost as heat and entropy increases. When the spring unwinds and turns into kinetic energy heat is lost again and entropy increases.

Do you ever wonder why things always get cluttered again after you've cleaned and organized? It's a law of the universe, and you can't break it. If you do nothing, you've already lost. Clutter prevails. You can't win against entropy. You can only fight it. You can't even break even. Entropy will always increase. You need to keep adding energy into the system (organizing). The flow of energy maintains order. By adding energy into a system you create organization. That's what 5S is.

Fight entropy. 5S your desk. It might affect your raise.

Posted by Jon Miller at 8:31 PM | Permalink | Comments (6) | TrackBacks (0)

A Wall Street Journal article today titled Snow Defends Presidents’ Handling of the Economy got me thinking again about the problem of excessive executive compensation for Lean manufacturing. The problem of excessive executive compensation for lean Manufacturing is that it is a kaizen killer.

What’s a “kaizen killer?” I will explain but first let’s see what U.S. Treasury Secretary John Snow has to say on the topic of executive compensation in America. We can imagine Mr. Snow shrugging as he claims that we are seeing the United States’ “labor market efficiently rewarding more-productive people” even as the income gap widens.

What's been happening in the United States for about 20 years is [a] long-term trend to differentiate compensation," Mr. Snow said in an interview with The Wall Street Journal last week. "Look at the Harvard economics faculty, look at doctors over here at George Washington University...look at baseball players, look at football players. We've moved into a star system for some reason which is not fully understood. Across virtually all professions, there have been growing gaps.

The article cites a study that CEO pay has increased from 40 times the average worker’s pay in 1970 to 400 times the average worker’s pay today. Why are CEOs’ compensations so high? The invisible hand of the market, says Snow:

In an aggregate sense, it reflects the marginal productivity of CEOs. Do I trust the market for CEOs to work efficiently? Yes. Until we can find a better way to compensate CEOs, I'm going to trust the marketplace.

Mr. Snow, a former CEO himself and a trained economist, now has a job which in part requires him to use statistics to spin economic information in a way that is favorable to the people he works for. It is a pity that to Treasury Secretary Snow the problem of the widening gap of income and excessive executive compensation in the United States is one at a “philosophical level” and not a problem at a practical level that affects dozens of millions of Americans and actually needs to be addressed by policy under Mr. Snow’s watch. Ignorance is easier to plead than incompetence.

But CEOs are leaders of organizations who have been hired to run businesses profitably. They do not have the option, unlike Mr. Snow, of raising taxes in order to stay in business. Executives who want to stay competitive need to engage everyone in their organization in kaizen and Lean thinking. To executives, the widening gap in compensation is not an issue at the “philosophical level”.

What’s the problem with executives who are paid 400 times the average worker? It makes people who are asking “What’s in it for me?” no longer believe you when you reply “job security” or “improved competitiveness” or “a better work environment”. Executives who are compensated in ways that are excessive are not credible as leaders in a kaizen culture.

For our purposes Lean manufacturing (or Lean healthcare or Lean transaction or Lean government) is when there is a kaizen culture in the organization that is as close as possible and profitable to TPS and the associated business philosophy. For our purposes kaizen is persistent improvement across all aspects of a business, based on eliminating waste, variability and unreasonable conditions, towards real profitability.

This type of kaizen culture requires the development of people who understand TPS and will continuously do kaizen and solve problems for themselves and their customers to reduce cost and improve quality. This requires significant ongoing education and training within an organization.

In our experience, the companies that are most successful in the world with kaizen do kaizen as OJT – On the Job Training. I've been taught that there are three parts to successful OJT. They are knowledge, ability and motivation. If any one of these three is lacking, the results will be poor. In summary:

Results = Knowledge x Ability x Motivation

I would argue that one of the key roles of a leader is to develop the people in their organization. This is true from the Chief Executive making sure that she has a reliable team of individuals who can take her place, all the way down to the front line supervisor making sure that new workers are trained to follow standards that are in place.

When people are treated unfairly, this rapidly erodes motivation. Based on conversations I have had as part of my effort to teach people about kaizen, very few who are paid a salary in the range of "average" think today's executive compensation is fair. This badly erodes the ability of these leaders to lead people to a kaizen culture like that of Toyota. Whether or not executives today understand this is another important question, one that is beyond the scope of this article.

I suppose at this point I should make a strong case for why executive compensation that is as much as 400 times that of the average worker is “excessive”, but I’ll leave that up to smart people who have argued more eloquently and passionately than I can here. Author and management thought leader, the late Dr. Peter Drucker raised the early alarm over excessive executive compensation. Author, consultant and fellow blogger Bill Waddell wrote a delightful rebuff of Bob Lutz’s justification of his excessive compensation. Economist, lawyer, writer and actor Ben Stein wrote brilliantly on Sunday February 12 in his New York Times column titled New Front: Protecting America’s Investors. Ben Stein’s article is such an impressive display of fairness and clear thought that I hope it is widely read by his peers.

According to a Watson Wyatt Worldwide survey of 55 institutional investors, cited in the February 13, 2006 issue of BusinessWeek, 90% of institutional investors think that corporate executives are overpaid and 85% think the compensation system hurts the image of corporate America. Institutional investors are typically not shareholder activists or labor representatives in their spare time. For the most part they are hard-core capitalists, so this particular statistic is saying something.

But let’s suppose Mr. Snow is completely right and that a CEO making 400 times is only the best example of capitalism at work rewarding the most productive performers in the job market. Excessive (or should I say questionable?) compensation for executives of the type described in the March 18, 2006 Wall Street Journal article The Perfect Payday represents a similar problem for Lean manufacturing.

The article describes how CEOs and executives at companies such as Affiliated Computer Services, United Health Group, Mercury Interactive, Analog Devices, Brooks Automation, Comverse Technology and Vitesse Semiconductor all appeared to reap significant financial benefit from bending the rules.

The CEOs all had agreements that allowed them to perfectly time their right to buy company stock. The dates they were granted happened to be when the stock traded at the lowest value that year. These CEOs did this not once, but many times

The odds to something like this happening by chance alone in one example were one in 300 billion, according to the article. Maybe extraordinary luck is part of what makes these CEOs 400 times more productive than the average worker. But he SEC doesn’t think so and they are investigating these cases as examples of backdating.

It's not that I don't believe in business leaders being very well compensated. People who have great ideas, take significant personal risks, or help organizations execute good ideas in a positive and transformative manner may deserve to be compensated more generously than the person who doesn’t offer ideas or take significant personal risks.

Peter Drucker said “Strategy is a commodity, execution is an art”. In this day and age where strategy (ideas such as restructuring an organization’s business lines, putting an emphasis on innovation, or relocating to lower cost countries) seem to be a commodity available for purchase from any number of experts, the CEO of today who executes these strategies hardly seems to qualify for such generous compensation.

I would take it a step further. To borrow a saying from the military, “Amateurs worry about strategy. Dilettantes worry about tactics. Professionals worry about logistics.”

In the military, strategy happens at the level of Generals. Other officers then execute these orders through by giving orders to carry out tactics. The logistics required to build or blow up bridges, take or save lives happens at the level of what is known as the rank and file. We’re back to relying on those 400 people who are less productive than the CEO / General with the winning strategy and artful execution.

Brad Schmidt of Gemba tells the 2,000 year old Chinese story of the warlord who was undefeatable on the field of battle. This warlord believed in the “four sames” philosophy. Unlike other armies in those warring times, his army all had the same food, same clothes, same lodgings, and the same enemy. In China 2,000 years ago these soldiers, like Treasury Secretary’s workers who are 1/400th as productive as the CEO of today, were expendable. The Chinese warlord most probably received much greater rewards for victory in battle than the average foot soldier. Yet he understood that creating distance between himself and his troops by flaunting this gap in compensation was not the way to win.

Bringing it back to Lean manufacturing, it’s true that consultants are sometimes criticized for receiving excessive compensation. When consultants work at a company only to do “kaizen events” to make improvements in quality, cost, delivery or safety, I would agree with this. These things are a commodity, like the strategies and decisions of most excessively paid CEOs. Consultants see an opportunity to apply a known solution to a problem their client company is facing. Like the best executives they study the current situation, identify the gap with the target condition and apply their knowledge and skills to close the gap. While this benefits both sides, too often the consultant or executive does not leave a culture of kaizen at their client company. The result is short-term cost reduction but sustainability in the long-term is lacking. The same is true for excessively paid executives.

Based on anecdotal evidence, kaizen consultants are paid anywhere from 2 to 10 times what the average worker at their client is paid. As long as kaizen consultants are credible in delivering the results they promise (and they are promising sustained improvement), they are practicing what they preach and doing their work in a way that is respectful to people, I believe this is fair. But ultimately the market decides and sets the price based on supply and demand. Hopefully the same will be true for executive compensation very soon, for the sake of making better companies and better societies through kaizen.

Now that I’ve gotten this one out of my system, dear reader, please enjoy many months of rant-free blogging.

Posted by Jon Miller at 9:59 PM | Permalink | Comments (0) | TrackBacks (0)

In this chapter Taiichi Ohno discusses “just in time” but spends very little time on how material and information flows in TPS and most of his time wondering about the origin of the English phrase.

Toyota Production System has two pillars: autonomation (jidoka) and just in time but I realized only recently that “just in time” is a created term.

Taiichi Ohno proceeds to explain his theory that Kiichiro Toyoda took the English words and made a unique expression based on Japanese thinking. As a native English speaker I think he’s off base on this theory but his thought process is interesting.

Taiichi Ohno writes:

According to people from countries where they speak English such as America and England the correct phrase is “exactly on time”. The phrase “just in time” does not actually exist.

He can’t be blamed for this misconception. This chapter was written in 1982. Then, as now, it is not rare for English teachers in Japan have dubious credentials.

With his limited English Taiichi Ohno continues to explore the nuances of “timing”, “in time” and “just”. He likens the use of “just” in the phrase “just a moment” to the Japanese “chotto” which means “a little”. Whether being “in time” or asking someone to wait, they key idea is that you are waiting only a little or you are on time only a little and not too much.

Taiichi Ohno says the better word in Japanese is “chodo” which means “just” as in “I just made it” or “just barely”. In other words, if you need material delivered after lunch it should be delivered just around lunch and not in the morning or the day before. That is still “in time” but not “just in time”.

He clarifies the misconception by some English speakers who observe Toyota’s Just in Time and think “exactly on time” places an unreasonable burden on suppliers. Taiichi Ohno says that if a delivery is needed for use at 1PM, an 11AM is delivery is OK but a 9AM delivery is not OK.

A deliver 2 hours in advance of the time of use allows for 1 or 2 hours of inventory so that by the time the line is empty the new material will be available. Just in Time at Toyota is not about holding suppliers to a 5 or 10 minute “exactly on time” delivery window and punishing suppliers if they fail.

Taiichi Ohno ends the chapter believing that “just in time” is not real English and that Kiichiro Toyoda invented the phrase to better express the Japanese concept the “chodo” on time.

Toyota history credits Kiichiro Toyoda with adding “just in time” to the development of the Toyota Production System in the 1930s. It was Taiichi Ohno, with the help of Shigeo Shingo, who made Just in Time into what it is today, built around the three elements of Takt Time, One Piece Flow and Downstream Pull. Kiichiro Toyoda had the vision, Taiichi Ohno built the framework and Shigeo Shingo worked out the details to make JIT a reality. We are ever grateful.

As a matter of interest Jules Styne wrote a song called “Just in Time” for the musical Bells Are Ringing in 1956. That’s the same year in which Taiichi Ohno visited the U.S. on his study mission. It’s probably safe to say Ohno’s trip to the U.S. didn’t include a visit to the Broadway show.

Posted by Jon Miller at 10:27 AM | Permalink | Comments (0) | TrackBacks (0)

At Gemba we advocate something called the “open office” both for ourselves and to support the Lean transaction efforts of our clients. The open office is exactly what it sounds like, a Lean office area with as few walls as possible. So imagine my horror reading an article in the March 2006 issue of Fast Company about a gentleman named Douglas Ball and his ideas for the cubicle of the near future.

The article cites a projected shortage of knowledge workers by 2009 as one of the motivators for new and improved cubicle design. It’s sad that companies think they have to attract talent by giving people a more comfortable personal working space. Would I rather have a sleek Douglas Ball-designed office furniture system than a bland and traditional cubicle? Frankly I don’t think I could work in either after working in an open office. The cost is simply too high.

In an open office the flow of information is much quicker than in one with walls. This results in faster learning and sharing of ideas, improved cross training, catching errors quicker, and a better understanding for everyone in the office of the status and direction of the business. Everywhere we've implemented the open office clients report that productivity improved by more than 30%. Space savings and quality improvements are usually greater. If you don’t value these things, fancy cubicles may be for you.

"NT is meant to undo the problems that bedevil workers consigned to open-plan systems, creating a sense of territory and privacy while maintaining the potential for collaboration." What exactly does “bedevil” the workers in these cubicles? What problem does giving people “a sense of territory and privacy” solve? Perhaps the designer went to the gemba, observed the actual process, and identified the wastes associated with working among cubicles to come up with these improvements. But I doubt it.

The statement “And it's designed to feel as appealing as the cockpit of a sports car--and almost as snug” gives you some idea of the target demographic of this product and the design-push mindset that went into building it. This system furniture is not necessarily designed for the job, it’s designed for a target hire.

The analogy for manufacturing would be that a “new and improved” batch and queue production system is designed because it makes the factory workers feel more secure to see a large amount of work in front of them. Even though this increases worker comfort, it is still a money-losing and inferior production system.

Herman Miller is coming out with this new and improved cubicle code-named “NT”. But caveat emptor: office furniture systems that place priority on personal territory at the cost of process flow will result in highly sub-optimized performance at best and dysfunction at worst for your organization. There is a place for space and comfort in the workplace, but design the process first around flow to enable best overall quality and cost performance. You can create a separate area with plush chairs, relaxation and comfort, when that is appropriate in the workplace.

What motivates Mr. Ball to make a new an improved cubicle? Apparently he is responsible for the original “system furniture” concept (a.k.a the cubicle) and he thinks he is making amends. Mr. Ball is quoted as saying. 'We've seen what's happened in the workplace. So much has been taken away from people--the office, the door, their privacy, and space. What we want to do here is give back.' Not to wish anyone ill, but if I could give the gift of walls, doors, privacy and space to all of our competitors, I would happily foot the bill.

With sincere apologies to Mr. Ball, here’s to hoping the NT project meets a quick and quiet death in a marketplace that values Lean thinking and Lean transactions.

Posted by Jon Miller at 4:23 PM | Permalink | Comments (4) | TrackBacks (0)

E. Alan Hartman, Dean of the University of Wisconsin-Oshkosh College of Business, has been rolling up his sleeves and doing gemba kaizen. He first wrote about his experience with kaizen at the Ariens Co. in the Appleton Post-Crescent in February. Yesterday he concluded "Kaizen best learned through participation" in the same newspaper.

It never occurred to me that kaizen could be learned any other way than hands-on. Learning gemba kaizen, or how to see waste, identify the root cause and find a way to fix it, is like riding a bicycle. Nearly impossible to learn from a book but impossible to forget once you learn how it's done.

The first step is to become aware of the 7 types of waste that are all around you in every process. Mr. Hartman writes that an experienced Lean leader at Ariens observed half a dozen things that he missed. Spend a day on the facotry floor observing and documenting the 7 wastes and you will never forget what they are.

One of the challenges, Mr. Hartman points out, was how kaizen could be done for processes at the college that were done only once or twice a year.

Another thing about kaizen is that it is easier when you try it first and then think about it afterwards.

Mr. Hartman concludes "Our college staff will be doing a Kaizen event. I will let you know how that goes." We'll be waiting eagerly to see how the University of Wisconsin College of Business applies Lean principles to its processes.

Posted by Jon Miller at 8:03 PM | Permalink | Comments (0) | TrackBacks (0)

Nidhi Shah recently posted a question on this blog "Is there a link between Gemba kaizen and HRD personnel in an organisation?" Thanks for your question Nidhi. Kaizen and Lean manufacturing can sometimes be seen as technical areas that are owned by production management, industrial engineering or quality departments. In both organizations just starting out with kaizen and in mature Lean manufacturing organization there is a strong case for having kaizen activity integrated as part of a company's human resource development strategy.

In addition to hiring, training and resolving personnel conflicts human resource specialists should develop people into good problem solvers. This is really the heart of kaizen. The way to develop people's kaizen skills and problem solving is mostly not through class room study but in actual practical situations on the gemba. Of course this is the job of the team leader, supervisor or manager but HRD has a role in identifying the types of OJT (on the job training) needed to support not only the production or transactional process but also problem solving within that process.

At many companies active in kaizen, as in Toyota, kaizen activity (whether it be QC Circles, suggestion systems, or jishuken) are paid for out of the training budget, as part of human resource development.

In regards to suggestion systems and employee involvement in day-to-day problem solving and kaizen activity there is often the question of whether people should be paid for their kaizen ideas. The answer is that yes, they should be paid. The reason is that people are asked to develop and document these kaizen ideas during their breaks, lunch time and after work. It is not so much a reward as a thanks for doing informal of overtime work. This payment for ideas (typically $5 for all ideas implemented) comes out of the HRD budget because this type of kaizen is also training.

There are specific ways that HRD personnel can support Lean manufacturing and kaizen. For instance the Skill Matrix is a key to used to visualize cross training and enabling multi-process handling and one-piece flow. As part of a training and skill development system, the Skill Matrix is a very useful tool. See here for an example of an article I posted earlier on how the use of a skill matrix enabled kaizen.

The Human Capital Institute website often contains good information on the area of Human Resources Development. An article titled The Latest Trends of Japanese HRM Systems: An Interview with Professor Yasuhiko Uchida is a very interesting study of trends and comparisons of HR systems. The following two questions and answers in the interview I found relevant the topic of the link between HRD personnel and kaizen:

Are Japanese companies giving up on their practice of long-term employment?

The competencies companies really want are, for example, kaizen ability on the shop floor, craftsmanship, and firm-specific technical knowledge such as high quality liquid crystal production capability for Sharp Corporation, hybrid car engine technologies for Toyota, and precision instruments assembly technologies for Canon. Sharp has been able to develop LCD technologies because it has shifted three-quarters of its technological specialists in various fields to LCD-not by trying to bring in that talent from outside.

For Japanese companies role of HRD is not only critical to kaizen, but also developing core competencies and even innovation in new products and technologies, according to Professor Uchida

As an addendum to the article there is a list of differences between HR in the United States and Japan. Since kaizen originated in Japan and many of us recognize Toyota as one of the better companies at doing long-term kaizen I think understanding these differences can provide insight to the question of the link between kaizen and HRD personnel. From the article:

1. Role of HR
U.S.: To support business departments.
Japan: One part of management strategy (like capital management).

4. HR development methods
U.S.: People develop through experience working in the specific job and off-site training.
Japan: Moving personnel to different jobs in the company is the most effective method for developing employees over the long-term.

"Kaizen won't work for us because this isn't Japan" is an often-heard excuse. The processes, parts or services that people create around the world are not so different. The people, and how we develop them into customer-focused problem solvers is the key difference. For most of us reading right now “...this is not Japan” is a true statement, but not an excuse. A more useful way to put it may be that some organizations find kaizen challenging “...because we don't have a human resource development strategy that supports kaizen.”

There are enough organizations outside of Japan succeeding with Lean manufacturing and kaizen to refute the above excuse. At the same time you could argue that success with kaizen has nothing to do with the differences in how firms in Japan and the United States approach HRD. But there are not so many organizations outside of Japan that can honestly say they have been doing kaizen non-stop for 20. 30 or 40 years. That requires a strong link between kaizen and HRD personnel because ultimately kaizen is all about people becoming problem solvers.

Posted by Jon Miller at 10:16 PM | Permalink | Comments (4) | TrackBacks (0)

In this brief chapter Taiichi Ohno emphasizes the need to do kaizen in order to be ready to compete with lowest cost production. When production volumes decrease, one strategy is to produce products with higher value added and higher margins. This strategy of moving up-market does not always work, so you need to prepare by doing kaizen to lower costs, says Ohno.

This message is very relevant today. Toyota is very active in doing kaizen even as they reach record profits and production growth. Not only that, according to a March 7, 2006 Automotive News article Toyota will compete with the Chinese automobile manufacturers by offering lower cost automobiles starting in 2010. Toyota appears to have learned Taiichi Ohno's lesson to "do kaizen when times are good".

Taiichi Ohno says that if you wait to do kaizen until business is slow, then you are forced to spend money just to reduce costs and become competitive. You spend money on your Lean manufacturing efforts when your margins are getting smaller and this takes your attention and cash at a time when you need it most to run the business. So do kaizen when times are good, and be ready for the eventual slow times.

When the economy is strong and you have a lot of business, you can cut costs effectively. If you try to lose weight when you are starving, you will not drop fat but muscle, and become weaker. When you are cutting people because you have no breathing room to cut costs, this is not true cost reduction or kaizen. The most important thing is to do kaizen when times are good, says Taiichi Ohno.

Doing kaizen when business is good can be difficult, because the numbers show that your financial performance is good. Why do what is difficult (changing people's behavior through kaizen) when you can do more of what you are doing now - the same things that are making money today? This is the big mistake companies make.

Taiichi Ohno says that companies have a responsibility to maintain employment and make a profit. The only way to do this is to reduce cost. Costs are reduced by scientifically reducing waste from every process. "I think this effort is the most important job of Industrial Engineering" says Taiichi Ohno.

Taiichi Ohno uses a Japanese proverb similar to "An empty sack cannot stand upright" to express that it is very difficult to make good decisions and do kaizen to cut costs the right way when your business is struggling. By the same token, it is easier to do kaizen the right way when times are good. When you are poor and struggling to make ends meet it is hard to think beyond today. The lesson from Taiichi Ohno in this chapter is very clear. Avoid the trap of becoming comfortable with your success, and do kaizen when times are good.

Posted by Jon Miller at 7:02 AM | Permalink | Comments (1) | TrackBacks (0)

As part of our Lean manufacturing benchmarking trip we visited a bus manufacturing plant in Japan with a group of executives from an aerospace company on February 27, 2006. We spent 6 hours observing their Lean manufacturing operation in action and asking about their kaizen efforts and management philosophy for continuous improvement. Among the many things we learned was the "simple is best" approach to built-in quality. They way they guarantee quality through gemba kaizen (immediate, on-site improve) is quite ingenious.

The production line had "Quality Gates" between each major process where inspectors would check the quality of the work performed by the workers in the process being checked. At first glance the number of inspections and checks might make you ask "is this built-in quality?"

What was unique and smart about the whole operation was that the quality checkers were all production employees with lots of experience in the process they were checking. If they found a problem, they would call the employee over and show him or her what the problem was and how to fix it. The employee would then fix it and return back to their workstation.

In this case, the quality function was being used as a training tool and a way to do kaizen. If the employee who was having problems with quality improved their performance they were rewarded with a gift certificate for beer. The management summarized the thinking behind their approach to quality kaizen as follows:

1. A person who knows the job, and who has done the job well is your best inspector because they know what aspects to watch out for.

2. It's easier to take instruction from a person who has actually done the work before than from an inspector who is not part of production. A person who has done the job before will be your best trainer.

3. The employee who made the mistake is called out of the area and he or she will have to fix their mistake. At this time the trainer can show them any short cuts or impart some wisdom on the subject that the employee may not have grasped fully.

4. By training the person immediately after the mistake is made, they will understand the countermeasure needed and remember it most easily.

5. Recognizing that people may feel bad after being told they have produced bad quality, and in order for people not to feel like this process is punishment, once the worker shows improved performance based on the new standard they are given a reward. In this case they figured that beer would be a nice touch.

This was a classic case where the company asked itself what results it wanted (quality kaizen, people involvement, built in quality) then found the simplest and most direct method get them there.

Posted by Brad Schmidt at 1:50 PM | Permalink | Comments (3) | TrackBacks (0)

An interesting blurb in The Detroit News today titled For Toyota Briefing, Timing's Everything gives an example how at Toyota "... the renowned Toyota Production System is not limited to making production leaner and more efficient. It permeates every facet of the business, from vehicle development and purchasing to sales, administration -- even public relations events."

The public relations event in question is a February 27, 2006 meeting between Toyota President Watanabe and a group of 10 reporters. The available time for the meeting was 7 minutes, from 21:08 to 21:15, accrding to the article.

"That worked out to a remarkable talk time of 48.0 seconds per reporter" says the article. "Talk time" of 48 seconds... how does that work?

Checking their math, if each of the 10 reporters was allowed 1 question, and since there are 60 seconds per minute and 7 minutes available:

Takt Time = Net Available Time / Customer Demand

Takt Time = (7 minutes x 60 seconds / minute) / 10 questions = 420 seconds / 10 questions

Takt Time = 42 seconds / question

So I guess Takt Time is 42 seconds but the "talk time" of 48 seconds assumes a 14% overrun (6 seconds) per reporter. The 42 second takt time is for both question and answer, so it sounds like the reporters need to kaizen their talk time!

Posted by Jon Miller at 6:50 PM | Permalink | Comments (10) | TrackBacks (0)

Toyota executives are heard to say that "we put people on the balance sheet as assets" but I had taken this figuratively not literally (philosophy rather than accounting practice). At the moment I have no concrete evidence that Toyota puts people on the asset column of their balance sheet. Toyota's consolidated financial statements are not a great help in this area.

Assets are listed on page 7 as:

- Cash and cash equivalents
- Time deposits
- Marketable securities
- Trade accounts and notes receivable...
- Finance receivables, net
- Other receivables
- Inventories
- Deferred income taxes
- Prepaid expenses and other current assets
- Noncurrent finance receivables, net
- Investments and other assets
- Land
- Buildings
- Machinery and equipment
- Vehicles and equipment on operating leases
- Construction in process

There is no mention of "people" unless it is hidden under "Investments and other assets" which is very possible. These statements are prepared "in accordance with accounting principles generally accepted in the United States of America" also known as GAAP (Generally Accepted Accounting Practices).

GAAP doesn't do a very good job of showing how assets create wealth today. More and more intangible assets and "intellectual capital" such as patents, copyrights, brand names, and human resources are creating wealth but these are seldom reported as assets. The ability of people to generate wealth by making new things (innovation) and making existing things more effective (kaizen) is certainly worth measuring more accurately.

Perhaps Toyota has their own internal balance sheet to account for their people assets. Now that there seems to be increasing interest on the question of how to put people on the balance sheet as assets, we will do some research into how Toyota does this and report back what we find.

Posted by Jon Miller at 8:42 PM | Permalink | Comments (4) | TrackBacks (0)