Did Toyota fool the lean community for decades?

8 min read Original article ↗
  • 1.

    © Emiel vanEst Did Toyota Fool the Lean Community for Decades? Emiel van Est & Pascal Pollet March 2014

  • 2.

    © Emiel vanEst In the Lean community we admire Taiichi Ohno for his role in the development of the Toyota Production System.

  • 3.

    © Emiel vanEst Get ready to admire him even more!

  • 4.

    © Emiel vanEst Hi I am Emiel van Est Toyota Kata ambassador The Netherlands I am Pascal Pollet Toyota Kata ambassador Belgium emiel@leanmanagement.nl pascal.pollet@sirris.be

  • 5.
  • 6.

    © Emiel vanEst Recently we read something amazing. Near the end of his life Taiichi Ohno said in an interview:

  • 7.

    © Emiel vanEst “I’m proud to be Japanese and I wanted my country to succeed. I believed my system was a way that could help us become a modern industrial nation. That is why I had no problem with sharing it with other Japanese companies, even my biggest competitors.” - Taiichi Ohno - Source: Profitability With No Boundaries P99

  • 8.

    © Emiel vanEst “But I was very, very concerned that you Americans and the Europeans would understand what we were doing, copy it, and defeat us in the marketplace.” - Taiichi Ohno - Source: Profitability With No Boundaries P99

  • 9.

    © Emiel vanEst Hey, wait a minute, I thought Toyota had been very open to us…

  • 10.

    © Emiel vanEst “I did my best to prevent the visitors from fully grasping our overall approach.” - Taiichi Ohno - Source: Profitability With No Boundaries P99

  • 11.
  • 12.

    © Emiel vanEst “I explained it by talking about … reduction of the seven wastes (muda)” - Taiichi Ohno - Source: Profitability With No Boundaries P99

  • 13.
  • 14.

    © Emiel vanEst Talking about the 7 Wastes was a way to confuse his visitors?

  • 15.

    © Emiel vanEst Even today for many people Lean = Eliminating Waste

  • 16.

    © Emiel vanEst His strategy to confuse us is still effective almost 25 years after his death! RIP Taiichi Ohno February 29, 1912 – May 28, 1990

  • 17.

    © Emiel vanEst Just an empty slide for you to fully grasp this… Take your time….

  • 18.

    © Emiel vanEst As said, we are Toyota Kata ambassadors

  • 19.

    © Emiel vanEst With the improvement kata it can be explained why the 7 wastes was a way to confuse.

  • 20.

    © Emiel vanEst The improvement kata is a pattern of thinking and acting we can practice to meet challenges.

  • 21.
  • 22.

    © Emiel vanEst As you can see, the improvement kata starts with understanding the direction.

  • 23.

    © Emiel vanEst Eliminating waste lacks direction 1 2 3 45 6 7 Overproduction Inventory Waiting MotionTransport Rework Overprocessing

  • 24.

    © Emiel vanEst What to do? Logistics Manager Production Manager We need smaller bins to reduce travel distance for our assembly people We need bigger bins to reduce travel distance for our logistics people Example from Toyota Kata P40

  • 25.
  • 26.

    © Emiel vanEst “All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.” - Taiichi Ohno -

  • 27.

    © Emiel vanEst That’s where kanban comes in right?

  • 28.

    © Emiel vanEst “I explained it by talking about techniques … with Japanese names like kanban…” - Taiichi Ohno - Source: Profitability With No Boundaries P99

  • 29.

    © Emiel vanEst Kanban was another way to confuse us?

  • 30.
  • 31.

    © Emiel vanEst By focussing our attention on the tools Ohno could hide the most important: his way of thinking and acting. Lean solutions (tools, techniques and principles) to improve quality, cost, delivery • A systematic, scientific routine of thinking & acting • Managers as the teachers of that routine Visible Less Visible Image by Mike Rother

  • 32.

    © Emiel vanEst We just copied the solution without understanding the thinking that created the solution.

  • 33.

    © Emiel vanEst We misunderstood the purpose of kanban.

  • 34.

    © Emiel vanEst The purpose of kanban is to eliminate kanban!

  • 35.

    © Emiel vanEst The best number of kanban cards is 0

  • 36.

    © Emiel vanEst Ah I understand. We do not want material to stop; we want it to flow continuously so we get the shortest lead times.

  • 37.

    © Emiel vanEst Well, Yes and No… Stay with us, we will explain.

  • 38.

    © Emiel vanEst First, lets talk about making money.

  • 39.

    © Emiel vanEst “Costs do not exist to be calculated. Costs exist to be reduced.” - Taiichi Ohno -

  • 40.

    © Emiel vanEst Who has used these graphs? Traditional Thinking Price = Cost + Profit This worked when supply was lower then demand Lean Thinking Profit = Price – Cost That changed to a situation with more competition and the market dictating the price Cost Profit Price Cost Profit Price Value in Market

  • 41.
  • 42.

    © Emiel vanEst What’s wrong with these graphs? Cost Profit Price Cost Profit Price Value in Market

  • 43.

    © Emiel vanEst These graphs hide some important information!

  • 44.

    © Emiel vanEst Over the years the portion of fixed costs has risen. 

  • 45.

    © Emiel vanEst Leaving us with less to improve 1920 1960 Fixed Cost Profit Price Variable Cost

  • 46.

    © Emiel vanEst These graphs lack a second dimension. 

  • 47.

    © Emiel vanEst Variable costs vary by volume Volume $ Fixed Cost Profit Variable Cost

  • 48.

    © Emiel vanEst Profit = Price – Cost Profit = Sales – fixed cost – variable cost Volume $ Fixed Cost Profit Variable Cost

  • 49.

    © Emiel vanEst We were directed to improve an ever smaller portion of variable costs to improve our margins.

  • 50.

    © Emiel vanEst The better way to improve margins is…

  • 51.

    © Emiel vanEst …to increase volume with the same fixed costs and less variable costs.

  • 52.

    © Emiel vanEst So Ohno directed us in this direction… $ Fixed Cost Profit Current Condition Volume

  • 53.

    © Emiel vanEst … while he spurted in this direction! $ Fixed Cost Profit Current Condition Volume

  • 54.

    © Emiel vanEst Sorry to bother you with another book but we do not want you to think we make this all up…

  • 55.

    © Emiel vanEst From the very beginning Toyota set course to beat GM Source: Inside the Mind of Toyota P58

  • 56.

    © Emiel vanEst Imagine the difference at the time!

  • 57.

    © Emiel vanEst So, back to continuous flow and kanban. What were we thinking?

  • 58.
  • 59.

    © Emiel vanEst Or this? Ohno frequently referred to his river system Source: Profitability With No Boundaries

  • 60.

    © Emiel vanEst Ever used this image? No worries, this is one of our own… Waiting Inventory Transport Over- production Rework Over- processing Waiting Inventory Transport Over- production Rework Over- processing

  • 61.

    © Emiel vanEst It is not about the boat, it is about the water! Waiting Inventory Transport Over- production Rework Over- processing

  • 62.

    © Emiel vanEst It is not a lake, it is a river. Waiting Inventory Transport Over- production Rework Over- processing

  • 63.

    © Emiel vanEst It is not about less water. It is about more water flowing faster.

  • 64.

    © Emiel vanEst That is why the rocks have to move!

  • 65.

    © Emiel vanEst Is there more we misunderstood? What about quality?

  • 66.

    © Emiel vanEst Is quality “Job One” at Toyota?

  • 67.

    © Emiel vanEst “There are two reasons we try to improve quality.” - Taiichi Ohno - Source: Profitability With No Boundaries P101

  • 68.

    © Emiel vanEst “If our product is better more people will buy it.” - Taiichi Ohno - Source: Profitability With No Boundaries P101 

  • 69.

    © Emiel vanEst “Also, bad quality causes big disruptions in my river system.” - Taiichi Ohno - Source: Profitability With No Boundaries P101 

  • 70.

    © Emiel vanEst “When the experts from your country visited, they noticed that our machines were very dependable, our quality was high... I understand that many went back … and suggested you implement preventative maintenance programs, quality circles, and other programs in order to copy our results.” - Taiichi Ohno - Source: Profitability With No Boundaries P101

  • 71.

    © Emiel vanEst “I do not think that they understood why we did these things, which might explain why these changes often weren’t very helpful. I tried to prevent them from understanding why we wanted a river system, and I think I was successful.” - Taiichi Ohno - Source: Profitability With No Boundaries P101

  • 72.
  • 73.

    © Emiel vanEst While Ohno pointed us to the rocks in the water

  • 74.

    © Emiel vanEst He hid his river system plans…

  • 75.

    © Emiel vanEst Now we understand this we can create more value for everyone on this planet.

  • 76.

    © Emiel vanEst So, lets make a deep bow for Ohno

  • 77.
  • 78.

    © Emiel vanEst Want another quote? Here is one more for you to chew on…

  • 79.

    © Emiel vanEst “Where there is no Standard there can be no Kaizen” - Taiichi Ohno -

  • 80.

    © Emiel vanEst Thank you for staying with us!