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Why Toyota is Still My North Star

by Michael Ballé
April 14, 2015

Why Toyota is Still My North Star

by Michael Ballé
April 14, 2015 | Comments (4)

Toyota’s role as the North Star for companies striving to be the best at what they do seems to have faded these past years. The company has faced huge challenges in global auto markets, continuing aftershocks of the US financial crisis, massive recalls, political vendettas and class-action suits against (non-existent) unintended acceleration, tsunami woes, anti-Japanese riots in China, and more. 

Still, during this long hard slog, small bits of news emerged. Toyota knew that its plants could be profitable when loaded at 80%, but realized during the great recession crisis that this threshold could be lowered to 70%. Toyota was working on accelerating common-ization of components to offset the increasing number of platforms and products. The experimental Ohira plant, the first new plant built in japan for two decades, would be radically lower cost. And of course, kaizen continued on various key processes such paint, stamping, and cabling in sites across the world.

And so for researchers like me, who continue to look to Toyota for learning and leadership, it was notable to hear that Toyota has just announced its Toyota New Global Architecture. This means first, impressive performance improvement in both product and process:

  • Fuel economy improvement of up to 25% with 15% power increase
  • 40% reduction of the cost of new plants
  • 20% less resources to develop a new model
  • A target of 75% reduction of part numbers

Furthermore, these performance targets are going to be achieved by the familiar interconnection of product improvement and process improvement (process in the technical process sense of the term). As I understand the proposed changes, production engineering is driving these improvements, as always, just as much as product engineering.

In fact, Jeff and Jim’s "TPS 2.0" has deep ranging implications that can be easily missed if we think, "oh, lean engineering, we’ll get there once we’ve figured out lean production." The point being that one of the key ideas Toyota has taught us is that product engineering and production engineering are NOT separate issues but two sides of the same coin – the palm and the back of the same hand, if you will.

Indeed, in a 2012 document presenting the TGNA initiative; Toyota re-emphasized Monozukuri: 

  1. One-by-one production
  2. Produce at the optimum speed for sale
  3. Small-scale production

Resulting in Low Cost, Small Volume Production. This “reforming” of Monozukuri would rely on technological innovation in terms of: 

  1. Simple and slim: simple equipment, break resistant and easy to repair and capital investment reduction
  2. Variable models in variable volume: small scale production lines with simple set-up changeovers to new or different models
  3. Net shaping (of the TPS 7 forms of muda, to help eliminate waste of over-processing): bringing the shape of the product in the early phases closer to the final shape to reduce material loss, through craftsmanship and stock removal.
  4. High added value: more compact, more affordable, higher performance, more stylish, more reasonably priced

(Source: Toyota Motor Corporation Annual Report 2012

In the past five years the local lean engineering community has gained a deeper hands-on appreciation of how intermeshed product and processes are: Product innovation often comes from progress in process innovation. We also understand better the truly outstanding feats of engineering that Toyota’s new drive represents.

Toyota’s long-term obsessions are alive and well, and the size and scope of the expected performance improvement serves to show that lean thinking properly applied can continue to deliver, and deliver. The one notable change to the TPS structure is adding energy efficiency to the explicit improvement goal list of quality, safety and flexibility. In other words, Toyota is still Toyota and remains an inspiring North Star for lean thinkers.

Sadly, while I’m stunned by Toyota’s technical prowess as described by Bertel Schmitt and Ed Niedermeyer I keep having conversations with lean directors in large global companies who want to know how to further deploy their lean programs with their roadmaps, kaizen counts, savings, penetration rate (I kid you not) and other measures of process optimization. I keep asking myself: where did we go so wrong? How could we turn radically new management method based on seeking dynamic performance improvement through the intermesh of product and production engineering into corporate programs for static optimization of existing processes? 

My hunch is that part of the answer lies in our understanding of basic language. For instance: 

  • System: do we understand “system” as a mechanical assembly of “best practices” to be implemented across the board or “system” as a method for learning as a piano learning system or a golf learning system?
  • Process: do we understand process as the organizational sequence of tasks to get something done, or as the technical engineering know-how to make parts better?
  • Standards: do we understand standards as rules that should be applied wall to wall or as the flag on top of the hill that all teams should strive to reach – in order to push it even further up the performance slope?
  • Kaizen: do we understand kaizen as the random spot improvement of local processes, never to be touched again, or as the technical hard work to respond to a challenge (cut down the line from 30 meters to 3) by trying again and again and progressing small step to small step until the goal is reached.

Sixty-five years after it recovered from bankruptcy, Toyota still tells us that it strives to make cars one by one, and, I believe, we still willfully misconstrue this statement. According to Schmitt and Niedermeyer, Toyota executive Hirofumi Muta claimed that TNGA was the “next step from TPS”. If so, this is immensely exciting. But also a challenge for all of us in the lean community. When are we going to take what Toyota is trying to teach us seriously, as opposed to reducing lean thinking to what we already know?

The views expressed in this post do not necessarily represent the views or policies of The Lean Enterprise Institute.
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4 Comments | Post a Comment
Daniel Jones April 14, 2015
3 People AGREE with this comment

a wake up call to all those locked into consulting mode! Lean is all about developing new capabilities. I am sure these capabilities will also help them to lead the way in redefining mobility - their next goal.

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Bob Emiliani April 15, 2015
1 Person AGREES with this comment

RE: " I keep asking myself: where did we go so wrong?"

Perhaps language has less to do with it than the failure to effectively convey to managers the most basic requirement: think for themselves.

Former Toyota president and chairman Fujio Cho said it well (in 2007): "Our way of thinking is very difficult to copy or even to understand."

Not thinking leads to a predictable result: Managers view Lean is as a corporate program for optimizing existing processes, usually with layoffs.

This view among managers creates an abundance of opportunties for consultants.

Neither managers nor consultants understand the thinking that created TPS and the Toyota Way.

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Ken Hunt April 16, 2015

Be careful about blanket statements regarding what consultants do and don't understand. I have been taught by Sensei's from Japan that worked for Toyota. A couple of themlearned fron Ohno himself. They have consultant at my company for many years. I think they get it.

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Vitezslav Pilmaier April 16, 2015
2 People AGREE with this comment

Actually somewhere in 2012 I have attended a seminar by TEC (http://www.toyota-engineering.co.jp/english/), where we have been told, that the Toyota Way (or TPS) we know from books of Jeff Liker and others is old (they have not sad wrong, just old) and pointed towards the fact, that actually we should be speaking about the TMS (Toyota Management System), consisting of T-TPS, TMSS and TDS (see the above link on the bottome of the page, that should open).

This made me think about the simple fact, that if some system has really engraved the Kaizen into it, it means the system itself have to evolve as well. And actually Toyota did all of the course of its history - as I see it the TNGA is not TPS 2.0 as Jeff put into his article, but its even not TPS X.0 (whatever) version - it is still the same TPS, but just evolving (actually we could esily track some evlution steps - pre-Ohno san TPS, Ohno san era TPS, post Ohno san TPS, T-TPS evolving to TMS and now TNGA).

And this visible evolution (quite logical - practically with each new generation of managers) is the confirmation to me, that Toyota is still the Truth North Star to me as well.

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TPS or the Toyota Way?
Thank you, Tatsuro Toyoda
TPS 2.0?
Lean Is A Product-Driven Strategy
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