When you think of Toyota, you think of class beyond compare. What is the success behind Toyota? A very simple concept called Toyota Production System (TPS).
Let us understand how it all began. A delegation of officials from Toyota, visited the automobile plants in Michigan, belonging to the Ford Motor Company, the world’s leader in automobile manufacturing. They came away unimpressed. They found large amounts of inventory lying unused. Another observation that appalled them was that the work flow across departments in the company differed from day to day, indicating less than optimum use of resources. So much for Ford’s concept of automation! This statement is not in anyway to negate the Yeoman contribution of Henry Ford, to bringing automation to the automobile industry but more a reflection on the lack of importance given to proper inventory management.
The same delegation visited an American Supermarket called Piggly Wiggly and this visit left them impressed. They found that inventory management in the supermarket was exemplary as they reordered and restocked their products only after the stock had been sold. This lead Toyota to think of inventory management as an area that could help reduce costs.
The delegation went back Japan and applied what it had learned at Piggly Wiggly to its automation process. They reduced inventory holding to the levels that would be needed only for short periods of time, after which inventory would be reordered. This laid the foundation of the Just-in-Time inventory system.
Management philosophy fine-tuned with best practices gave birth to Toyota Production system. TPS brings together manufacturing and logistics management along with customer/supplier interaction. There are two basic premises on which TPS rests. The first is called ‘Jidoka’ which means ‘automation with a human touch’. When a problem occurs in the assembly line, the entire production stops. This is to prevent the production of products of poor quality. The second is the concept of ‘Just-in-Time’. TPS was built on the concepts propagated by the founder of Toyota Sakichi Toyoda. It was developed between 1948 and 1975 by a team from Toyota consisting of Eiji Toyoda, Shigeo Shingo and Taiichi Ohno.
There are three ‘M’s in TPS; Muri, Mura and Muda:
What is Muri? The literal translation of Muri is overburden. A process should be designed in such a way to ensure maximum value output, without ‘muri’ or overburden.
What is Mura? The process so designed should be able to produce what you require without any inconsistency or Mura.
What is Muda? It follows logically that any inconsistency or stress in the process will generate waste or Mura, which should be eliminated.
The concept of Muri, Mura and Muda are very simple yet so profound was its impact on the company that Toyota is now a byword for quality.
The ultimate requirement for any process should be reduce or totally eliminate wastage. TPS speaks of 7 kinds of Muda. They are, in terms of the order of an assembly line, over-production, motion, waiting, conveyance, processing, inventory and correction. Elimination of waste is central to TPS. By applying this concept in Toyota, costs were brought down and lead time in inventory management was reduced. Quality control improved and this paved the way to Toyota becoming one among the ten leading companies across the globe.
The profits made by this company are manifold and the year 2007 saw Toyota top the charts in manufacture of the largest number of cars across the world. TPS has lead the propagation of ‘The Toyota Way’. In brief, the basic philosophy underlying ‘The Toyota Way’ speaks of decision making in long term interest rather short-term; the right results will be produced when you use the right process; developing your people and partners will add value to the organization; learning is driven by continuously solving problems beginning from the root.
TPS has sometimes been likened to squeezing out water from a dry towel! However, as the saying goes, the proof of the pudding lies in eating. TPS has produced results making Toyota what it is today. This is proof enough.