ToyotaProductionSystem

ToyotaProductionSystem

BeyondLarge-ScaleProduction

TaiichiOhno

ForewordbyNormanBodek

TableofContentsPublisher'sForeword..........ix

PrefacetotheEnglishEdition.......xiii

ACommentonThisBook........xvii

ANoteonJapaneseNames........xix

1

StartingfromNeed..........1

TheOilCrisisOpenedOurEyes

SlowGrowthIsScary

"CatchUpwithAmerica"

Just-In-Time

UsingaCommon-SenseIdea

GivetheMachineIntelligence

ThePowerofIndividualSkillandTeamwork

CostReductionIstheGoal

TheIllusionofJapaneseIndustry

EstablishingaProductionFlow

ProductionLeveling

IntheBeginning,ThereWasNeed

ARevolutioninConsciousnessIsIndispensable

2

EvolutionoftheToyotaProductionSystem...17

RepeatingWhyFiveTimes

CompleteAnalysisofWaste

MyPlant-FirstPrinciple

WritingtheStandardWorkSheetYourself

TeamworkIsEverything

TheSkillofPassingtheBaton

AnIdeafromtheU.S.Supermarket

WhatIsKanban?

IncorrectUseCausesProblems

TheTalentandCouragetoRethinkWhatWeCallCommonSense

EstablishingtheFlowIstheBasicCondition

UseYourAuthoritytoEncourageThem

MountainsShouldBeLowandValleysShouldBeShallow

ChallengetoProductionLeveling

ProductionLevelingandMarketDiversification

KanbanAcceleratesImprovements

CarryingCartsasKanban

TheElasticNatureofKanban

3

FurtherDevelopment.......45

AnAutonomicNervousSystemintheBusinessOrganization

ProvideNecessaryInformationWhenNeeded

TheToyota-StyleInformationSystem

FineAdjustment

CopingwithChanges

WhatIsTrueEconomy?

Re-ExaminingtheWrongsofWaste

GenerateExcessCapacity

TheSignificanceofUnderstanding

UtilizingtheFullWorkSystem

DoNotMakeaFalseShow

RequiredNumbersAreAll-Important

TheTortoiseandtheHare

TakeGoodCareofOldEquipment

LookStraightattheReality

0.1WorkerIsStillOneWorker

ManagementbyNinjutsu

InanArtForm,ActionIsRequired

AdvocatingProfit-MakingIndustrialEngineering

SurvivingtheSlow-GrowthEconomy

4

GenealogyoftheToyotaProductionSystem..75

AGlobalWorldAroundUs

TwoExtraordinaryCharacters

LearningfromtheUnyieldingSpirit

ToyotaismwithaScientificandRationalNature

ProvideGoodEquipmentEvenIftheFactoryIsSimple

PursuitofaJapanese-StyleProductionTechnique

MakingProductsThatHaveValue

AChessplayer'sView

InSearchofSomethingJapanese

WitnessingaDialecticEvolution

5

TheTrueIntentionoftheFordSystem....93

TheFordSystemandtheToyotaSystem

SmallLotSizesandQuickSetup

TheForesightofHenryFord

StandardsAreSomethingtoSetUpYourself

PreventionIsBetterthanHealing

IsThereaFordafterFord?

InverseConceptionandBusinessSpirit

GettingAwayfromQuantityandSpeed

6

SurvivingtheLowGrowthPeriod.....111

TheSystemRaisedintheHigh-GrowthPeriod

RaisingProductivityDuringLowGrowth

LearningfromtheFlexibilityofAncientPeople

PostscripttotheOriginalJapaneseEdition...119

GlossaryofMajorTerms........121

Editor'sNotes............131

AbouttheAuthor...........135

Index..............137

Publisher'sForewordJUSTASWEhave been recognizing the greatness ofMr. Shigeo Shingo,wealsorecognizethegeniusofMr.TaiichiOhno.ItwasMr.OhnowhoshouldbecreditedwiththecreationoftheToyotajust-in-timeproductionsystem.

ImetMr.Ohno in Japan at ToyodaGoseiwhere he became chairman afterretiring from Toyota Motors. Toyoda Gosei is a Toyota subcontractormanufacturing steeringwheels, automobile parts like rubber hoses and plasticdashboards,andothermaterials.

AtourlastmeetingIaskedhimwhereToyotawastodayintheimprovementprocess.Bynow,thecompanymusthavereducedallwork-in-processinventory-loweringthewaterlevelintherivertoexposealltherocks,enablingthemtochipawayatalltheproblems.

"WhatisToyotadoingnow?"Iasked.

Hisanswerwasverysimple.

"Allwearedoingislookingatthetimeline,"hesaid,"fromthemomentthecustomergivesusanorder to thepointwhenwecollect thecash.Andwearereducingthattimelinebyremovingthenonvalue-addedwastes."

Simple but brilliant. It gives a very clear focus to continuous improvement.Where we in the West would look immediately for some magic automaticmiracle like computer integrated manufacturing (CIM), robotics, or advancedmanufacturingtechniques, theJapanesearesimplyreducingwastes.Ofcourse,

somewastes can be removed by acquiring new equipment but that should bedonelast-notfirst.

ThereisnothingverycomplexinthemagicofMr.Ohno'steachings.Infact,itisoftenconfusinglisteningtohimbecausehetalkssosimply,oftenjustsayingtolookforandeliminatewaste.Wecannotbelievethatitisthatsimple-butitistrue.Justreducethetimelinebyremovinganywastes.

Mr. Ohno's simple tale told in the book is brilliant and should be read bymanagerseverywhere.Itisnotjustataleofmanufacturing,itisataleofhowtorunabusinesssuccessfully.Mr.OhnowentbackandreviewedhowHenryFordranhisbusiness.HenryFordwasabletomineironoreonaMondayand,usingthatverysameironore,produceacarcomingofftheassembly-line-onThursdayafternoon.

HenryFordalsofocusedonthetotaleliminationofnonvalued-addedwastes.Mr.Ohno just simplyupdatedHenryFord.He reducedchangeover timeswiththe help of Mr. Shingo from days and hours to minutes and seconds. Heeliminatedjobclassificationstogiveworkersflexibility.

Inthepast10years,IhavevisitedhundredsofmanufacturingplantsinJapanandtheUnitedStates.IneverseeaJapaneseworkerjustwatchingamachine.Inthe United States, it is the reverse - I have never visited an American plantwithout seeing aworker justwatching amachine. Iwill never forgetwalkingthroughafiberopticscablemanufacturingoperationandwatchingayoungmanjustlookingataglassextrusionmachine.

Allhedidwaswatchtheglassandthedialswaitingfortheglasstobreakorbe out of tolerance. I could not believe the waste and the lack of respectmanagement had for that human being.Manufacturing must be both efficientandalsohaverespectforthepersonrunningthemachine.

Theworldowes a great deal toMr.TaiichiOhno.Hehas shownushow tomanufacturemoreefficiently,reducecosts,producegreaterquality,andalsotakeanimportantlookathowweaspeopleworkinafactory.

AJapanesefactoryisfarfromperfect.Toyotaplants,atleasttheonesIhaveseen,areasdirtyifnotdirtierthanmanyAmericanplantsIhavevisited.Buta

change is happening. Respect for humanity in the manufacturing process isbecomingarealityandMr.Ohnoisoneoftheworld'sleadersinthisarea.

Whilemostcompaniesfocusedonstimulatingsales,Mr.Ohnobelievedjust-in-time was a manufacturing advantage for Toyota. And for many years, hewould not allow anything to be recorded about it. He claimed it was becauseimprovementisneverending-andbywritingitdown,theprocesswouldbecomecrystallized.ButIthinkhealsofearedAmericanswoulddiscoverthispowerfultoolanduseitagainsttheJapanese.

Just-in-timeismuchmorethananinventoryreductionsystem.Itismuchmorethatreducingchangeovertimes.Itismuchmorethanusingkanbanorjidoka.Itismuchmore thanmodernizing thefactory. It is, inasense, likeMr.Ohnosays:maki►i>;a_factoryoperateforthecompanyjustlikethehumanbodyoperatesfor an individual. The autonomic nervous system responds evenwhenwe areasleep.Thehumanbodyfunctionsingoodhealthwhenitisproperlycaredfor,fedandwateredcorrectly,exercisedfrequently,andtreatedwithrespect.

Itisonlywhenaproblemarisesthatwebecomeconsciousofourbodies.Thenwe respond bymaking corrections. The same thing happens in a factory.Weshould have a system in a factory that automatically respondswhen problemsoccur.

You should all enjoy spending a fewmomentswithMr.Ohno and thinkingabout how you might improve your own manufacturing companies and eachother,improveyourself,andhelpmakeabetterworldforusall.

Iamextremelygrateful tobeableasacompanytobringMr.Ohno'sclassicbook on the Toyota production system to the English reader. I want toacknowledge the contributions ofMr.YuzuruKawashima, proprietor, andMr.Katsuyoshi Saito, deputy manager, of Diamond Inc., the original Japanesepublisher,forgrantingustherightstotranslateandpublishthiswork.

Ialsothankthosewhohelpedcreate thisEnglishversion- thebook'seditor,Cheryl Berling Rosen; Connie Dyer, clarifier of numerous content questions;AndrewP.Dillon,clarifierofnumeroustranslationquestions;PatriciaSloteandEsmeMcTighe,productioncoordinators;BillStanton,bookandcoverdesigner;and,lastbutnotleast, thestaffofRudraPress,ourfaithfulfriends,typesetters,

andartists.

Finally,Iwishtoexpressmyindebtednesstotheauthor,whohasinspiredsomany of us in our quest for improving the quality and productivity of today'sworkplace.

NormanBodck

Chairman,Productivity,Inc.

PrefacetotheEnglishEditionTHETOYOTAPRODUCTIONsystem,underthenameofakanbanorajust-in-time system, has become the topic ofmuch conversation inmanyworkplacesand offices. It has been studied and introduced into workplaces regardless ofindustrialtype,scale,andevennationalboundaries.And,indeed,thisisahappyoccurrence.

TheToyotaproductionsystemevolvedoutofneed.Certainrestrictionsinthemarketplacerequiredtheproductionofsmallquantitiesofmanyvarietiesunderconditionsoflowdemand,afatetheJapaneseautomobileindustryhadfacedinthe postwar period. These restrictions served as a touchstone to test whetherJapanese car manufacturers could establish themselves and survive incompetition with the mass production and mass sales systems of an industryalreadyestablishedinEuropeandtheUnitedStates.

The most important objective of the Toyota system has been to increaseproduction efficiency by consistently and thoroughly eliminating waste. Thisconcept and the equally important respect for humanity that has passed downfrom the venerable Toyoda Sakichi (18671930), founder of the company andmaster of inventions, to his son Toyoda Kiichiro (18941952), Toyota MotorCompany's first president and father of the Japanese passenger car, are thefoundationoftheToyotaproductionsystem.

TheToyota production systemwas conceived and its implementation begunsoonafterWorldWarII.ButitdidnotbegintoattracttheattentionofJapaneseindustry until the first oil crisis in the fall of 1973. Japanese managers,accustomedtoinflationandahighgrowthrate,weresuddenlyconfrontedwithzero growth and forced to handle production decreases. It was during thiseconomic emergency that they first noticed the results Toyota was achievingwithitsrelentlesspursuitoftheeliminationofwaste.Theythenbegantotackletheproblemofintroducingthesystemintotheirownworkplaces.

The world has already changed from a time when industry could selleverythingitproducedtoanaffluentsocietywherematerialneedsareroutinely

met.Socialvalueshavechanged.Wearenowunabletosellourproductsunlesswe think ourselves into the very hearts of our customers, each of whom hasdifferent concepts and tastes. Today. the industrial world has been forced tomasterinearnestthemulti-kind,smallquantityproductionsystem.

The starting concept of the Toyota production system was, as I haveemphasizedseveraltimes,athorougheliminationofwaste.Infact,thecloserwecame to this goal, the clearer became the picture of individual human beingswithdistinct personalities.There is no real substance to that abstractmasswecall "the public. "Wediscovered that industry has to accept orders fromeachcustomerandmakeproductsthatdifferaccordingtoindividualrequirements.

Allkindsofwastesoccurwhenwetrytoproducethesameproduct in large,homogeneousquantities. In theend, costs rise. It ismuchmoreeconomical tomakeeachitemoneatatime.TheformermethodistheFordproductionsystemandthelatteristheToyotaproductionsystem.

IhavenointentionofcriticizingHenryFord(1863-1947).Rather,Iamcriticalof Ford's successors who have suffered from excessive dependence on theauthority of the Ford sys-tenm precisely because it has been so powerful andcreated such wonders of industrial productivity. However, times change.Manufacturers and workplaces can no longer base production on desk-topplanningaloneandthendistribute,orpush,theirproductsontothemarket.Ithasbecomeamatterofcourse forcustomers,orusers, eachwithadifferentvaluesystem, to stand in the frontline of themarketplace and, so to speak, pull thegoodstheyneed,intheamountandatthetimetheyneedthem.

TheToyotaproductionsystem,however,isnotjustaproductionsystem.Iamconfident itwill reveal itsstrengthasamanagementsystemadapted to today'seraofglobalmarketsandhigh-levelcomputerizedinformationsystems.

Iwouldappreciatereceivingthecriticisms,corrections,andfrankopinionsofmyreaders.

TaiichiOhno

June1987

ACommentonThisBookINCOUNTRIESAROUNDtheworld,peoplearestudyingproductionmethods.InJapan,theToyotaproductionsystemwasdevelopedsome30yearsagobyMr.Taiichi Ohno, presently vice president of the Toyota Motor Company. Thisrevolutionarymethodisshowingtremendousresultstodayandwillcontinue toevolveinthefuture.

Themulti-stepproductionsystemcharacteristicofmanyproductionprocessesinvolves push and pull methods. In the widely used push method, plannedproductionquantityisdeterminedbydemandpredictionsandinventoryonhand;succeeding production periods are determined from standard informationpreparedatcertaintimesforeachstep;theproductisthenproducedinsequencestarting from step one. In the pull method, the final process withdraws therequired quantities from the preceding process at a certain time, and thisprocedureisrepeatedinreverseorderupthroughalltheearlierprocesses.Eachmethodhasmeritsandshortcomings.Choosingoneortheotherandapplyingiteffectivelydependson thephilosophyandpracticalcreativityofmanagersandsupervisors.

TheToyotaproductionsystemisapullmethod.Tounderstanditstremendoussuccess,onehastograspthephilosophybehinditwithoutbeingsidetrackedbyparticular aspects of the system, such as kanbari. Kanban are instructionsenclosedinclearplasticthatataglancecommunicateinformationneededatthework station. If the kanban system is introducedwithout being part of a totalphilosophy, however, I feel problems will ensue. The system did not happenovernightbutthroughaseriesofinnovations-amethoddevelopedover30yearstoimproveoverallefficiencyandtoenhancetheworkenvironment.

Forthisreason,IthinkitbenefitstheindustrialworldthatMr.Ohno,themanmost responsible for the Toyota production system, has written this book todescribehisphilosophyandideasforreform.

Mr.Ohno isadeterminedmanwithsomeveryspecialskills.Hehasalwayschallenged existing concepts and been able to conceive of and apply

improvementsthatarebothaccurateandswift.Peoplewhocandothisarerare,andIhavelearnedmuchfromobservinghimandlisteningtohistheories.

Theories alone, however, may not improve the character of a business orincreaseproductivity.Forthisreason,Irecommendthisbooknotonlytothoseassociatedwithproductionandmanufacturing,buttoanymanagerorsupervisor.By reading this book and then using creativity and imagination to apply thetheories,improvementshouldresultevenincompaniesunlikeToyota.

MuramatsuRintaro

FacultyofScienceandEngineering

WasedaUniversity

ANoteonJapaneseNamesIN JAPAN, THE family name appears first. Thus, the famed inventor of theToyota production system is known in Japan as Ono Taiichi, and not TaiichiOhnoasusuallywrittenintheWest.

InProductivityPressbookswetrytofollowtheJapanesepracticeofplacingthesurnamefirst,inpart,tomaketherepresentationofJapanesenamesuniformbutprimarilyoutofcommoncourtesy.ThereaderthereforewillfindmembersoftheToyodafamilyreferredtoasToyodaSakichi,ToyodaKiichiro,ToyodaEiji,andsoforth.However,whenapersonsuchasTaiichiOhnoisfrequentlyreferredtoinotherWesternpublicationsandthemediaintheWesternmanner,werefertohimorherlikewise.

Also, when romanizing Japanese characters, a macron is used over a longvowelinallJapanesewordsexceptforwellknownplacenames(Kyoto,Tokyo),wordsthathaveenteredtheEnglishlanguage(shogun,daimyo),andindividual'snamesinwhichcustomarilythemacronisreplacedbyanh(Ohno,notOno).

ToyotaProductionSystem

1

StartingfromNeedTheOilCrisisOpenedOurEyes

THE OIL CRISIS in the fall of 1973, followed by a recession, affectedgovernment, business, and society theworld over. By 1974, Japan's economyhadcollapsedtoastateofzerogrowthandmanycompaniesweresuffering.

ButattheToyotaMotorCompany,althoughprofitssuffered,greaterearningsweresustainedin1975,1976,and1977thanatothercompanies.ThewideninggapbetweenitandothercompaniesmadepeoplewonderwhatwashappeningatToyota.

Prior to theoil crisis,when I talked topeople aboutToyota'smanufacturingtechnology and production system, I found little interest.When rapid growthstopped,however,itbecameveryobviousthatabusinesscouldnotbeprofitableusing the conventional Americanmass production system that hadworked sowellforsolong.

Timeshad changed. Initially, followingWorldWar II, no one imagined thatthe number of cars produced would increase to today's level. For decades,America had cut costs by massproducing fewer types of cars. It was anAmericanworkstyle-butnotaJapaneseone.Ourproblemwashowtocutcostswhileproducingsmallnumbersofmanytypesofcars.

Then,duringthe15-yearperiodbeginningin1959-1960,Japanexperiencedunusuallyrapideconomicgrowth.Asaresult,massproduction,Americanstyle,

wasstillusedeffectivelyinmanyareas.

Wekeptremindingourselves,however,thatcarelessimitationoftheAmericansystemcouldbedangerous.Makingmanymodels in small numbers cheaply -wasn'tthissomethingwecoulddevelop?AndwekeptthinkingthataJapaneseproductionsystemlikethismightevensurpasstheconventionalmassproductionsystem. Thus, the principal objective of the Toyota production systemwas toproducemanymodelsinsmallquantities.

►SlowGrowthIsScary

In the periods of high growth before the oil crisis, the usual business cycleconsisted of two or three years of prosperity with, at most, six months ofrecession.Attimes,prosperitylastedlongerthanthreeyears.

Slowgrowth,however,reversesthiscycle.Anannualeconomicgrowthrateof6to10percentlastsatmostsixmonthstooneyear,withthenexttwoorthreeyearsrealizinglittleornogrowthorevennegativegrowth.

Generally,Japaneseindustryhasbeenaccustomedtoaneraof"ifyoumakeit,youcan sell it," and theautomobile industry isnoexception. I amafraid that,becauseofthis,manybusinessmanagersaimforquantity.

In the automobile industry, the Maxcy-Silberston' curve has been usedfrequently. According to this principle ofmass production, although there arelimits to the extent of cost reduction, the cost of an automobile decreasesdrasticallyinproportiontotheincreaseinquantitiesproduced.Thiswasprovedthoroughlyintheeraofhighgrowthandtheprinciplehasbecomeembeddedinthemindsofpeopleintheautomotiveindustry.

In today's slow-growth era, however,wemust downplay themeritsofmassproductionassoonaspossible.Today,aproductionsystemaimedatincreasinglot sizes (for example, operating a die press to punch out as many units aspossiblewithinagiventimeperiod)isnotpractical.Besidescreatingallkindsofwaste,suchaproductionsystemisnolongerappropriateforourneeds.

►"CatchUpwithAmerica"

Imitating America is not always bad. We have learned a lot from the U. S.automobile empire.America has generatedwonderful productionmanagementtechniques, businessmanagement techniques such as quality control (QC) andtotal quality control (TQC), and industrial engineering (IE) methods. Japanimported these ideas and put them into practice. The Japanese should neverforget that these techniqueswereborn inAmericaandgeneratedbyAmericanefforts.

August 15, 1945, was the day Japan lost the war; it also marked a new

beginningforToyota.ToyodaKiichiro(18941952),thenpresidentoftheToyotaMotorCompany,' said, "Catch upwithAmerica in three years.Otherwise, theautomobile industryofJapanwillnot survive."Toaccomplish thismission,wehadtoknowAmericaandlearnAmericanways.

In1937,IwasworkingintheweavingplantofToyodaSpinningandWeaving.Once I heard a man say that a German worker could produce three times asmuchasaJapaneseworker.TheratiobetweenGermanandAmericanworkerswas1-to-3.ThismadetheratiobetweenJapaneseandAmericanworkforces1-to-9.IstillremembermysurpriseathearingthatittooknineJapanesetodothejobofoneAmerican.

HadJapaneseproductivity increasedatallduring thewar?PresidentToyodawassayingthatweshouldcatchupinthreeyears,butitwouldbeverydifficulttoraiseproductivitybyeightorninetimesinsuchatimeperiod.Itmeantthatajobthenbeingdoneby100workershadtobedoneby10workers.

Furthermore,thefigureofone-eighthorone-ninthwasanaveragevalue.Ifwecompared theautomobile industry,oneofAmerica'smostadvanced industries,the ratiowouldhavebeenmuchdifferent.But could anAmerican really exerttentimesmorephysicaleffort?Surely,Japanesepeoplewerewastingsomething.Ifwecouldeliminatethewaste,productivityshouldrisebyafactoroften.ThisideamarkedthestartofthepresentToyotaproductionsystem.

►Just-In-Time

ThebasisoftheToyotaproductionsystemistheabsoluteeliminationofwaste.Thetwopillarsneededtosupportthesystemare:

•just-in-time

•autonomation,orautomationwithahumantouch.

Just-in-timemeansthat,inaflowprocess,therightpartsneededinassemblyreach the assembly line at the time they are needed and only in the amountneeded. A company establishing this flow throughout can approach zeroinventory.

From the standpoint of production management, this is an ideal state.However,with a productmade of thousands of parts, like the automobile, thenumberofprocessesinvolvedisenormous.Obviously,itisextremelydifficulttoapplyjust-in-timetotheproductionplanofeveryprocessinanorderlyway.

An upset in prediction, amistake in the paperwork, defective products andrework,troublewiththeequipment,absenteeism-theproblemsarecountless.Aproblem early in the process always results in a defective product later in theprocess.Thiswillstoptheproductionlineorchangeaplanwhetheryoulikeitornot.

Bydisregardingsuchsituationsandonlyconsideringtheproductionplanforeachprocess,wewouldproducepartswithout regard to laterprocesses.Wastewouldresult-defectivepartsononehand,hugeinventoriesofpartsnotneededimmediatelyontheother.Thisreducesbothproductivityandprofitability.

Even worse, there would be no distinction between normal and abnormalstates on each assembly line.When there is a delay in rectifying an abnormalstate, too many workers would make too many parts, a situation not quicklycorrected.

Therefore,toproduceusingjust-in-timesothateachprocessreceivestheexactitem needed, when it is needed, and in the quantity needed, conventionalmanagementmethodsdonotworkwell.

►UsingaCommon-SenseIdea

Iamfondofthinkingaboutaproblemoverandover.Ikeptthinkingabouthowtosupplythenumberofpartsneededjust-in-time.Theflowofproductionisthetransfer of materials. The conventional way was to supply materials from anearlier process to a later process. So, I tried thinking about the transfer ofmaterialsinthereversedirection.

In automobile production,material ismachined into a part, the part is thenassembledwithothersintoaunitpart,andthisflowstowardthefinalassemblyline. Thematerial progresses from the earlier processes toward the later ones,formingthebodyofthecar.

Let'slookatthisproductionflowinreverse:alaterprocessgoestoanearlierprocess to pickuponly the right part in thequantityneededat the exact timeneeded.Inthiscase,wouldn't itbe logical for theearlierprocess tomakeonlythe number of parts withdrawn? As far as communication between the manyprocessesisconcerned,wouldn'titbesufficienttoclearlyindicatewhatandhowmanyareneeded?

We will call this means of indication kanhan (sign board) and circulate itbetweeneachoftheprocessestocontroltheamountofproduction-thatis,theamountneeded.Thiswasthebeginningoftheidea.

We experimented with this and finally decided on a system. The finalassembly line is takenas thestartingpoint.On thisbasis, theproductionplan,indicatingthedesiredtypesofcarswiththeirquantityandduedate,goestothefinalassemblyline.Thenthemethodoftransferringthematerialsisreversed.Tosupply parts used in assembly, a later process goes to an earlier process towithdrawonlythenumberofpartsneededwhentheyareneeded.Inthisreverseway,themanufacturingprocessgoesfromfinishedproductbackto theearliestmaterialsformingdepartment.Every link in the just-in-time chain is connectedand synchronized. By this, the management work force is also reduceddrastically. And kanban is the means used for conveying information aboutpickinguporreceivingtheproductionorder.

Kanbanwillbedescribedlaterindetail.Here,Iwantthereadertounderstandthebasicpostureof theToyotaproductionsystem.Thesystemissupportedbythe just-in-time system, already discussed, and autonomation, described in thenextsection.ThekanbanmethodisthemeansbywhichtheToyotaproductionsystemmovessmoothly.

►GivetheMachineIntelligence

TheotherpillaroftheToyotaproductionsystemiscalledautonomation-nottobe confused with simple automation. It is also known as automation with ahumantouch.

Manymachinesoperateby themselvesonce theswitch is turnedon.Today'smachines have such high performance capabilities, however, that a small

abnormality,suchasapieceofscrapfallingintothemachine,candamageitinsomeway. The dies or taps break, for instance.When this happens, tens andsoon hundreds of defective parts are produced and quickly pile up. With anautomatedmachineofthistype,massproductionofdefectiveproductscannotbeprevented.Thereisnobuilt-inautomaticcheckingsystemagainstsuchmishaps.

This is why Toyota emphasizes autonomation - machines that can preventsuch problems "autonomously" - over simple automation. The idea originatedwith the invention of an auto-activated weaving machine by Toyoda Sakichi(18671930),founderoftheToyotaMotorCompany.

The loom stopped instantly if any one of the warp or weft threads broke.Because a device that could distinguish between normal and abnormalconditionswasbuiltintothemachine,defectiveproductswerenotproduced.

AtToyota,amachineautomatedwithahumantouchisonethatisattachedtoanautomaticstoppingdevice.InallToyotaplants,mostmachines,neworold,areequippedwithsuchdevicesaswellasvarioussafetydevices,fixed-positionstopping, thefull-worksystem,andbaka-yokefoolproofingsystems topreventdefectiveproducts(seetheglossaryforfurtherexplanation).Inthisway,humanintelligence,orahumantouch,isgiventothemachines.

Autonomation changes themeaning ofmanagement aswell. An operator isnot needed while the machine is working normally. Only when the machinestopsbecauseofanabnormalsituationdoesitgethumanattention.Asaresult,one worker can attend several machines, making it possible to reduce thenumberofoperatorsandincreaseproductionefficiency.

Looking at this anotherway, abnormalitieswill never disappear if aworkeralwaysattendstoamachineandstandsinforitwhenanabnormalitydoesoccur.An old Japanese saying mentions hiding an offensively smelly object bycovering it up. If materials or machines are repaired without the managingsupervisor's beingmade aware of it, improvementwill never be achieved andcostswillneverbereduced.

Stopping the machine when there is trouble forces awareness on everyone.When the problem is clearly understood, improvement is possible. Expandingthis thought, we establish a rule that even in amanually operated production

line, theworkers themselves should push the stop button to halt production ifanyabnormalityappears.

Inaproductliketheautomobile,safetymustalwaysbeofprimaryimportance.Therefore, on any machine on any production line in any plant, distinctionsbetween normal and abnormal operations must be clear and countermeasuresalwaystakentopreventrecurrence.ThisiswhyImadeautonomationtheotherpillaroftheToyotaproductionsystem.

►ThePowerofIndividualSkillandTeamwork

Implementing autonomation is up to the managers and supervisors of eachproductionarea.Thekeyistogivehumanintelligencetothemachineand,atthesame time, to adapt the simple movement of the human operator to theautonomousmachines.

What is the relationship between just-in-time and automationwith a humantouch,thetwopillarsoftheToyotaproductionsystem?Usingtheanalogyofabaseball team, autonomation corresponds to the skill and talent of individualplayerswhile just-in-time is the teamwork involved in reachinganagreeduponobjective.

Forexample,aplayerintheoutfieldhasnothingtodoaslongasthepitcherhasnoproblems.Butaproblem-theopposingbattergettingahit,forexample-activatestheoutfielderwhocatchestheballandthrowsittothebaseman"justintime"toputtherunnerout.

Managersandsupervisorsinamanufacturingplantareliketheteammanagerandthebatting,base,andfieldcoaches.Astrongbaseballteamhasmasteredtheplays; the players can meet any situation with coordinated action. Inmanufacturing,theproductionteamthathasmasteredthejust-in-timesystemisexactlylikeabaseballteamthatplayswelltogether.

Autonomation, on the other hand, performs a dual role. It eliminatesoverproduction, an important waste in manufacturing, and prevents theproductionofdefectiveproducts.Toaccomplishthis,standardworkprocedures,corresponding to each player's ability, must be adhered to at all times.Whenabnormalities arise - that is, when a player's ability cannot be brought out -

specialinstructionmustbegiventobringtheplayerbacktonormal.Thisisanimportantdutyofthecoach.

Intheautonomatedsystem,visualcontrol,or"managementbysight,"canhelpbringproductionweaknesses(ineachplayer,thatis)tothesurface.Thisallowsusthentotakemeasurestostrengthentheplayersinvolved.

A championship team combines good teamwork with individual skill.Likewise, a production line where just-in-time and automation with a humantouchwork together isstronger thanother lines. Itspower is in thesynergyofthesetwofactors.

►CostReductionIstheGoal

Frequently we use the word "efficiency" when talking about production,management, and business. "Efficiency," in modern industry and business ingeneral,meanscostreduction.

AtToyota,as inallmanufacturing industries,profitcanbeobtainedonlybyreducingcosts.Whenweapplythecostprincipleselliiiqprice=profit+actualcost,wemake the consumer responsible for every cost. This principle has noplaceintoday'scompetitiveautomobileindustry.

Our products are scrutinized by cool-headed consumers in free, competitivemarketswhere themanufacturing cost of aproduct is ofno consequence.Thequestioniswhetherornottheproductisofvaluetothebuyer.Ifahighpriceissetbecauseofthemanufacturer'scost,consumerswillsimplyturnaway.

Costreductionmustbethegoalofconsumerproductsmanufacturerstryingtosurvive in today'smarketplace.Duringaperiodofhigheconomicgrowth, anymanufacturer can achieve lower costs with higher production. But in today'slowgrowthperiod,toachieveanyformofcostreductionisdifficult.

Thereisnomagicmethod.Rather,atotalmanagementsystemisneededthatdevelops human ability to its fullest capacity to best enhance creativity andfruitfulness,toutilizefacilitiesandmachineswell,andtoeliminateallwaste.

The Toyota production system, with its two pillars advocating the absolute

eliminationofwaste,wasborninJapanoutofnecessity.Today,inaneraofsloweconomic growth worldwide, this production system represents a concept inmanagementthatwillworkforanytypeofbusiness.

►TheIllusionofJapaneseIndustry

AfterWorldWar II, when ToyodaKiichiro, father ofJapanese car production,advocatedcatchingupwithAmerica in threeyears, thisbecameToyota'sgoal.Becausethegoalwasclear,activityatToyotabecamefocusedandvigorous.

Myjobuntil1943wasintextiles,notautomobiles;thiswasanadvantage.Infact, the idea of automationwith a human touchwas obtained from the auto-activatedloomsofToyodaSakichi'stextileplant.WhenImovedtoautomobileproduction, although I was new, I could spot its merits and shortcomings incomparisontothetextileplant.

Duringpostwar rehabilitation,Japan'sautomobile industryhada rough time.Domesticproductionfor1949was25,622trucksandonly1,008passengercars.Insignificant as domestic production seemed, Toyota's production plant wasfilledwitheagerpeopletryingtodosomething.PresidentToyoda'swords"CatchupwithAmerica"generatedthisspirit.

In 1947, I was in charge of the No. 2 manufacturing machine shop at thepresentmainofficeplantinToyotaCity,thencalledtheKoromoplant.TocatchupwithAmerica,Ithoughtofhavingoneoperatorcareformanymachinesandalsodifferenttypesofmachinesratherthanonepersonpermachine.Therefore,thefirststepwastoestablishaflowsysteminthemachineshop.

InAmericanaswellasinmostJapanesemachineshops,alatheoperator,forexample, operates only lathes. In many plant layouts, as many as 50 or 100lathesareinonelocation.Whenmachiningiscompleted,theitemsarecollectedand taken to thesubsequentdrillingprocess.With that finished, the items thengotothemillingprocess.

IntheUnitedStates,thereisaunionforeachjobfunctionwithmanyunionsineachcompany.Latheoperatorsareallowedtooperateonlylathes.Adrillingjobmustbe taken toadrillingoperator.Andbecause theoperatorsare single-skilled,aweldingjobrequiredatthelathesectioncannotbedonetherebutmust

be taken toaweldingoperator.Asaconsequence, therearea largenumberofpeopleandmachines.ForAmerican industries to achieve cost reductionundersuchconditions,massproductionistheonlyanswer.

When large quantities are produced, the labor cost per car and depreciationburden are reduced. This requires highperformance, high-speedmachines thatarebothlargeandexpensive.

This typeof production is a plannedmassproduction system inwhich eachprocessmakesmanypartsandforwardsthemtothenextprocess.Thismethodnaturally generates an abundance of waste. From the time it acquired thisAmericansystemuntilthe1973oilcrisis,Japanhadtheillusionthatthissystemfittheirneeds.

►EstablishingaProductionFlow

Itisnevereasytobreakthemachine-shoptraditioninwhichoperatorsarefixedtojobs,forexample,latheoperatorstolatheworkandwelderstoweldingwork.ItworkedinJapanonlybecausewewerewillingtodoit.TheToyotaproductionsystembeganwhenIchallengedtheoldsystem.

With the outbreak of the Korean War in June 1950, Japanese industryrecovered its vigor. Riding this wave of growth, the automobile industry alsoexpanded.AtToyota, itwasabusyandhecticyear,beginning inAprilwithathree-month labor dispute over manpower reduction, followed by PresidentToyodaKiichiro'sassumingresponsibilityforthestrikeandresigning.Afterthis,theKoreanWarbrokeout.

Although there were special wartime demands, we were far from massproduction.Wewerestillproducingsmallquantitiesofmanymodels.

Atthistime,IwasmanagerofthemachineshopattheKoromoplant.Asanexperiment, I arranged the various machines in the sequence of machiningprocesses.Thiswasa radical change from theconventional system inwhichalargequantityofthesamepartwasmachinedinoneprocessandthenforwardedtothenextprocess.

In 1947, we arranged machines in parallel lines or in an Lshape and tried

having oneworker operate three or fourmachines along the processing route.Weencounteredstrongresistanceamongtheproductionworkers,however,eventhough therewasno increase inworkorhours.Ourcraftsmendidnot like thenewarrangementrequiringthemtofunctionasmulti-skilledoperators.Theydidnotlikechangingfrom"oneoperator,onemachine"toasystemof"oneoperator,manymachinesindifferentprocesses."

Theirresistancewasunderstandable.Furthermore,oureffortsrevealedvariousproblems. For example, amachinemust be set up to stopwhenmachining isfinished;sometimesthereweresomanyadjustments thatanunskilledoperatorfoundthejobdifficulttohandle.

Astheseproblemsbecameclearer, theyshowedmethedirectiontocontinuemovingin.Althoughyoungandeagertopush,Idecidednottopressforquick,drasticchanges,buttobepatient.

►ProductionLeveling

In business, nothing is more pleasing than customer orders. With the labordispute over and the special demands of the KoreanWar beginning, a livelytension filled the production plant. How would we handle the demand fortrucks?Peopleintheproductionplantwerefrantic.

Therewas a shortageof everything fromcrudematerials toparts.We couldnotgetthingsinthequantityoratthetimeneeded.Ourpartssupplierswerealsoshortonequipmentandmanpower.

BecauseToyotamadechassis,whenmanypartsdidnotarriveon timeor intherightamounts,assemblyworkwasdelayed.Forthisreason,wecouldnotdoassemblyduringthefirsthalfofthemonth.Wewereforcedtogatherthepartsthatwerearrivingintermittentlyandirregularlyanddotheassemblyworkattheendof themonth.Like theold song "dekansho" that tells of sleeping half theyear,thiswasdekanshoproductionandtheapproachnearlydidusin.

Ifapartisneededattherateof1,000permonth,weshouldmake40partsaday for25days.Furthermore,we should spreadproductionevenly throughouttheworkday.Iftheworkdayis480minutes,weshouldaverageonepieceevery12minutes.Thisidealaterdevelopedintoproductionleveling.

Establishing(1)aproductionflowand(2)awaytomaintainaconstantsupplyofrawmaterialsfromoutsideforpartstobemachinedwasthewaytheToyota,orJapanese,productionsystemshouldbeoperated.Ourmindswerefilledwithideas.

Becausetherewereshortagesofeverything,wemusthavethoughtitallrighttoincreasemanpowerandmachinestoproduceandstoreitems.Atthetime,weweremaking nomore than 1,000 to 2,000 cars a month, and keeping a one-monthinventoryineachprocess.Exceptforneedingalargewarehouse,thisdidnotseemtoobigaburden.Wedidforeseeabigproblem,however,ifandwhenproductionincreased.

Toavoid thispotentialproblem,we looked forways to level all production.Wewantedtogetawayfromhavingtoproduceeverythingaroundtheendofthemonth, so we started by looking inside Toyota itself. Then, when outsidesupplierswereneeded,we first listened to their needs and then asked them tocooperateinhelpingusachieveleveledproduction.Dependingonthesituation,we discussed the supplier's cooperation in terms of manpower, materials, andmoney.

►IntheBeginning,ThereWasNeed

Sofar, Ihavedescribed, insequence, thefundamentalprinciplesof theToyotaproductionsystemanditsbasicstructure.Iwouldliketoemphasizethatitwasrealizedbecausetherewerealwaysclearpurposesandneeds.

I strongly believe that "necessity is the mother of invention." Even today,improvementsatToyotaplantsaremadebasedonneed.Thekeytoprogressinproductionimprovement,Ifeel,islettingtheplantpeoplefeeltheneed.

Evenmyown efforts to build theToyota production systemblockbyblockwere also basedon the strongneed to discover a new productionmethod thatwouldeliminatewasteandhelpuscatchupwithAmericainthreeyears.

Forexample,theideaofalaterprocessgoingtoanearlierprocesstopickupmaterialsresultedfromthefollowingcircumstance.Intheconventionalsystem,anearlierprocessforwardedproductstoalaterprocesscontinuouslyregardlessof the production requirements of that process.Mountains of parts, therefore,

mightpileupatthelaterprocess.Atthatpoint,workersspenttheirtimelookingforstoragespaceandhunting forparts insteadofmakingprogress in themostimportantpartoftheirjobs-production.

Somehowthiswastehadtobeeliminatedanditmeantimmediatelystoppingtheautomaticforwardingofpartsfromearlierprocesses.Thisstrongneedmadeuschangeourmethod.

Rearranging the machines on the floor to establish a production floweliminatedthewasteofstoringparts.Italsohelpedusachievethe"oneoperator,many processes" system and increased production efficiency two and threetimes.

I alreadymentioned that in America this system could not be implementedeasily.ItwaspossibleinJapanbecausewelackedfunction-orientedunionslikethose in Europe and the United States. Consequently, the transition from thesingletothemulti-skilledoperatorwentrelativelysmoothly,althoughtherewasinitialresistancefromthecraftsmen.Thisdoesnotmean,however,thatJapaneseunionsareweakerthantheirAmericanandEuropeancounterparts.Muchofthedifferenceliesinhistoryandculture.

Some say that trade unions in Japan represent a vertically divided societylacking mobility while function-oriented unions of Europe and Americaexemplifylaterallydividedsocietieswithgreatermobility.Isthisactuallyso?Idon'tthinkso.

In the American system, a lathe operator is always a lathe operator and awelder isawelder to theend. In theJapanesesystem,anoperatorhasabroadspectrumof skills.Hecanoperate a lathe,handleadrillingmachine, andalsorun a milling machine. He can even perform welding. Who is to say whichsystem is better? Since many of the differences come from the history andcultureofthetwocountries,weshouldlookforthemeritsinboth.

In the Japanese system, operators acquire a broad spectrum of productionskillsthatIcallmanufacturingskillsandparticipateinbuildingupatotalsystemintheproductionplant.Inthisway,theindividualcanfindvalueinworking.

Needsandopportunitiesarealwaysthere.Wejusthavetodriveourselves to

find the practical ones. What are the essential needs of business under slowgrowth conditions? In other words, how can we raise productivity when theproductionquantityisnotincreasing?

►ARevolutioninConsciousnessIsIndispensable

There is nowaste in businessmore terrible than overproduction.Why does itoccur?

We naturally feel more secure with a considerable amount of inventory.Before, during, and after World War II, buying and hoarding were naturalbehaviors.Even in thismore affluent time, people bought up tissuepaper anddetergentwhentheoilcrisiscame.

Wecouldsaythisistheresponseofafarmingsociety.Ourancestorsgrewriceforsubsistenceandstoreditinpreparationfortimesofnaturaldisaster.Fromourexperienceduringtheoilcrisis,welearnedthatourbasicnaturehasnotchangedmuch.

Modern industry also seems stuck in this way of thinking. A person inbusiness may feel uneasy about survival in this competitive society withoutkeepingsomeinventoriesofrawmaterials,work-in-process,andproducts.

Thistypeofhoarding,however,isnolongerpractical.Industrialsocietymustdevelopthecourage,orratherthecommonsense,toprocureonlywhatisneededwhenitisneededandintheamountneeded.

This requireswhat I call a revolution in consciousness, a changeof attitudeandviewpointbybusinesspeople. Inaperiodofslowgrowth,holdinga largeinventory causes thewaste of overproduction. It also leads to an inventory ofdefectives,whichisaseriousbusinessloss.Wemustunderstandthesesituationsin-depthbeforewecanachievearevolutioninconsciousness.

2

EvolutionoftheToyotaProductionSystemRepeatingWhyFiveTimes

WHENCONFRONTEDWITH a problem, have you ever stopped and askedwhy five times? It is difficult to do even though it sounds easy. For example,supposeamachinestoppedfunctioning:

1.Whydidthemachinestop?

Therewasanoverloadandthefuseblew.

2.Whywasthereanoverload?

Thebearingwasnotsufficientlylubricated.

3.Whywasitnotlubricatedsufficiently?

Thelubricationpumpwasnotpumpingsufficiently.

4.Whywasitnotpumpingsufficiently?

Theshaftofthepumpwaswornandrattling.

5.Whywastheshaftwornout?

Therewasnostrainerattachedandmetalscrapgotin.

Repeatingwhy five times, like this, can help uncover the root problem andcorrect it.If thisprocedurewerenotcarriedthrough,onemightsimplyreplacethefuseor thepumpshaft. In thatcase, theproblemwouldrecurwithinafewmonths.

Totell thetruth,theToyotaproductionsystemhasbeenbuiltonthepracticeand evolution of this scientific approach. By asking why five times and

answering it each time,we canget to the real cause of the problem,which isoftenhiddenbehindmoreobvioussymptoms.

"WhycanonepersonatToyotaMotorCompanyoperateonlyonemachine,whileattheToyodatextileplantoneyoungwomanoversees40to50automaticlooms?"

By starting with this question, we obtained the answer "The machines atToyota are not set up to stop when machining is completed." From this,automationwithahumantouchdeveloped.

To the question "Why can'twemake this part using just-intime?" came theanswer "Theearlierprocessmakes themsoquicklywedon't knowhowmanyaremadeperminute."Fromthis,theideaofproductionlevelingdeveloped.

The firstanswer to thequestion"Whyarewemaking toomanyparts?"was"Becausethereisnowaytoholddownorpreventoverproduction."Thisledtotheideaofvisualcontrolwhichthenledtotheideaofkanban.

It was stated in the previous chapter that the Toyota production system isbased fundamentally on the absolute elimination of waste. Why is wastegenerated in the first place? With this question, we are actually asking themeaningofprofit,whichistheconditionforabusiness'scontinuedexistence.Atthesametime,weareaskingwhypeoplework.

Inaproductionplantoperation,dataarehighlyregarded-butIconsiderfactstobeevenmoreimportant.Whenaproblemarises,ifoursearchforthecauseisnotthorough,theactionstakencanbeoutoffocus.This iswhywerepeatedlyaskwhy.ThisisthescientificbasisoftheToyotasystem.

►CompleteAnalysisofWaste

Whenthinkingabouttheabsoluteeliminationofwaste,keepthefollowing twopointsinmind:

1.Improvingefficiencymakessenseonlywhenitistiedtocostreduction.Toachievethis,wehavetostartproducingonlythethingsweneedusingminimummanpower.

2.Lookat theefficiencyofeachoperatorandofeach line.Thenlookattheoperatorsasagroup,andthenattheefficiencyoftheentireplant(allthelines).Efficiencymustbeimprovedateachstepand,atthesametime,fortheplantasawhole.

Forexample,throughoutthe1950labordisputeovermanpowerreductionandthe ensuing business boom of the Korean War, Toyota struggled with theproblemofhowtoincreaseproductionwithoutincreasingmanpower.Asoneoftheproductionplantmanagers,Iputmyideastoworkinthefollowingways.

Let's say, for instance, one production line has 10 workers and makes 100products per day. Thismeans the line capacity is 100 pieces per day and theproductivityperpersonis10piecesperday.Observingthelineandworkersinfurther detail, however, we notice overproduction, workers waiting, and otherunnecessarymovementsdependingonthetimeofday.

Supposewe improved the situation and reducedmanpowerby twoworkers.The fact that 8workers could produce 100 pieces daily suggests that we canmake 125 pieces a day, increasing efficiency without reducing manpower.Actually,however, thecapacity tomake125piecesadayexistedbeforebut itwasbeingwastedintheformofunnecessaryworkandoverproduction.

Thismeansthatifweregardonlyworkthatisneededasrealworkanddefinethe rest as waste, the following equation holds true whether consideringindividualworkersortheentireline:

Presentcapacity=work+waste

Trueefficiency improvement comeswhenweproducezerowaste andbringthepercentageofworkto100percent.Since,intheToyotaproductionsystem,we must make only the amount needed, manpower must be reduced to trimexcesscapacityandmatchtheneededquantity.

ThepreliminarysteptowardapplicationoftheToyotaproductionsystemistoidentifywastescompletely:

•Wasteofoverproduction

•Wasteoftimeonhand(waiting)

•Wasteintransportation

•Wasteofprocessingitself

•Wasteofstockonhand(inventory)

•Wasteofmovement

•Wasteofmakingdefectiveproducts

Eliminating these wastes (see Glossary for categorical explanations)completelycanimprovetheoperatingefficiencybya largemargin.Todothis,wemustmakeonlythequantityneeded,therebyreleasingextramanpower.TheToyota production system clearly reveals excess manpower. Because of this,some labor union people have been suspicious of it as ameans of laying offworkers.Butthatisnottheidea.

Management's responsibility is to identify excess manpower and utilize iteffectively.Hiringpeoplewhenbusiness isgoodandproductionishighjust tolay them off or recruiting early retireeswhen recession hits are bad practices.Managersshould use themwith care.On the other hand, eliminatingwastefulandmeaninglessjobsenhancesthevalueofworkforworkers.

►MyPlant-FirstPrinciple

Theproductionplantismanufacturing'smajorsourceofinformation.Itprovidesthemostdirect,current,andstimulatinginformationaboutmanagement.

I have always firmly believed in the plant-first principle, perhaps because Istartedoutontheplantfloor.Eventoday,aspartoftopmanagement,Ihavebeenunable to separatemyself from the reality found in the production plant. Thetimethatprovidesmewiththemostvitalinformationaboutmanagementis thetimeIspendintheplant,notinthevicepresident'soffice.

Sometimein1937-1938,mybossatToyodaSpinningandWeavingtoldmetopreparestandardworkmethodsfortextilework.Itwasadifficultproject.Fromabookonstandardworkmethods Ibought fromMaruzen,' Imanaged todo the

job.

Aproperworkprocedure,however,cannotbewrittenfromadesk.Itmustbetriedandrevisedmanytimesintheproductionplant.Furthermore,itmustbeaprocedurethatanybodycanunderstandonsight.

WhenIfirstcametotheToyotaMotorCompanyduringthewar,Iaskedmyworkers to prepare standard work methods. Skilled workers were beingtransferred from the production plant to the battlefield and more and moremachinesweregraduallybeingoperatedbyinexperiencedmenandwomen.Thisnaturally increased theneedforstandardworkmethods.Myexperienceduringthatperiodlaidthefoundationformy35yearsofworkontheToyotaproductionsystem.Itwasalsotheoriginofmyplant-firstprinciple.

►WritingtheStandardWorkSheetYourself

In each ToyotaMotor Company plant, as well as in the production plants ofcooperating firms adopting the Toyota production system, visual control isthoroughly established. Standard work sheets are posted prominently at eachwork station.When one looks up, the andon (the line stop indication board)comes into view, showing the location and nature of trouble situations at aglance.Furthermore,boxescontainingpartsbroughttothesideoftheproductionlinearrivewithanattachedkanban,thevisualsymboloftheToyotaproductionsystem.

Here,however,Iwanttodiscussthestandardworksheetasameansofvisualcontrol,whichishowtheToyotaproductionsystemismanaged.

Standard work sheets and the information contained in them are importantelementsoftheToyotaproductionsystem.Foraproductionpersontobeabletowriteastandardworksheetthatotherworkerscanunderstand,heorshemustbeconvincedofitsimportance.

We have eliminated waste by examining available resources, rearrangingmachines, improving machining processes, installing autonomous systems,improving tools, analyzing transportationmethods, and optimizing the amountof materials at hand for machining. High production efficiency has also been

maintained by preventing the recurrence of defective products, operationalmistakes, and accidents, and by incorporating workers' ideas. All of this ispossiblebecauseoftheinconspicuousstandardworksheet.

The standard work sheet effectively combines materials, workers, andmachines to produce efficiently. At Toyota, this procedure is called a workcombination.Theresultisthestandardworkprocedure.

ThestandardworksheethaschangedlittlesinceIwasfirstasked toprepareone 40 years ago at the textile plant. However, it is based thoroughly onprinciples and plays an important role in Toyota's visual control system. Itclearlyliststhethreeelementsofthestandardworkprocedureas:

1.Cycletime

2.Worksequence

3.Standardinventory

Cycletimeisthetimeallottedtomakeonepieceorunit.This isdeterminedby production quantity; that is, the quantity required and the operating time.Quantity required per day is the quantity required per month divided by thatmonth'snumberofoperatingdays.Cycletimeiscomputedbydividingoperatinghoursbythequantityrequiredperday.Evenwhencycletimeisdeterminedthisway,individualtimesmaydiffer.

InJapan,itissaidthat"timeistheshadowofmotion."Inmostcases,delayisgeneratedbydifferences inoperatormotionandsequence.The jobof thefieldsupervisor, section chief, or group foreman is to trainworkers. I have alwayssaid that it should take only three days to train new workers in proper workprocedures.Wheninstructioninthesequenceandkeymotionsisclear,workersquicklylearntoavoidredoingajoborproducingdefectiveparts.

Todo this,however, the trainermust actually take thehandsof theworkersandteachthem.Thisgeneratestrustinthesupervisor.Atthesametime,workersmust be taught to help each other. Because people are doing thework, ratherthan machines, there will be individual differences in work times caused byphysicalconditions.Thesedifferenceswillbeabsorbedbythefirstworkerinthe

process,justasinthebatontouchzoneintrackrelay.Carryingoutthestandardworkmethodsinthecycletimehelpsworkerharmonygrow.

The term "work sequence"means justwhat it says. It does not refer to theorderofprocessesalongwhichproductsflow.Itrefersrathertothesequenceofoperations, or the order of operations in which a worker processes items:transportingthem,mountingthemonmachines,removingthemfrommachines,andsoon.

Standard inventory refers to the minimum intra-process work-in-processneededforoperationstoproceed.Thisincludesitemsmountedonmachines.

Evenwithoutchangingmachinelayout,standardinventorybetweenprocessesis generally unnecessary if work is carried out in the order of machiningprocesses.Allthatisneededaretheitemsmountedonthevariousmachines.Onthe other hand, one item's worth (or two where two items are mounted onmachines)ofstandard inventorywillbe required ifworkproceedsbymachinefunctionratherthanbytheprocessflow.

IntheToyotaproductionsystem,thefactthatpartshavetoarrivejust-in-timemeansthatstandardinventorieshavetobemetthatmuchmorerigorously.

►TeamworkIsEverything

Itouchedonthesubjectofharmonyindiscussingcycletimes.NowIwouldliketospendsometimegivingyoumythoughtsonteamwork.

Work and sports have many things in common. In Japan, competition istraditionally individual,as insumowrestling,kendoswordsmanship,and judo.Infact,inJapanwedonot"compete"intheseactivitiesbutratherwe"seekthewayandstudy it"devotedly.This approachhas its analogy in theworkarena,wheretheartoftheindividualcraftsmanishighlyvalued.

Competitive team sports came to Japan afterWestern culturewas imported.Andinmodernindustry,harmonyamongpeopleinagroup,asinteamwork,isingreaterdemandthantheartoftheindividualcraftsman.

Forexample, inaboatracewitheightrowersperboat,abaseballteamwith

nineplayers,avolleyballgamewithsixpeopleperside,orasoccerteamwithelevenmembers, thekey towinning or losing is teamwork.Evenwith one ortwostarplayers,ateamdoesnotnecessarilywin.

Manufacturingisalsodonethroughteamwork.Itmighttake10or15workers,for example, to take a job from rawmaterials to finishedproduct.The idea isteamwork - not howmany partsweremachined or drilled by oneworker, buthowmanyproductswerecompletedbythelineasawhole.

Yearsago,Iusedtotellproductionworkersoneofmyfavoritestoriesaboutaboatrowedbyeightmen,fourontheleftsideandfourontherightside.Iftheydonotrowcorrectly,theboatwillzigzagerratically.

Onerowermightfeelheisstrongerthanthenextandrowtwiceashard.Butthisextraeffortupsetstheboat'sprogressandmovesitoffcourse.Thebestwaytopropeltheboatfasterisforeveryonetodistributeforceequally,rowingevenlyandatthesamedepth.

Todayavolleyballteamhassixplayers;previouslytherewerenine.Ifanine-member team tried to play a six-member team using the same plays, playersmight be injured bumping into one another. They would probably lose alsobecausehavingmoreplayersisnotnecessarilyanadvantage.

Teamworkcombinedwithotherfactorscanallowasmallerteamtowin.Thesameistrueinaworkenvironment.

Sports gives us somanyhelpful hints. In baseball, for example, if someonedrew boundaries around the infield defense zone and said only the secondbaseman could play therewhile the third baseman could only play in anotherdesignatedarea,thegamewouldnotbeasmuchfuntowatch.

Similarly,atworkthingsdonotnecessarilyrunsmoothlyjustbecauseareasofresponsibilityhavebeenassigned.Teamworkisessential.

►TheSkillofPassingtheBaton

AboutthetimeIbeganworkontheToyotaproductionsystem,theKoreanWarwas coming to an end. Newspapers were calling the so-called 38th parallel a

nationaltragedy.Thesameistrueinwork.Wecannotdrawa"38thparallel"ineachother'sworkarea.

Theworkarenaislikeatrackrelay-thereisalwaysanareawherethebatonmaybepassed.Ifthebatonispassedwell,thetotalfinaltimecanbebetterthantheindividualtimesofthefourrunners.Inaswimmingrelay,aswimmercannotdive before the previous swimmer's hand touches thewall. In track, however,rulesaredifferentandastrongrunnercanmakeupforaweakrunner.Thisisaninterestingpoint.

Inamanufacturingjobdonebyfourorfivepeople,thepartsshouldbehandedoveras if theywerebatons. Ifanoperator ina laterprocess isdelayed,othersshouldhelp setuphisorhermachine.When theworkarea returns tonormal,that worker should get the baton and everyone else should return to theirpositions.Ialwaystellworkerstheyshouldbeskillfulinbatonpassing.

Inwork and in sports, it is desirable for teammembers toworkwith equalstrength. In actuality, this is not always the case, particularly with newemployees who are unfamiliar with the work. At Toyota, we call the baton-passing system the "Mutual Assistance Campaign. " It provides the power togeneratemorepowerfulteamwork.

I feel themost important point in common between sports andwork is thecontinuingneedforpracticeandtraining.Itiseasytounderstandtheorywiththemind;theproblemistorememberitwiththebody.Thegoalistoknowanddoinstinctively.Havingthespirittoendurethetrainingisthefirststepontheroadtowinning.

►AnIdeafromtheU.S.Supermarket

Torepeat,thetwopillarsoftheToyotaproductionsystemarejust-in-timeandautomationwithahumantouch,orautonomation.Thetoolusedtooperatethe

systemiskanban,anideaIgotfromAmericansupermarkets.

FollowingWorldWarII,AmericanproductsflowedintoJapan-chewinggumandCoca-Cola,eventhejeep.ThefirstU.S.-stylesupermarketappearedinthenlid-1950s.And, asmore andmore Japanese people visited theUnitedStates,theysawtheintimaterelationshipbetweenthesupermarketandthestyleofdaily

lifeinAmerica.Consequently,thistypeofstorebecametherageinJapanduetoJapanesecuriosityandfondnessforimitation.

In1956,I touredU.S.productionplantsatGeneralMotors,Ford,andothermachinery companies. But my strongest impression was the extent of thesupermarket's prevalence inAmerica. The reason for thiswas that by the late1940s,atToyota'smachineshopthatImanaged,wewerealreadystudying theU.S.supermarketandapplyingitsmethodstoourwork.

Combiningautomobilesandsupermarketsmayseemodd.Butforalongtime,since learning about the setup of supermarkets in America, we made aconnectionbetweensupermarketsandthejust-in-timesystem.

Asupermarketiswhereacustomercanget(1)whatisneeded,(2)atthetimeneeded, (3) in theamountneeded.Sometimes, of course, a customermaybuymore than he or she needs. In principle, however, the supermarket is a placewherewebuyaccordingtoneed.Supermarketoperators, therefore,mustmakecertainthatcustomerscanbuywhattheyneedatanytime.

Compared to Japan's traditional, turn-of-the-centurymerchandisingmethodssuch as peddling medicines door to door, going around to customers to takeorders, and hawking wares, America's supermarket system is more rational.Fromtheseller'sviewpoint,laborisnotwastedcarryingitemsthatmaynotsell,whilethebuyerdoesnothavetoworryaboutwhethertobuyextraitems.

From the supermarket we got the idea of viewing the earlier process in aproductionlineasakindofstore.Thelaterprocess(customer)goestotheearlierprocess (supermarket) to acquire the required parts (commodities) at the timeand in the quantity needed. The earlier process immediately produces thequantity just taken (restocking the shelves).Wehoped that thiswould help usapproachour just-in-timegoaland, in1953,weactuallyapplied the system inourmachineshopatthemainplant.

In the 1950s, American-style supermarkets appeared in Japan, bringing theobject of our research even closer. And when in America in 1956, I finallyfulfilledmydesiretovisitasupermarketfirsthand.

Ourbiggestproblemwith thissystemwashowtoavoid throwing theearlier

processintoconfusionwhenalaterprocesspickeduplargequantitiesatatime.Eventually,aftertrialanderror,wecameupwithproductionleveling,describedlaterinthebook.

Figure1.ASampleofKanban

►WhatIsKanban?

The operating method of the Toyota production system is kanban. Its mostfrequently used form is a piece of paper contained in a rectangular vinylenvelope.

This piece of paper carries information that can be divided into threecategories: (1)pickup information, (2) transfer information,and(3)productioninformation.Thekanban carries the information vertically and laterallywithinToyotaitselfandbetweenToyotaandthecooperatingfirms.

AsIsaidearlier,theideacamefromthesupermarket.Supposewetakekanbanintothesupermarket.Howwoulditwork?

Commodities purchased by customers are checked out through the cashregister. Cards that carry information about the types and quantities ofcommoditiesboughtarethenforwardedtothepurchasingdepartment.Usingthisinformation,commoditiestakenareswiftlyreplacedbypurchasing.Thesecardscorrespond to thewithdrawal kanban in the Toyota production system. In thesupermarket,thecommoditiesdisplayedinthestorecorrespondtotheinventoryattheproductionplant.

If a supermarket had its own production plant nearby, there would beproductionkanban inaddition to thewithdrawalkanbanbetween the storeandtheproductiondepartment.From thedirectionson this kanban, theproductiondepartment-wouldproducethenumberofcommoditiespickedup.

Of course, supermarkets have not gone that far. In our production plant,however,wehavebeendoingthisfromthebeginning.

The supermarket systemwas adopted in themachine shop around 1953. Tomake itwork,we used pieces of paper listing the part number of a piece andotherinformationrelatedtomachiningwork.Wecalledthis"kanban."

Subsequently,thiswascalledthe"kanbansystem."Wefeltthatifthissystemwereusedskillfully,allmovementsintheplantcouldbeunifiedorsystematized.After all, one piece of paper provided at a glance the following information:productionquantity, time,method, sequenceor transferquantity, transfer time,destination,storagepoint,transferequipment,container,andsoon.Atthetime,Ididnotdoubtthatthismeansofconveyinginformationwouldcertainlywork.

Generallyinabusiness,what,when,andhowmanyaregeneratedbytheworkplanningsectionintheformofaworkstartplan,transferplan,productionorder,ordeliveryorderpassedthroughtheplant.Whenthissystemisused,"when"issetarbitrarilyandpeoplethinkitwillbeallrightwhetherpartsarriveontimeorearly. Managing parts made too early, however, means carrying a lot ofintermediateworkers.Theword66just"in"just-in-time"meansexactlythat.Ifpartsarriveanytimepriortotheirneed-notattheprecisetimeneeded-wastecannotbeeliminated.

In theToyotaproductionsystem,overproduction iscompletelypreventedbykanban.Asaresult,thereisnoneedforextrainventoryand,consequently,there

is no need for the warehouse and its manager. Generation of countless paperslipsalsobecomesunnecessary.

►IncorrectUseCausesProblems

Withabettertool,wecangetwonderfulresults.Butifweuseitincorrectly,thetoolcanmakethingsworse.

Kanban is one of those tools that if used improperly can cause a variety ofproblems. To employ kanban properly and skillfully, we tried to clearlyunderstanditspurposeandroleandthenestablishrulesforitsuse.

Kanbanisawaytoachievejust-in-time;itspurposeisJustin-time.Kanban,inessence, becomes the autonomic nerve of the production line. Based on this,production workers start work by themselves, and make their own decisionsconcerningovertime.Thekanbansystemalsomakesclearwhatmustbedonebymanagersandsupervisors.Thisunquestionablypromotes improvement inbothworkandequipment.

The goal of eliminating waste is also highlighted by kanban. Its useimmediatelyshowswhatiswaste,allowingforcreativestudyandimprovementproposals. In the production plant, kanban is a powerful force to reducemanpower and inventory, eliminate defective products, and prevent therecurrenceofbreakdowns.

It is not an overstatement to say that kanban controls the flow of goods atToyota.Itcontrolstheproductionofacompanyexceeding$4.8billionayear.

Inthisway,Toyota'skanbansystemclearlyreflectsourwishes.Itispracticedunderstrictrulesanditseffectivenessisshownbyourcompany'sachievements.The Toyota production system, however, advances by the minute and closesupervisionofthekanbanrulesisaneverendingproblem.

► The Talent and Courage to Rethink What We CallCommonSense

Thefirstruleofkanbanisthatthelaterprocessgoestotheearlierprocesstopickupproducts.Thisrulewasderivedfromneedandfromlookingatthingsupside-down,orfromtheoppositestandpoint.

To practice this first rule, a superficial understanding is not enough. Topmanagementmustchangeitswayofthinkingandmakeacommitmenttoreversetheconventionalflowofproduction,transfer,anddelivery.Thiswillmeetwithlotsof resistance and requires courage.Thegreater the commitment, however,

themoresuccessfulwillbetheimplementationoftheToyotaproductionsystem.

Inthe30yearssinceImovedfromtextilestotheworldofautomobiles,Ihaveworked continuously to develop and promote the Toyota production system,eventhoughIdoubtedmyabilitytosucceed.

This may sound presumptuous, but the growth of the Toyota productionsystem has tended to coincide with the growth of my own responsibilities atToyota.

In1949-1950,asmanagerofthemachineshopinwhatisnowthemainplant,Imadethefirststeptowardthe"Just-intime"idea.Then,toestablishtheflowofproduction,werearrangedthemachinesandadoptedamulti-processsystemthatassigns one operator to three or four machines. From then on, I utilized mygrowingauthoritytoitsfullestextenttoexpandtheseideas.

During this period, all the ideas I boldly put into practicewere intended toimprovetheold,conservativeproductionsystem-and theymighthave lookedhigh-handed. Toyota's top management watched the situation quietly, and Iadmiretheattitudetheytook.

I have a good reason for emphasizing the role of top management indiscussing the first rule of kanban.There aremanyobstacles to implementingtherulethatthelaterprocessmusttakewhatitrequiresfromtheearlierprocesswhenitisneeded.Forthisreason,managementcommitmentandstrongsupportareessentialtothesuccessfulapplicationofthisfirstrule.

To the earlier process, however, this means eliminating the productionscheduletheyhaverelieduponforsolong.Productionworkershaveagooddealofpsychologicalresistancetotheideathatsimplyproducingasmuchaspossibleisnolongerapriority.

Tryingtomakeonlytheitemswithdrawnalsomeanschangingthesetupmoreoften unless the production line is dedicated to one item. Usually, peopleconsideritanadvantagefor theearlierprocesstomakealargequantityofoneitem.ButwhileproducingitemAinquantity,theprocessmaynotmeettheneedforitemB.Consequently,shorteningsetuptimeandreducinglotsizesbecomesnecessary.

Among the new problems, themost difficult surfacewhen the later processpicks up a large quantity of one item.When this happens, the earlier processimmediately runs out of that item. If we try to counter this by holding someinventory,however,wewill notknowwhich itemwill bewithdrawnnext andwill have to keep an inventory o f each item: A, B, and so on. If all earlierprocesses start doing this, piles of inventorywill form in every corner of theplant.

Therefore,torealizeasysteminwhichthelaterprocesspicksuprequiresustotransformtheproductionmethodsofboththeearlierand-the-la-terprocesses.

Stepbystep,Isolvedtheproblemsrelatedtothesystemofwithdrawalbythelaterprocess.Therewasnomanualandwecould findoutwhatwouldhappenonlybytrying.Tensionincreaseddailyaswetriedandcorrectedandthentriedandcorrectedagain.Repeatingthis,Iexpandedthesystemofpickupbythelaterprocess within the company. Experiments were always carried out at a plantwithinthecompanythatdidnotdealwithpartsorderedfromoutside.Theideawastoexhaustthenewsystem'sproblemswithinthecompanyfirst.

In1963,westartedhandlingthedeliveryofthepartsorderedfromoutside.Ittook nearly 20 years. Today we frequently hear a chassis maker asking thecooperating firm to bring parts just-in-time as if "just-in-time" was the mostconvenientsystem.However, ifusedforpickinguppartsorderedfromoutsidewithout first changing the production method within the company, kanbanimmediatelybecomesadangerousweapon.

Just-in-timeisanidealsysteminwhichtheitemsneededarriveatthesideoftheproductionlineatthetimeandinthequantityneeded.Butachassismakercannotsimplyaskthecooperatingfirmtoemploythissystem,becauseadoptingjust-in-time means completely overhauling the existing production system.Therefore, once decided upon, it should be undertaken with a firm anddeterminedmind.

►EstablishingtheFlowIstheBasicCondition

AfterWorldWar II,ourmainconcernwashowtoproducehighqualitygoodsand we helped the cooperating firms in this area. After 1955, however, the

question became how to make the exact quantity needed. Then, after the oilcrisis,westartedteachingoutsidefirmshowtoproducegoodsusingthekanbansystem.

Prior to that, the Toyota Group guided cooperating firms on work orproduction methods, in the Toyota system. Outsiders seem to think that theToyotasystemandkanbanarethesamething.ButtheToyotaproductionsystemistheproductionmethodandthekanbansystemisthewayitismanaged.

So, up until the oil crisis, we were teaching Toyota's production methods,focusingonhowtomakegoodsasmuchaspossibleinacontinuousflow.Withthis groundwork already done, it was very easy to give guidance to Toyota'scooperatingfirmsonkanban.

Unlessone completelygrasps thismethodofdoingwork so that thingswillflow, it is impossible togoright into thekanbansystemwhenthe timecomes.The Toyota Group was able to adopt and somehow digest it because theproduction plant already understood and practiced the idea of establishing aflow.Whenpeoplehavenoconceptof this, it isverydifficult to introduce thekanbansystem.

Whenwefirsttriedtousethekanbansystemonthefinalassemblyline,goingtoamachineshopofanearlierprocesstowithdrawtheitemsneededatthetimeandinthequantityneededneverworked.Thiswasonlynaturalandnotthefaultofthemachineshop.Werealizedthatthesystemwouldnotworkunlesswesetupaproductionflowthatcouldhandlethekanbansystemgoingbackprocessbyprocess.

Kanbanisatoolforrealizingjust-in-time.Forthistooltoworkfairlywell,theproduction processes must be managed to flow as much as possible. This isreallythebasiccondition.Otherimportantconditionsarelevelingproductionasmuch as possible and always working in accordance with standard workmethods.

At Toyota's main plant, the flow between the final assembly line and themachining line was established in 1950 and the synchronization started on asmallscale.Fromthere,wekeptgoing in reverse toward theearlierprocesses.Wegraduallylaidthegroundworkforthecompany-wideadoptionofkanbanso

thattheworkandtransferringofpartscouldbedoneunderthekanbansystem.Thishappenedgraduallybygainingtheunderstandingofallpeopleinvolved.

Itwasonlyin1962thatwecouldmanagethekanbansystemcompany-wide.Afterachievingthis,wecalledthecooperatingfirmsandaskedthemtostudyitbywatchinghowitreallyworked.Thesepeopleknewnothingaboutkanbanandmakingthemunderstanditwithoutatextbookwasdifficult.

Weaskedthecooperatingfirmsfromnearbytocome,afewatatime,tostudythesystem.Forexample,theoutsidediepresspeoplecametoseeourdiepressoperationandthemachineshoppeoplecametoseeourmachineshop.Thiswayofteachinggaveustheabilitytodemonstrateanefficientproductionmethodinanactualproductionplant.Asamatterof fact, theywouldhavehaddifficultyunderstandingthesystemwithoutseeingitinaction.

This teaching effort startedwith the cooperating firms nearbyand spread tothe Nagoya district. In the outlying Kanto district, however, progress wasdelayedinpartduetothedistance.However,abiggerreasonwasbecausepartmakersintheKantodistrictweresupplyingtheirproductsnotonlytoToyotabuttoothercompaniesaswell.TheyfelttheycouldnotusethekanbansystemjustwithToyota.z

Wedecidedthatthiswouldtaketimeforthemtounderstand,andwesetoutpatiently.Inthebeginning,thecooperatingfirmssawkanbanastroublesome.Ofcourse, no top management came; no directors in charge of production ormanagersofproductiondepartmentsshowedupinthebeginning.Usuallypeopleinchargeoftheoperationwouldcome,butnooneveryimportant.

Atfirst,Ibelieve,manyfirmscamewithoutknowingwhatwasinvolved.Butwe wanted them to understand kanban and if they didn't, Toyota employeeswould go and help. People from nearby firms understood the system earlyalthoughtheyfacedresistanceintheircompanies.Andtodayitisapleasuretoseeallthiseffortbearfruit.

►UseYourAuthoritytoEncourageThem

In the beginning, everyone resisted kanban because it seemed to contradictconventional wisdom. Therefore, I had to experiment with kanban withinmy

ownsphereofauthority.Ofcourse,wetriedtoavoidinterferingwiththeregularworkgoingon.

Inthe1940s,Iwasinchargeofthemachineshopandtheassembly line.Atthetime,therewasonlyoneplant.Bytheendofthelabordisputein1950,thereweretwoproductiondepartmentsinthemainplant,No.IandNo.2.Imanagedthe latter.Kanban could not be tried inNo. 1 because its forging and castingprocesseswould affect theplant as awhole.Kanban could be applied only inNo.2'smachiningandassemblyprocesses.

I soon becamemanager of theMotomachi plant when it was completed in1959andbeganexperimentingwithkanban there.Because thecrudematerialscame from the main plant, however, kanban could be used only between themachineshop,pressshop,andassemblyline.

In 1962, I was named manager of the main plant. Only then was kanbanimplementedinforgingandcasting,makingitacompany-widesystematlast.

Ittook10yearstoestablishkanbanattheToyotaMotorCompany.Althoughitsounds like a long time, I think it was natural because we were breaking intotallynewconcepts.Itwas,nonetheless,avaluableexperience.

To make kanban understood throughout the company, we had to involveeveryone. If themanagerof theproductiondepartmentunderstood itwhile theworkersdidnot,kanbanwouldnothaveworked.At the foreman level,peopleseemedquite lost because theywere learning something totally different fromconventionalpractice.

Icouldyellataforemanundermyjurisdiction,butnotataforemanfromtheneighboring department. Thus, getting people in every corner of the plant tounderstandnaturallytookalongtime.

During this period, Toyota's top manager was a man of great vision who,withoutaword,lefttheoperationentirelytome.WhenIwas-ratherforcefully--urgingforemenintheproductionplanttounderstandkanban,mybossreceiveda considerable number of complaints.They voiced the feeling that this fellowOhnowasdoingsomethingutterlyridiculousandshouldbestopped.Thismusthaveputthetopmanagerinadifficultpositionattimes,buteventhenhemust

havetrustedme.IwasnottoldtostopandforthisIamgrateful.

In 1962, kanban was adopted company-wide; it had earned its recognition.After that,weenteredahigh-growthperiod - the timingwasexcellent. I thinkthegradualspreadofkanbanmadepossiblethestrongproductionyield.

While inchargeof theassembly line, I applied the just-intimesystem there.The most important processes for assembly were the earlier processes ofmachiningandbodypainting.Thebodiescamefromthediepresssection.Themachining process was difficult to connect by kanban to the crude materialsectionbutweweresatisfiedtoaccumulateexperienceasweworkedtolinkupthe machining process. This period was valuable because we could identifykanban'sinadequacies.

►MountainsShouldBeLowandValleysShouldBeShallow

Tomake the second rule of kanbanwork (having the earlier process produceonly the amountwithdrawnby the later process)manpower and equipment ineach production process must be prepared in every respect to produce thequantitiesneededatthetimeneeded.

In this case, if the later process withdraws unevenly in terms of time andquantity, the earlier process must have extra manpower and equipment toaccommodate its requests. This becomes a heavy burden. The greater thefluctuation in quantity picked up, themore excess capacity is required by theearlierprocess.

To make matters worse, the Toyota production system is tied throughsynchronization not only to each production processwithin the ToyotaMotorCompanybutalsototheproductionprocessesof thecooperatingfirmsoutsideToyotausingkanban.Becauseof this, fluctuations inproduction andordersatToyota'sfinalprocesshaveanegativeimpactonallearlierprocesses.

To avoid the occurrence of such negative cycles, the large chassis maker,specificallyToyota's final automobile assembly line (the "first process"),mustlowerthepeaksandraisethevalleysinproductionasmuchaspossiblesothattheflowsurfaceissmooth.Thisiscalledproductionleveling,orloadsmoothing,

intheToyotaproductionsystem.

Ideally,levelingshouldresultinzerofluctuationatthefinalassemblyline,orthelastprocess.Thisisverydifficult,however,becausemorethan200,000carsmonthly come off the several assembly lines at Toyota in an almost infinitenumberofvarieties.

The number of varieties reaches thousands just by considering thecombinations of car size and style, body type, engine size, and transmissionmethod.Ifweincludecolorsandcombinationsofvariousoptions,wewillrarelyseecompletelyidenticalcars.

Modern society's diversewants andvalues are clearly seen in thevarietyofcars. In fact, it is certainly this diversity that has reduced the effectiveness ofmass production in the automobile industry. In adapting to this diversity, theToyota production system has been much more efficient than the Ford-stylemassproductionsystemdevelopedinAmerica.

Toyota's production system was originally conceived to produce smallquantities ofmany types for the Japanese environment. Consequently, on thisfoundation it evolved into a production system that canmeet the challenge ofdiversification.

Whilethetraditionalplannedmassproductionsystemdoesnot respondeasilytochange,theToyotaproductionsystemisveryelasticandcantakethedifficultconditions imposed by diverse market demands and digest them. The Toyotasystemhastheflexibilitytodothis.

After the oil crisis, people started paying attention to theToyota productionsystem. I would like to make clear that the reasons lie in the system'sunsurpassed flexibility inadapting tochangingconditions.Thiscapacity is thesource of its strength even in a lowgrowth period when quantity does notincrease.

►ChallengetoProductionLeveling

Let me tell a story about a specific case of production leveling. In Toyota'sTsutsumiplant,production is leveledon twoassembly linesmakingpassenger

cars:Corona,Carina,andCelica.

Inoneline,theCoronaandCarinaflowalternately.TheydonotrunCoronasinthemorningandCarinasintheafternoon.Thisistomaintainalevelload.Thelotsizeforsingleitemsiskeptassmallaspossible.Greatcareistakentoavoidgeneratingundesirablefluctuationintheearlierprocess.

Even the production of large numbers of Coronas is leveled. For example,supposewemake10,000Coronasworking20daysamonth.Assume that thisbreaks down to 5,000 sedans, 2,500 hardtops, and 2,500wagons. Thismeansthat 250 sedans, 125 hardtops, and 125 wagons are made daily. These arearrangedontheproductionlineasfollows:onesedan,onehardtop,thenasedan,thenawagon,andsoon.Thisway,thelotsizeandfluctuationinproductioncanbeminimized.

ThefinelytunedproductioncarriedoutinthefinalautomobileassemblylineisToyota'smassproductionprocess.Thatthistypeofproductioncanbecarriedoutdemonstrates that the earlier processes, such as thedie press section, havesettled into the new system after breaking away from the traditional plannedmassproductionsystem.

Inthebeginning,theideaoflevelingtoreducelotsizeandminimizethemassproductionofsingleitemsplacedtooheavyademandonthediepresssection.Ithadbeenalongacceptedproductionfactthatcontinuouspunchingwithonedieinthepressbringsthecostdown.Itwasconsideredcommonsensetoproduceinthelargestlotspossibleandpunchcontinuouslywithoutstoppingthepress.

TheToyotaproductionsystem,however, requires leveledproductionand thesmallestlotspossibleeventhoughitseemscontrarytoconventionalwisdom.So,howdidthediepresssectioncopewiththisproblem?

Making lots small means we cannot punch with one die for very long. Torespondtothedizzyingvarietyinproducttypes,thediemustbechangedoften.Consequently,setupproceduresmustbedonequickly.

The same is true for othermachine sections, all theway back to the earlierprocesses.Eventhecooperatingfirmssupplyingpartsareusingbuzzwordslike"reduce lot size" and "shorten setup time" - ideas completely contrary to past

practice.

In the 1940s, Toyota's die changes took two to three hours. As productionlevelingspreadthroughthecompanyinthe1950s,setuptimeswenttolessthanonehourandaslittleas15minutes.Bythelate1960s,itwasdowntoamere3minutes.

In summary, the need for quick die changes was generated and steps weretakentoeliminatetheadjustments-somethingneverdiscussedinpreviousworkmanuals.Todothis,everybodychippedinwithideaswhileworkersweretrainedto shorten changeover times. Within the Toyota Motor Company and itscooperatingfirms,people'sdesiretoachievethenewsystemintensifiedbeyonddescription.Thesystembecametheproductoftheireffort.

►ProductionLevelingandMarketDiversification

AsIalreadymentioned,productionlevelingismuchmoreadvantageousthantheplanned massproduction system in responding to the diverse demands of theautomobilemarket.

Wecansaythiswithconfidence.Generallyspeaking,however,diversificationof themarketandproduction levelingwillnotnecessarilybe inharmonyfromthebeginning.Theyhaveaspectsthatdonotaccommodateeachother.

It is undeniable that leveling becomes more difficult as diversificationdevelops. However, I want to emphasize again that, with effort, the Toyotaproduction system can cope with it well enough. In keeping marketdiversificationandproduction leveling inharmony, it is important toavoid theuseofdedicatedfacilitiesandequipmentthatcouldhavemoregeneralutility.

Forexample,takingtheCorolla,theworld'slargestmassproducedcarin1978,a definite production plan can be set up on a monthly basis. The total carsneeded can be divided by the number of work days (the number of days onwhich actual production can be carried out) to level the number of cars to bemadeperday.

On the production line, even finer leveling must be done. To let sedans orcoupesflowcontinuouslyduringafixedtimeinterval iscontrarytolevelingin

that the same item is allowed to flow in abatch.Of course, if twoproductionlineswereused,oneforsedansandoneforcoupesexclusively,levelingwouldbeeasier.

Butthisisnotpossiblebecauseofrestrictionsinspaceandequipment.Whatcanbedone?Ifoneproductionlineissetupsothatsedansandcoupescanbothbeassembledinanysequence,thenlevelingwouldbepossible.

Viewedfromthisperspective,massproductionusingdedicatedfacilities,oncethe strongest weapon for reducing cost, is not necessarily the best choice. Ofincreasing importance are efforts to put together specialized, yet versatileproduction processes through the use of machines and jigs that can handleminimal quantities of materials. More effort is needed to find the minimumfacilitiesandequipmentrequiredforgeneraluse.Todothis,wemustutilizeallavailableknowledgetoavoidunderminingthebenefitsofmassproduction.

By studying every process like this, we can keep diversification andproductionlevelinginharmonyandstillrespondtocustomerordersinatimelymanner. As market demands grow more diverse, we must put even moreemphasisonthispoint.

►KanbanAcceleratesImprovements

Under its firstandsecondrules,kanbanservesasawithdrawalorder,anorderforconveyanceordelivery,andasaworkorder.Rulethreeofkanbanprohibitspickinguporproducinggoodswithoutakanban.Rulefourrequiresakanbantobe attached to the goods. Rule five requires 100 percent defect-free products(thatis,donotsendanythingdefectivetothesubsequentprocess).Rulesixurgesustoreducethenumberofkanban.Whentheserulesarefaithfullypracticed,theroleofkanbanexpands.

Akanbanalwaysmoveswiththeneededgoodsandsobecomesaworkorderforeachprocess. In thisway,akanbancanpreventoverproduction, the largestlossinproduction.

To ensure that we have 100 percent defect-free products, wemust set up asystemthatautomaticallyinformsusifanyprocessgeneratesdefectiveproducts;that is, a system in which the process generating defective products feels the

pinch.Thisisindeedwherethekanbansystemisunrivaled.

Processesproducinginajust-in-timesystemdonotneedextrainventory.So,ifthepriorprocessgeneratesdefectiveparts,thenextprocessmuststoptheline.Furthermore,everyoneseeswhenthishappensandthedefectivepartisreturnedto theearlierprocess. It isanembarrassingsituationmeant tohelpprevent therecurrenceofsuchdefects.

Ifthemeaningof"defective"goesbeyonddefectivepartstoincludedefectivework, then themeaningof"100percentdefect-freeproducts"becomesclearer.In other words, insufficient standardization and rationalization' creates waste(miida), inconsistency(mura),andunreasonableness(muri)inworkproceduresandworkhoursthateventuallyleadtotheproductionofdefectiveproducts.

Unless such defective work is reduced, it is difficult to assure an adequatesupplyforthelaterprocesstowithdrawortoachievetheobjectiveofproducingas cheaply as possible. Efforts to thoroughly stabilize and rationalize theprocessesarethekeytosuccessfulimplementationofautomation.Onlywiththisfoundationcanproductionlevelingbeeffective.

It takesagreateffort topractice thesix rulesofkanbandiscussedabove. Inreality, practicing these rules means nothing less than adopting the Toyotaproductionsystemasthemanagementsystemofthewholecompany.

Introducingkanbanwithout actuallypracticing these ruleswill bringneitherthe control expected of kanban nor the cost reduction. Thus, a half-heartedintroductionof kanbanbrings a hundredharms andnot a single gain.Anyonewhorecognizestheeffectivenessofkanbanasaproductionmanagementtoolforreducing cost must be determined to observe the rules and overcome allobstacles.

It is said that improvement is eternal and infinite. It should be the duty ofthose working with kanban to keep improving it with creativity andresourcefulnesswithoutallowingittobecomefixedatanystage.

►CarryingCartsasKanban

I have described the kanban as the piece of paper contained in a rectangular

vinylenvelope.An important roleofkanban is toprovide the information thatconnectstheearlierandlaterprocessesateverylevel.

A kanban always accompanies the goods and thus is the essentialcommunications tool for just-in-time production. In the following case, thekanbanfunctionsevenmoreeffectivelywhencombinedwithcarryingcarts.

InToyota'smainplant,acarryingcartoflimitedloadcapacityisusedtopickuptheassembledenginesandtransmissionsinthefinalassemblyline.Akanbanisattachedtotheengine,forexample,carriedonthiscarryingcart.

Butthecarryingcartitselfsimultaneouslyperformstheroleofakanban.Thus,whenthestandardnumberofenginesatthesideofthefinalassemblyline(threetofiveunits)isreached,theworkerinthesectionthatattachestheenginetothevehicle takes thevacantcarryingcart to theengineassemblypoint (theearlierprocess), picks up a cart loaded with the necessary engines, and leaves thevacantcarryingcart.

Inprinciple, akanban shouldbe attached. In this case, however, even if thekanbanitself isnotattachedtothecarryingcart, theearlierandlaterprocessescan talk to eachother, decideon thenumberof carrying carts tobeused, andagreeonthepickuprulessothatthesameeffectivenesscanbeachievedbyusingsimplenumberplates.

Forexample,whenthereisnovacantcartintheunitassemblyline,thereisnoplace to put completedunits.Overproduction is automatically checked even ifsomeonewantstomakemore.Thefinalassemblylinealsocannotholdanyextrainventoryotherthanthatonthecarryingcarts.

As the basic idea of kanban spreads throughout manufacturing, many toolslikethecarryingcartkanbancanbedevised.Nonetheless,weshouldnotforgettoalwaysusetheprinciplesofkanban.

Let me raise another example. In an automobile production plant, chainconveyersareusedasawaytorationalize,orimprove,transportation.Partscanbesuspendedfromtheconveyorwhilebeingpaintedorcarriedtotheassemblyline on it. Of course, it goes without saying that no part can be hung on theconveyorwithoutakanbanonthehanger.

When many types of parts are carried by this chain conveyer, indicatorsdesignating theparts neededare attached to thehangers at regular intervals toeliminateanymistakeinthetypeofpart,quantity,ortimeitisrequired.Thus,byinstalling ameans of conveying only the parts indicated, smooth delivery andwithdrawalofneededpartscanbeachieved.Production leveling ismaintainedbycirculatingthepart-indicatorswiththeconveyer.

►TheElasticNatureofKanban

I would like to give another example that demonstrates the true-meaning-ofkanban.

Thepropellershaftisanimportantautopartthatcausesproblemssporadicallyinassembly.Topreventunevenrotation,workersattachsmallpiecesofironasbalanceweightsduringthefinishingstage.

There are five types of balance weights. A piece suitable for a particulardegree of imbalance in the propeller shaft is selected from the five types andattached.Ifthereisnoimbalance,nobalanceweightisneeded.

In some cases, many pieces have to be attached. The number of differentbalanceweights used is irregular.Unlike ordinary parts, the amount needed isnot knownwhen theproductionplan iswritten.Thus,with theseparts, unlessproduction is well managed, an urgent need may arise, while in other cases,unnecessaryinventorypilesup.

Wemightsaythisisnotaseriousproblembecauseitisonlyasmallpieceofiron.Inreality,however,itisabigproblembecauseextraindirectworkersmaybekeptidle.ThisisyetanotherchallengetoToyota'skanbansystem.

Kanbanmustwork effectively tomaintain just-in-time in the plant.And forkanban to be effective, stabilization and production leveling are indispensableconditions. Some people think, however, that kanban can be used only tomanagepartsprocessedindailystablequantities-butthisisamistake.Othersthinkkanbancannotbeusedwithoutasteadywithdrawalofparts.This isalsowrongthinking.

Kanban was introduced to manage the balance weight problem, one of the

most difficult processes in automobile production. Since the amount was notstable, the first step toward effectivelymanaging the production, transfer, anduseofthebalanceweightwastoknowatalltimeshowmanyofthefiveweightswereheldineachprocess.Withtheseamountsinmind,wehadtofindawaytotriggerproductionor transfer so that anurgentneedor excess inventorycouldnotarise.

What was the result? By attaching a kanban to the actual balance weights,types and quantities available could be identified accurately.With the kanbancirculatingbetweentheprocesses,productionandtransferofthepartscouldbeinitiated in the necessary sequence at all times.As a result, inventories of thefiveweightswerekeptconstantand,eventually,reduceddrastically.

Thekanbansystemisnot inflexibleorstiff.AsToyota'sexperiencewith thebalanceweightsdemonstrates,kanbanisaneffectivetoolevenformanagementofspecialpartswheretheamountusedisunstableandwherekanbanmayseeminapplicableatfirst.

3

FurtherDevelopmentAnAutonomicNervousSystemintheBusinessOrganization

A BUSINESS ORGANIZATION is like the human body. The human bodycontainsautonomicnervesthatworkwithoutregardtohumanwishesandmotornervesthatreacttohumancommandtocontrolmuscles.Thehumanbodyhasanamazingstructureandoperation;thefinebalanceandprecisionwithwhichbodypartsareaccommodatedintheoveralldesignareevenmoremarvelous.

In the human body, the autonomic nerve causes us to salivatewhenwe seetasty food. It accelerates our heart rate during exercise so that circulation isenhanced. It performs other similar functions that respond automatically tochangesinthebody.Thesefunctionsareperformedunconsciouslywithoutanydirectivefromthebrain.

At Toyota, we began to think about how to install an autonomic nervoussystem in our own rapidly growing business organization. In our productionplant,anautonomicnervemeansmakingjudgmentsautonomouslyatthelowestpossiblelevel;forexample,whentostopproduction,whatsequencetofollowinmakingparts,orwhenovertimeisnecessarytoproducetherequiredamount.

Thesediscussionscanbemadebyfactoryworkersthemselves,withouthavingtoconsulttheproductioncontrolorengineeringdepartmentsthatcorrespondtothebraininthehumanbody.Theplantshouldbeaplacewheresuchjudgmentscanbemadebyworkersautonomously.

InToyota'scase,Ibelievethisautonomicnervoussystemgrewastheideaofjust-in-time penetrated broadly and deeply into the production field, and asadherencetotherulesincreasedthroughtheuseofkanban.AsIthoughtaboutthe business organization and the autonomic nerves in the human body, theconceptsbegantointerconnect,overlap,andstirmyimagination.

Inactualbusinesspractice,theproductioncontroldepartment,asthecenterofoperation, sends out various directives. These plans must then be alteredcontinuously.Becausetheseplansarewhatreallyaffectabusiness'spresentand

future,wecouldsaytheycorrespondtothebackboneinthehumanbody.

Planschangeveryeasily.Worldlyafflirsdonotalwaysgoaccording toplanand orders have to change rapidly in response to changes in circumstances. Ifone sticks to the idea that, once set, a plan should not be changed, a businesscannotexistforlong.

It is said that the sturdier the human spine, the more easily it bends. Thiselasticityisimportant.Ifsomethinggoeswrongandthebackboneisplacedinacast,thisvitalareagetsstiffandstopsfunctioning.Stickingtoaplanonceitissetupislikeputtingthehumanbodyinacast.Itisnothealthy.

Somepeople think that acrobatsmusthave softbones.But this isnot true -acrobatsarenotmollusks.Theirstrong,flexiblebackbonesenablethemtomakesurprisingmovements.

The spine of an older person, likemyself; does not bend easily. And, oncebent,itdoesnotunbendquickly.Thisisdefinitelyaphenomenonofaging.Weobservethesamephenomenoninabusiness.

I think a business should have reflexes that can respond instantly andsmoothly to small changes in the planwithout having to go to the brain. It issimilar to the fluttering reflex action of the eyes when dust is around or thereflexactionofahandpullingawayquicklywhenittouchessomethinghot.

Thelargerabusiness,thebetterreflexesitneeds.Ifasmallchangeinaplanmust be accompanied by a brain command tomake itwork (for example, theproduction control department issuing order slips and plan change sheets), thebusiness will be unable to avoid burns or injuries and will lose greatopportunities.

Buildingafine-tuningmechanismintothebusinesssothatchangewillnotbefelt as change is like implanting a reflex nerve inside the body. Earlier I saidvisualcontrolispossiblethroughjust-in-timeandautonomation.IfirmlybelievethatanindustrialreflexnervecanbeinstalledbyusingthesetwopillarsoftheToyotaproductionsystem.

►ProvideNecessaryInformationWhenNeeded

I have emphasized that an "agricultural" mind at work in the industrial agecausesproblems.Butshouldwethengotoa"computer"mindinonejump?Theanswerisno.Thereshouldbean"industrial"mindbetweentheagriculturalandthecomputerminds.

The computer is indeed a great invention.With computers available, it is awastetoperformcalculationsbyhand.Conventionalwisdomdictatesthatsuchworkbedoneby computers. In reality, however, the situation seemsdifferent.Whileweintendhumanstocontrolthem,computershavebecomesospeedythatnowitlooksasifhumansarecontrolledbythemachine.

Is it really economical to provide more information than we need - morequicklythanweneedit?This is likebuyinga large,highperformancemachinethatproducestoomuch.Theextraitemshavetobestoredinawarehouse,whichraisesthecost.

Much of the excess information generated by computers is not needed forproductionatall.Receivinginformationtooquicklyresults inearlydeliveryofrawmaterials,causingwaste.Toomuchinformationthrowstheproductionfieldintoconfusion.

Theindustrialmindextractsknowledgefrommanufacturingpeople,givestheknowledge to the machines working as extensions of the workers' hands andfeet, and develops the production plan for the entire plant including outsidecooperatingfirms.

America's mass-production system has used computers extensively andeffectively.AtToyota,wedonot reject thecomputer,because it isessential inplanning production leveling procedures and calculating the number of partsneeds daily.We use the computer freely, as a tool, and try not to be pushedaroundbyit.Butwerejectthedehumanizationcausedbycomputersandthewaytheycanleadtohighercosts.

Toyota's just-in-time production is a way to deliver exactly what theproduction line needs when it is needed. This method does not require extrainventory. Similarly, wewant information only when we need it. Informationsenttoproductionshouldbetimedexactly.

Acomputer performs instantly calculations that previously took an hour. Itstempo is incompatible with that of people. We can run into completelyunexpected situations unless we realize this. Processing customer orders andinformation on market wants and needs by computer can be very effective.However, information needed for production purposes, although arrived atgradually,isnotneeded10or20daysinadvance.

An industrial mindmust be very realistic - and realism is what the Toyotaproductionsystemisbasedupon.

►TheToyota-StyleInformationSystem

Toyota naturally makes production schedules - like other companies. Justbecauseweproducejust-in-timeinresponsetomarketneeds, that is, incomingorders from the Toyota Automobile Sales Company, does not mean we canoperatewithoutplanning.Tooperatesmoothly,Toyota'sproductionscheduleandinformationsystemmustbetightlymeshed.

First, theToyotaMotorCompanyhasanannualplan.Thismeans the roughnumber of cars - for instance, 2million - to be produced and sold during thecurrentyear.

Next, there is the monthly production schedule. For example, the type andquantitiesofcarstobemadeinMarchareannouncedinternallyearlyon,andinFebruary, a more detailed schedule is "set." Both schedules are sent to theoutsidecooperatingfirmsastheyaredeveloped.Basedontheseplans,thedailyproductionscheduleisestablishedindetailandincludesproductionleveling.

IntheToyotaproductionsystem,themethodofsettingupthisdailyscheduleisimportant.Duringthelasthalfofthepreviousmonth,eachproductionlineisinformedofthedailyproductionquantityforeachproducttype.AtToyota,thisiscalledthedailylevel.Ontheotherhand,thedailysequencescheduleissentonly to one place - the final assembly line. This is a special characteristic ofToyota'sinformationsystem.Inothercompanies,schedulinginformationissenttoeveryproductionprocess.

This is how the Toyota information system works in production: when theproduction line workers use parts at the side of the line for assembly, they

remove thekanban.Theprecedingprocessmakesasmanypartsaswereused,eliminating the need for a special production schedule. In other words, thekanbanactsasaproductionorderfortheearlierprocesses.

Figure2.AutomobileAssemblyLine

Forexample,Figure#2depictsthefinalbodyassemblylineinanautomobileplant.Eachsubassemblyprocesscombineswith themain line in themiddle toform the production line. The numbers in the illustration are the car passnumbers.Thus,Car#1isabouttocomeoffthelineandCar#20hasjustenteredProcess#1.

Theproductionorder,orsequenceschedule, is issuedtoProcess#1foreachcar (in this example, specifications for Car #20 are issued). The worker atProcess#1attachesasheetofpaper(productionordersheet)tothiscarwithallthe information needed for its production (that is, they information indicatingwhatkindofcar it is).Theworkers inprocesses followingProcess#2can tellwhichpartstouseforassemblybylookingatthecar.

Workersinthesub-processescanalsotellwhattodoassoonastheycansee

the car. If the car is not visible because it is blockedby equipment or pillars,informationispassedbykanbaninthefollowingway:

SupposebumpersarebeingassembledonthemainlineinProcessA.Let'scalltheprocesswherebumpersarepreparedSubprocess3.ProcessAneedstoknowwhattypeofbumpergoesonCar6.Therefore,theprocessonthemainassemblylineassemblingCar6givestheinformationtoProcessAonakanban.Nootherinformationisneeded.

Computers could relay such information to each processwhen it is needed.Settingup thecomputers,however, requiresequipmentandwiring thatarenotonly expensive but often unreliable. With the computers of today, Car #20'sinformationisissuedtoProcessAandtothemainlineatthesametime.But,atthatmoment,ProcessAneedsinformationonlyonCar#6-notonCar#20.

Toomuchinformationinducesustoproduceaheadandcanalsocauseamix-upinsequence.Itemsmightnotbeproducedwhenneeded,or toomanymightbemade,somewithdefects.Eventually,itbecomesimpossibletomakeasimplechangeintheproductionschedule.

Inbusiness, excess informationmustbe suppressed.Toyota suppresses it bylettingtheproductsbeingproducedcarrytheinformation.

►FineAdjustment

Automaticadjustmentsareanimportanteffectinproductionifweorganizetheinformationsystemasjustdescribed.

Withmarketpredictionsandtheautomobileingeneral,quantitiesandproducttypes shift constantly with or without a big economic crisis. To cope with aconstantly fluctuating market, the production line must be able to respond toschedule changes. In reality, however, the information system and productionconstraintsmakechangedifficult.

Animportantcharacteristicofkanbanisthatwithincertainlimitsitmakesfineadjustments automatically.A linedoesnot havedetailed schedulesbeforehandandsodoesnotknowwhattypeofcartoassembleuntilthekanbanisremovedandread.Forexample,itanticipatesfourCarA'sandsixCarB'sforatotalof10

cars.Butintheend,theratiomightturnouttobethereverse-sixCarA'sandfourCarB's.

Reversedratios,however,donotcausesomeonetorunaroundannouncingthechange. It happens simply because the production process follows theinformationcarriedbythekanban.Kanban'svalueisthatitallowsthisdegreeofchangetobehandledautomatically.Ifweignoremarketfluctuationsandfailtomakeadjustmentsaccordingly,soonerorlaterwewillhavetomakeabigchangeinscheduling.

Forexample,bystickingtoaproductionscheduleforthreemonthsdespitea5to 10 percent sales slump,wemight be forced to cut production by 30 to 40percent in one jump four or five months later under the guise of inventoryadjustment.Thiswouldcauseproblemsnotonlywithinthecompanybutinthecooperatingfirmsaswell.Thelargerthebusiness,thegreaterthesocialimpact-andthiscouldbeaseriousproblem.

Sticking to a schedule once it is established, regardless of circumstances, ishowthingsaredoneunderacontrolled(orplanned)economy.Idon'tbelievethefine adjustments in production made possible by using kanban will work incontrolledeconomieswhereinitialproductionplansnevervary.

►CopingwithChanges

The term "fine adjustment" has a hiddenmeaning that should be understood,especially by topmanagement. Everyone knows that things do not always goaccordingtoplan.Buttherearepeopleintheworldwhorecklesslytrytoforceascheduleeventhoughtheyknowitmaybeimpossible.Theywillsay"It'sgoodtofollowtheschedule"or"It'sashametochangetheplan,"andwilldoanythingtomake it work. But as long as we cannot accurately predict the future, ouractionsshouldchangetosuitchangingsituations.Inindustry, it is importanttoenableproductionpeopletocopewithchangeandthinkflexibly.

Imyselfhave struggled for a long timewith aproduction systemnot easilyunderstood by others. Looking back at the route I have persistently taken, Ibelieve Icansafely recommend:"Correctamistake immediately - to rushandnottaketimetocorrectaproblemcausesworklosslater."Ialsosay,"Wait for

therightopportunity."Theseideasdevelopedfromkanban,thetoolthatkeptusfromfailureandmisjudgment.

Ibelievetheroleoffineadjustmentsisnotonlytoindicatewhetheraschedulechangeisa"go"ora"temporarystop,"butalsotoenableustofindoutwhyastop occurred and how tomake the fine adjustments necessary tomake it goagain.TheToyota production system is still not perfect.More development isneededonfineadjustments.

Inaturallypreferafreeeconomyoveracontrolledone.Today,however, thevalue of private enterprise is frequently questioned and it is imperative thateveryonebequalifiedandflexibleenoughtomakefineadjustmentswhentheyareneeded.

►WhatIsTrueEconomy?

"Economy" is a word used daily but rarely understood, even in business.Particularly in business, the pursuit of true economy is tied directly to itssurvival.Therefore,wemustconsiderthispointseriously.

IntheToyotaproductionsystem,wethinkofeconomyintermsofmanpowerreduction and cost reduction. The relationship between these two elements isclearerifweconsideramanpowerreductionpolicyasameansofrealizingcostreduction,themostcriticalconditionforabusiness'ssurvivalandgrowth.

Manpower reductionatToyota isacompany-wideactivitywhosepurpose iscost reduction. Therefore, all considerations and improvement ideas, whenboileddown,mustbetiedtocostreduction.Sayingthisinreverse,thecriterionofalldecisionsiswhethercostreductioncanbeachieved.

Twootherissuesincostreductionarejudgingwhichismoreadvantageous,Aor B, and selecting which is most economical and advantageous among theseveralalternativesofA,B,C,andsoon.

Firstlet'sconsiderjudging.Frequently,problemsarisewhenjudgingwhichoftwothingsisbetter.Forexample,shouldacertainproductbemadeinternallyorordered from outside? In making a certain product, should we purchasemachines exclusively for that purpose or use a generalpurpose machine we

alreadyhave?

Weshouldnotbebiased inmakingsuch judgments.Takeacool lookat thesituationinyourjurisdiction.Don'tbasejudg-mentsonasinglecostanalysisandconclude that it would be cheaper to order it from outside than to make itinternally.

Inselecting,wecanconsidermanymethodstoachieveamanpowerreduction.Forexample,wecanbuyautomatedmachines,orchangetheworkcombination,orevenconsiderbuyingrobots.Therearecountlesswaystoachieveanobjectivewhen pursuing such improvement ideas. Therefore, we should list everyconceivable improvement idea, examine each in depth, and, finally, select thebest.Ifanimprovementispushedforwardbeforethoroughstudy,wecaneasilyendupwithanimprovementthat,whilemakingasmallcostreduction,coststoomuchtoimplement.

For example, let's suppose there is a suggestion to install a $500 electricalcontrol device to replace one worker. If this $500 device could reduce theworkforce by one worker, it would be a big gain for Toyota. If closer studyreveals,however,thatoneworkercouldbeeliminatedatnocostbychangingthesequenceofwork,thenspending$500wouldbeconsideredawaste.

InToyota'searlydayswhenbuyingautomaticmachinesseemedsoeasy,suchexampleswerenumerous.Thisisacommonproblemforbigaswellasmedium-andsmall-sizebusinesses.

Toyota's main plant - its oldest facility - provides an example of a smoothproductionflowaccomplishedbyrearrangingtheconventionalmachinesafterathoroughstudyoftheworksequence.Themanagerofacertainsmallbusinessvisitedourmainplantwiththepreconceptionthatnothingwouldberelevanttohis firm because Toyota was so much larger. Looking around the productionplant,however,herealizedthattheoldmachineshehaddiscardedlongagowereworkingwellatToyota.Hewasamazedand thoughtwemusthaveremodeledthem.

It is crucial for the production plant to design a layout in which workeractivities harmonize with rather than impede the production flow. We canachieve thisbychanging thework sequence invariousways.But ifwe rashly

purchase the most advanced highperformance machine, the result will beoverproductionandwaste.

►Re-ExaminingtheWrongsofWaste

TheToyota production system is amethod to thoroughly eliminatewaste andenhanceproductivity.Inproduction,"waste"referstoallelementsofproductionthat only increase cost without adding value - for example, excess people,inventory,andequipment.

Toomanyworkers,equipment,andproductonly increase thecostandcausesecondary waste. For example, with too many workers, unnecessary work isinventedwhich,inturn,increasespowerandmaterialsusage.Thisissecondarywaste.

Thegreatestwasteofallisexcessinventory.Ifthereistoomuchinventoryfortheplanttostore,wemustbuildawarehouse,hireworkerstocarrythegoodstothiswarehouse,andprobablybuyacarryingcartforeachworker.

In thewarehouse,peoplewouldbeneededfor rustpreventionand inventorymanagement. Even then, some stored goods still rust and suffer damage.Because of this, additionalworkerswill be needed to repair the goods beforeremoval from thewarehouse foruse.Oncestored in thewarehouse, the goodsmust be inventoried regularly. This requires additional workers. When thesituation reaches a certain level, some people consider buying computers forinventorycontrol.

If inventoryquantitiesarenotcompletelycontrolled, shortagescanarise.Sodespite planned daily production, some people will think shortages are areflectionontheproductioncapacity.Aplanforincreasingproductioncapacityis consequently put into the followingyear's equipment investment plan.Withthepurchaseofthisequipment,inventoryincreasesevenmore.

Theviciouscycleofwastegeneratingwastehideseverywhereinproduction.To avoid this, production managers and supervisors must understanding fullywhatwasteisanditscause.

Theaboveexampleisaworst-casescenario.AlthoughIdon'tthinkthiscould

happen in Toyota's production plant, similar phenomena might easily occur,althoughtheextentwoulddiffer.

Allof theprimaryandsecondarywastesdescribedaboveeventuallybecomepart of the direct and indirect labor cost, depreciation cost, and generalmanagementexpenses.Theywouldcontributetocostincreases.

Considering these facts, we can never ignore the costraising elements. Thewastecausedbyasinglemistakewilleatuptheprofitthatordinarilyamountstoonlyafewpercentofsalesandtherebyendangerthebusinessitself.BehindthenotionthattheToyotaproductionsystemaimsatreducingcostsliestheabove-mentionedunderstandingofthecostfacts.

Eliminating waste is specifically aimed at reducing cost by reducingmanpower and inventory, clarifying the extra availability of facilities andequipment,andgraduallydiminishingsecondarywaste.Regardlessofhowmuchis said, adopting the Toyota production systemwill bemeaninglesswithout acomplete understanding of the elimination of waste. For this reason, I haveexplaineditagain.

►GenerateExcessCapacity

I have mentioned that there are many ways to achieve a goal. Let's considerToyota'sthinkingaboutwhatiseconomicallyadvantageousfromthestandpointofproductioncapacity.

Opinionsdifferon theeconomicadvantagesofmaintainingextraproductioncapacity. In brief, excess capacity utilizes workers and machines that areotherwiseidle,incurringnonewexpense.Inotherwords,theycostnothing.

Let's consider excess capacity in internal versus external production.Often,costcomparisonsaremadebetweenproducingaproductinternallyororderingitfromoutside. If there is excess capacity for internal production, the only costactually incurred is the variable expense that increases in proportion to theamount of production; for example, the material and oil cost. Consequently,without having to look at the cost comparison, internal production would beadvantageous.

Now,considertheproblemofwaiting.Ifaworkerhastowaituntilapalletisfull before transporting it, havinghimdo linework or preparationwould costnothing.Thispointshouldrequirenostudy-itwouldbecrazytospendvaluabletimecalculatingtheworkpower.

Next is the problemof reducing lot sizes.When a generalpurposemachine,suchasadiepress,hasexcesscapacity,itisanadvantagetoreducelotsizeasmuchaspossible,asidefromtheseparateproblemofshorteningsetup time. Ifthemachinestillhasexcesscapacity,itisbettertocontinuereducingsetuptimetoutilizeit.

Aswe've seen above,when there is excess capacity, loss or gain is evidentwithoutrequiringcoststudies.Themostimportantthingistoknowtheextentofexcesscapacityatalltimes.Ifwedon'tknowwhether there isexcesscapacity,weareboundtomakemistakesintheselectionprocessandincurexpenses.

AtToyota,wegoonestepfurtherandtrytoextractimprovementsfromexcesscapacity.Thisisbecause,withgreaterproductioncapacity,wedon'tneedtofearnewcosts.

►TheSignificanceofUnderstanding

Inthissection,Iwanttoemphasizetheimportanceofthoroughlyunderstandingproductionandmanpowerreduction.

"Thewaywecurrentlyoperate,theproductionlinehasafairlyhighoperationrate and fairly low defect rate. Therefore, as awhole, things seem to beproceedingreasonably."

Ifwe allow ourselves to feel thisway,we cut off any hope for progress orimprovement.

"Understanding"ismyfavoriteword.Ibelieveithasaspecificmeaning-toapproachanobjectivepositivelyandcomprehend itsnature.Careful inspectionof any production area revealswaste and room for improvement.No one canunderstandmanufacturingbyjustwalkingthroughtheworkareaandlookingatit.Wehavetoseeeacharea'sroleandfunctionin theoverallpicture.Throughcloseobservation,wecandividethemovementofworkersintowasteandwork:

• Waste - The needless, repetitious movement that must be eliminatedimmediately.Forexample,waitingfororstackingsubassemblies.

•Work-Thetwotypesarenon-value-addedworkandvalue-addedwork.

Non-value-addedworkmaybe regardedaswaste in the conventional sense.For example,walking to pick up parts, opening the package of goods orderedfromoutside,operatingthepushbuttons,andsofortharethingsthathavetobedone under present working conditions. To eliminate them, these conditionsmustbepartiallychanged.

Value-added work means some kind of processing - changing the shape orcharacterofaproductorassembly.Processingaddsvalue.Inprocessing,inotherwords,therawmaterialsorpartsaremadeintoproductstogenerateaddedvalue.Thehigherthisratio,thegreatertheworkingefficiency.

Figure3.UnderstandingtheManufteturingFunction

Examples of processing are: assembling parts, forging raw materials, pressforging,welding,temperinggears,andpaintingbodies.

In addition, some production activities are outside the standard workprocedures, for example, small repairs of equipment or tools and reworkingdefectiveproducts.Consideringthese,wecometorealizethattheratioofvalue-addedworkislowerthanmostpeoplethink.

This iswhyI frequentlyemphasize thatworkermovement in theproductionarea must be working, or value-adding movement.Moving is not necessarilyworking.Workingmeansactuallyadvancingtheprocesstowardcompletingthejob.Workersmustunderstandthis.

Manpowerreductionmeansraisingtheratioofvalue-addedwork.Theidealistohave100percentvalue-addedwork.ThishasbeenmygreatestconcernwhiledevelopingtheToyotaproductionsystem.

►UtilizingtheFullWorkSystem

Toraise theratioofvalue-addedwork,wemustbeconcernedwithnon-value-addedmovements,thatis,thetotaleliminationofwaste.Inconnectionwiththisproblem,let'sconsidertheredistributionofwork.

Ifweseesomeonewaitingormovingneedlessly ina jobdonebya teamofworkers, it is not difficult to eliminate waste, redistribute the work load, andreducemanpower. In reality, however, suchwaste isusuallyhidden,making itdifficulttoeliminate.Let'slookatsomeexamples.

In any manufacturing situation, we frequently see people working ahead.Insteadofwaiting,theworkerworksonthenextjob,sothewaitingishidden.Ifthis situation is repeated, inventory begins to accumulate at the end of aproduction line or between lines. This inventory has to be moved or neatlystacked.Ifthesemovementsareregardedas"work,"soonwewillbeunabletotell waste from work. In the Toyota production system, this phenomenon iscalled thewaste of overproduction - ourworst enemy - because it helps hideotherwastes.

Themostimportantstepinreducingmanpoweristoeliminateoverproductionandestablishcontrolmeasures.To implement theToyotaproductionsystem inyour own business, there must be a total understanding of waste. Unless allsourcesofwastearedetectedandcrushed,successwillalwaysbejustadream.

Let's lookatonemeasure.Withanautomaticmachine,suppose thestandardinventoryofaprocessisfivepieces.Iftheinventorystandsatonlythreepieces,the earlier process automatically starts producing the item until there are fivepieces.Whentheinventoryreachesitsrequirednumber,theearlierprocessstopsproduction.

If the standard inventory of the later process decreases by one, the earlierprocess starts production and sends the item to the later process. When theinventory in the later process reaches the required number, processing in theearlierprocessstops.

Thus, in such a system, standard inventories are alwaysmaintained and themachinesofeachprocessworktogethertopreventoverproduction.Wecallthisthefullworksystem.

►DoNotMakeaFalseShow

Topreventoverproductionandmake itemsasneeded,onebyone,wehave toknowwhentheyareneeded.Thus,theappropriatetacttimebecomesimportant.

Tactisthelengthoftime,inminutesaridseconds,ittakestomakeonepieceoftheproduct.Itmustbecalculatedinreversefromthenumberofpiecestobeproduced.Tactisobtainedbydividingtheoperabletimeperdaybytherequirednumberperday(pieces).Operabletimeisthelengthoftimethatproductioncanbecarriedoutperday.

IntheToyotaproductionsystem,wemakeadistinctionbetweenoperatingandoperable rates. The operating rate means the present production record of amachine based on its fulltime operation capacity.On the other hand, operablerate refers to the availability of a machine in operable condition when it isneeded. The ideal operable rate is 100 percent. To achieve this, machinemaintenancemustbeconstantandsetuptimesmustbereduced.

Forexample,theoperablerateofanautomobileisthepercentageoftimethecarwillrunsmoothlywhenthedriverwantsitto-theidealbeing,ofcourse,100percent.

Ontheotherhand,theoperatingratereferstotheamountoftimeperdaythe

carisactuallydriven.Fewpeoplewoulddriveacaranylongerthanneeded.Ifone drove the car from morning till night regardless of need, the constantgasoline and oil consumption would increase the probability of mechanicalproblems and result in loss. Therefore, the ideal rate is not necessarily 100percent.

To establish tact time, we must understand how the required productionfigures for the day are decided. But first, I would like to touch upon therelationship between production quantity and number of workers. If thisrelationship is viewed in terms of efficiency, we should remember thatimprovingefficiencyandreducingcostarenotnecessarilythesame.

Forexample,onaproductionline,10workersproduced100piecesofproductperday.Improvementswereintroducedtoincreaseefficiency.Now10workerscouldproduce120piecesaday,a20-percentincreaseinefficiency.

Demandroseatthistime,soproductioncouldbeincreasedto120piecesadaywithout having to increase manpower. Obviously, this cost reduction wouldincreaseprofits.

Now, suppose that market demand - that is, the required number forproduction-dropsto100or90piecesperday.Whathappens?Ifwecontinuetomake120piecesadaybecauseofourimprovedefficiency,wewillhave20to30piecesleftoverdaily.Thiswillincreaseourmaterialandlaborexpensesandresultinaseriousinventoryproblem.

Inacaselikethis,howcanweimproveefficiencyandstillreducecosts?

The problem is solved by improving the process so that eight workers canproduce thedaily required100pieces. If 90pieces are needed, sevenworkersshouldbeused.Allofthisrequiresthattheprocessbeimproved.

At Toyota, increasing efficiency by increasing production while the actualdemand or required number remains unchanged or even drops is called an"apparentincrease[increaseincalculationIofefficiency."

►RequiredNumbersAreAll-Important

Required numbers are based on sales and this is determined by the market.Consequently, production is given a number based on demand or the actualorders-anumberthatcannotbeincreasedordecreasedarbitrarily.

Back in the days when you could sell everything you could make, peopletended to forget about required numbers. They were busy buyinghighperformancemachinesthatwouldallowthemtokeepupwiththegrowingdemand. Even while preparing for production increases, however, a businessmustalso keep track of daily demand changes and be preparedwith a systemthatcanshifttoreducedproductionwhennecessary.AtToyota,productionhasbeenbuiltaroundrequirednumbers.

As I described in the previous section, there are two ways to increaseefficiency: (1) increase the production quantity or (2) reduce the number ofworkers.

Ifaskedtochoosebetweenthesemethods,mostpeopleontheproductionlinewilltendtowardincreasingefficiencybyincreasingproduction.Thisisprobablybecause reducing workers is more difficult and involves reorganizing theworkforce. However, it is unrealistic not to reduce the number of workers ifdemandisdropping.

The goal, as I have often said, is cost reduction. Therefore, an increase inefficiencymustbeachievedbyamethodconsistentwiththisgoal.Toeliminateoverproduction reduce costs, it is absolutely necessary that the productionquantityequaltherequirednumber.

EveryToyotaplantproduces in accordancewith actualdemand.Cardealersaround the country send their orders daily to the main office of the ToyotaAutomobileSalesCompanyinNagoya.Theseordersareclassifiedbycomputerastocartype,model,fueldischargerate,style,transmission,color,andsoforth.The resulting data serve as the basis for production requirements at Toyota'sproductionplants.

Theproductionsystemitself isalsobasedon thisdata. Increasingefficiencythroughmanpowerreductioncanberealizedonlybyeliminatingwastefromthetact time which is calculated from the required number. These improvementsmayenableaworkertodomoreorautonomateaportionofhisorherwork.The

resulting extra manpower can then be utilized to carry out other productionwork.Theoperatingrateofthemachinesisalsodeterminedthisway.

►TheTortoiseandtheHare

Whenthinkingaboutoverproduction,Ioftentellthestoryofthetortoiseandthehare.

Inaplantwhererequirednumbersactuallydictateproduction,Iliketopointout that the slowerbut consistent tortoisecauses lesswaste and ismuchmoredesirable than the speedyharewho racesaheadand then stopsoccasionally todoze.TheToyotaproductionsystemcanberealizedonlywhenall theworkersbecometortoises.

Highperformancemachineswere indemand for a long time before the term"highperformance"wasthoroughlyexamined.Whenwesayhighperformance,we may mean high-precision finishing, low energy consumption, or eventrouble-freemachines.Each can be correct.However, a frequentmistake is toregardhigh-productivityandhigh-speedmachinesasbeingthesame.

Ifwecanraisethespeedwithoutloweringtheoperablerateorshorteningthelife of the equipment, if a higher speed will not change the manpowerrequirementsorproducemoreproductsthanwecansell-thenwecansayhighspeedmeanshighproductivity.

Speed ismeaninglesswithout continuity. Just remember the tortoise and thehare. Moreover, we cannot fail to notice that machines not designed forenduranceathighspeedswillhaveshortenedlifespansifwespeedthemup.

Increasing speed in the name of productivity improvement alone or forcinghigh speeds on amachine that cannot endure themmerely to avoid a drop inproduction may seem to benefit production. However, these actions actuallyhinder production. Production managers and supervisors as well as othermanagersmustunderstandthis.

►TakeGoodCareofOldEquipment

Doesthevalueofequipmentreallygodown?Inthecaseofaworker,yearsofexperienceadddepthandtheworker'svaluetothecompany.Amachine,lackinghumanqualities,isdiscardedaftergivinglongservice.Iwanttoadvocatethat,likeworkers,machines thatgive long service shouldbeusedwithgreat, greatcare.

Thelanguageofbusinesseconomicstalksof"depreciation,""residualvalue,"or "book value" - artificial terms used for accounting, tax purposes, andconvenience.Unfortunately,peopleseemtohaveforgottenthatsuchtermshavenorelevancetotheactualvalueofamachine.

Forexample,weoftenhear:"Thismachinehasbeendepreciatedandpaidoff,and,therefore,wecandiscarditanytimewithoutloss,"or"Thebookvalueofthismachineiszero.Whyspendmoneyonanoverhaulwhenwecanreplaceitwithanew,advancedmodel?"

Thiskindofthinkingisabigmistake.

Ifapieceofequipmentpurchasedinthe1920siskeptupandcanguarantee,atpresent,anoperable rateclose to100percentand if itcanbear theproductionburden placed on it, themachine's value has not declined a bit. On the otherhand,ifamachinepurchasedlastyearhasbeenpoorlymaintainedandproducesatonlyhalf itsoperablerate,weshouldregard itsvalueashavingdeclined50percent.

Amachine's value is not determined by its years of service or its age. It isdeterminedbytheearningpoweritstillretains.

When replacing old equipment, we can look at it economically in differentways.We can compare cost analyses or interest on investment. But can suchmethodsthatappearsologicalreallybeusedinaplant?Wemustnotlosesightofthefactthatthesemethodsarebasedonlyonpremise.

For example, some people think conventionalmaintenance is the onlyway.Then theydecide that absolute loss canonlybebasedon several premises. Inpractice,however,thesemethodscannotevenbeusedasstandards.Despitethis,facedwithapoorlymaintained,deterioratingmachine,theyapplythesemethodsand conclude it would be better to replace the machine. This is completely

irrational.

How, then, shouldwedecidewhetherornot to replaceanoldmachine?Myconclusion is that if adequatemaintenance has been done, replacementwith anewmachine is never cheaper, even ifmaintaining theolder one entails someexpense.Ifwedodecidetoreplaceit,weshouldrealizethatwehaveeitherbeenmisledbyourcalculationsandmadethewrongdecisionorthatourmaintenanceprogramhasbeeninadequate.

When we lose an economic argument, we then argue the validity ofreplacementbysaying"itistoodifficulttorestoretheneededprecision"or"wewanttooverhaulitbuthavenosubstitutemachine."

Thisreasoningisunsound.Itshowswewantnewmachinesbecausewedon'thave a better idea.When replacing aged equipment,we should always decidecasebycase.

Whether overhauled or renewed, if themachines are poorlymaintained anddrivenclosetodeath,thecostsincurredbyreplacementisenormous.Computedasmaintenancecost,forexample,itwouldmeannothingunlessanactualeffectwasachievedinproportiontothecostincrease.

►LookStraightattheReality

Businessmanagementmustbeveryrealistic.Avisionofthefutureisimportantbut itmust be down-to-earth. In this age,misreading reality and its ceaselesschangescanresultinaninstantdeclineinbusiness.Weareindeedsurroundedbyaharshenvironment.

Somepeoplesaythecharacterofbusinessmustchange.Theyinsistthatsinceoureconomicbasehaschangedfromhightolowgrowth,weshouldrepayloansandworkonlywithinthelimitsofworkingcapital.Weshouldhavethoughtofthis,however,inthehigh-growthperiod.

Duringhighgrowth,suchbusinesschangesmighthavebeeneasy.Butifonecompany increased production, others felt uneasy and so they also expanded.Machinesandmanpowerwereincreasedwithoutquestioningtheirefficiency.Asaresult,profitsdidnotincreaseatthesameratesalesdid.Thosesatisfiedwith

thisreflecteda"pre-management"mentalitynolongeracceptableinthebusinessworld'sdemandingenvironment.

Acompanypreparedtocarryouttruerationalizationwhileexperiencinghighgrowthcouldhavehelditsgrowthto5percentandnotincreasedequipmentandworkers.Othercompanies,meanwhile,wouldhaveexpanded their salesby10percent.Doingso,profitsmighthaveincreasedenoughtorepayallthedebtsandexpandthefacilities.Anactionlike this, frommanagement'sviewpoint,wouldhaveputbusinessinadesirableposition.

Inthecurrentlowgrowthperiod,marketcompetitionhasbecomeincreasinglyfierce - a battle of life and death. In such an environment, strengthening thecharacterofbusinessisanabsoluterequirementforsurvival.

In theeffort tomake theToyotaproductionsystemtrulyeffective, there isalimittowhattheToyotaMotorCompany,achassismaker,candoalone.Onlybyworking as partners with the cooperating firms is it possible to perfect thissystem. The same is true in improving the character of management. Toyotaalonecannotachievethegoalifthecooperatingfirmsdonotworktogether.So,we have been asking our cooperating firms to implement Toyota productionsystempoliciesintheirownbusinesses.

About10yearsago,Ivisitedthetemperingshopofanothercompany.Atthetime,ourmonthlyproductionwasapproximately70,000cars.

Themanagersaid,"Wehaveenoughmanpowerandequipment tocopewithyourorderevenifyoumake100,000cars."

SoIaskedhim,"Then,isyourplantclosedfor10daysoutofthemonth?"

Heanswered,"Wewouldneverdoasillythinglikethat."

Then Iwent to an earlier process - themachine processing section.There Isawwomenworkersworkinglikedogsatmaximumspeedbecausetheydidnotwantthefurnacetobeidle.

On calculation, the unit price was fairly low. The furnace in the temperingplantwasfilledwith itemsto treatso that thefuelcostperunitwouldbeless.Becausetheyhadthecapacitytoproduce100,000carparts,theyaccumulatedan

extra30,000partseachmonth.Toyotawasgoingtoorderonlywhatweneeded,however,so,thetemperingfirmprobablyhadtobuildawarehouse.

Theoil crisismadepeoplebegin tounderstand thewasteofoverproduction.Andonly thendid theybegin to recognize theToyotaproductionsystem's realvalue. I wish the readers could see for themselves how warehouses aredisappearingonebyonefromthesitesofourcooperatingfirms.

►0.1WorkerIsStillOneWorker

In business, we are always concerned with how to produce more with fewerworkers.

Inourcompany,weuse the term"worker saving" insteadof"laborsaving."The term "labor saving" is somehow easily misused in a manufacturingcompany.Labor-savingequipmentsuchastheliftandbulldozer,usedmainlyinconstructionwork,aredirectlyconnectedtoreducingmanpower.

In automobile plants, however, a more relevant problem is partial andlocalized automation. For example, in work involving several steps, anautomatic device is installed only at the last stage. At other points in theoperation,workcontinuestobedonemanually.Ifindthiskindoflaborsavingallwrong.Ifautomationisfunctioningwell,thatisfine.Butifitissimplyusedtoallowsomeonetotakeiteasy,itistoocostly.

How can we increase production with fewer workers? If we consider thisquestion in terms of the number of worker days, it is a mistake. We shouldconsider it in terms of number of workers. The reason is that the number ofworkersisnotreducedevenwithareductionof0.9workerdays.

First, work and equipment improvement should be considered. Workimprovement alone should contribute half or one-third of total cost reduction.Next,autonomation,orequipmentimprovement,shouldbeconsidered.Irepeatthat we should be careful not to reverse work improvement and equipmentimprovement. If equipment improvement is done first, costs only go up - notdown.

Thecompanynewspaper reportedon a talk I gaveonworker saving. In the

story,theterm"laborsaving"wasprintedinerroras"usingfewerworkers."ButwhenIsawit,Ithought,"Thisistrue.""Usingfewerworkers"getsattheheartoftheproblemfarbetterthan"laborsaving."

Whenwe say "labor saving," it sounds bad because it implies eliminating aworker.Laborsavingmeans,forexample,ajobthattook10workersinthepastisnowdonebyeightworkers-eliminatingtwopeople.

"Usingfewerworkers"canmeanusingfiveoreventhreeworkersdependingontheproductionquantity- there isnofixednumber."Laborsaving"suggeststhatamanagerhiresa lot ofworkers to startwith, reducing thenumberwhentheyarenotneeded."Usingfewerworkers,"bycontrast,canalsomeanworkingwithfewerworkersfromthestart.

Inactualexperience,Toyotahadalabordisputein1950asaresultofreducingitsworkforce. Immediately after its settlement, theKoreanWar broke out andbrought special demands.Wemet thesedemandswith just enoughpeople andstillincreasedproduction.Thisexperiencewasvaluableand,sincethen,wehavebeenproducingthesamequantityasothercompaniesbutwith20to30percentfewerworkers.

Howwasthispossible?Inshort,itwastheeffort,creativity,andpowerofitspeoplethatenabledToyotatoputintopracticethemethodsthatultimatelyhavebecome the Toyota production system. And this is not just an expression ofconceit.

In the Toyota production system,we frequently say, "Do not make isolatedislands."Ifworkersaresparselypositionedhereandthereamongthemachines,itappearsasiftherearefewworkers.However,ifaworkerisalone,therecanbeno teamwork. Even if there is only enough work for one person, five or sixworkers should be grouped together to work as a team. By providing anenvironment sensitive to human needs, it becomes possible to realisticallyimplementasystemthatemploysfewerworkers.

►ManagementbyNinjutsu

To think thatmass-produced itemsarecheaperperunit isunderstandable -butwrong.

Acompany'sbalancesheetmayregardworkinprocessashavingsomeaddedvalue and treat it as inventory or property. But this is where the confusionbegins.Mostofthisinventoryisfrequentlynotneededandhasnoaddedvalue.

Increasing production is a prosperous business.Materials are purchased andworkers work overtime. Even though the inventory they are generating isunnecessary,workersnaturallydemandovertimepayaswellasabonus.

Webecameaccustomed toaworkingenvironment inwhichexpandingsalesand increasing capital, manpower, and machines were believed good.Management generally did not see the forest for the trees. And, naturally,businessmanagersweremainlyinterestedintheirmainmotivation-profit.

These days we can make calculations too quickly, and this can causeproblems.Thefollowingincidenthappenedattheendof1966whenwebeganproducingtheCorolla.

Corollaswerefairlypopularandsellingwell.Westartedwithaplantomake5,000cars. I instructed theheadof theenginesection tomake5,000unitsanduseunder100workers.After twoor threemonths,hereported,"Wecanmake5,000unitswith80workers."

Afterthat,theCorollakeptsellingwell.SoIaskedhim,"Howmanyworkerscanmake10,000units?"

Heinstantlyanswered,"160workers."

SoIyelledathim."IngradeschoolIwastaughtthattwotimeseightequalssixteen.Afteralltheseyears,doyouthinkIshouldlearnthatfromyou?DoyouthinkI'mafool?"

Beforelong,100workersweremakingover10,000units.Wemightsaymassproductionmadethispossible.But itwasdue largely to theToyotaproductionsystem in which waste, inconsistencies, and excesses were thoroughlyeliminated.

Ifrequentlysaymanagementshouldbedonenotbyarithmeticbutbyninjutsu,theartofinvisibility.Mymeaningfollows.

Other countries these days use the word "magic" in expressions like"managementmagic"or"managementmagician."InJapan,however,ninjutsuismore suitable formanagement.As children,wewatched ninjutsu tricks at themovies - like the hero suddenly disappearing. As a management technique,however,itissomethingveryrational.

To me, management by ninjutsu means acquiring management skills bytraining.Inthisage,Iampainfullyawareofthefact thatpeopletendtoforgetthe need for training. Of course, if skills to be learned are not creative orstimulating and if they do not require the best people, trainingmay not seemworthwhile.Butlet's takeahardlookattheworld.Nogoal,regardlessofhowsmall,canbeachievedwithoutadequatetraining.

IfintheUnitedStatesthereismanagementmagic,theninJapan,wecancallittheToyotaproductionsystem'smanagementbyninjutsu,areflectionofits

Japanesecharacterandculture.

►InanArtForm,ActionIsRequired

If you look up the word "engineer" in an English dictionary, you might find"technologist," while in Japanese, its meaning uses the character for "art."Analyzing this character, youwill find it is created by inserting the character"require" into the character "action. " So, art seems to be something requiringaction.

Inmathematics,useoftheabacusrequirespracticeeventhoughtheprincipleoftheabacusbeadscanbeunderstoodeasilybyanybody.Butfastandaccurateoperationrequiresconstantpractice.

Themartialartofshinai,thebamboosword,wasfirstcalledgekken,attackingwiththesword.Butitsoonbecamekenjutsu,theartofusingthesword.WhenactualfightingwiththeswordceasedinthebeginningoftheMeijiera,itbecamekendo,thewayofthesword.Recently,itisbeingcalledkengi,thetechniqueofusingthesword.

Intheerawhenthestrongeropponentgenerallywon,itwasgekken,fightingwithswords.Butastheartformdeveloped,evenaweakeropponentcouldwinandsoitbecamekenjutsu.Whenthepracticaluseoftheswordwasnolongerin

demand,itbecamekendo.Inmyopinion,swordsmanshipadvancedmostduringthekenjutsuerabecauseactionwasrequired.

Actionisalsorequiredingijutsu(technology)-realactioniswhatcounts.Thecharacter for "talk" is alsopronounced jutsu.Recently there seems tobemoretechnologytalkthanpractice.Thisshouldbeamatterofgreatconcerntous.

IfeelthatIamstillapracticingtechnologist.Imaynotbeagreatspeakerbutit does not botherme. Talking about technology and actually practicing it aretwodifferentthings.Computersbegandoingmathematicsatthesametimethatkenjutsuchangedfromkendotokengi.Anartformhasitsownvalue,however,andIamstillgreatlyattractedtoit.

►AdvocatingProfitMakingIndustrialEngineering

AfterWorldWar II, theUnitedStates influenced Japangreatly inmanyways.Americanculturalattitudesbecamefairlycommonnation-wideeveninpolitics.

Intheworldofindustry,Americawas,withoutdispute,theleader.CatchingupwithandsurpassingAmericawasnotajobtobedoneinaday.Tocatchup,theshortest route was to buy advanced American technology. So, aggressiveJapanesebusinessesimportedandadoptedAmerica'shigh-levelproductionandmanufacturing technology. In academia and business, a great number ofAmericanbusinessmanagementtechniqueswerealsostudiedanddiscussed.Forexample, Japanese businesses carefully studied industrial engineering (IE), acompany-widemanufacturing technologydirectly tied tomanagement thatwasdevelopedandappliedintheUnitedStates.

Defining industrial engineering seems to be fairly difficult. When firstintroduced, it was pointed out that the Toyota production systemwasmethodengineering(ME),notIE.Don'tbeconfusedoverthemeanings.

To me, IE is not a partial production technology but rather a totalmanufacturing technology reaching the whole business organization. In otherwords, IE is a system and the Toyota production systemmay be regarded asToyotastyleIE.

WhatisthedifferencebetweentraditionalIEandtheToyotasystem?Inbrief,

ToyotastyleIEism(5keruorprofitmakingIE,knownasMIE.UnlessIEresultsincostreductionsandprofitincreases,Ithinkitismeaningless.

There are various definitions of IE. A former head of the American SteelWorkers' Union defined its function as that of entering a plant to improvemethodsandproceduresandtoreducecosts.Andthisisexactlyso.

"IE is the use of techniques and systems to improve the method ofmanufacturing.Inscopeit:rangesfromworksimplificationtolarge-scalecapitalinvestmentplans."'

"IEhastwomeanings.Oneaimsatimprovingworkmethodsintheplantorinaparticularworkactivity.Theotheronemeansthespecializedstudyoftimeandaction. However, this is the work of a technician. Essentially, an industrialengineerstudiessystematicapproachestoimprovements."z

I would like to add a definition from the Society for Advancement ofManagement(SAM),anorganizationthatsucceededtheTaylorSociety:

Industrial engineering applies engineering knowledge and techniques forthestudy,improvement,planning,andiniplenienta-tionofthefollowing:

1.methodandsystem,

2.qualitativeandquantitativeplanningandvariousstandardsincludingthevariousproceduresintheorganizationofwork,

3.measuringactualresultsunderthestandardsandtakingsuitableactions.

Thisisalldonetoexercisebettermanagementwithspecialconsiderationforemployeewelfare,anditdoesnotrestrictbusinesstoloweringthecostofimprovedproductsandservices.'

IhavelistedvariousIEdefinitions,eachsayinggoodthings,becausetheyareuseful references.However, inprivatebusiness, implementing IEeffectively isnoteasy.

ThereasonIcallToyota's industrialengineeringprofitmakingIEismywishthattheToyotaproductionsystembornandraisedatToyotaMotorCompanybe

comparable or superior to the American IE's business management andmanufacturingsystem.

We are very happy that the Toyota production system has become, as Iintended, a company-wide manufacturing technology directly tied tomanagement.And,fortunately,itisextendingtotheoutsidecooperatingfirmsaswell.

►SurvivingtheSlow-GrowthEconomy

IhavesaidbeforethatIcalmlyacceptthewords"slowgrowth."

Over 5 percent macro-economic growth would be regarded as prosperityrather than recession, and we would consider 3 to 5 percent growth normal.Becausefuturecyclesmaybringzeroornegativegrowth,wemustbeprepared.

The Japanese automobile industry experiencednegativegrowth immediatelyaftertheoilcrisisand,atonetime,fellintoaslump.Afterthat,however,exportsimprovedand,comparedtothesluggishstateofotherindustries,theautomobileindustryaloneseemed toenjoygood fortune.Theactual situation,however, isnotnecessarilyoptimistic.

Domestic demand has matured following a cycle and, presently, a largedemandcannotbehopedfor.Exportexpansionwillalsoslowdownasamatterof course. In Europe and theUnited States, political and emotional resistanceagainstJapanesecarshasgraduallyrisen.With therisingyen, the internationalmarketcanalsobeexpected to reflectadecliningcompetitivenessofJapanesecars. Also, U. S. firms have entered into small-car manufacturing, negativelyaffectingJapaneseexports.

Theautomobileindustrymayhavebeenendowedwithtoomuchgoodfortune.Thereisalreadyahiddendanger.Ifdomesticdemandscontinuetheirslowgrowthandifexportssufferevenaslightslump,weshallfaceaserioussituation.

Textileandutilitiesindustriesareregardedaseconomicallydepressedanditissaid that theonly formula for recovery lies in somebasicbusiness shifts.Theautomobile industry ispresentlybooming,but there isnoguarantee that itwill

notalsofallonhardtimes.

In a severe recession or slow-growth economy, private enterprises mustperseverebywhatevermeanstheycan.TheToyotaproductionsystemhasbeenthoroughinremovingwaste,inconsistency,andexcessfromproduction.Itisbynomeansapassiveordefensivemanagementsystem.

TheToyotaproductionsystemrepresentsarevolutioninthinking.Becauseitrequires us to change ourway of thinking in fundamentalways, I hear strongsupport as well as strong criticism. I find that the cause of such criticism isinsufficientunderstandingofwhatthesystemis.

Of course,we have notmade a big enough effort to teach people about thenature of the Toyota production system. However, it would not be anexaggeration to say that it has already gone beyond Toyota, the company, tobecomeauniquelyJapaneseproductionsystem.

4

GenealogyoftheToyotaProductionSystemAGlobalWorldAroundUs

ITISSAIDToyodaKiichirooncetoldToyodaEiji,'currentpresidentofToyota,that in a comprehensive industry such as automobile manufacturing, the bestwaytoworkwouldbetohaveall thepartsforassemblyat thesideofthelinejustintimefortheiruse.

We have already called this idea of just-in-time the principle behind theToyota production system. The words "just-intime" pronounced by ToyodaKiichirowere a revelation to someToyotamanagement people, one ofwhombecamequiteattachedtotheidea.AndIhavebeenattachedeversince.

"Just-in-time"wasnewtousthenandwefoundtheconceptstimulating.Theideaofneededpartsarrivingateachprocessontheproductionlinewhenandinthequantityneededwaswonderful.Althoughitseemedtocontainanelementoffantasy, something made us think it would be difficult but not impossible toaccomplish.Inanycase,itgavemeanidea.

Inthespringof1932,1graduatedfromthemechanicaltechnologydepartmentof Nagoya Technical High School and joined Toyoda Spinning andWeaving.ThecompanywasfoundedbyToyodaSakichi,whomwemightcallthefatherofToyota.

Twoyearsearlier,theworldsawNewYork'sstockmarketcrash.Theensuingworldwide economic depression still deeply affected the Japanese economy.Businesswashad,unemploymentwasrising,thesocialatmospherewasviolentanditwastheyearPrimeMinisterInukaiwasassassinated.

MymotiveforjoiningToyodaSpinningandWeavingwastousemytechnicaleducation. Jobs were scarce at the time. But my father, an acquaintance ofToyodaKiichiro,helpedmeacquireaposition.

I never dreamed of encountering Toyoda Kiichiro and the world ofautomobiles. But in 1942, Toyoda Spinning and Weaving was dissolved. In1943,IwastransferredtotheToyotaMotorCompany,whereIenteredToyodaKiichiro'sbusyrealmofproducingautomobilesforthewareffort.

Mytextileexperiencewasvaluable.Whether incarorfabricproduction, therelationshipbetweenworkersandmachinesisbasicallythesame.Foraprivatebusiness that is part of a secondary manufacturing industry, cost reductionremainsman-agen)ent'sbiggestproblem-inboththeEastandWest.

Prior to thewar and even the automobile, Japan's textile industry had beenstruggling in the rough waters of world trade. To catch up with and surpassLancashireandYorkshire,England'smajortextileregions,andtostrengthenourinternational standing,wewerealready implementingcost reductionmeasures.Thus, Japan's textile industry already had a global view and was activelyrationalizingitsproductionmethods.

In comparison, the automobile industry in Japan had a short history.Beforeand during World War II, Toyoda Kiichiro headed two teams of automobileengineers and business managers in an attempt to mass-produce carsdomestically. But while truck production was reaching fairly high quantities,passengercarproductionwasstillfaraway.

By the late 1940s, Toyoda Kiichiro saw the possibility of his wish beingfulfilled.InOctober1949,therestrictiononsmallpassengercarproductionwaslifted and price controls abolished. The lifting of distribution control andtransitiontoindependentsalescameinApril1950.Unfortunately,ataboutthistime,ToyodaKiichiroresignedfromthepresidency,takingresponsibilityforthelabordispute.

Toyoda Spinning andWeaving and the ToyotaMotor Company,while bothsmallinscale,possessedaglobalatmosphere.WhenIJoinedToyodaSpinningandWeavingin1932,twoyearsafterToyodaSakichi'sdeath,thelegacyofthegreatinventorremained.Unconsciously,weseemedtoknowwhat"worldclass"was. Moving to the world of automobiles, I met Toyoda Kiichiro, whoseforesight was matched by no one's. Thus, from the beginning, our corporateworldwasgloballyoriented.

►TwoExtraordinaryCharacters

The twopillarsof theToyotaproductionsystemareautonomationand just-in-time.

AutonomationwastakenfromtheideasandpracticeofToyodaSakichi.TheToyota-typeautoactivatedloom,whichheinvented,wasfastaswellasequippedwith a device to automatically stop themachine should any one of themanywarpthreadsbreakortheweftthreadrunout.

Amajor condition forproductionunder theToyotaproduction system is thetotal elimination ofwaste, inconsistency, and excess. Therefore, it is essentialthatequipmentbestoppedimmediatelyifthereisapossibilityofdefects.

From Toyoda Sakichi, we learned that applying human intelligence tomachineswastheonlywaytomakemachinesworkforpeople.Thefollowingisan excerpt from an article by Haraguchi Akira entitled "Conversation withToyodaSakichi":

Thetextile industryat that timewasnotas largeas today's.Mostly,olderwomen wove at home by hand. In my village, every family farmed andeachhousehadahand-weavingmachine.Influencedbymyenvironment,Igraduallybegan thinking about this hand-weavingmachine.Sometimes, Iwouldspendalldaywatchingthegrandmothernextdoorweaving.Icameto understand the way the weaving machine worked. The woven cottonfabricwaswoundintoathickerandthickerroll.ThemoreIwatched, themoreinterestedIbecame.

ToyodaSakichiwas talkingabout the springof1888whenhewas20yearsold.Reading this, Iwas impressed by theway he observed all day, graduallyunderstanding theway the loomoperated andbecomingmore interested ashewatched.

With any problem, I always ask why five times. This Toyota procedure isactually adapted from Toyoda Sakichi's habit of watching.We can talk aboutwork improvement, but unless we know production thoroughly we canaccomplishnothing.Standontheproductionflooralldayandwatch-youwilleventuallydiscoverwhathastobedone.Icannotemphasizethistoomuch.

Opening our eyes and standing in the manufacturing plant, we reallyunderstand what waste is. We also discover ways to turn "moving" into"working,"activitiesthatalwaysconcernus.

"Just-in-time"camedirectlyfromToyodaKiichiro.ThissecondToyotapillardidnothavethesameobjectiveastheautoactivatedloomthatpromptedtheideaofautonomation.Itposeddifferentsortsofdifficulties.

Toyoda Sakichi went to America for the first time in 1910 when theautomobile industrywas just beginning.Thepopularityof carswas rising andmany companieswere attempting to produce them. Ford had been selling theModelTfortwoyearswhenToyodaSakichisawtheminthemarketplace.

Looking back, itmust have been tremendously stimulating, especially to aninventorlikeToyodaSakichi.DuringhisfourmonthsinAmerica,hemusthavegraspedwhatanautomobilewasandhowitcouldbecomethefeetofthepeople.OnhisreturntoJapan,heoftensaidwewerenowintheeraofautomobiles.

In agreement with Toyoda Sakichi's wishes, Toyoda Kiichiro went into thebusiness of cars. His understanding of the automobile industry andAmerica'srole was astute. He realized the great potential as well as the difficulty anautomobile manufacturer would encounter dealing with countless peripheralfirmsanddevelopingacompatiblebusinesssystem.

IwasstronglyaffectedbyToyodaKiichiro'swords:"justin-time."Afterwards,I wondered about how he came up with the idea. Of course, I can never bepositivebecauseIcouldn'taskhimdirectly.ButitisclearhethoughtagreatdealabouthowtosurpassAmerica'shighlydevelopedautomobileproductionsystem.

Just-in-timeisauniqueconcept.Consideringhowdifficultitistounderstandevennow,IcannothelppayingrespecttoToyodaKiichiro'srichimagination.

►LearningfromtheUnyieldingSpirit

BothToyodamenhadastrong,unyieldingspirit.ToyodaSakichi'swasexposed,whileToyodaKiichiroseemstohavekepthishidden.

StatementsmadebyToyodaSakichibetween1922and1924stronglyaddress

theideathatJapanesepeopleshouldchallengetheworldwiththeirintelligence:

Presently,whitepeoplequestionwhat contributions Japanesepeoplehavemadetomoderncivilization.TheChineseinventedthemagneticcompass.But what invention did the Japanese make? Japanese people are merelyimitators.Thisiswhattheysay.

Therefore,Japanesepeoplemustaddressthissituationseriously.Iamnotsaying to fight,butwemustproveour intelligenceandclearourselvesofthisshame....Ratherthanstirringuphostilitybycompetinginternationally,weshouldprogressenoughtoshowourpotential.

WehadTaka-Diastase'andDr.NoguchiHideyo.`Buttheseachievementsweremadeundertheguidanceofwhitepeople-withtheirhelpandtheuseoftheirfacilities.Isayweshouldachievegreatnessthroughthecapabilitiesofourownpeople,withoutassistancefromoutsiders.

In Toyoda Sakichi's statements we see a tremendous enthusiasm combinedwith insight.WhenToyodaKiichiro toldus tocatchupwithAmerica in threeyears, he did not show the same fighting spirit. However, his determinationclearlyrevealsanaggressivenature.ThesetwomenaregreatleadersinToyotahistory.

InNovember1935, at theToyotamodel car exhibitionheld in theShibaurasectionofTokyo,ToyodaKiichirorepeatedwhathispredecessorhadoncetoldhim, "I served our country with the loom. I want you to serve it with theautomobile."Thiswashisdyingwishandastorypeoplestilllovetotell.

OnMarch26,1952,ashort timebeforeToyota'sautomobileenterprisewentinto full-scale operation, Toyoda Kiichiro passed away. It was indeed a greatloss.Ibelievejustin-timewasToyodaKiichiro'sdyingwish.

►ToyotaismwithaScientificandRationalNature

"Toyotaism" was established by Toyoda Kiichiro. He placed the followingconditionsontheautomobilebusiness:

•Toprovidecarsforthegeneralpublic

•Toperfectthepassengercarindustry

•Tomakereasonablypricedcars

•Torecognizetheimportanceofsalesinmanufacturing

•Toestablishthebasicmaterialindustry

Toyoda Kiichiro wrote an article, published in September 1936, entitled"Toyota to the Present" that provides a good description of Toyotaism. In thefollowingexcerpt,hemakessomeprovocativepoints:

Atlast,Toyotacarsareoutonthemarket.Theyarenotheretodaybecauseof a simple engineering hobby. The cars were born from the intenseresearchofnumerouspeople,asynthesisofideasfromdifferentfields,andfromdedicatedeffortsandcountlessfailuresoveralongperiodoftime.

Would it be possible tomake cars for the general population of Japan?Three years ago, many people would have said no. The most seriousdoubterswerethoseexperiencedinautomobilemanufacturing.

We startedwork early on engine design and research.Most preparationwasfinishedin1933,andonSeptember1,thetenthanniversaryofthegreatearthquake,'weformallybecameanautomobileproductioncompany.

Peoplecalledtheventurereckless.Wewerewarnedhowdifficultitwastooperateanautomobilebusiness.However,wehadknownthisforseveralyears and hadworked hard to prepare ourselves.We firmly believed thatToyoda's strengthandexperience inautomatic loommanufacturingwouldmakeourendeavorpossible.

Problems differed from those of weaving machines, however, and werealizedthenewbusinesswouldbedifficulttocreate.So,forthreeyearswemanagedthebusinessundertheguiseofahobby.

But the unexpected lapse in automobile manufacturing forced us to take abusinessattitude-notahobbyist's.Thebusinessnowinvolvesanobligationtothe country.Whether we like it or not, we have to make it work as soon aspossible.

Sinceformallydecidingtogointocarmanufacturing,whathavewedone?...Iwilldescribesonicofourpreparationsofthepastthreeyears.

Themostimportantareainautomobilemanufacturingis,withoutadoubt,theproblemofmaterials.Toengageincarproductionwithoutsolvingthematerialsproblemislikebuildingahousewithoutafoundation.

InJapan,thesteelindustryisfairlyadvancedandcanprovidematerialssuitedexclusively for automobiles. But turning steelmaking into a business wouldrequireaconsiderableinvestmentaswellasconsiderableresearch.Nomaterialsmakerwouldbepatientenoughtoprovidethenecessaryassistance.Andeveniftherewere,theycouldnotcontinuethenecessaryresearchindefinitely.

Materials progress means engine improvement. And progress in enginedevelopment means materials must be improved. To obtain the materialsessentialtoengineresearchinJapan,wemustmanufacturethemourselves.

Regardlessofhowwellanengineismade,itslifewillbeshort,itspricehigh,anditsperformancepoorifpropermaterialsarenotusedattherighttime.Ifwecannot make the materials, we cannot do the necessary research on theautomobile.TodoitwouldcostJapanoverV2million($500,000).

IsitevenpossibleforJapantomakethematerials?ThefastestwaytogetananswerwastoaskProfessorHondaKotaro.5So,IwenttothecityofSendaiandaskedhim.Hesaidthat,atpresent,Japandidhavethecapabilityandthattherewasnoneedtohireforeigners.Greatlyrelieved,Iimmediatelysetouttobuildasteelmill.

Somevisitors toourcompanyaskwhatpercentageofourcastproductspassthequality test.Tosustain thebusiness,95percentmustpass. I felt that ifwewere in the sorry position of having to worry about the quality of our castproducts,wemightaswellquitmakingcars.So,IencouragedourplantworkersbysayingitwouldbeashameforToyotanottomakeitsowncastproducts.

We failed many times before successfully blowing cylinders into the diesusingdiepresseswithapassratioofover90percent.Weeventuallysucceeded,however,withtheolddiepresseswehadusedwithelectricfurnacestocastthinpartsforthelooms.Evenso,50(1to600cylinderswererejected.

Aftermaking1,000piecesofanitem,mostworkersbecomefairlyskilledanddefect-free.Butthefirstseveral100pieceswillcontainsomegoodandsome bad.Until skills are established,we have to be prepared to discardanything borderline. This is how materials problems are satisfactorilysolved.

►ProvideGoodEquipmentEvenIftheFactoryIsSimple

ToyodaKiichirc insisted on the highest quality equipment and worked to usethemeffectively:

Weknowmachinemanufacturingcanbedoneusingproper tools.Buttheproblemistoproducethemcheaply.

Machiningcastproductsisnotmuchdifferentfrommanufacturingtextilemachines. Textile machines must be mass produced to a considerableextent. The same is true of automobiles.With textilemachines, there aremany varieties. In the case of the automobile, types may he fewer butgreateraccuracyandmorespecializedmachinesarcnecessary,suchasfineboringandhoningmachines.

Wecanget ideas inother countries by studying thenewmanufacturingequipment being developed by other automotivemachinemakers. In thisarea, it is obvious that advanced equipment will enable us to makeinexpensiveproductsasgoodasthoseproducedelsewhere.

AlthoughIfeelplantfacilitiescanbeassimpleasbarracks,I trytobuyequipmentthatcanperformperfectly-regardlessofcost.Wereallyhavenoalternative but to buy machines costing Y50,0(X) (SI2,50O) to Y60,000(515,000)each.Ifwearenotpreparedtospendmoneyforgoodmachines,weshouldnotbeinautomobilemanufacturing.

At the time, I tried to save money by using barracks as plants andreducing research spending.Regardless of howmuch Iwas laughed at, IwouldhaverunoutofmoneyhadIcontinuedbuyingthingsthatwerenotneeded. Eliminating a lot of small wastes enabled us to afford goodequipment.

Machinerymustbechosencarefully.ToavoidendingupwithwrongmachinesandwastingY30,000 ($7,500) to Y50,000 ($12,500), wewent to America toexaminethemfirst.

Once this expensive equipment is acquired, we have to learn to use itcorrectly.So,westudytoolusebecauseregardlessofhowgoodamachineis,wecannotproduce largequantitiesaccuratelywithoutproper tools.Weneed toolsintendedformassproduction-and theirdesignandproductioncaneasily takethreetofouryears.This iswhatwehavebeendoingsinceToyota firstboughttheequipmentthreeyearsago.

Afterbuyingmillionsofyenworthofmachinery,hundredsofpeopleworkedhard for three years without putting a single car on themarket. Stockholdersbegantoworryandwonderwhencarswouldstart rollingout.Those inchargealsofeltthatsomehowweshouldproduceoneortwocarsjusttoshowwewerereallydoingsomething.

However,acarmadethiswaywouldnotbeofthehighestquality.Thispointis difficult formanagers and capital investors to understand. Ifwe hadn't hadmanagers with enough courage to make a bold commitment to carmanufacturing, wewould not have found investors to trust the engineers andleaveeverythingtothem.

It would be easy if money was guaranteed once cars were produced. Butmoneyisalwayslostthefirstfewyearswhichiswhythisbusinessissodifficultto establish. Anyone who plans such a endeavor and doesn't look ahead isfoolish.

Inthefirstfewyears,manymanagersthoughtthisway.Theyconsideredmeoverlyconfidentwithnothoughtofthefuture.

It iseasier tooperatea triedandtruebusiness thatusesknownmethodsandwillclearlymakemoney.Startingadifficultbusinessthatnooneelsewilltouchis a challenge.But if it fails, the fault is entirely yours - andyou can commitharakiriwithaclearconscience.

Iwill go as far as I canwith the automobile. If I do anything, itwill be tomakecars thepubliccanafford. Iknowitwillbedifficult,but this iswhere I

started.

►PursuitofaJapanese-StyleProductionTechnique

Toyoda Kiichiro's mission, while laying the foundation of the automobilebusiness, was to develop a Japanese production technique. This requiredintelligence.

OnereasonitwasdifficulttodevelopanautomobileindustryinourcountrywasthatthecarbodycouldnotbemassproducedasinAmerica.Anditisdifficulttoestablishtheindustrymakingcarbodiesbyhand.Thisproblemwasalwaysthemostagonizing.

Someone suggested that we hire a foreigner. But that amounted toimporting America's mass-production system and that didn't fit oursituation. At the time, we lacked almost everything pertaining to thisindustryandwereactuallymakingpartsbyhand.

Japanese people are by nature craft-oriented andmakemany things byhand.Massproduction, however, requiresusingdiepresses.ButwewerenotgoingtomaketensofmillionsofcarsasinAmerica,andwecouldnotinvestasmuchmoneytomakedies.Somehow,wehadtocombinethediepresses and hand-finishing in a way that avoided copying the Americanmethodexactly.

Ihadtothoroughlyexaminetheindustrytoseehowfarithadadvanced.So I toured the plants in theTokyo areawith the guidance ofKawamataKazuo.OnatourofSugiyamaSteelwheretheyweremakingfenderswithdiepresses,Ireceivedsomeunexpectedhelp.

There could havebeenother plants doing similarworkbut I askedMr.Sugiyamaifhewouldbeinterestedinmakingthemoldforthecarbody.Hesaidyes.Becauseitwasthefirsttimeandwehadnoequipmentthatcoulddoit,westudiedvariousmethodsanddidthefinishingbyhand.

Other countries, of course, have machines for making molds. Somemanufacturers specialize in making models for different companies and,unlike Japan, can afford to install thousands of such machines. Because

hand-finishing would be faster and less costly, however, we decided tohandcraftitthistimeandproducearoughmoldinaboutayearandahalf.Thisareaneedsfutureresearch.

Thenextpointisthattop-gradesheetmetalgreatlyfacilitatesmakingthemoldsforthediepresses.WeaskedProfessorMishimaTokushichitostudysheetmetal.During a foreign tour, he learned some advanced techniquesthatwillenableustogreatlyimproveourproducts.Weareexperiencedincoatingandliningandwillrequirenoassistanceinthoseareas.

Lastly,inassembly,weneedequipment,setups,andskillintheassemblyarea. Japanese people are adept with their hands and training will be noproblem. In thenear future, Iamcertainwecanmakebetter cars for lessthanforeignmanufacturers.

►MakingProductsThatHaveValue

With theMay 1936 enactment of the automobilemanufacturing business law,domestic carmanufacturers cameunder government protection and assistance.Under this law, business in the automobile industry required a governmentpermit and the domestic automobile industry's growthwas to be protected bysuppressing the foreign car assembly businesses. This was a powerfulgovernmentprotectionistpolicy.

However, Toyoda Kiichiro recognized that the market always demandsreasonablypricedproducts.Althoughhebelievedthelegislationwouldpreventwild competition, he feared that, if relied on too heavily, it would eventuallyforcecustomers to abandon the domestic industry.As a personalwarning, hiswritingsrevealhisconcernforself-responsibilityonprivatebusiness.

Usingourpresentknowledge,wecanatleastmaketheshapeofanautomobile.Futureprogresswilldependonacademicresearch.Today'sproblem,however,isthat,regardlessofhowgoodacarwemake,itwillmeannothingunlesswemakeiteconomically.

Thisproblemeventuallyrelatestoprice.WhatquantitymustweproduceinJapantoenableustoselldomesticcarsatreasonableprices?Noonecanknowthisfigurewithcertainty.

Cars have to be sold at prices that are reasonable today. But what isreasonable?We know our carswill not sell unless they are cheaper thanforeign models. We might manage to sell 50 to 100 cars a month byappealing to patriotism.But selling 200 or 500would be difficult. In theend,pricesmustbecompetitive.Aconsumerautomaticallyderivespleasurefrombuyingsomethingatalowerprice.

We know from experience in purchasing equipment that prices aresometimes driven down more than necessary. Cars sold to governmentagencies may bring the desired price, but in other cases prices must belowered.Appealing to patriotismherewould be useless. If prices are notkeptlow,wewillbeunabletosellhundredsofcarsamonth.

Good marketing and skillful advertising might allow us to deceive thebuyersforawhile-butnotforlong.Aspeoplelearnthevalueofdomesticcars, theywillbuyonlyifthepriceiscommensurate.Theywon'tbuyjustforthesakeofthecountry.

Itisanewproductandwemustinvestthemoneytoproduceitwellandkeep prices low. Tomake and sell cars domestically,manufacturersmustcarefully consider whether or not they can make ends meet with suchprices.

Fortunately, the automobilemanufacturingbusiness legislationhasbeenenforcedtoacertainextent.However,ifitincreasesthepriceofbothforeignanddomesticcars,wewillhaveonlyourselves toblame.The lawshouldenabledomesticcarproductiontoimprovesothatconsumerscanpayless.On this point, we have a great responsibility, but, at the same time, wecannotofferlowpricesatthebeginning.

Canwe actually produce economical cars domestically?Lowpricesarefine-butiftheymeanpoormaterials,poorquality,andeventuallyunusableproducts,nothingisachieved.Howdowebreakthroughthisdilemma?Theautomobile manufacturing business law would be useful in reducing thepressure of competition, especially the dumping practices of the well-establishedforeigncompanies.But,infaircompetitior.,wemustrelyonourowncapability.

►AChessplayer'sView

ToyodaSakichi andToyodaKiichirohad an international businessperspectiveandexcelled atperceiving theworld as awhole.Theyhad the foresight to goalwaystotheheartofthematter.Bothspenttheirlivesmainlyintheproductionfields,lookingatthingsrealistically,calmly,andobjectively.

Apersonstandinginaproductionareacanendupcleaning thecornerofanenormous box with a toothbrush. Toyoda Sakichi and Toyoda Kiichiro weredifferent and always studied the entire picture. They had the overview ofchessplayers and were constantly designing strategies. They knew how tocheckmate.

In Haraguchi Akira's interview, we discover that Toyoda Sakichi was aninventorofgreatgenius:

He would not read catalogues or books. He would not borrow fromnewspapers or magazines. He never asked for information or borrowedfrom others to help in an invention. He never studied mathematics orphysics. His thinking and inventing were accomplished completely byhimself.Nomathematicsteacherormechanicalexpertcouldfindfaultwithhisinventions.Hislogicfitallscientificprinciples.

Becausehisinventionssprangdirectlyfromactualpractice,theydidnotalwaysfollowscientificprinciples. Inapplication,however,his inventionsproducedbetterresults.Heputhisideasintoactions,notwords.

Hedidn'tuseconsultantsorassistants.Hewasindependentandalone.Hedidnot have a special research lab or any referencematerials at his side.The living room in his home was his laboratory and office. He had novisitorsandhewouldn'tcallonanyone.Frommorningtillnight,hewouldsit in the room, looking up at the ceiling and down at the surface of themattress, pondering things quietly. In this way, he generated over onehundredpatents.

Finda subject to thinkabout, stare at anobjectuntil ahole is almostboredthrough it, and find out its essential nature. Stand and watch a neighborhoodgrandmother'shand loom for awhole day.Thiswas howToyodaSakichiwas

inspiredandtrackeddownthefacts.

He went abroad to make firsthand observations. We cannot help but beimpressed by his progressive nature. He would expand an idea to its fullestcapacity and, the next moment, compress it to its smallest form. In terms ofchess, he had both an overall view of the chessboard aswell as checkmatingcapability.

In 1911,ToyodaSakichi touredEurope and theUnitedStates. Prior to that,underadverseandcomplicatedcircumstances,hequittheToyodaSpinningandWeavingCompany.ButinAmerica,whenhesawtheNorthropandIdealSystemautomatic loons, deemed theperiod's outstanding achievements, he recognizedthe superiority of his own inventions. Thus, after traveling abroad, he re-establishedhimselfandagaindemonstratedhisunyieldingspirit.

At that time in America, he also saw cars. He decided at once to go intoautomobilemanufacturingaftertheautomaticloom.Inhismind,hisloomsandtheautomobilewerestronglyconnected.

Toyoda Sakichi's autoactivated loom and the ring-type loom, had things incommonwithautomobiles.Bothfunctionedautomaticallyusingmachinepower.Also, in terms of idea and application, the ring-type loom overcoming thelimitationofthreadlengthintextilemakingwassimilartotheunlimitednatureofanautomobilerunningfreelyonaroadwithouttracks.

Toyoda Sakichi's imagination, although boundless, was always realistic.ReturningfromAmerica,he issaid tohaveannounced,"Fromnowon, it's theautomobile." Thus, in his mind, besides looms, a chessplayer's view of theJapaneseautomobileindustrywasforming.

►InSearchofSomethingJapanese

ThepathfromToyodaSakichitoToyodaKiichiroandthentothepresentToyotaMotor Company is the path of a developing and maturing modern Japaneseindustry. The line connecting them is the pursuit of a technology ofJapaneseorigin.

In1901,ToyodaSakichifirstthoughtaboutinventinganautoactivatedloom.

Twenty-fivedevelopmentalyearslater,itwasaccomplishedentirelybyJapanesepeople.ThiswasToyodaSakichi'swishanditwasfulfilled.

Goingthroughhisrecords,wefindafierce,challengingattitudetowardEuropeans,asenseofrivalry.Hehimselfstatedthatitwasanintelligentrivalry,aperceptionthatwasaheadofhistime.

ToyodaSakichi'smissioninlife,business,andtheworldwastocultivateandtrainthenaturalintellectoftheJapanesepeople,selloriginalJapaneseproductsproducedbythisintellect,andincreasethenationalwealthofJapan.

Toyoda Sakichi sold his own cultivated intellect in the form of his patents.Today we might call the development and production of Toyoda Sakichi'sautoactivatedloomahighdensity,"how-to"industry.

PlattBrothersofEnglandpurchased thepatent for the loom in 1930. It is awell-knownstorythattheYImillion($500,000)thatresultedfromthisdealwasspentonautomobileresearch.

I am overwhelmed by Toyoda Sakichi's tenacity in employing the Japaneseintellect he regarded so highly. He believed Japanese business as well as thecountrywouldcontinuetolagbehindtheEuropean-Americanworldunlessthecreativityand original technology of Japanese peoplewas discovered.Raisingthisnationalconsciousnessbecamehispersonalgoal.

Japan'sroleintoday'sworldofbuyingandsellingconl-nioditiesisverylarge.Actually, the role is sometimes too large and causes friction.Overcoming thisproblem will require politically facilitated agreements regarding quantities.When I think in purely economic terms, I conclude that we must exportcommodities with high added value that aremarketable domestically as well.This means commodities demanding a lot of brain power, as Toyoda Sakichiusedtosay.Eventually,wemayhavetoexportintellectitself.

Toyoda Sakichi pursued and developed an original Japanese technology. IknownobetterexamplethanToyodaSakichi,whodidnotconfinehimselftoanivory tower, but discovered things to study in real life, inventing andcommercializingtheautoactivatedloonsthatattainedtheworld'shighestlevelofmechanical design and performance. Althoughmany great ideas emerge from

the academic world, few inventions are born in industry or become theorganizing principle of the industry itself. In Japan, especially, such examplesarerare.

Taka-DiastasedevelopedbyDr.Takamine Jokichiwasobviouslya Japanesecreation, as Toyoda Sakichi pointed out, but the work was done in a foreignlaboratory.Although this does not lower its value, it does distinguish it fromToyodaSakichi'sinventioninhowandwhereitwasachieved.Therewereasyetfew Japanese scientific achievements, and the soil to grow such achievementswas not very fertile. For this reason, Toyoda Sakichi's achievements wereunique.

Touching upon ToyodaKiichiro's keen insight, in his article "Toyota to thePresent" cited earlier, he said the quality of the sheetmetal in the die pressesgreatlyaffects themakingof themold. It isMucheasier tomakemoldsusingtop-gradesheeting.Dr.MishimaTokushichiwasaskedtostudythisissue.

MKsteel,inventedbyDr.Mishima,wasoneofthefewJapanesediscoveriesalongwith the ferrite orNKSmagnet invented byDr.HondaKotaro. ToyodaKiichiro'sexpectationswereextremelyhigh.Unfortunately, theGermanBoschCompanyandGeneralElectricoftheUnitedStatesmadegreatereffortstoapplythese inventions. Nonetheless, Toyoda Kiichiro watched them more carefullythanotherJapanesebusinessmen.

At every opportunity, Toyoda Kiichiro emphasized the importance ofcooperation between academia and industry in establishing businesses likeautomobilemanufacturing.Hefelt that, ineverything,astrongfoundationwasessential.

►WitnessingaDialecticEvolution

Before his involvement with automobiles, Toyoda Kiichiro worked withweavingmachines.Many of our elders helped Toyoda Sakichi with his greatinvention, putting it towork in the business. Theyworked behind the scenes,unknowntotheoutsideworld.Intheearlydays,ToyodaKiichiroworkedbusilyatToyodaSakichi's feetdevelopingandcommercializing theautomatic looms,sellingthemtoforeignbusinesses,andnegotiatingcontracts,andsoforth.

Although interested in automobiles from the start, itwasperhapsduringhistourofEuropeandAmericain1930,whenhewenttoEnglandtonegotiatewithPlattBrothers,thathewasmoststronglyinfluenced.NewYorkespeciallymusthaveshockedhimwithitsfloodofcars.

When ToyodaKiichiro returned home, the bedridden Toyoda Sakichi askedhim to report in detail on the automobile situation in the United States andEurope.Then,ToyodaSakichiinstructedhimtospendtheYImillionfromPlattBrothers on automobile research, an amazing act of courage and foresight.ToyodaKiichiromusthavebeenfilledwithtremendousexcitementandasenseofresponsibilitywhenhereceivedtheinstructions.

IlookatthechangesintheperiodfromToyodaSakichitoToyodaKiichiroasa time of evolution. In the same sense, I look at the changes from ToyodaKiichiro to the present time as a similar and continuing evolution. In thisevolution, there are mountains and valleys. There are successes and failures.Thereare favorableandadversesituations.There ismovementandstagnation.Theflowofastreamissometimesrapidandsometimesslowandsometimesthestreamseemstohedryingup.

InToyota'sevolution,somethinginthestreamhasbeencontinual,solid,andbasedon Japanese creativity.ToyodaKiichiro realized better than anyone elsethat things cannot be achieved in a day. He was eager to learn the basics ofautomobilemanufacturingasquicklyaspossiblefromGeneralMotorsandFord.He acquired materials from the American producers to compare with thoseofJapanandthenlookedforajapanesemethodofproduction.

In 1933, Toyoda Kiichiro announced the goal to develop domesticallyproducedcarsforthegeneralpublic:

"We shall learn production techniques from the American method of massproduction.Butwewill not copy it as is.We shall use our own research andcreativitytodevelopaproductionmethodthatsuitsourowncountry'ssituation."

IbelievethiswastheoriginofToyodaKiichiro'sideaofjust-in-time.

Trueinnovation-Imeanrealtechnologicalinnovation-alsobringssomekindofsocialreform.LikeFord'sModelA,ToyodaSakichi'sautoactivatedloomalso

broughtanindustrialrevolution.

The world of the automobile that Toyoda Kiichiro entered was, in a broadsense, a composite industry. To narrow the gap between theJapanese andAmericanautomobileindustriesandcreateadomesticproductionsystem,hehadto exploreways to learn the basic technology,master the different productiontechnologies, organize the production system, and find a uniquely Japaneseproductiontechnology.

Thus, ToyodaKiichiromust have clearly envisioned Justin-time as the firststepintheevolutionofaJapaneseproductionsystem.It is, infact, thestartingpointoftheToyotaproductionsystem,constitutingitsskeletalstructure.Wecansee, therefore, how the search for Japanese originality flows into the creativedevelopmentoftheToyotasystem.

FromToyodaSakichitoToyodaKiichirotothepresent,Toyotaasacompanyhasmanagedtoevolveinthemidstofenormousinternalandexternalchanges,aprocessthatmightbecalledadialecticevolution.

5

TheTrueIntentionoftheFordSystemTheFordSystemandtheToyotaSystem

HENRYFORD(1863-1947),withoutdispute,createdtheautomobileproductionsystem.

Strictlyspeaking,theremaybeasmanywaysofmakingautomobilesasthereare automobile companies or individualmanufacturing plants. This is becauseproduction methods reflect the philosophy of business management and theindividuality of the person in charge of the plant. However, the basis ofautomobileproductionasamodernindustryisthemass-productionsystemthatFordhimselfpracticed.

The Ford system symbolizes mass production and sales in America eventoday.Itisamass-productionsystembasedonworkflow,sometimescalledtheautomationsystem.

Thisistherealmassproductionsysteminwhichrawmaterialsaremachinedand carried along conveyor belts to be transformed into assembled parts. Thecomponents of various types are then supplied to each of the final assemblyprocesses,with the assembly line itself moving at a fixed speed, as parts areassembledtoultimatelybecomefullyassembledcarsconingoffthelineonebyone.

To clarify the difference between the Ford and Toyota production systems,let'sfirsttakeacloselookattheFordsystem.

Charles E. Sorensen, the Ford Company's first president, originally headedproductionandwas,therefore,animportantmaninFordhistory.Hisbook,MyForty Years with Ford, bestows advice and describes the history of Ford'sdevelopment. The following excerpt vividly portrays the beginning andevolutionoftheFordsystem:

Asmaybeimagined,thejobofputtingthecartogetherwasasimpleronethanhandlingthematerialsthathadtobebroughttoit.CharlieLewis,theyoungestandmostaggressiveofourassembly foremen,and l tackled theproblem.Wegraduallyworkeditoutbybringinguponlywhatwetermedthe fast-movingmaterials. The main bulky parts, like engines and axles,needed a lot of room.Togive them that space,we left the smaller,morecompact, light-handling material in a storage building on the northwestcornerofthegrounds.Thenwearrangedwiththestockdepartmenttobringup at regular hours such divisions ofmaterial aswe hadmarked out andpackaged.

Thissimplificationofhandlingcleanedthingsupmaterially.Butatbest,Ididnotlikeit.Itwasthenthattheideaoccurredtomethatassemblywouldheeasier, simpler, and faster ifwemoved the chassis along, beginning atoneendoftheplantwithaframeandaddingtheaxlesandthewheels;thenmoving it past the stockroom, instead of moving the stockroom to thechassis. I had Lewis arrange thematerials on the floor so that what wasneededatthestartofassemblywouldbeatthatendofthebuildingandtheotherpartswouldbealongthelineaswemovedthechassisalong.WespenteverySunday during July planning this. Then oneSundaymorning, afterthestockwaslaidoutinthisfashion,LewisandIandacoupleofhelpersputtogetherthefirstcar,I'msure,thatwaseverbuiltonamovingline.

Wedid thissimplybyputting theframeonskids,hitchinga towrope tothefrontendandpulling theframealonguntilaxlesandwheelswereputon. Then we rolled the chassis along in notches to prove what could bedone.While demonstrating thismoving line, we worked on some of thesubassemblies,suchascompletingaradiatorwithallitshosefittingssothatwecouldplaceitveryquicklyonthechassis.Wealsodidthiswiththedashandmountedthesteeringgearandthesparkcoil.'

ThisdescribesthesceneofthefirstexperimentinsettinguptheworkflowatFord.Thebasicformofthisworkflowiscommontoallautomobilebusinessesaroundtheworld.Eventhoughtoday,somemanufacturers-Volvo,forinstance-have one person assemble the entire engine, in general, the manufacturingmainstreamstillutilizesFord'sworkflow,orautomation,system.Althoughtheevents described by Sorensen took place around 1910, the basic pattern haschangedverylittle.

LikeFord's,theToyotaproductionsystemisbasedontheworkflowsystem.Thedifferenceisthat,whileSorensenworriedaboutwarehousingparts,Toyotaeliminatedthewarehouse.

►SmallLotSizesandQuickSetup

Makinglargelotsofasinglepart-thatis,punchingoutalargequantityofpartswithoutadiechange-isacommonsenseproductionruleeventoday.Thisisthekey toFord'smass production system.TheAmerican automobile business hascontinuouslyshownthatplannedmassproductionhasthegreatesteffectoncostreduction.

TheToyotasystemtakesthereversecourse.Ourproductionsloganis"smalllotsizesandquicksetups."Whyarewesodifferentfrom-infact,theoppositeof-theFordsystem?

Forexample,theFordsystempromoteslargelotsizes,handlesvastquantities,and produces lots of inventory. In contrast, the Toyota system works on thepremise of totally eliminating the overproduction generated by inventory andcostsrelatedtoworkers,land,andfacilitiesneededformanaginginventory.Toachievethis,wepracticethekanbansysteminwhichalaterprocessgoestoanearlierprocesstowithdrawpartsneededjustintime.

Tomakecertaintheearlierprocessproducesonlyasmanypartsasarepickedupby the laterprocess, theworkersandequipment ineachproductionprocessmustbeabletoproducethenumberofpartsrequiredwhentheyareneeded.Ifthe later process varies its pick-up in termsof time and amount, however, theearlier process must be prepared to have available the maximum amountpossiblyneededinthefluctuatingsituation.Thisisanobviouswastethatboostscosts.

Completeeliminationofwaste is thebasisof theToyotaproductionsystem.Therefore,productionlevelingisstrictlypracticedandfluctuationisflattenedorsmoothed.Lot sizes aremade smaller and the continuous flowof one item inlargequantityisavoided.

Forexample,wedonotconsolidateallCoronaproductioninthemorningand

Carinaproductionintheafternoon.CoronasandCarinasarealwaysproducedinanalternatingsequence.

Inshort,wheretheFordsystemstickstotheideaofmakingaquantityofthesameitematonetime,theToyotasystemsynchronizesproductionofeachunit.Theideabehindthisapproachisthatinthemarketplace,eachcustomerbuysadifferentcar,soinmanufacturing,carsshouldbemadeoneatatime.Evenatthestageofmakingparts,productioniscarriedoutonepieceatatime.

Tobeable toaverageproductionandreduce lotsizes,quickdiechangesarenecessary. In the 1940s, in Toyota's production department, setups in largeprocessestooktwotothreehours.So,forefficiencyandeconomy,diechangeswereavoidedasmuchaspossible.At first, the ideaofquick setupmetstrongresistanceintheproductionarea.

Setupwasregardedasanelementthatreducesefficiencyandincreasescost-and thereseemedno reason forworkers towant tochangediescheerfully.Onthis point, however, we had to ask them to change their attitude. Rapidchangeovers are an absolute requirement for the Toyota production system.Teachingworkers to reduce lot sizes and setup times took repeatedon-the-jobtraining.

In the 1950s, when production leveling was being pushed at Toyota, setuptimewasreducedtounderanhour,sometimesdroppingto15minutes.Thisisanexampleoftrainingworkerstomeetneedsbychangingwhatisconsideredtobecommonsense.

General Motors, Ford, and the European automobile makers have beenimproving and refiningproductionprocesses in their ownway.Theyhave notattempted, however, the production leveling Toyota has been working toachieve.

Usingalargediepressasanexample,EuropeanandAmericanmanufacturersstill take a long time for setup - perhaps because there is no need to hurry.Nevertheless,lotsizesremainlargeandtheycontinuetopursuemassproductionunderaplannedproductionsystem.

Which is in the superior position, the Ford system or the Toyota system?

Because each is undergoing daily improve ment and innovation, a quickconclusion cannot be drawn. I firmly believe, however, that as a productionmethodtheToyotasystemisbettersuitedtoperiodsoflowgrowth.

►TheForesightofHenryFord

SorensenwritesthatHenryFordwasnotthefather-butasponsorofthemass-productionsystem.Noteveryonewouldagreeonthispoint.I,forone,aminaweofFord'sgreatness.IthinkthatiftheAmericankingofcarswerestillalive,hewouldbeheadedinthesamedirectionasToyota.

IbelieveFordwasabornrationalist-andIfeelmoresoeverytimeIreadhiswritings.He had a deliberate and scientificway of thinking about industry inAmerica.Forexample,ontheissuesofstandardizationandthenatureofwasteinbusiness,Ford'sperceptionofthingswasorthodoxanduniversal.

The following excerpt fromFord's book,Today andTomorrow,2 reveals hisphilosophyofindustry.Itisfromachapterentitled"LearningfromWaste":

Conserving our natural resources bywithdrawing them fromuse is not aservice to thecommunity.That isholding to theold theorythatathingismore important than a man. Our natural resources are ample for all ourpresentneeds.Wedonothavetobotheraboutthemasresources.Whatwedohavetobotheraboutisthewasteofhumanlabour.

Takeaveinofcoalinamine.Aslongasitremainsinthemine,itisofnoimportance,butwhenachunkofthatcoalhasbeenminedandsetdowninDetroit, it becomes a thing of importance, because then it represents acertainamountofthelabourofmenusedinitsminingandtransportation.Ifwewastethatbitofcoal-whichisanotherwayofsayingifwedonotputittoitsfullvalue-thenwewastethetimeandenergyofmen.Amancannotbepaidmuchforproducingsomethingwhichistobewasted.

My theory of waste goes back of the thing itself into the labour ofproducingit.Wewanttogetfullvalueoutoflaboursothatwemaybeabletopayitfullvalue.Itisuse-notconservation-thatinterestsus.Wewanttousematerial to its utmost in order that the time ofmenmay not be lost.Material costs mean nothing. It is of no account until it comes into the

handsofmanagement.

Saving material because it is material, and saving material because itrepresentslabourmightseemtoamounttothesamething.Buttheapproachmakesadealofdifference.Wewillusematerialmorecarefullyifwethinkof it as labour.For instance,wewill not so lightlywastematerial simplybecausewecanreclaimit-forsalvageinvolveslabour.Theidealistohavenothingtosalvage.

Wehavealargesalvagedepartment,whichapparentlyearnsforustwentyor more million dollars a year. Something of it will be told later in thischapter.Butasthatdepartmentgrewandbecamemoreimportantandmorestrikinglyvaluable,webegantoaskourselves:

Why should we have so much to salvage? Arc we not giving moreattentiontoreclaimingthantonotwasting?

Andwiththatthoughtinmind,wesetouttoexamineallourprocesses.Alittleofwhatwedointhewayofsavingmanpowerbyextendingmachineryhasalreadybeentold,andwhatwearedoingwithcoal,wood,powerandtransportationwillbetoldinlaterchapters.Thishastodoonlywithwhatwaswaste.Our studies and investigations up to date have resulted in thesavingof80,000,000poundsof steelayear that formerlywent intoscrapand had to be reworkedwith the expenditure of labour. This amounts toabout three million dollars a year, or, to put it in a better way, to theunnecessarylabouronourscaleofwagesofupwardoftwothousandmen.Andallofthatsavingwasaccomplishedsosimplythatourpresentwonderiswhywedidnotdoitbefore.'

►StandardsAreSomethingtoSet:UpYourself

In 1937 or 1938,while stillworking at Toyoda Spinning andWeaving, Iwasonce told by my boss to prepare a standard work sheet for weaving. As Imentionedearlier,Ifounditverydifficult.Sincethen,Ihavecontinuedtothinkaboutwhatismeantbytheword"standard"instandardwork.

Theelementstoconsiderinstandardworkareworker,machine,andmaterials.Ifnotcombinedeffectively,theworkerswillfeelalienatedandfinditimpossible

toproduceefficiently.

Standardsshouldnotbeforceddownfromabovebutrathersetbyproductionworkers themselves.Onlywhen theplant system isconsideredasawholecanstandardsforeachproductiondepartmentbecomedefect-freeandflexible.

In this sense, standards should be thought of not only as the productiondepartment'sstandardsbutalsoastopmanagement's.LetushearFord'sopinioninhischapteronstandardsinTodayandTomorrow:

Onehastogoratherslowlyonfixingstandards,foritisconsiderablyeasiertofixawrongstandardthanarightone.Thereisthestandardizingwhichmarksinertia,andthestandardizingwhichmarksprogress.Thereinliesthedangerinlooselytalkingaboutstandardization.

Therearetwopointsofview-theproducer'sandtheconsumer's.Suppose,forinstance,acommitteeoradepartmentofthegovernmentexaminedeachsectionofindustrytodiscoverhowmanystylesandvarietiesofthesamethingwerebeingproduced,andtheneliminatedwhattheybelievedtobeuselessduplicationandsetupwhatmightbecalledstandards.Wouldthepublicbenefit?Notintheleast-exceptinginwartime,whenthewholenationhastobeconsideredasaproductionunit.Inthefirstplace,nobodyofmencouldpossiblyhavetheknowledgetosetupstandards,forthatknowledgemustcomefromtheinsideofeachmanufacturingunitandnotatallfromtheoutside.Inthesecondplace,presumingthattheydidhavetheknowledge,thenthesestandards,althoughperhapseffectingatransienteconomy,wouldintheendbarprogress,becausemanufacturerswouldbesatisfiedtomakethestandardsinsteadofmakingtothepublic,andhumaningenuitywouldbedulledinsteadofsharpened.'

WeseeinFord'sthinkinghisstrongbeliefthatastandardissomethingnottobedirectedfromabove.Whetheritbethefederalgovernment,topmanagement,oraplantmanager,thepersonwhoestablishesthestandardshouldbesomeonewhoworks inproduction.Otherwise,Fordemphasizes, thestandardwouldnotleadtoprogress.AndIagree.

Inpursuingthedefinitionofstandards,Ford'sthinkingextendsintothefuture

ofprivatebusinessesandindustry:

Theeventualityofindustryisnotastandardized,automaticworldinwhichpeoplewillnotneedbrains.Theeventualityisaworldinwhichpeoplewillhaveachancetousetheirbrains,fortheywillnotbeoccupiedfromearlymorninguntil late at nightwith thebusinessofgaining a livelihood.Thetrueendofindustryisnotthebringingofpeopleintoonemould;it isnottheelevatingoftheworkingmantoafalsepositionofsupremacy-industryexiststoservethepublicofwhichtheworkingmanisapart.Thetrueendofindustryistoliberatemindandbodyfromthedrudgeryofexistencebyfilling the world with well-made, lowpriced products. How far theseproductsmay be standardized is a question, not for the state, but for theindividualmanufacturer.'

Here,theforesightofFordisrevealedclearly.Weseethatautomationandthework-flow system invented and developed byFord and his collaboratorswerenever intended to causeworkers towork harder and harder, to feel driven bytheirmachines and alienated from theirwork.As in everything else, however,regardless of good intentions, an idea does not always evolve in the directionhopedforbyitscreator.

TracingtheconceptionandevolutionofworkflowbyFordandhisassociates,I think their true intentionwas toextendawork flow from the final assemblylinetoallotherprocesses;thatis,frommachineprocessingtothediepressthatcorrespondstotheearlierprocessesinourToyotasystem.

By settingup a flowconnectingnot only the final assembly linebut all theprocesses, one reduces production lead time. Perhaps Ford envisioned such asituationwhenheusedtheword"synchronization."

Ford's successors, however, didnotmakeproduction flowasFord intended.Theyendedupwiththeconcept"thelargerthelotsize,thebetter."Thisbuildsadam,sotospeak,andstopstheflowatthemachiningandstampingprocesses.

AsIalreadymentioned,American-stylelaborunionsmayalsohavehinderedtheworkflexibilityintheproductionarea,butIdonot thinkthiswas theonlycause. Amajor reason is that Ford's successors misinterpreted the work flowsystem.Thefinalprocessisindeedaworkflow,butinotherproductionlines,I

thinktheywereforcingtheworktoflow.

In thecourseofdevelopingtheToyotaproductionsystem-changingfromaforced to a realwork flow - human intelli gencewas transferred to countlessmachines.Inthisway,thetwopillars,just-in-timeandautonomation,wereboththemeansofrealizingthesystemaswellastheend.

►PreventionIsBetterthanHealing

To prepare for future natural disasters, people are accustomed to stockpilinggoods,forexample,theJapanesefarmingtribes.Althoughnotnecessarilyabadsocialcustom, Ideny itsvalue in industry. I am talking about theway today'smanagers store raw materials and finished products to meet unexpecteddemands.

Business isconnected to theoutsideworld.Why, then,should it store thingsforitsownsafety?AsIhaveoftensaid,thistendencytostorethingsisthestartofwasteinbusiness.

"Ifanewmachineispurchased,keepitoperatingfulltime...Aslongasitisrunning smoothly, let the machine produce to capacity ... In case of futuretroublewith themachine, let it producewhile it can."Thiswayof thinking isstilldeeplyrootedamongmanufacturingpeople.

Inaneraoflowgrowth,suchideasnolongerapply,butthetendencytomakeandstoreisstillstrong.IfToyota'sjust-intimeprincipleworks,certainlythereisnoneedforstoringextrarawmaterialsandfinishedproducts.

But what should we do if the machine stops and production requirementscannotbemet?Underthekanbansystem,whatwouldhappenifthelaterprocesswenttotheearlierprocesstopickupneededgoodsandfoundthemachinedownandthegoodsnotproduced?Certainly,itwouldbeadifficultsituation.

For this reason, the Toyota production system stresses in all productionprocessestheneedforprevention.Ifwethinktokeepinventoryinanticipationofmachineproblems,whynotconsiderpreventingtroublebeforeitoccurs?

As the Toyota production system gradually spread within and outside the

Toyota Motor Company, I asked everyone concerned to study how machineproblems and process difficulties could be prevented. Thus, preventive"medicine" or maintenance became an integral part of the Toyota productionsystem.

Ford had similar ideas on this subject. To fulfill his business's socialresponsibility, he established hospitals, schools, and the well-known FordFoundation.Whenahospitalwasbuilt,Fordpublishedhisopinionsonhealth,disease,treatment,andprevention.

Inachapterentitled"CuringorPreventing,"Fordargues that ifwecanfindgood food and prepare it perfectly, health can be maintained and diseaseprevented:

Thebestdoctorsseemtoagreethatthecureformostindispositionsistobefoundindietandnotinmedicine.Whynotpreventthatillnessinthefirstplace? It all leads up to this - if bad food causes illness, then theperfectfoodwillcausehealth.Andthatbeingthecase,weoughttosearchforthatperfectfood-andfindit.Whenwehavefoundit,theworldwillhavetakenitsgreatestsinglestepforward.''

Fordpointedoutthatthepossibilityofsucceedinginthiscrucialgoalwouldbegreaterifitsscientificstudywasorganizednotbyaresearchinstitutionbutbybusiness as a socio-business need.While he did not say prevention itselfwasindispensable to the work flow that forms the basis of the Ford system, it isinterestingtodiscoverthatthemanwhoinventedautomationalsoponderedsuchproblems.

A strong production line means a strong business. In describing thecomplementaryrelationshipbetweenjust-intimeandautonomation,Toyota'stwosupporting pillars, I emphasize their part in building a production line with astrongconstitution.Toyota'sstrengthdoesnotcomefromitshealingprocesses-itcomesfrompreventivemaintenance.

►IsThereaFordafterFord?

I havebeen talking about theorigins of theFord system, themass-productionsystempresentlydominatingtheUnitedStates.

Withrespecttoworkflow,ToyotahaslearnedalotfromtheFordsystem.TheFordsystemwasborninAmerica,however,andusheredintheautomobileagewith its introductionof themass-producedModelT. I have similarly sought aJapanese-styleproductionsystemequallysuitedtotheenvironmentofJapan.

As to the evolution of the Ford automation system inAmerican automobilemanufacturing,theFordCompanyincluded,IthinkFord'strueintentionhasnotbeenaccuratelyunderstood.AsIhavealreadysaid,thereasonIthinkthisisthat,compared to the smooth flow in an automobileplant's final assembly line, theflowofotherprocesseshasnotbeenestablishedandasystembasedonlargelotsthatseemtostoptheflowhasbeenincorporated.

Whyisthis?BeforeFord'sultimategoalwasunderstoodclearly,competitionin theU.S.automobilemarketplace intensified.TheFordCompany itselfwasunderpressurefromitsrival,GeneralMotors.IthinkthissituationhaltedstudyoftheappropriatedevelopmentoftheFordsystem.

ThefactthattheAmericanautomobileindustryfacedamajorturningpointinthe1920siswelldescribedinthebookMyYearswithGeneralMotors,writtenbyAlfredY.Sloan,Jr.,theformerChairmanoftheBoardofGeneralMotors.

AccordingtoSloan,anincidentoccurredbetween1924and1926thatchangedAmerica'sautomobileindustrydramatically.Thesmallerbuthigher-classmarketthat had existed since 1908 was transformed into a larger market demandingbetter-classcarsforthegeneralpublic.

In other words, where Ford's goal was providing a cheap mode oftransportation, thenewmarket demanded a constantly improving automobile -foreveryone.

With the development of the automobile industry in the 1920s, the U. S.economy entered a period of new growth. With it, new elements appeared,further changing the market. These new elements can be divided into fourcategories:

1.installmentpaymentplan

2.usedcartrade-ins

3.sedan-typebody

4.changingmodelsyearly

Ifweconsidertheautomobileenvironmentaswell,Iwouldaddtothislist:

5.improvedroads

These elements are deeply rooted in today's automobile industry and it isalmost impossible to think about the industry without them. Prior to 1920,however,andforalittlewhileafter,carbuyerswerelimitedtothosepurchasinga car for the first time; typically they paid in cash or acquired a special loan.Manycarswereof the "touring"or "roadster" type, styles that didnot changefromyeartoyear.

This situation continued forawhile. Even if themodel changed, the changewas not conspicuous until the entire changeover reached completion. Newelementsdevelopedatdifferentratesandwereaddedseparatelyuntil,finally,allthechangescametogetherasacompletelynewmodel.

Sloan grabbed hold of this important modification in the marketplace andbegan to offer more and more different models. This "fullline" policy wasGeneral Motor's unique strategy to answer public demands. How did theautomobileindustryasawholerespondtothisdiversification?,

In the transition from mass-produced Model T's to the fullline policy ofGeneral Motors, production processes became complicated. To reduce costswhilemakingvarioustypesofcars,standardpartshadtobedevelopedforuseindifferent models. The Ford system, however, was not modified to any greatextent.

At about this time, pricing policies were actively studied and employed inresponsetothewidevariationsresultingfromdiversificationinthemarketplace.I think that in production, however, the unfinished Ford system changed littleandbecamedeeplyrooted.

While building up theToyota production system, I always kept inmind theJapanesemarket and its demands formany types of cars in small quantities -differentfromAmericandemandsforafewtypesinlargequantities.

The Toyota production system helps production meet market demands.Wenowknowthatproducingmanytypesofcarsinlargequantitiesiseconomicallydesirable,eventhoughtheToyotasystemwasbuiltonthepremiseofmanytypesinsmallquantitiesfortheJapaneseenvironment.Thus,thesystemisprovingitseffectivenessinthematureJapanesemarket.Atthesametime,IthinktheToyotaproductionsystemcanbeappliedinAmericawherethemarketformanytypesinlargequantitieshasexistedsinceSloan'stime.

►InverseConceptionandBusinessSpirit

TodayandTomorrowwaspublished inAmerica in1926at thepeakofHenryFord'scareer.Infact,thisperiodoftimealsomarkedaturningpointfortheU.S.automobile industry. Later we shall discuss the details of the changes thatoccurred,butinbrief,whilethehighpointinFord'scareer,thisperiodironicallymarked the beginning of the FordCompany's downward slide and the rise ofGeneralMotors.

Theyear1926correspondstoTaisho15inJapanand,coincidentally,wasthetimewhenToyodaSakichi'sautoactivatedloomwasperfected.

ItwasFordwhoperfected theautomobile industry.Heknew indetail everymaterial used in his vehicles and his knowledgewas not superficial.With hisown hands, he created separate business operations for the various metals,includingsteelandnonferrousmetals,andtextiles.

Fordthoughtflexiblyaboutthingswithoutgettingcaughtinexistingconcepts.Oneofhisexperiencesconcernstextiles:

Spinning andweaving have come down to us through the ages and theyhavegatheredaboutthemtraditionswhichhavebecomealmostsacredrulesofconduct.Thetextileindustrywasoneofthefirsttomakeuseofpower,butalso itwasoneof thefirst touse the labourofchildren.Many textilemanufacturers thoroughly believed that low-cost production is impossiblewithoutlowpricedlabour.Thetechnicalachievementsoftheindustryhavebeenremarkable,butwhether ithasbeenpossibleforanyonetoapproachthe industrywith an absolutelyopenmind, free from tradition, is anothermatter."

FordmusthavewrittenthisbeforethedevelopmentofSakichi'sautoactivatedloom,aninventionthatchangedthetextileindustryshackledbycenturiesoftradition.Nonetheless,Ford'sideasanddevelopingbusinessdesignsopenoureyes:

We use more than 100,000 yards of cotton cloth and more than 25,000yardsofwoollenclothduringeverydayofproduction...

At first,we took forgranted thatwehad tohave cotton cloth -wehadneverusedanythingbutcottonclothasafoundationmaterialfortopsandfor artificial leather.We put in a unit of cotton machinery and began toexperiment, but, not being bound by tradition, we had not gone far withtheseexperimentsbeforewebegantoaskourselves:

Iscottonthebestmaterialwecanusehere?

Andwe discovered thatwe had been using cotton cloth, not because itwasthebestcloth,butbecauseitwastheeasiesttoget.Alinenclothwouldundoubtedly be stronger, because the strength of cloth depends upon thelength of the fibre, and the flax fibre is one of the longest and strongestknown.CottonhadtobegrownthousandsofmilesfromDetroit.Weshouldhavetopaytransportationontherawcotton,ifwedecidedtogointocottontextiles, and we should also have to pay transportation on this cottonconvertedintomotor-caruse-veryoftenbackagaintowhereithadbeengrown.FlaxcanbegrowninMichiganandWisconsin,andwecouldhaveasupplyathandpractically readyforuse.But linenmakinghadevenmoretraditionsthancotton,andnoonehadbeenabletodomuchinlinenmakingin this country because of the vast amount of hand labour consideredessential.

We began to experiment at Dearborn, and these experiments havedemonstratedthatflaxcanbemechanicallyhandled.Theworkhaspassedtheexperimentalstage.Ithasproveditscommercialfeasibility."

I was intrigued by Ford's question "Is cotton the best material we can usehere?"

As Ford pointed out, people follow tradition. This might be acceptable in

privatelife,butinindustry,outdatedcustomsmustbeeliminated.Inthisprocessofaskingwhy,weseevividlyonefacetofFord'sbusinessspirit.

Progress cannotbegeneratedwhenweare satisfiedwith existing situations.This also applies to improving production methods. If we just walk aroundaimlessly,wewillneverbeabletoaskgoodquestions.

I have always tried to view things upside down. Reading Ford, I wasencouragedbythewayherepeatedlycameupwithbrilliantinverseconceptions.

►GettingAwayfromQuantityandSpeed

Igonot forget thatTodayandTomorrowwaswritten in the1920s,overahalfcenturyagowhenFord'scareerwasatitspeak.Shortly,hewouldfacehisfirstfailure and discouragement even though the FordMotor Company ultimatelysurvived.

As I said earlier, I have long doubted that the mass-production systempracticedinAmericaandaroundtheworldtoday,eveninJapan,wasFord'strueintention.For this reason, Ihaveconstantly sought theoriginofhis ideas.Forexample, take a look at the American social environment of the 1920s whenFordwasprospering:

Butarewemovingtoofast-notmerelyinthemakingofautomobiles,butin lifegenerally?Onehearsa [great]dealabout theworker beinggrounddownbyhardlabour,ofwhatiscalledprogressbeingmadeattheexpenseofsomethingorother,andthatefficiencyiswreckingallthefinerthingsoflife.

It is quite true that life is out of balance - and always has been. Untillately,mostpeoplehavehadno leisure touseand,ofcourse, theydonotknow how to use it. One of our large problems is to find some balancebetweenworkandplay,betweensleepandfood,andeventuallytodiscoverwhymengrowoldanddie.Ofthismorelater.

Certainlywe aremoving faster than before.Or,more correctly,we arebeingmovedfaster.Butis20minutesinamotorcareasierorharderthanfourhours' solid trudgingdownadirt road?Whichmodeof travel leaves

the pilgrim fresher at the end? Which leaves him more time and moremental energy?And soonwe shall bemaking an hour by air what weredays'journeysbymotor.Shallweallthenbenervouswrecks?

But does this state of nervouswreckage towhichwe are all said to becoming exist in life - or in books? One hears of the workers' nervousexhaustioninbooks,butdoesonehearofitfromtheworkers?...

Theveryword"efficiency"ishatedbecausesomuchthatisnotefficiencyhasmasqueradedassuch.Efficiencyismerelythedoingofworkinthebestwayyouknowratherthanintheworstway.Itisthetakingofatrunkupahillonatruckratherthanonone'sback.Itisthetrainingoftheworkerandthegiving tohimofpower so thathemayearnmoreandhavemoreandlivemorecomfortably.TheChinesecoolieworkingthroughlonghoursfora few cents a day is not happier than theAmericanworkerwith hisownhomeandautomobile.Theoneisaslave,theotherisafreeman."'

There have been many changes in the last half century. Circumstances inChinahavechangeddrastically,forinstance.Recently,betweenSeptember1977andSeptember1978,1visitedmanyChinese industries tryinghardtopromotemodernindustrialization.

FromFord's timeto thepresent, throughourpostwarperiodwhenwebeganwork on the Toyota production system, and within the industrialization thatChina is trying toachieve, there isoneuniversal element -- andFordcalled it"trueefficiency."Fordsaidefficiencyissimplyamatterofdoingworkusingthebestmethodsknown,nottheworst.

TheToyotaproductionsystemworkswiththesameidea.Efficiencyisneverafunctionof quantity and speed.Ford raised thequestion: "Arewemoving toofast?"Inconnectionwiththeautomobileindustry,itisundeniablethatwehavebeen pursuing efficiency and regarding quantity and speed as its two majorfactors.TheToyotaproductionsystem,ontheotherhand,hasalwayssuppressedoverproduction,producinginresponsetotheneedsofthemarketplace.

In the high-growth period, market needs were great and losses caused byoverproduction did not appear on the surface. During slow growth, however,excess inventory shows up whether we like it or not. This kind of waste is

definitelytheresultofpursuingquantityandspeed.

When describing the characteristics of the Toyota production system, weexplainedtheconceptofsmalllotsizesandquicksetup.Actually,attheheartofthisisourintentiontoreformtheexistinganddeeplyrootedconceptof"fasterandmore"bygeneratingacontinuousworkflow.

Tobetruthful,evenatToyota,itisverydifficulttogetthediepressing,resinmodeling, casting, and forging processes into a total production flow asstreamlinedastheflowsinassemblyormachineprocessing.

Forexample,withtraining,setupofalargepresscanbeaccomplishedinthreeto fiveminutes.This is shorter than that of other companies by a surprisinglylargemargin.Inthefuture,asworkflowisperfected,wecouldslowdownandstillkeepitunder10minutes.

ThisexplainswhytheToyotaproductionsystemistheoppositeofAmerica'ssystem of mass production and quantity sales - the latter system generatesunnecessarylossesinpursuitofquantityandspeed.

6

SurvivingtheLowGrowthPeriodTheSystemRaisedintheHigh-GrowthPeriod

TOWARDTHEENDof1955,Japanenteredaperiodofhighgrowthrareforthetime inworldeconomics.Kanban, theoperating toolof theToyotaproductionsystem, was adopted company-wide in 1962, when Japan was well into itsgrowth.ItissignificantthatthekanbansystemwithitsrootsatToyotacoincidedwiththisperiodoftime.

AssoonasJapanenteredthehigh-growthperiodandcourageouslycalledforincome doubling, Japan's businessmen seemed to lose sight of traditionalJapaneseways.TheylostsightofaneconomyuniquetoJapanesebusiness,andofthesocietyitself.This"lossofsight"wasduetotheacceptanceofAmericanmass production and the growing public tendency to consider consumption avirtue.

Into the automobile industry came a flood of large, highperformancemachines, such as the transfer machine or robot. In a period of high growth,whateverwasmadewassold,sothesemassproductionmachinesdemonstratedtheireffectiveness.

However, theproblemwasoneofattitude-ofcontainingandunderstandingthis abundant and rapidly attained economy. At Toyota, although we wereexcited about automation and robotics, it was very doubtful whether theirpurpose-arealincreaseinefficiency-wasbeingachieved.

It is easy to understand the purpose of reducing manpower by usingautomation and fewer workers with the help of large, highperformancemachines.While trying to double income figures, Japan saw national incomeaverages rise sharplyand thepreviousadvantageofproductioncostsbasedonlowwagesdiminish.Forthesereasons,businessesracedtoautomate.

However, the machines and equipment used in automation had a seriousshortcoming - they were unable to makejudg-ments or stop by themselves.Therefore,topreventlossescausedbydamagedmachinery,tools,anddies,and

the production of large quantities of defective products, supervision by anoperatorwasnecessary.Consequently, thenumberofworkersdidnotdecreasewithautomation.Manualwork inmostcases justchangednames.Thus,whilethemachinesindeed"savedmanpower,"theydidnotincreaseefficiency.

Tome,itwasquestionablewhetheritwaslabor-savingwhentwicethenumberofworkerswasneeded.Itwouldbeallrightifwewerepreparedtoreducethenumber ofworkers by half using highperformancemachines.But that did nothappen. I concluded that the work could be done very well with the existingolderequipment.

It isdangerouswhenindustrialistsdonotrealizethis.Ifweblindlyfollowedthetrends,whatwouldhappenwhentheeconomyofscalebrokedown?Itwasnotdifficulttoenvisiontheconfusionandmayhemthatwouldfollow.

Japan'seconomyexpandedinthefirsttwoquartersof1965andthedesireforlarge, highperformance machines in production plants intensified. This desirewasnotonlyattheproductionlevel-topmanagementoftenledtheway.

At the time, I seriously felt it would be dangerous to continue purchasinghighperformanceequipmentthisway.AtToyota,weallunderstoodthisalarmingtrend, but the problem laywith our affiliates.Wegathered their topmanagersand personally asked them to cooperate, to understand and adopt the Toyotasystemofproduction.

Wediscussedreducingmanpowertoreducecost.Weevendemonstratedfromactual Toyota statistics that, by carrying out true rationalization, productioncouldbedonemorecheaplywithoutrobots.

Then and even now,many people harbor thesemisconceptions.Many thinkcost reduction can be achieved only if the number of workers is reduced byacquiring robots or highperformance machines. Results show, however, thatcostsarenotreducedatall.

It was obvious that the root of the problem was the idea of labor-savingthroughautomation.

►RaisingProductivityDuringLowGrowth

For automation to be effective, we must implement a system in which themachinessensetheoccurrenceofanabnormalityandstopthemselves.Inotherwords, we must give the automated machines a human touch - enoughintelligencetomakethemautonomatedandachieve"workersaving"ratherthan"laborsaving."

The oil crisis in the fall of 1973 brought a new twist to Japan's economy.AtToyota,whereproduction increaseshadbeen achieved yearly since the 1930s,wewereforcedtoreduceproductionfor1974.

ThroughouttheindustrialsectorinJapan,profitsplummetedasaresultofzerogrowthandtheshockofproductioncutbacks.Theresultswereterrible.At thistime,becauseToyotahadsufferedlessfromtheeffectsof theoilcrisis,peoplebegantopayattentiontoitsproductionsystem.

With the reduced production that followed the oil crisis, Toyota facedproblems thathadbeenhiddenor lessvisibleduring theprevioushigh-growthperiod.Theproblemshadtodowiththeautonomatedmachinestowhichafixednumberofoperatorswereassigned.

Aperfectautonomatedmachine, that is, amachinewithoutanoperator,wastheexception.Theautonomatedmachinethatneededtwoworkerstocompleteacyclewas the problem.With production reduced by 50 percent, the operationstill required twoworkers.Oneworkerwasneededat the inputandoneat theoutputofalarge,autonomatedmachine,forexample.

Thus,anautonomatedmachinediscoversabnormalitiesandperformstheusefulroleofpreventingtheproductionofdefectiveproducts.Fromanotherangle,however,ithasthedisadvantageofrequiringacertainnumberofworkers.

This is amajor handicap in any factory that has to respond to a change inproduction. Therefore, the next step for the Toyota production systemwas toembarkondemolishingthesystemofafixednumberofworkers.Thiswastheconceptofreducingthenumberofworkers.

This idea is applied not only to themachine but also to the production linewherepeopleareworking.Afive-workerline,forexample,isorganizedinsuchawaythattheworkcanbedonebyfourmenincaseoneworkerisabsent.But

the quantity produced is only 80 percent of the standard. To accomplish this,improvementsinplantlayoutandequipment,aswellasmulti-skilledtrainingofworkersmustbeinstitutedwhiletimesarestillnormal.

Toreduce thenumberofworkersmeans thataproduction lineoramachinecanbeoperatedbyone,two,oranynumberofworkers.Theideaoriginatedwiththeneedtorefutetheneedforafixednumberofworkersforamachine.

Isn'tthissortofunderstandingneededbyallbusinessesduringperiodsoflowgrowth?Inahigh-growthperiod,productivitycanberaisedbyanyone.Buthowmanycanattainitduringthemoredifficultcircumstancesinducedbylowgrowthrate?Thisisthedecidingfactorinthesuccessorfailureofanenterprise.

Even during high growth, to prevent generating excess inventory throughoverproduction,weavoidedarbitrarilybuyingmassproductionmachinery.Weknewhowbigastraintheapproachof"bigguns"couldbeonmanufacturing.Sowe concentrated on developing the Toyota production system without beingpushedbythetrends.

TheToyotaproductionsystemfirstestablishedthebasisofrationalizationwithitsproductionmethod.Itschallengewasthetotaleliminationofwastebyusingthejust-in-timesystemandkanban.

For every problem, we must have a specific countermeasure. A vaguestatement thatwasteshouldbeeliminated,or that thereare toomanyworkers,willnotconvinceanybody.Butwith the introductionof theToyotaproductionsystem,wastecanbe identified immediately and specifically. In fact, I alwayssayproductioncanbedonewithhalfasmanyworkers.

At Toyota today, changes are occurring in all production areas. Everyoneknows the fluctuations of various factors in producing different types of cars.Whenonemodeldropsinsales,itscostsrise.Butyoucannotaskthecustomertopaymoreforthecar.

Carmodelsinlesserdemandstillsomehowhavetobemadecheaplyandsoldfor a profit. Facing this fact, we continue to study methods of increasingproductivityevenwhenquantitiesdecrease.

Eachautomobilemodelhas itsownhistory.TheCoronacurrentlysellswell,butitdidnot,atfirst,andwehadadifficult time.Whenamodeldoesnotsellwell,wemust increaseefficiencyevenwith smallquantities to reducecosts. Ialwaystellpeopleinmanufacturing:

"There must be hundreds of people around the world who can improveproductivity and efficiency by increasing production quantity. We, too, havesuchforemenatToyota.Butfewpeopleintheworldcanraiseproductivitywhenproduction quantities decrease.With even one such person, the character of abusinessoperationwillbethatmuchstronger."

Peoplepreferworkingwithlargequantities,however.Itiseasierthanhavingtoworkhardandlearnfromproducingsmallquantities.

Ithasbeenover30yearssinceIbeganworkontheToyotaproductionsystem.During this period, I have been taught a lot of ideas bymany people and bysociety.Eachideawasconceivedanddevelopedinresponsetoaneed.

Ithinkitismoreworthwhileinacompanytoworkintheareawherethereareproblemsduetodwindlingsalesthaninanareawheresalesarerising.Theneedforimprovementismoreurgenteventhoughitmaynotseemthatway.

It isashame that in today'sbusinessand industrial society, the relationshipsbetweenworkandworkerandmachineandworkerhavebecomesoadversarial.For our development to continue, we must become more generous, moreresourceful,andmorecreative.

As the Toyota production system evolved, I frequently applied reversecommonsenseorinversethinking.Iurgeallmanagers,intermediatesupervisors,foremen,andworkersinproductiontobemoreflexibleintheirthinkingastheygoabouttheirwork.

►LearningfromtheFlexibilityofAncientPeople

Digressing for amoment, it is said that the characters for fermented soybean(natt(5)andbeancurd(tofu)hadoppositemeaningsoriginally.

Therearevarioustheoriesaboutthis.OneholdsthatOgyuSorai,aConfucian

scholar of themid-Edo period,mistook the two terms.Another has it that heintentionallyswitchedthem.

NattO, a product for which the Tohoku region, Mito, and other areas arefamed,shouldoriginallyhavebeenwrittenthewaytofuisnow[11],becausenattoismadebyallowingsoybeans[$]torot[as

Whatwenowcall"tofu"wasoriginallywrittenwiththecharactersnowusedfornatto,[*],becausetofuismadefromsoybeansI_R]andformed[m]intocubes.

Theproblemisthatnoonewouldevereatnattoifthewordwerewrittenwiththecharactersfor"rottensoybeans,"whiletofuissowhiteandappetizingthat,evenifitwerewrittenas[a],noonewouldthinkofitasrottenbeans.Thestorygoes,then,thateachwrittenwordwasusedfortheother.

NomenclatureinJapancontainsmanyotherfascinatingexamplesofthissort,examplesthatrevealacharacteristicallyJapanesewayofconceivingthings.

AmongtheChinesecharactersusedinJapanese,wefindathoughtprocessinJapanesethatdiffersfromtheolderChinese.ThiswayofthinkingwasbornintheJapaneseenvironment.

Iplacevalueon thenative ideasunique toJapan.For instance,although theToyota Motor Company has become a Y 2 trillion firm, we do not considermovingawayfromthemainofficeinMikawa.Sometimeswearewarnedthatbystayinginsuchaplacewemissoutonthelatestnews.However,Idonotbelievethiskeepsus in thedarkinformation-wisefromtheworldor therestofJapan.TheToyotastyle informationsystemmentionedearlier,organizedaspartof theToyotaproductionsystem,isworkingveryeffectivelyinthissense.

Of course, what is important is not the system but the creativity of humanbeings who select and interpret the information. Fortunately, the Toyotaproductionsystemisstillbeingperfected.Improvementsaremadedailythankstothevastnumberofsuggestionsreceivedfromitsemployees.

MymindhasatendencytocrystallizeandsoIrenewmydeterminationeveryday and force myself to think creatively. There is always much to do in the

productionfield...

PostscripttotheOriginalJapaneseEditionMY WISH HAS been to give readers a basic understanding of the Toyotaproduction system. I wanted to illustrate how it reduces costs by improvingproductivity with human effort and innovation even in periods of severe lowgrowth-notbyincreasingquantities.

Whilewritingthisbook,IwitnessedJapaneseeconomyrunningintomoreandmore serious international problems regarding theyen.This concernsmeverymuch.Theautomobileindustryhasgrowninthelasttwoorthreeyearsprimarilythroughexports.Thisgrowth,however,seemstohavealreadyreacheditslimit.

.Japanese industrymustgetaway frommassproductionquicklyandmakeatransition based on bold ideas. It would be very fortunate if the Toyotaproductionsystembecameausefultoolingeneratingthesechanges.

WithouttheassistanceofMr.MitoSetsuoofKeizaiJduarisuto,thisbookwouldnothavebeenpossible.Iwishtorecordthefacthereandexpressmygratitudeto

him.

IhavebeenrenewedandinfluencedbythewritingsandpersonalgreatnessofMr.ToyodaSakichiandMr.ToyodaKiichiro.TothemIamindebted.

Finally,IwishtothankthestaffmembersofDiamondInc.forthelabortheyprovidedbehindthescenes.[Ed.-DiamondistheoriginalJapanesepublisher.]

TaiichiOhno

1978

GlossaryofMajorTermsAs a guide to understanding and applying the Toyota production system, theauthorhasdefined24importantterms.

►Andon

Andon,theline-stopindicatorboardhungabovetheproductionline,isavisualcontrol.Thetroubleindicatorlightworksasfollows:

Whenoperationsarenormal, thegreen light ison.Whenaworkerwants toadjustsomethingonthe lineandcallsforhelp,he turnsonayellowlight. Ifalinestopisneededtorectifyaproblem,theredlightisturnedon.Tothoroughlyeliminateabnormalities,workersshouldnotbeafraidtostoptheline.

►Autonomation(AutomationwithaHumanTouch)

The Toyota production system utilizes autonomation, or automation with ahumantouch,rather thanautomation.Autonomationmeans transferringhumanintelligencetoamachine.TheconceptoriginatedwiththeautoactivatedloomofToyoda Sakichi. His inventionwas equippedwith a device that automaticallyandimmediatelystoppedthemachineif theverticalor lateral threadsbrokeorranout.Inotherwords,adevicecapableofmakingajudgmentwasbuiltintothemachine.

AtToyota, this concept is appliednot only to themachinerybut also to theproductionlineandtheworkers.Inotherwords,ifanabnormalsituationarises,aworker is required tostop the line.Autonomationprevents theproductionofdefec tive products, eliminates overproduction, and automatically stopsabnormalitiesontheproductionlineallowingthesituationtobeinvestigated.

►Baka-Yoke(Fool-Proofing)

Toproducequalityproducts100percentofthetime,innovationsmustbemadetotoolsandequipmentinordertoinstalldevicesfor thepreventionofdefects.

Thisiscalledbaka-yoke,andthefollowingareexamplesofBaka-yokedevices:

1.Whenthereisaworkingmistake,thematerialwillnotfitthetool.

2.Ifthereisirregularityinthematerial,themachinewillnotstart.

3. If there is a working mistake, the machine will not start the machiningprocess.

4.When thereareworkingmistakesora step leftout, correctionsaremadeautomaticallyandmachiningcontinues.

5.Irregularitiesintheearlierprocessarecheckedinthelaterprocesstostopthedefectiveproducts.

6.Whensomestepisforgotten,thenextprocesswillnotstart.

►BatonPassingZone

Inaswimmingrelay,thefastestandslowestswimmersmustbothswimthesamefixed distance. In a track relay, however, a faster runner can make up for aslower runner in thebatonpassing zone.On a production line, the track relaymethod ispreferred.To improve theefficiencyof the line, thesupervisormustestablishabatonpassingzonewhereworkershaveachancetocatchup.

►DoNotMakeIsolatedIslands

Ifworkersareisolatedhereandthere,theycannothelpeachother.Butifworkcombinations are studied and work distribution, or work positioning, done toenable workers to assist each other, the number of workers can be reduced.Whenworkflowisproperlylaidout,smallisolatedislandsdonotform.

►FiveWhy's

ThebasisofToyota'sscientificapproachistoaskwhyfivetimeswheneverwefind a problem. In theToyota production system, "5W"means fivewhy's.Byrepeating why five times, the nature of the problem as well as its solution

becomesclear.Thesolution,orthehow-to,isdesignatedas"IH."Thus,"FiveWhy'sequalOneHow"(5W=1H).

►Just-In-Time

Withthepossibilityofacquiringproductsatthetimeandinthequantityneeded,waste, unevenness, and unreasonableness can be eliminated and efficiencyimproved. Toyoda Kiichiro, father ofJapanese car manufacturing, originallyconceived this idea which his successors then developed into a productionsystem.Thethingtorememberisthatitisnotonly"intime"but"justintime."Just-in-time and autonomation constitute the two main pillars of the Toyotaproductionsystem.

►Kanban

Akanban("tag")isatoolformanagingandassuringjust-intimeproduction,thefirstpillaroftheToyotaproductionsystem.Basically,akanbanisasimpleanddirectformofcommunicationalwayslocatedatthepointwhereitisneeded.Inmost cases, a kanban is a small piece of paper inserted in a rectangularvinylenvelope.Onthispieceofpaperiswrittenhowmanyofwhatparttopickuporwhichpartstoassemble.

In the just-in-time method, a later process goes to an earlier process towithdrawneededgoods,when and in thequantity needed.The earlier processthenproducesthequantitywithdrawn.Inthiscase,whenthelaterprocessgoesto the earlier process to pick up, they are connected by the withdrawal ortransport information, called withdrawal kanban and transport kanban,respectively.Thisisanimportantroleofkanban.

Anotherroleisthein-process,orproductionorderingkanban,whichtellstheoperatortoproducethequantitywithdrawnfromtheearlierprocess.Thesetwokanbanworkasone,circulatingbetweentheprocesseswithintheToyotaMotorCompany, between the company and its affiliates, and also between theprocessesineachaffiliate.

In addition, there is the signal kanban used in the stamping process, forinstance,whereproductionofaspecificquantity,perhapsmorethanrequiredby

just-in-time,cannotbeavoided.

►LaborSavingtoWorkerSavingtoReducingNumberofWorkers

Iflarge,highperformancemachinesarebought,wesaveworkerenergy.Inotherwords, labor saving is achieved. However, it is more important to reduce thenumber of workers by using these machines and reassigning workers todepartments where they are needed. If, as a result of labor saving, 0.9 of aworker is saved, itmeansnothing.At leastonepersonmustbesavedbeforeacostreductionresults.Therefore,wemustattainworkersaving.

AtToyota,wesetanewgoal-toreducethenumberofworkers.Toachieveworker saving, we promoted autonomation. When production was decreased,however,wecouldnotreducethenumberofworkersproportionately.Thiswasbecause autonomation was operated by a fixed number of workers. In alowgrowthperiod,wemust (1) breakdown this concept of a fixednumberofworkersand(2)setupnew,flexibleproductionlineswhereworkcanbecarriedon by fewer workers regardless of production quantities. This is the aim ofreducingthenumberofworkers.

►Movingvs.Working

Regardlessofhowmuchworkersmove,itdoesnotmeanworkhasbeendone.Workingmeansthatprogresshasbeenmade,thatajobisdonewithlittlewasteand high efficiency. The supervisor must make an effort to turn workers'movementsintoworking.

►Multi-ProcessOperationSystem

In themachining process, suppose, for example, that five lathes, five millingmachines, and five drillingmachines are lined up in two parallel rows. If anoperator operates five lathes, we call this a multi-unit operation system. Thesameistrueforhandlingfivemillingorfivedrillingmachines.

If,however,anoperatorusesonelathe,onemillingmachine,andonedrillingmachine (that is, several processes), we call this a multi-process operation

system. In the Toyota production system, setting up the production flow is ofprimary importance. Therefore, we try to achieve a multi-process operationsystem that directly reduces the number of workers. For the worker on theproductionline,thismeansshiftingfrombeingsingle-skilledtobecomingmulti-skilled.

►OperatingRateandOperableRate

Theoperatingrateisthecurrentproductionlevelinrelationtothefulloperatingcapacity of the machine for a specific length of time. If sales go down, theoperating rate naturally drops. On the other hand, if orders increase, theoperating rate can reach 120 percent ormore through shiftwork or overtime.Whetheranoperatingrateisgoodorbadisdeterminedbythewayequipmentisusedrelativetothequantityofproductsneeded.

The operable rate at Toyota means the machine's availability and operablecondition when operation is desired. The ideal 100 percent depends on goodequipmentmaintenanceandrapidchangeovers.

►ProductionLeveling

On a production line, fluctuations in product flow increase waste. This isbecause the equipment, workers, inventory, and other elements required forproductionmustalwaysbepreparedforpeakproduction.Ifalaterprocessvariesits withdrawal of parts in terms of timing and quantity, the range of thesefluctuationswillincreaseastheymoveupthelinetowardtheearlierprocesses.

Topreventfluctuationsinproductioneveninoutsideaffiliates,wemusttrytokeepfluctuationin thefinalassemblylinetozero.Toyota'sfinalassemblylineneverassemblesthesameautomobilemodelinabatch.Productionisleveledbymakingfirstonemodel,thenanothermodel,thenyetanother.

-ProfitMakingIndustrialEngineering

Theproductionmanagementtechniquewecallindustrialengineering(IE)camefromAmerica.Traditionaldefinitionsaside,intheToyotaproductionsystem,IEis regarded as the production technology that attempts to reduce costs by

harmonizing quality, quantity, and timing throughout the production area. It isnot theIEmethoddiscussed inacademia.Themost importantcharacteristicofToyotastyleIEisthatitisaprofit-earningIEtieddirectlytocostreduction.

►RealCause

Underneaththe"cause"ofaproblem,therealcauseishidden.Ineverycase,wemust dig up the real cause by asking why, why, why, why, why. Otherwise,countermeasurescannotbetakenandproblemswillnotbetrulysolved.

►RequiredNumbersEqualProductionQuantity

AtToyota,productionquantityequalsmarketdemandoractualorders.Inotherwords,thenumberneededisthenumbersold.Therefore,becausemarketneedsare directly connected to production, manufacturing cannot arbitrarily changeproduction quantities. To reduce overproduction, efficiency improvementmustbe achieved on the basis of required numbers. In other words, productionquantitiesarebasedondemand.

►SmallLotSizesandQuickSetups

In production leveling, batches are made as small as possible in contrast totraditionalmassproduction,wherebiggerisconsideredbetter.AtToyotawetrytoavoidassemblingthesametypeofcar inbatches.Ofcourse,whenthefinalassemblyprocessdoesproducethisway,theearlierprocess-suchasthepressoperation - naturally has to go alongwith it.Thismeansdie changesmust bedonefrequently.Uptonow,conventionalwisdomhasdictatedhavingeachdiepress punch out as many parts as possible. In the Toyota production system,however,thisdoesnotapply.Diechangesaremadequicklyandimprovedevenmorewith practice. In the 1940s, it took two to three hours. In the 1950s, itdroppedfromonehourto15minutes.Presently,setupshavebeenshortenedtothreeminutes.

►StandardWorkProcedures

For just-in-time production to be carried out, standard work sheets for each

processmustbeclearandconcise.Thethreeelementsofastandardworksheetare:

1.Cycletime,thelengthoftime(minutesandseconds)inwhichoneunitistobemade;

2.Worksequence,thesequenceofworkintheflowoftime;

3. Standard inventory, the minimum amount of goods needed to keep theprocessgoing.

►StoppingtheLine

A production line that does not stop is either a perfect line or a linewithbigproblems.Whenmanypeopleareassignedtoalineandtheflowdoesnotstop,itmeansproblemsarenotsurfacing.Thisisbad.

Itisimportanttosetupalinesothatitcanbestoppedwhennecessary:

•topreventgeneratingdefectiveproducts,

•tomakeimprovementswithonlyafewworkers,andfinally,

•todevelopalinethatisstrongandrarelyneedstobestopped.

Thereisnoreasontofearalinestop.

►ToyotaProductionSystem

The first aspect of theToyota production system is theToyotastylemethodofproduction,whichmeansputtinga flowinto themanufacturingprocess. In thepast, latheswere located in the lathearea,andmillingmachines in themillingarea.Now,we place a lathe, amillingmachine, and a drillingmachine in theactualsequenceofthemanufacturingprocessing.

This way, instead of having one worker per machine, one worker overseesmanymachinesor,moreaccurately,oneworkeroperatesmanyprocesses.Thisimprovesproductivity.

Nextisthekanbansystem,anoperationaltoolthatcarriesoutthejust-in-timeproductionmethod.Kanbanassuresthattherightpartsareavailableatthetimeand in the quantity needed by functioning as the withdrawal or transportinformation,anorderforconveyanceordeliveryofthegoodsandalsoasaworkorderwithintheproductionprocesses.

VisualControl(ManagementbySight)

Autonomationmeansstoppingtheproductionlineorthemachinewheneveranabnormalsituationarises.Thisclarifieswhatisnormalandwhatisabnormal.Intermsofquality,anydefectiveproductsareforcedtosurfacebecausetheactualprogress of work in comparison to daily production plans is always clearlyvisible.Thisideaappliestomachinesandthelineaswellastothearrangementofgoodsandtools,inventory,circulationofkanban,standardworkprocedures,and so on. In production lines using the Toyota production system, visualcontrol,ormanagementbysight,isenforced.

►WasteRecognitionandElimination

To recognize waste, we must understand its nature. Production waste can bedividedintothefollowingcategories:

•overproduction

•waiting

•transporting

•toomuchmachining(over-processing)

•inventories

•moving

•makingdefectivepartsandproducts

Considerthewasteofoverproduction,forexample.Itisnotanexaggerationtosaythatinalowgrowthperiodsuchwasteisacrimeagainstsocietymorethana

businessloss.Eliminatingwastemustbeabusiness'sfirstobjective.

►WorkFlowandWorkForcedtoFlow

Work flowmeans thatvalue is added to theproduct ineachprocesswhile theproductflowsalong.Ifgoodsarecarriedbyconveyor,thisisnotworkflow,butworkforcedtoflow.ThebasicachievementoftheToyotaproductionsystemissetting up the manufacturing flow. This naturally means establishing a workflow.

►WorkImprovementvs.EquipmentImprovement

Planstoimproveproductioncanberoughlydividedinto(1)workimprovement,suchasestablishingworkstandards, redistributingwork,andclearly indicatingtheplaceswherethingsaretobeplaced,and(2)equipmentimprovement,suchas buying equipment and making machines autonomated. Equipmentimprovementtakesmoneyandcannotbeundone.

In the Toyota production system, sequencing of work and workstandardizationaredonefirst.Inthisway,mostproblemareascanbeeliminatedor improved. If equipment improvement comes first,manufacturing processeswillneverbeimproved.

Editor'sNotesChapter1

1.ForcomparativestatisticsbetweenJapaneseandU.S.automakers,seepages215-217inMichaelA.Cusumano'sThu'JapaneseAutomobileIndustry(TheCouncil on East Asian Studies, Harvard University, distributed by HarvardUniversityPress,1985).

2.In1937,ToyotaMotorCompanywasfoundedbyToyodaKiichiro,thesonofToyodaSakichi,anautomaticloominventorfascinatedbymotorvehiclesandfounderofToyodaSpinningandWeavingandToyodaAutomaticLoom.Thefamily name "Toyoda,"whichmeans "abundant rice field,"was changed to"Toyota"bytheautomobiledivisionformarketingpurposes.Thewordisanalternatereadingofthetwologographswithwhichthefamilynameiswritten.[Ibid.,59.]

Chapter2

1.MaruzenisachainofJapanesebookstores.

2.Thereare threedistinct regionalmarkets inJapan:Kanto,encompassing theTokyo area; Kansai, in the Kyoto-Osaka region; and Nagoya, wherein liesToyotaCity.Eachregionpersonifiesdifferentbusinessqualities.[DavidJ.Lu,InsideCorporateJapan(Cambridge,MA:ProductivityPress,1987),Ch.1.]

3.Theterm"rationalization"isfrequentlyusedinJapanesewritingstoindicateactivitiesundertakentoupgradetechnology,improvequality,andreducecost.Itmayalsomean reorganizingand integratingan industrywhileengaged intheabove-mentionedactivities.[Ibid.,227.]

Chapter3

1. From Factory magazine, formerly published by McGraw-Hill and defunctsince1977.

2. Attributed to ProfessorW.V. Clark, Massachusetts Institute of Technology,whometwith the inspectionpartyofJapan's IEAssociationfoundedby theJapan Productivity Center for the purpose of studying American IE in theearly 1960s. The IE definition attributed to Professor Clark is not in hisoriginalwordsbuthasbeenretranslatedintoEnglishfromJapanese.

3. This IE definition is an English translation of a Japanese translation of theoriginal English definition. The source of the original English definitioncannotbelocated.

Chapter4

1. Toyoda Eiji was president of ToyotaMotor Company from 1967 to 1982.Born in1913,hewas thecousinofToyodaKiichiroand the sonofToyodaSakichi'sbrother.

2.Taka-Diastase is the trade nameof a digestive compound developed byDr.TakamineJokichi(1854-1922),aJapanesechemistwhoworkedintheUnitedStates.Takaminewasalsothefirsttosucceedintheextractionofepinephrine.

3.Dr.NoguchiHideyo (1876-1928)was a Japanese-bornAmerican physicianandbacteriologistwhoworkedintheUnitedStates.

4.Anearthquakein1923intheTokyoareapromptedthemunicipalgovernmentto import thousands of Model T trucks from the United States to replacedestroyedtransportationnetworksandtodistributesupplies. [Cusumano,op.cit.,17.1

5. Honda Kotaro was a professor at Tohoku University and Japan's leadingexpertinironalloys.

6.This1936legislation,draftedbythemilitary,requiredthatcompaniesmakingover3,000vehiclesperyearobtainalicensefromthegovernment.Onlyfirmswithover50percentoftheirsharesandmembersof theirboardofdirectorsheldbyJapanesecitizenscouldbelicensed.[Ibid.,17.]

Chapter5

1.CharlesE.Sorensen,withSamuelT.Williamson,MyFortyYearswithFord

(NewYork:W.W.Norton&Company,1956),117-118.

2. Today and Tomorrow has been out of print for decades. Because of itseducationalvalue,ProductivityPresswill issuea commemorativeedition in1988.

3. Henry Ford, Today and Tomorrow (New York: Doubleday and Company,1926),90-92.

4.Ibid.,78.

5.Ibid.,79.

6.Ibid.,192.

7.WhileFordhadalwaysproducedjustonecar type,GeneralMotors in1923beganofferingseveralcartypeswithyearlymodelchanges.(Cusumano,op.cit.,270.1

8.Ford,op.cit.,55-56.

9.Ibid.,56-57.

10.Ibid.,4-6.

AbouttheAuthorTAIICHI OHNO WAS born in Dairen (Port Arthur), Manchuria, China, inFebruary 1912. In 1932, after graduating from the department of mechanicalengineering, Nagoya Technical High School, he joined Toyoda Spinning andWeaving. In1943,hewas transferred to theToyotaMotorCompanywherehewas named machine shop manager in 1949. He became Toyota's director in1954, managing director in 1964, senior managing director in 1970, andexecutivevicepresidentin1975.AlthoughheretiredfromToyotain1978,Mr.Ohno continues as chairman of Toyoda Spinning andWeaving. He resides inToyota-shi,Aichi-ken.

This book first appeared in Japan in May 1978 and reached its twentiethprinting inFebruary1980.ProductivityPress's1988edition is the firstprintedfortheEnglish-readingpublic.

Index

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AbouttheShopfloorSeriesPut powerful and proven improvement tools in the hands of your entireworkforce!

Progressiveshopfloorimprovementtechniquesareimperativeformanufacturerswhowanttostaycompetitiveandtoachieveworldclassexcellence.Andit'sthecomprehensiveeducationofallshopfloorworkersthatensuresfullparticipationandsuccesswhenimplementingnewprograms.TheShopfloorSeriesbooksmakepracticalinformationaccessibletoeveryonebypresentingmajorconceptsandtoolsinsimple,clearlanguageandatareadinglevelthathasbeenadjustedforoperatorsbyskilledinstructionaldesigners.Onemainideaispresentedeverytwotofourpagessothatthebookcanbepickedupandputdowneasily.Eachchapterbeginswithanoverviewandendswithasummarysection.Helpfulillustrationsareusedthroughout.

BookscurrentlyintheShopfloorSeriesinclude:

5SforOperators5PillarsoftheVisualWorkplace

TheProductivityDevelopmentTeam

ISBN1-56327-123-0/133pages

Order5SOP-B163/$25.00

Mistake-ProofingforOperators

TheProductivityDevelopmentTeam

ISBN1-56327-127-3/93pages

OrderZQCOP-B163/$25.00

TPMforSupervisors

TheProductivityDevelopmentTeam

ISBN1-56327-161-3/96pages

OrderTPMSUP-B163/$25.00

CellularManufacturing

TheProductivityDevelopmentTeam

ISBN1-56327-213-X/96pages

OrderCELL-B163/$25.00

Just-In-TimeforOperators

TheProductivityDevelopmentTeam

ISBN1-56327-133-8/84pages

OrderJITOP-B163/$25.00

OEEforOperators

TheProductivityDevelopmentTeam

ISBN1-56327-221-0/_96pages

OrderOEEOP-B163/$25.00

QuickChangeoverforOperatorsTheSMEDSystem

TheProductivityDevelopmentTeam

ISBN1-56327-125-7/93pages

OrderQCOOP-B163/$25.00

TPMTeamGuide

KunioShirose

ISBN1-56327-079-X/175pages

OrderTGUIDE-B163/$25.00

TPMforEveryOperator

JapanInstituteofPlantMaintenance

ISBN1-56327-080-3/136pages

OrderTPMEO-B163/$25.00

AutonomousMaintenance

JapanInstituteofPlantMaintenance

ISBN1-56327-082-X/138pages

OrderAUTMOP-8163/$25.00

FocusedEquipmentImprovement

JapanInstituteofPlantMaintenance

ISBN1-56327-081-1/138pages

OrderFEIOP-B163/$25.00

Continue Your Learning with In-House Training and Consulting fromProductivity,Inc.

Productivity, Inc. offers a diverse menu of consulting services and trainingproductsthatcomplementtheexcitingideasfromourbooks.Whetheryouneedassistance with long-term planning or focused, results-driven training,Productivity's experienced professional staff can enhance your pursuit ofcompetitiveadvantage.

Productivity, Inc. integrates a cutting edge management system with today'sleading process improvement tools for rapid, measurable, lasting results. In

concert with your management team, we will focus on implementing theprinciples of Value Adding Management, Total Quality Management, Just-InTime, and Total Productive Maintenance. Each approach is supported byProductivity'swidearrayofteam-basedtools:Standardization,One-PieceFlow,Hoshin Planning, Quick Changeover, Mistake-Proofing, Kanban, ProblemSolving with CEDAC, Visual Workplace, Visual Office, AutonomousMaintenance, Equipment Effectiveness, Design of Experiments, QualityFunctionDeployment,andmore.

Productivity is known for significant improvement on the shopfloor and thebottom line. Through years of repeat business, an expanding and loyal clientbase continues to recommend Productivity to their colleagues. Contact us tolearnhowwecantailorourservicestofityourneeds.

Telephone:1-800-394-6868(U.S.only)or1-503-2350600

Fax:1-800-394-6286