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The Toyota Way

The Big Idea

Toyota first caught the world’s attention in the 1980s when consumers started noticing that Toyota cars lasted longer and required fewer repairs than American cars. Today, the company is the world’s most profitable car manufacturer, consistently producing high-quality cars using fewer man hours and less on-hand inventories. To this day, Toyota continues to raise the bar for manufacturing, production development and process excellence.

The Toyota Way explains the management principle and business philosophy behind Toyota’s success. It narrates Toyota’s approach to Lean Production (known as the Toyota Production System) and the 14 principles that drive Toyota towards quality and excellence. The book also explains how you can adopt the same principles to improve your business processes, while cutting down on operations and production costs.

The World Class Power of the Toyota Way

The Toyota Way: Using Operational Excellence as a Strategic Weapon

The Toyota Production System (TPS) and Lean Production

Toyota invented Lean Production in the 1940s and 50s. The company focused on eliminating wasted time and material from every step of the production process (from raw materials to finished goods).

The result was a fast and flexible process that gives the customers what they want, when they want it, at the highest quality and most affordable cost. Toyota improved production by:

• Eliminating wasted time and resources.
• Building quality into workplace systems
• Finding low-cost and yet reliable alternatives to expensive new technology.
• Perfecting business processes.
• Building a learning culture for continuous improvement.

The “4P” model of the Toyota Way

How Toyota Became the World’s Best Manufacturer

Toyota developed the Toyota Production System (TPS) after World War II. While Ford and GM used mass production and economies of scale, Toyota faced very different business conditions. Toyota’s market was very small but it had to produce a variety of vehicles on the same assembly line to satisfy customers. The solution: making the operations flexible. This resulted in the birth of TPS.

TPS borrowed some of its ideas from the United States. The core idea of the Just in Time (JIT) system came from the concept of the “pull-system”, which was inspired by the American supermarkets. In the pull system, individual items are replenished as each item begins to run low on the shelf.

Applied to Toyota, it means that the first step in the process is not completed until the second step uses the materials or supplies from Step 1. At Toyota, every step of the manufacturing process uses Kanban to signal to the previous step when its part needs to be replenished.

The company was also inspired by W. Edwards Deming. Aside from broadly defining customers to include internal and external clients, he also encouraged Toyota to adopt a systematic approach to problem solving, which became a cornerstone for continuous improvement (known as Kaizen).

The Heart of the Toyota Production System: Eliminating Waste

The point of the TPS is to minimize time spent on non-value adding activities by positioning the materials and tools as close as possible to the point of assembly.

The Major types of non-value adding waste in business or production process are:

1. Overproduction.
2. Waiting or time on hand.
3. Unnecessary transport or conveyance.
4. Over processing or incorrect processing.
5. Excess inventory.
6. Unnecessary movement.
7. Defects.
8. Unused employee creativity.

The Business Principles of the Toyota Way

Principle 1: Base your management decision on a long-term philosophy, even at the expense of short-term financial goals

The Toyota message is consistent: Do the right thing for the company, its employees, the customer and the society as a whole. This long-term philosophy is the guiding post of the company in its continuous quest to offer the best in quality and service to its customers, employees and stockholders.

Long-term goal should supersede short-term decision making or goals.

Develop, work, grow and align the company towards a common goal that is bigger than making money. Your philosophical mission is and should be the foundation of all your other principles.

Toyota is aligned around satisfying the customer. It believes that a satisfied customer comes back and gives more business through referrals. It generates value for the customer, the society and the economy.

One of the keys to success of Toyota is that it lives by the philosophy of self reliance and a “let’s do it ourselves” attitude. This can be best illustrated when it ventured into the luxury car industry. It did not buy a company that already made luxury cars. Rather, it created its own luxury division — the Lexus — from scratch in order to learn and understand the essence of a luxury car. . . . . . .