Sustainable Competitive Advantage:

Lean Manufacturing

Case Study:  Toyota

Toyota Production System as a Sustainable Competitive Advantage

 

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Founder, Ten3 Business e-Coach Inspiration and Innovation unlimited!

 

 

 

"The emphasis should be on why we do a job."  ~ Edwards Deming

 

Specific Factors Underlying Toyota's Success

  • Lean manufacturing system.

  • An effective and efficient human resources management system, the cornerstone of which is a high level of employee loyalty and commitment to quality.

  • A state-of-the-art assembly system incorporating the latest robotic technology.

  • A well-coordinated network of world-class suppliers.

  • A highly effective and efficient just-in-time (JIT) inventory system.

Toyota's 10 Management Principles

  • Relentlessly strive to conduct Kaizen activities... More

 

 

7 Principles of TPS

  • Pull Production: To reduce inventory holding costs and lead times, Toyota developed the pull production method wherein the quantity of work performed at each stage of the process is dictated solely by demand for materials from the immediate next stage. The Kamban scheme coordinates the flow of small containers of materials between stages. This is where the term Just-in-Time (JIT) originated.

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Transitioning Your Company To a Lean Enterprise

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Example of a Lean Value Chain

 

Toyota’s Global Competitive Advantage

Toyota’s global competitive advantage is based on a corporate philosophy known as the Toyota Production System. The system depends in part on a human resources management policy that stimulates employee creativity and loyalty but also on a highly efficient network of suppliers and components manufacturers.

Employee Empowerment: Average Annual Results

  • More than 700,000 improvement suggestions were submitted by Toyota's employees.

  • That is an average of over 10 improvement suggestions per employee per year.

  • Over 99% of suggestions were implemented.

The Toyota Way: 14 Principles

The Toyota Way is not the Toyota Production System (TPS). The 14 Principles of the Toyota Way is a management philosophy used by the Toyota corporation that includes TPS, also known as lean manufacturing. TPS is the most systematic and highly developed example of what the principles of the Toyota Way can accomplish. The Toyota Way consists of the foundational principles of the Toyota culture, which allows the TPS to function so effectively... More

Corporate Culture

The fundamental reason for Toyota's success in the global marketplace lies in its corporate philosophy – the set of rules and attitudes that govern the use of its resources.

Toyota have successfully penetrated global markets and established a world-wide presence by virtue of its productivity. The company's approach to both product development and distribution is very consumer-friendly and market-driven. Toyota's philosophy of empowering its workers is the centrepiece of a human resources management system that fosters creativity, continuous improvement, and innovation by encouraging employee participation, and that likewise engenders high levels of employee loyalty. Knowing that a workplace with high morale and job satisfaction is more likely to produce reliable, high-quality products at affordable prices, Toyota have institutionalized many successful workforce practices. Toyota has done so not only in its own plants but also in supplier plants that were experiencing problems.1

Although many car manufacturers have earned a reputation for building high-quality cars, they have been unable to overcome Toyota's advantages in human resource management, supplier networks and distribution systems in the highly competitive car market. Much of Toyota's success in the world markets is attributed directly to the synergistic performance of its policies in human resources management and supply-chain networks.

Five Ss

The Five Ss refer to the five dimensions of of workplace optimization: Seiri (Sort), Seiton (Set in order), Seiso (Shine), Seiketsu (Standardize), and Shitsuke (Sustain)... More

The Focus of Toyota Production System

Real TPS is not just about “flow” or “pull production” or “cellular manufacturing” or "load leveling". TPS in Toyota is primarily concerned with making a profit, and satisfying the customer with the highest possible quality at the lowest cost in the shortest lead-time, while developing the talents and skills of its workforce through rigorous improvement routines and problem solving disciplines. This stated aim is mixed in with the twin production principles of Just in Time (make and deliver the right part, in the right amount, at the right time), and Jidoka (build in quality at the process), as well as the notion of continuous improvement by standardization and elimination of waste in all operations to improve quality, cost, productivity, lead-time, safety, morale and other metrics as needed.2

 

 

References:

  1. Creating Sustainable Competitive Advantage: The Toyota Philosophy, M. Reza Vaghefi

  2. TPS vs. Lean and the Law of Unintended Consequences, Art Smalley

  3. Lean Manufacturing Overview, 42 PowerPoint slides by Factory Strategies Group LLC

  4. Toyota Production System, Taiichi Ohno

  5. The Toyota Way, Jeffrey Liker

  6. Kanban Just-In-Time at Toyota, Japan Management Association

  7. Lean Manufacturing That Works, Bill Carreira

  8. Lean Production Simplified, Pascal Dennis, John Shook

  9. The Lean Manufacturing Pocket Handbook, Kenneth W. Dailey

  10. Study of the Toyota Production System, Shigeo Shingo

  11. Kaizen: The Key To Japan's Competitive Success, Masaaki Imai

  12. Kaizen, 25 PowerPoint slides by Factory Strategies Group LLC