Sam Lee Mohan, Founder & CEO at GBC, 4 min read
“Toyota’s Legendary Production System…Capability Into Competitive Advantage”
I am a long-standing admirer of Toyota. I suppose the fascination started when I was just a little kid, around 8 years of age. My dad’s new car was a cream 1974 Toyota Corolla. My dad loved his car and it wasn’t until 1987 when his beloved corolla car would get stolen. Yes, you read right, stolen! Shortly after the devastation, my dad bought a yellow 1984 Toyota Cressida. My dad’s love for Toyota was simple…reliability. He would go on for hours talking about why Toyota had captured his heart and that he would only ever own a Toyota. If you’re thinking “Okay, so your dad loves Toyota, so what?” Well, let me quickly reassure that this article is not about my dad and his love for Toyota but rather about The Heart of Toyota’s Strategy and their legendary production system.
So, let me first start by telling you about how Toyota competes. By manufacturing world-class, quality vehicles at lower costs and selling them at competitive prices, the heart of Toyota’s strategy is to out-compete its rivals. Over 50 years ago, Toyota began its journey to improve its manufacturing competence to achieve this result. Through many trials and countless failures, the company gradually pulled together a loose collection of techniques and practices and integrated them into a full-fledged process which will later become known as the Toyota Production System (TPS). The following principles, practices and techniques underpins TPS and is the foundation of their strategy:
- In order to stop transferring materials from place to place and stop non-value-add activities, Toyota implemented just-in-time delivery of parts and components.
- Toyota’s leadership and development program fostered development of people who can come up with unique ideas for production improvements. They gave employees training to become better problem solvers.
- Messages such as “Never be satisfied” or “T in TPS stands for Thinking” is touted by managers to emphasize continuous improvement.
- Critical to the whole concept was Toyota’s empowerment of its people to stop production lines when problems or defects are spotted. This empowerment ensured quality into the production process.
- Toyota’s TPS philosophy holds that defects should only be dealt with as and when they occur. This philosophy means that at Toyota when production lines are running smoothly, they should not be subject to control. It simply means that when defects do occur, less manpower is required to control quality.
- To identify root causes, TPS implemented the five Whys. Simply asking “Why?” five times allows identifying root causes of errors and correcting them so that they don’t reoccur.
- To minimise their cost, TPS includes finding where a part is made cheaply and using that price as a benchmark.
Many of you reading this article would probably agree that Toyota’s efforts to refine and improve on its TPS gives the company capabilities that are envied by many. Not only have car manufacturing companies tried to emulate Toyota’s TPS but also hospitals and postal services have implemented TPS – The Heart of Toyota’s Strategy.
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