Taichi Ohno and Toyota Production System - Article Example

Tiichi Ohno and Toyota Production System The Toyota Motor Corporation (TMC), or in short Toyota, is a Japanese multinational and the largest maker ofautomobiles in the world based on production and sales figures. Toyota is the brainchild of Kiichiro Toyoda, who convinced his father, Sakichi Toyoda to diversify into automobile manufacture. The company came up with a production mode that is attributed to being the reason behind their excellent performance that has made them among the market leaders in the car manufacturing industry of today. This article will examine the factors that lead to the Toyota Production System (TPS), the various elements of TPS and the corporation’s HR philosophy together with its benefits to the company. The article will in addition explore the Japanese-Western culture differences and the main challenges and advantages of the adoption of the TPS. Why Toyota did not follow Ford’s Production System Taiichi Ohno joined the Toyota group, then known as Toyoda Group Automotive Operations in 1932 and expanded on Just In Time (JIT) principles which had earlier been introduced into the company by Kiichiro Toyoda to cut down on waste (Hill & Jones, 2007). He (Ohno) in addition, began experimenting with developing methodologies to produce the required components and subassemblies in a timely manner to support the final assembly. The Toyoda group was renamed to the Toyota group during the chaos of the Second World War and Ohno made the transition to car and truck production. The war resulted in the levelling of the company’s production facilities but under Eiji Toyoda’s management, the plants were steadily rebuilt according to Smith and Hawkins (2004). Both Eiji Toyoda and Taiichi Ohno visited American car manufacturers, particularly Ford Motor Company from which they derived many ideas on how to go about manufacturing vehicles. They however did not adopt Ford’s mass production system since, to them; it had a number of inefficiencies that needed to be corrected (Toyoda, 1987). The other reason that could have influenced Toyota to develop a different production system was the difference in resource availability. Whereas Ford’s mass production system evolved during a period of economic growth, Toyota came into existence in a period that experienced scarce resources, caused by the disturbances of the Second World War (Clarke, 2005). Toyota thus came up with TPS as an alternative system of standards to Ford’s mass production system. TPS was developed with the aim of achieving maximum economic efficiency while utilizing a minimum of the available limited resources (Newlands & Hooper, 2009). Thus a key focus of the TPS is the reduction of any kind of wastefulness, or non-productive value adding activity. Wastefulness in this case being over production, unnecessary transport costs, bottlenecks in production and poorly carried out work processes. Ohno is credited as having contributed largely to the development of TPS (McCraw, 1997). Ohno’s contribution was mostly inspired by two concepts. The first concept was the assembly line production system and the second being the supermarket concept. Ohno got the production line system concept from Henry Ford’s book, Today and Tomorrow, which was first published in 1926, while the supermarket concept came from his visit in the US where he observed, in 1956, how the supermarkets replenished their shelves with a continuous supply of goods (Gulati, O’Hanlon & Smith, 2009). According to Ohno, producing more what is required at any time is wastage and the supermarket concept was his idea of reducing such wastages. Supermarket customers buy what they need and when they need it and Ohno studies this practice from two perspectives, one being that, since the customers pick on their own whatever they need, time is saved in terms of reduction in sales man-hours. The second perspective being that this reduces inventories since the workers only replace to the supermarket shelves whatever has been bought by the customer, no less, no more. This system can be summarized as the pull system (Monden, 1983) in which demand keeps the cycle moving as opposed to Ford’s mass production which moves in the opposite direction and goods seem like they are being pushed through the system. Thus, the most important feature of a supermarket system is that stocking is not only triggered but also maintained by actual demand. Toyota has utilized this concept to come up with a flexible system of production in which latter processes take from earlier processes. Ford’s mass production system was geared towards the elimination of changeovers but Ohno did not want to keep any inventories and as such wanted to develop a non- stock inventory system. TPS adopts a small lot production as opposed to Ford’s large lot production (Gulati, O’Hanlon & Smith, 2009). Ford produces a few models in large numbers while Toyota’s Production system can produce numerous modes in small quantities therefore giving it an advantage of flexibility. This flexibility makes it able to produce a customized car in a short time should a customer put in a request. The TPS may have been an adaptation of what Ohno and Toyoda learned from American auto manufacturers, particularly Ford, and from other American automobile manufacturers but it is different from these systems in numerous ways as shown above. Toyota wanted adopt a system that would best suit them. This they did by applying their uncanny ability to focus intently and single-mindedly on what they think is really important to them while rejecting the unimportant aspects. After isolating the important elements of what they learned from Ford, the Japanese set about to not only to improve but to also to perfect the important American manufacturing concepts. These concepts included waste elimination, standardized work processes, just in time processes and quality control. The Various Elements of TPS According to Ono (1988), among the very important elements of the TPS are the standard worksheets and the data in them. He stated that for an individual in the production process must first be convinced of the standardized worksheet’s importance before he or she can be able to write on in information that can be understood by the other workers. Toyota has been able to cut down if not eliminate waste by examining the resources available to them, rearranging their machinery, improving their processes of machining, examining transportation methods, and optimizing the number of materials being machined at any given time. The company has also been able to achieve high production efficiency by averting the reoccurrence of faulty products, accidents and operational mistakes, and by incorporating the ideas from their workers, which also raises their motivation for work. All these have been made possible due to utilization of the standardized worksheet (Ono, 1988). The standardized worksheet combines machines, workers and materials to make the production process efficient. This process is known around Toyota’s working cycles as a work combination (Toyoda, 1987). The standard worksheet has had few changes in it ever since it was introduced to the then textile factory. It is founded upon Toyota’s principles and plays a vital role in the company’s visual control system. Smith and Hawkins (2004) note that the standardized work procedure has the three elements of; cycle time, work sequence and standard inventory. Cycle time is defined as the time allocated for the manufacture of a single unit or piece and is determined by the production quantity. Work sequence refers to the sequence of operations or the order of operations by which a worker processes items, transports them around, places and removes them from machines, among other processes. Standard inventory refers to the minimum intra-process work in progress required for any operation to proceed and includes items mounted on machines. The other two vital elements of TPS that are especially important in enabling it achieve its goal of total elimination of waste are the just-in-time (JIT) and autonomation with a human touch which is also referred to as jidoka (Dennis & Shook, 2007). JIT production means producing only what is required, only when required, and only the amount that is required. JIT production is used to get rid of ant types of waste and in addition eliminates the need to have huge inventories which in turn cuts down storage and financing costs. Shingo, Shingo and Dillon (1989) state that, although most individuals regard J-I-T as being the most vital element of TPS, it is actually no more than move to achieve a stockless or a non-stock production. They further state that it is the conceptual framework of the stockless control that is important to TPS and these are load and schedule controls. Schedule control ensures that the manufacture of any product is completed in time while load control ensures that the product can actually be manufactured, creating a proper balance between load and capacity. Jidoka is a the Japanese term for autonomation and includes on one side the concept of autonomation and on the other side that of autonomous monitoring of defects and the elimination of whatever is causing them. In Toyota’s automated process, a poor quality product or a defect in a product can bring the whole production process to an immediate standstill and the process will only continue once the problem is solved (Dennis & Shook, 2007). Kaizen is yet another element of TPS and can be interpreted as Toyota’s management philosophy that entails each employee achieving the objective of continuous improvements the systems and structures at Toyota and generally support the techniques and tools of the production system. The foundation of this philosophy is based upon the fact that all businesses are confronted with numerous problems which can be solved by the establishment of a company culture that has two features. The first feature is letting each employee identify or point out errors and weaknesses in the production system and the second is encouraging the employees to work together towards achieving the solution to the problem. Just like the other elements, Kaizen is also aimed towards the elimination of wastage (Herstatt, Tschirky & Stockstrom, 2006) Ohno’s Contribution to TPS As mentioned above, Tiichi Ohno made a major contribution to Toyota’s production system although he did not do it all by himself. Shigeo Shingo, who was a consultant, an engineer and a mentor to Ohno was also influential in the development of the system, just as Eiji Toyoda was (Ireland, Hoskisson & Hitt, 2008). Ohno’s contribution to TPS was strongly influenced by Henry Ford, but he chose not to simply copy the manufacturing process at Ford. Ohno’s breakthrough was to realize the difference between operations and process, operations being a series of machines and process being the net flow of operations from the client’s order to the finished product. Even though the key elements of TPS had been in the company since Sakichi Toyoda developed his automatic loom, its specific development is seen a having occurred around 1945 when Ohno began implementing and polishing some of the principles that would latter on constitute TPS, examples being flow, basic pull and standardization within the factory (Gulati, O’Hanlon & Smith, 2009). In 1950, the depression in Japan, combined with the financial crisis at Toyota forced a restructuring process to occur in the company and its operations. Among the other steps, the company’s executives, including Taichi Ohno and Eiji Toyoda toured the US to learn a thing or two about restructuring, mostly from Ford. After studying the production system in North America, Ohno arrived at the conclusion that the American mass production type, which had a strict division of labour, could not work well in Japan and sought for ways to make Japanese vehicle manufacturing more competitive in the world. Ohno experimented with partly autonomous production streams, in which employees were placed personally responsible for to tasks ranging from cleaning and carrying out minor repairs on the production machines to the improvement of work processes alongside their production tasks (Chandler, Hagstrom & Solvell, 1999). As a way of encouraging employees to contribute more towards the improvement of TPS, Ohno planned activities, times and coordination mechanisms to accompany the production process. This also enabled the detection and elimination of minor production defects. Contrary to Ford’s Taylor production process that employed quality control checks at the end of the production process, Ohno emphasized on the importance of carrying out continuous quality controls of the production process. His fundamental concept was to have a production process without defects which would then result in both high quality products and very satisfied customers. Taiichi Ohno articulated the holistic and integrative nature of lean manufacturing and argued that businesses must be viewed at being the ‘holy trinity’ of the factory, the market and the company as a whole (Boxall, Boxall, Purcell & Wright, 2007). As mentioned earlier, Ohno’s approach to production differed from what he had observed at Ford, particularly the way he, and others at Toyota, designed Toyota’s production process to be determined by the needs of the market. As the name suggests, Ohno helped develop the Just-In-Time principle in which products reached the market just in time to meet the demand from customers. Apart from the internal process control and the company’s tightly integrated supply chains, Ohno also contributed to making innovation an important part of the TPS. Ohno stressed the importance of higher innovation levels, which included the development of new products and newer techniques of manufacture. Toyota’s Human Resources Philosophy The human resource management philosophy of Toyota is founded upon the key principle of people being its greatest asset (Canning, 1984). Toyota recognizes that a highly motivated workforce that is treated with respect is more likely to show greater commitment towards the fulfilment of an organization’s goals. A vital aspect of the philosophy is the determination to accord each worker with an opportunity to grow within the company and to have stable employment. To emphasize the prime importance of people to the company, Toyota UK refers to each of its workers as a member; this is the way the company highlights its unitary outlook in its internal relationships (Cole, 2002). This gives the relations between all workers in the plant a unitary outlook. Among the basic convictions of kaizen is that the individual who works at a work station understands the work station best. For this reason, the aim of Toyota’s human resource department is to increase employee productivity and motivation by eradicating wastage within the framework of a consistent and systematic operation (Alukal & Manos, 2006). The other model that Toyota applies in order to make workers use their experience, knowledge, skills and expertise to come up with a very effective system id the 5s process. The elements of the 5s system are understood as seiri, seiton,seiso, seiketsu and shitsuke. The Seiri process requires of employees to decide the accessories and tools needed for a particular work station while in the seiton process, employee is required to arrange in order the accessories and tools that are required for a work station in such a way that they will be at the right place when they will be required for use according to Smith and Hawkins (2004). The seiso process requires of employees to keep their respective workstations clean and orderly and also take care or the tools and accessories. In the seiketsu process, employees are required to observe work standards, rules and regulations and turn any instruction given to them to rules. The final S stand for shituke which requires of employees to always observe all the points listed above and seek for ways of improving them continuously (Herstatt, Tschirky & Stockstrom, 2006). The Benefits of the Toyota HR Philosophy Toyota’s HR philosophy has made the responsibilities and role of the HR department to be multifaceted and more that just the hiring of the workforce and the administration of policies related to pay, benefits and promotion (Besser, 1996). In many other companies, the HR department act as the accounting systems of the workforce while others even go as outsourcing HR services so as to save money in the process degrading the importance of HR management. At Toyota, the philosophy has made human resource perform more than just manage databases and HR is certainly not a function that can be outsourced. Since the workforce is so integral to its management philosophy, HR has become among the most powerful and important departments in the company. The HR philosophy at Toyota has made it possible for HR to be intertwined with the company’s production management department therefore making HR involved in the daily concerns of team members in the company. The HR department does not only administer procedure manuals but are also involved with the career paths of all the employees. The HR department are required to know all the workers at a personal level and understand the details of their performance and career paths (Liker & Meier, 2005). The benefits of this philosophy clearly show in Toyota’s global successes. Toyota have penetrated markets all over the globe and established themselves in e global arena due to their high productivity. By empowering its workers, the company encourages its employees to always perform at their peak and this effect is felt positively by the customers. The philosophy in addition encourages creativity, innovation and the culture of continuous improvement due to its encouragement of employee participation at all levels. Toyota’s workforce can be described as having high morale and job satisfaction and this is perhaps the reason why the company is able to produce high quality, affordable and reliable products. Although there are numerous vehicle manufacturing companies have earned themselves the status of building top-quality cars, none of them has been able to overcome the major HRM advantages that Toyota possesses (DuBrin, 2008). Toyota’s also has distribution and supply networks that are regarded as among the most competitive in the car manufacture industry. The high performance of Toyota is mostly directly credited to the excellent performance of its supply chain and HRM networks. Japanese-western Difference in Industrial Culture The rise of Japan as a major industrial nation has generated considerable amounts of interest among other countries, especially from the West, as to how Japan has managed to become such a serious competitor in a relatively short time. Most of the studies carried out about the Japanese workplace have come to a conclusion that it must be Japanese industrial culture that propelled the country to rise from ashes during the Second World War to become the industrialized nation it is today. A major difference between the Japanese and western workplaces can be observed from the way of doing things. Whereas the West exercise primary and direct control over tasks by means of technology and skills, the Japanese have developed numerous ways of mediating their activities according to human relations and whatever situations they may be faced with (Liker, Ettlie & Campbell, 1995). Neither a Japanese manager nor worker considers that tasks are to be performed directly by individuals based on their skills or with assistance from technology. In any incidence, the Japanese would always organize their activities around groups, placing less importance in technology and skills while favouring the exercising of social control over their actions. Japanese managers utilize secondary control in their activities, usually through the media of groups and social situations. Unlike individuals from the west, the Japanese do not develop an adversary relationship between mangers and workers (Scalpino, 1975). The Japanese culture generates strong forces between members of an organization and this averts the possibility of conflicts and uncertainty. An example of this is shown in their industrial strikes which are normally conducted during lunch hours or under conditions that would not cause the employer damages. Their argument for this is that the company is also theirs and as such, they have no reason to harm it. Both Japanese managers and workers within the large companies have far much less mobility than their western counterparts. The Japanese establish a close alignment with their companies from which they derive their sense of security, the material benefits of their work and their power and status. Trust is a key and paramount quality that separates the Japanese from the Western industrial culture. The Japanese culture provides more room for trust such that, the Japanese form of form of a contract may be contained in a single piece of paper. The contacts basically contain agreements of the contactor accepting to carry out the project and the client accepting to pay at specific terms. Unlike the Western types of contacts, the Japanese do not mention further conditions like quality or even standards or any “what if” clauses (Fenn & Gameson, 1992). The industrial culture in Japan considers the client as always being right and concentrates on making the customer happy since they believe that a happy customer will always come back for more business. This is advantageous since a business relationship that is based in mutual trust has a high chance of developing. The Japanese culture of non-argument is perhaps the contributing factor that helps in the prevention of potential conflicts within Japanese firms. The West in contrast adopts a dialectic argument system for conflict resolution which comes with a lot of conflict between involved parties. Advantages and Challenges of TPS By adopting the TPS, other organizations can also enjoy its benefits just like Toyota does. Just in time manufacturing can help remove the clutter of excess work-in-process inventories, reduce transport and the unnecessary handling of work-in-progress, speed up machine setups and address the cause of defects and machine problems that cause delays in production processes (Liker, 2004). Reduction of inventories further leads to reduced storage costs. By purchasing only the raw materials that are required for specific jobs improves Toyota’s cash flow and cut down cash that would otherwise be stuck with stored goods. Similarly, the storage of fewer finished products and less work-in-progress cuts down on the space requirements. Higher productivity is the other benefit of TPS. Higher productivity results from the reorganized production process with can produce similar results in any business it is applied on. The higher productivity propels the company to have good competitive advantage in the car manufacture industry. Toyota’s lean manufacturing makes the company have a more flexible production process (Liker, 2004). This flexibility enable Toyota produce multiple models at the same time and therefore advantageous since customized cars can be produced faster by Toyota that by the other car manufacturers. The flexibility in addition enables the company adjust faster to ant changes in the market. TPS also encourages better communication with suppliers and customers and this is a good recipe for growth. The TPS demands active contribution and participation of employees in the production process and therefore promotes the nurturing of skills and provides the employees with a sense of importance and belonging. The greater responsibilities accorded to workers by TPS fosters a culture of interest in their jobs and in the overall company’s performance (Clarke, 2005). The raised morale created by this system has even more advantages a few being the better performance at work and the reduction of staff turnover which in turn results in cost reduction in terms of reduced recruitment costs. A major challenge of the development and implementation of the TPS is the requirement of a culture change to one that will accommodate this system. Many western companies that have attempted applying the TPS have not been as successful as hoped and this could be attributed to the Japanese-Western culture difference, just as mentioned above. Introducing change of any form comes with its own challenges. For the system to work well, the top management must be completely committed to the implementation of the system, directly participate in its implementation and instruct the middle management to do likewise. The system requires of all employees to participate in its implementation and this can be very challenging since not all employees are likely to support the changes that come with the system. The company implementing the system also has to put in place a solid framework that would cultivate capable leaders and provide employees with the necessary practical skills. It took a few decades for Toyota to develop the TPS meaning that it takes patience and time to perfect the system. 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