4 Rules Embedded in the DNA of Toyota Production System

The 4 Rules of the Toyota Production System are Toyota’s DNA according to Steven Spencer and H. Kent Bowen. These authors believe that as hard as other companies try to reproduce Toyota’s Production System to achieve superior success they lack the key to producing Toyota’s DNA. Some companies have been able to replicate portions of the 4 Rules, but have failed to implement all of them.

The 4 Rules of the Toyota Production System are:
1. How People Work: All work should be specified, sequenced, timed, and output
2. How People Connect: Must have direct connections with suppliers and unambiguous yes-or-no way to send requests and receive responses
3. How the Production Line is Constructed: Must have simple and direct pathway for every product and service
4. How to Improve: Scientific Method must be used beginning at the lowest level of workers with the assistance of a teacher

The 4 Rules seem so simple and obvious that it makes you wonder how is it that no other companies have been able to execute the 4 Rules. Yet, as simple as Toyota’s DNA is to put on paper implementing it is not only the most important part of success but also the most difficult part.

One is quick to realize that there is no reason that companies cannot implement these 4 Rules. They are so basic that we have been doing them from the time we were children. To learn Rule 1, we all had toys that consisted of plastic or wood shapes that would only fit through its specified hole on a canister. For example, the rectangle block would only fit through the rectangular hole. As we repeated the actions, we learned how to reduce the time it took to get every shape into the appropriate hole. Rule 2 was taught on the first day of school when the teacher told us to raise our hand to go to the restroom. This was our first lesson in connecting with people in a “professional” manner. Mom teaches Rule 3, loud and clear as soon as possible. You are quickly taught that when you’re done with your toys, they have their own proper place to go. Stuffed animals go on the bed, books go on the bookshelf, and board games go in the closet on the shelf. The core of Rule 4, the Scientific Method is taught over and over in several different classes. Each time it begins to make a little more sense and you begin that it can be implied to anything. They do say that the greatest influence of your principles is your teachers and parents. Since some teachers and parents are more supportive and influential than others, some kids may never properly learn all of the 4 Rules. This supports the authors’ point that some companies have been able to implement some of the rules, but not all 4 Rules as a unit.

I fully agree with the authors that all other companies are missing that key to Toyota’s success, but I feel that they failed to include cultural effects. If there is one thing that I have learned in the past year as a lean implementer, it would be that cultural differences are forgotten too easily and quickly. That is if the cultural differences were even ever acknowledged and considered.

What are your thoughts?

How are changes in the Takt time (change in customer demand) implemented in the production system?...Heijunka is the answer

One of the major factors on which successful lean implementation depends is the "customer demand pattern" for a "given product family." If the demand pattern is very erratic, then it poses some difficulty. Hence, many companies first try to see if the demand pattern can be smoothened out.
In Ohno's (TOYOTA Production System thinker) teaching, there is the tale of "the slower but consistent tortoise causes less waste and is much more desirable than the speedy hare that races ahead and then stops occasionally to doze. This tale is an illustration of the leveling principle in which the workload is leveled for the sake of continuity (consistency of tortoise's pace) regardless to orders variations (the dashing of the hare).
The Lean framework adapted by Boeing (Source: Jerell Smith) in which stabilization of demand is shown as a foundational block. If the demand varies from day to day or month to month (which is true in most real life situations), people would take the annual demand and smooth it out over every month, every day or every shift to arrive at the "takt" time. This is called production leveling strategy (Heijunka).

One may still argue that you are creating finished goods inventory using "takt time" concept by production leveling. Why do not we hire and fire people based on the monthly customer demand pattern? In many cases, this may cause more chaos and disrupt the "rhythm." Many people would like "one rhythm" than to deal with the chaos of following "changing daily rhythms" based on the demand pattern for that day.

How a production line supporting multiple products with different takt times runs?

Lean implementation can be more straightforward in dedicated parts of your value stream - those places where only one product is made and where one-piece flow cells are appropriate.
But what if your value stream produces more than one product? What if it produces many products in any given month, or week or hour? Mixed Model flow is the solution you may have been looking for.
The popular way of dealing with this situation (called as the mixed-model flows) is to create product families based not just on similarities of manufacturing operations but also on the operation times.
What is Mixed-Model flow? Mixed-Model flow is making value flow by taking out the waste in your value stream so that multiple products are made in each time period.
This is accomplished by making the Mixed-Model flow part perform as if it were a dedicated asset. Each product "flows" at the rate of customer demand, even though multiple products are made there. For example, if two products A & B visit similar matching stations and the cycle time for A&B differ by over say 20% then they should "not" be lumped together in one product family. They should be handled by different manufacturing cells. Now where did this 20% come from? I have seen practitioners use some numbers such as these as a heuristic. It is not a magic number but based on experience. Any other ideas???

What is Value and Why is it hard to define it…

The Merriam Webster dictionary defines value as “the monetary worth of something” and “relative worth, utility and importance”. With respect to product and services value is generally defined with the notion of activity in mind. A value added activity can be defined as adding form fit or function to a product or service, an activity that the customer would be willing to pay for in isolation if they knew it was being done – e.g. Processing a part, laying foundation, Creating code, implementing functionality etc. However, sometimes it is hard to define what value is, mainly because of following reasons
• Most producers want to make what they are already making, and many customers only know how to ask for some variant of what they have already been getting. Because of this it is very important to abandon conventional approach and imperative for both producers and customers to jointly identify value.
• The appropriate definition of value changes once you look at it the whole through the eyes of the customer and not from the perspective of various firms along the value stream. Producers find it hard to redefine the value from customer’s perspective. It is vital for the growth of producers to accept the challenge of redefinition and redefine their strategy to provide what customer thinks is value to them.
• The final element in value definition is to identify the target cost to deliver the product or service to the customer. This is the cost if all visible muda were removed from the process. The value of a product or service should be judged by the question "What is the muda-free cost of this product? Relentless scrutiny of every activity along the value stream, searching for muda at every step, is key to reaching the target cost and hence defining the value.

Lean Enterprise Approach in Health Care Organizations.

A number of health care organizations have looked to manufacturing firms to develop process improvement initiatives that address their challenges. While they use slightly different terminology of lean, they have adopted many of the lean principles and practices to improve patient care. The industry began asking the same question as Automobile and Aerospace did years before: Can lean thinking be applied to health care? The following examples show attempts to do just that.

• Kaiser Permanente-Northern California has revamped its large primary care department using lean methods to reduce the appointment backlog (55 day wait times for an appointment) to deliver an open-access system. They collaborated with a university operations research group to develop an excel-based just-in-time scheduling system to support this new process.


• Two cancer institutes, Cancer Treatment Centers of America and Clearview Cancer Institute (CCI), employed a value stream approach to improve their operation process. Cancer Treatment Centers of America used the value stream mapping techniques to redesign their prescription process to cut a 32 step process in half and reduce turnaround times by 20%.


• In primary care practice, a medical clinic in Dubuque, Iowa developed improved office practices. They improve their process by observing and eliminating waste and applying standardization of tests and processes, and empowerment of nurses to identify and implement changes.
  
  This is of course not an exhaustive list. List your examples…

Differences between push and pull manufacturing

Push Manufacturing: manufacturing activities are planned based on a market forecast rather than actual customer demand.
• Emphasis on central planning
• Little communication between various stakeholders
• Material flows through in batches following a prescribed route in the work order
• Rely on heuristics
• Service levels assured by increasing and decreasing finished goods in inventory levels

Pull Manufacturing: manufacturing plan is based on actual customer demand.
• Control of manufacturing execution is at working level, which leads to much communication
• Material flows through the factory based on visual queues triggered by customer "pull"
• Rely on hands-on management
• Service levels are assured by increasing or decreasing levels between workstations

The 7 Wastes of Lean Enterprises

The main driver for a Lean Enterprise is to compress the time period from customer order to receiving payment from the customer. This is achieved by identifying and eliminating waste or non value added activities. In a conventional supply chain and in individual enterprise, there are potentially huge amounts of different wastes, famously known as The 7 Wastes. Recently an eighth waste, underutilized people, has been added to this category. Taiichi Ohno (developer of Toyota Production System) suggests that these account for up to 95% of all costs in non-Lean manufacturing environments.


These wastes are:

1. Overproduction – Producing items for which there are no customer demands. The Lean principle is to use a pull system, or producing products just as customers order them. Service organizations operate this way by their very nature. Manufacturing organizations, on the other hand, have historically operated by a Push System, building products to stock (per sales forecast), without firm customer orders. Anything produced beyond the customer demand (buffer or safety stocks, work-in-process inventories, etc.) ties up valuable labor and material resources and hence is a waste.


2. Waiting – Time during production (service) when no value is added to product (service). This includes waiting for material, information, equipment, tools, stock-outs, lot processing delays, equipment downtime, capacity bottlenecks, etc. The Lean principle is to use a just-in-time (JIT) system– not too soon, not too late.


3. Transportation – Unnecessary moving and handling of parts. This includes transporting work-in-process (WIP) long distances, trucking to and from an off-site storage facility. Lean demands that the material be shipped directly from the vendor to the location in the assembly line where it will be used. Material should be delivered to its point of use. The Lean term for this technique is called point-of-use-storage (POUS).


4. Over-Processing – Unnecessary processing or procedures than necessary to meet customer demand. Common examples deburring and multiple inspecting. Statistical process control techniques can be used to eliminate or minimize the amount of inspection required. Value Stream Mapping is another lean tool that can be used for this purpose also. This tool is frequently used to help identify non-valued-added steps in the process (for both manufacturers and service organizations).
   
5. Excess Inventory – Excess raw material, Work-In-Process (WIP), or finished goods. Inventory beyond that needed to meet customer demands negatively impacts cash flow and uses valuable floor space. Lean concepts like supermarket, and kanban can be used to tackle this waste.
   
6. Defects – Scrap, rework, replacement production, and inspection. Production defects and service errors waste resources in four ways. First, materials are consumed. Second, the labor used to produce the part (or provide the service) the first time cannot be recovered. Third, labor is required to rework the product (or redo the service). Fourth, labor is required to address any forthcoming customer complaints. Total Quality Management (TQM) is one of the lean tools that can be used to for reducing defects.


7. Excess Motion – Unnecessary motion of people or equipment that adds to value to product (service). This is caused by poor workflow, poor layout, housekeeping, and inconsistent or undocumented work methods. Value Stream Mapping (see above) is also used to identify this type of waste. Tools like 5S, cell design and Ergonomic workspace design can be used to eliminate this waste.


8. Underutilized People – Underutilization of mental, creative, and physical skills and abilities of employees of the organization. Some of the more common causes for this waste include – organizational culture, inadequate hiring practices, poor or non-existent training, and high employee turnover.

5 Principles to Characterize a Lean enterprise

The spotlight of any new concept is often on its application and results. In almost all successful concepts some fundamental assumptions and basic principles underlie the results. This holds true for Lean concept too. A copycat mentality without understanding the fundamentals behind lean can lead to phony gains and such a strategy will be ineffective. So this blog is focused on understanding the fundamental principles of a lean enterprise.

A set of five basic principles that characterize a lean enterprise are (as defined by Womack and Jones in their 1996 book Lean Thinking):

1. Define value precisely from the perspective of the end customer. The value should be defined in terms of a specific product, with specific capabilities, offered at a specific price and time.


2. Identify the entire value stream for each service, product or product family and eliminate waste. The value stream is all the specific actions required to bring a specific service or product through three critical activities in any business: Product/Service definition – from concept through detailed planning through launch Information management – from order taking through detailed scheduling to delivery Physical transformation – initial concept, to the receipt of the service/product by the customer Identifying the value stream almost always exposes enormous amounts of waste in the form of unnecessary steps, backtracking, and scrap, as the throughput travels from department to department and from company to company.


3. Make the remaining value-creating steps flow. Making steps flow means working on each design, order, and product continuously from beginning to end so that there is no waiting, downtime, or waste, within or between the steps. This usually requires introducing new types of organizations or technologies and getting rid of “monuments” – obstructions whose large scale or complex technology necessitates operating in a batch mode.


4. As flow is introduced let the customer pull i.e., to provide what the customer wants only when the customer wants it. Letting the customer pull the product/service from the value stream eliminates the following types of waste: designs that are obsolete before the product is completed, finished goods, inventories, elaborate inventory/information tracking systems, and “left overs” no one wants.


5. Pursue perfection. A lean thinking enterprise sets their sights on perfection. The idea of total quality management is to systematically and continuously remove the root causes of poor quality – with the ultimate goal of achieving Zero defects.

Standing Vs Seated Workstations in Lean Cells?

During the summer, I am consulting a company in lean manufacturing aspects. Currently I am working on creating “flow” in one of the assembly lines of the company. Yesterday, while finalizing the details of workstations in the assembly line, I was asked this question. Here are my two cents on this issue.

One of the most debated aspects of lean approach to assembly cell design is the requirement they be chair-free—that the assemblers stand rather than sit. In lean manufacturing the concept of standing workstation is popular. Given the choice between standing and sitting most people would prefer to sit.

There are numerous applications where standing is the preferred working posture, as opposed to sitting.

• Standing is preferred when the work area is too large. The maximum reach envelope when standing is significantly larger than the corresponding reach envelope when sitting. Have you ever seen a sitting workstation for checkout cashiers in stores like Wal-Mart? Do you ever cook on a sitting chair? Large work areas frequently are found in assembly environments, including auto assembly, packaging, welding, sheet metal, and paint lines. This also applies when the person works in more than one workspace to perform his/her job duties. In lean cells you want people to move frequently so that you can achieve “self-balancing” of the cell.


• Standing is preferred when the work surface obstruction does not allow the person to comfortably position his/her legs under the surface. This is often the case when working on a conveyor, using a workstation with a drawer located underneath the work surface or a wide front beam, or using specialized equipment.


• Ergonomics research shows that standing is recommended to maximize grip forces, and improve static or dynamic lifts. In general, more strength can be exerted while standing.

There is also an extensive lists of jobs that are most appropriately done standing, including construction workers, highway flaggers, medical personnel, painters, electricians, plumbers, loggers, firefighters, plant inspectors, and maintenance personnel.

Applications where seated workstation is preferred.

• Work that is highly dependent of fine motor functions—manual electronic assembly like soldering, writing, and sewing etc should be done at a seated workplace equipped with armrests.


• Work that require precise foot control movements.

Remember assembly and manufacturing line working requirements are different from the work requirements of office desks. The short term comfort of sitting does not translate to long-term well-being but instead leads to weight and back problems. In most of the manufacturing and assembly line scenario it is often un-ergonomic to perform your job while seated. From a strictly ergonomic standpoint sitting all the time is in fact no better than standing all the time.

So the rule of thumb…Use seated workstation only when fine motor skills are essential.

What is Lean Thinking?

John Krafcik, an MIT MBA student coined the term “Lean Manufacturing” to identify the Toyota methods, because the production system achieved more results with less resources. TPS, or lean production, was an after-effect of the competition in the Japanese automobile industry after World War II. The mass production techniques pioneered by Henry Ford were unsuitable for low volume production, so Toyota found it necessary to develop its own production system to build cars more cheaply with inbuilt quality. In essence, Lean production is the elimination of waste to produce more flexible and adaptable manufacturing processes. Lean Thinking extends lean production to go beyond manufacturing and to include the entire enterprise. Lean thinking extended the elimination of waste to include the creation of value at enterprise level.

This business philosophy goes by different names. Agile Philosphy, Just-In-Time (JIT), Synchronous Manufacturing and Continuous Flow are all terms that are used in parallel with lean thinking.The basic components and tools of the Toyota Production System (TPS) and lean production existed in literature much before publication of The Machine That Changed The World (Womack, et al., 1990). However advent of this book popularized the Lean concept and brought the ideas to masses. The key idea in the book (and one that is absent in earlier literature) is that of “Value.” Specifying value from customer's perspective (whether internal or external) is an important step in lean thinking. Lean thinking focuses on abolishing or reducing waste (or “muda”, the Japanese word for waste) on maximizing or fully utilizing activities that add value from customer’s perspective.

Value-Added: An activity that changes the size, shape, fit, form, of function of material or information to meet the customer requirement. The customer is willing to pay for it.

Non-Value-Added: Activities that take time and resources but do not add to customer requirements.

The value stream represents the end to end processes through the entire enterprise. The lean thinking focuses on every facet of the value stream by eliminating waste in order to reduce cost, generate capital, bring in more sales, and remain competitive in growing global market.