September 22–28, 2009 Business in Vancouver news 5

Companies learning to be lean the Toyota way

Global success of Japanese auto-manufacturing giant is a direct result of a corporate
operating philosophy that emphasizes employee accountability and continual improvement

Krisendra Bisetty
Toyota
MOtor Corp.
T oyota Motor Corp.’s ef-
ficient cars have earned
the Japanese auto giant top
(NYSE:TM)

place among global auto-

makers, and now its busi-
ness principles are helping
drive a new approach to run-
ning companies and manu-
facturing.
Toyota City, Japan
B.C. ma nufacturers,
President: Akio Toyoda
known largely for their love
Employees: 324,222
of the status quo, are start-
Market cap: US$129.3 billion
ing to adopt the Toyota way
P/E ratio: N/A
of doing things to generate
EPS: (US$4.85)
more efficiencies, cost-sav-
Sources: Stockwatch, Globe
ings and productivity, said Investor, Yahoo Finance
David Chao, a Vancouver
consultant who has been
helping businesses locally the crisis.”

and abroad hitch on to the
concept of lean manufac-
turing.
And in a coup for Chao,
who is president of Lean
Sensei International, three
gurus of the lean world are
in town this week to talk at a
lean strategy summit he has
organized for B.C. manufac-
turers and other businesses.
Jeffrey Liker, Mike Hos-
eus and David Meier, con-
sidered authoritative figures
on Toyota’s production pro-
cesses and authors of sev-
eral books on the subject
will provide insight over
the three-day conference on
what lean means for business
leaders and companies.
“It’s really become a
global movement,” Liker
said in an interview. “It’s
being adopted by hospitals,
mining companies and fi-
nancial companies and by
governments.”
Liker’s 2004 book, The
Toyota Way: 14 Management
Principles from the World’s
Toyota’s
management
principles
include:
•a philosophy that Toyota
exists to benefit customers
and society;
•a focus on survival for
the long term;
•fixing problems and find-
ing their root causes before
proceeding; Toyota has a
single eight-step problem-
solving method for the
entire company; and
•developing people by
respecting and challenging
them; Toyota’s view is that
a person who is not learn-
ing and is not challenged is
not growing and therefore
is not being respected.
Lean on me: Lean Sensei president David Chao (left) helped Paul Paris’ Paris Orthotics improve production to meet overwhelming
market demand
Greatest Manufacturer, be-
came an international best-
seller. It’s based on the
underlying philosophy and
principles that drive Toyota’s
quality and efficiency-ob-
sessed culture.
With Toyota operating
not as a single global giant
but as a collection of small
to medium-size companies
– plants, dealerships and en-
gineering divisions each de-
veloping their own capabil-
ity to continuously improve
– the company’s philosophy
is finding widespread ap-
peal, he said.
“One of the things that
distinguishes Toyota is a
very long-term perspective,”
said Liker, who is professor
of industrial and operations
engineering at the Univer-
sity of Michigan and prin-
cipal of Optiprise Inc., a
Michigan company that
helps companies learn from
Toyota’s management prin-
ciples.
“They’ve also set an inter-
mediate vision and one of
the major things they’re fo-
cused on is increased self-re-
liance of every region of the
company.”
The vision gets turned
into goals for each operat-
ing region and then broken
down into objectives for each
business unit of Toyota, in-
cluding engineering, manu-
facturing, sales and the sup-
ply base.
Eventually it gets to the
point where every hourly
worker, engineer and man-
ager can outline what will be
accomplished and how it re-
lates to the global vision.
But Liker said the ability
to align goals and objectives
from the boardroom down
to the factory floor is directly
proportional to the strength
of a company’s leadership.
“If the management is not
highly skilled in continu-
ous improvement, then just
giving them goals is pretty
hopeless,” he said.
“You’re just giving them
a goal that they have to fail
at.”
Or they’ll find ways to
make the numbers look
good, but perhaps sacrifice
quality or safety.
I n Nor t h A mer ic a ,
Toyota has worked for dec-
ades to develop a complete
line of leadership “from the
top to the bottom of the
basic hourly work group” to
teach companies its system
for eliminating waste and
solving problems in produc-
tion.
“And because they’ve
made that investment, when
there’s something like this
recession, they’re able to be
very adaptable,” said Liker.
He added that many
companies want a short-
term turnaround, but their
people aren’t capable of it.
“They don’t have a stable
process to begin with, and
they don’t have the tools for
improvement, so they just
kind of struggle and floun-
der.”
Chao, a former Toyota
consultant and the first en-
gineer hired by Suzuki
Canada Inc., said that un-
like at Toyota where every-
one, including executives,
is required to spend time on
the factory floor, most senior
“It’s really become a
global movement”
– Jeffrey Liker,
author,
The Toyota Way
managers of North Amer-
ican companies haven’t even
touched their product.
“And in North Amer-
ica, we often say, ‘If it ain’t
broken, don’t fix it,’ but the
Toyota way says, ‘If it ain’t
broken, let’s make it bet-
ter.’”
Among the 75 local cli-
ents Chao’s team has coached
over the past decade is Paris
Dominic Schaefer
Orthotics, Canada’s largest
manufacturer of prescrip-
tion orthoses, or foot arch
supports. In late 2006-07, it
was battling to scale produc-
tion capacity fast enough to
meet overwhelming increase
in orders.
“It sort of tipped us over
the tipping point,” recalled
Paul Paris, the Vancouver-
based company’s president.
“We used a lean interven-
tion as a catalyst or a mech-
anism to help us get out of
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The problem with most
Canadian manufacturers,
said Chao, is that they’re too
focused on “money-making”
and cutting corners to save
costs instead of giving cus-
tomers what they want.
“We will sacrifice long-
term gains for short-term
[benefits], whereas in Japan
and particularly Toyota,
they’ll sacrifice short-term
gains to ensure that there’s
long-term viability.”
Chao said that when he
walks into a typical Can-
adian factory, he’s always
taken aback.
“I walk in there and with-
in 15 minutes I can point out
20 things that can be im-
proved.” •
kbisetty@telus.net