Toyota Production System Berengueres 2012

THE TOYOTA
PRODUCTION
SYSTEM
RE-CONTEXTUALIZED
(With history, anecdotes and implementation tips)
th
4 Edition
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Jose Berengueres, Ph. D

The Toyota Production System Re-contextualized
4th Edition
ISBN 978-1-84753-477-4
Copyright © 2007-2012 by Jose Berengueres.
All rights reserved.
Revised 4rd English Edition,
Dubai October 2012

Contents
1 Industry Framework ................................................................. 11

1.1 Toyota: Growth and efficiency .................................................... 11
1.2 Size Matters ............................................................................... 13
1.3 The consolidation wave of the 90s ............................................. 15
1.4 Organic growth vs. Acquisition ................................................... 18
2 Brief history of Toyota .............................................................. 21

2.1 Origin .......................................................................................... 21
2.2 The Beginnings .......................................................................... 21
2.3 Mommy’s Loom .......................................................................... 24
2.4 From the Loom to the Automobile .............................................. 25
2.5 Taiichi Ohno or the birth of TPS ................................................. 28
3 The Production System ............................................................ 31

3.1 Underlying Principles.................................................................. 31
3.2 Operative Targets....................................................................... 33
3.3 The difference between “Lean” and “TPS” ................................. 33
3.4 Sociolinguistic barriers ............................................................... 35
3.5 A visit to Denso Academy .......................................................... 37
4 TPS step by step ...................................................................... 41

4.1 Poka-Yoke and Jidouka ............................................................. 41
4.2 Muda - Waste ............................................................................. 45
4.3 Standardization of Work ............................................................. 52
4.4 Visualization ............................................................................... 52
4.5 Itsutsu no Naze .......................................................................... 53
4.6 Heijunka and Push/Pull .............................................................. 55

4.7 Just-in-Time ................................................................................ 56
4.8 Gemba & Genchi Genbutsu........................................................ 57
4.9 Kanban ....................................................................................... 58
4.10 Andon ....................................................................................... 59
4.11 Multi-product mini-batch ........................................................... 61
4.12 Sense of Crisis.......................................................................... 62
4.13 5S – Kaizen .............................................................................. 63
4.14 How-to Organize a Kaizen committee ...................................... 70
4.15 The P.D.C.A method ................................................................. 74
4.16 How–to A3 Report and Value Stream Mapping ........................ 78
5 Appendix: Fun facts about Japanese carmakers ..................... 81

References .................................................................................. 87
Industry Framework | 11
There is only one way... to be the best,

slogan of Nissan in the roaring 90s
1 Industry Framework
1.1 Toyota: Growth and efficiency
Figure 1 shows the benefit per car sold of two carmakers (Toyota and
Volkswagen). From all the volume manufacturers Toyota is the one that
makes the highest profit and with great distance from the rest of global
manufacturers. It is also the largest company by market capitalization per
car sold (five year average). Where lays the reason of this competitive
advantage? If we ask people at consulting firms, they say that Toyota is
not the most productive manufacturer ever. In 2006 in the key North
American market for instance, Nissan beats Toyota in labour productivity
(18 hours of labour to make a car vs. 22 hours for Toyota) and also in
pre-tax profit per car sold 1500 vs. 1000 EUR. (GM lost 1000 per car sold).
Toyota does not own the most productive plants either.
Toyota 1000€
Profit per car Sold
1st Oil shock

331€
VolksWagen*
1960 1970 1980 1990 2000
Figure 1 Profit per car sold of Toyota vs. Volkswagen (2005). What is the source
of Toyota’s competitive advantage?
12 | Jose Berengueres
However, on a global scale it is the only one manufacturer that uses its
factories nearest to its full capacity. 96 to 106% compared to a typical
75% industry average. It is also the volume manufacturer that produces the
most reliable cars (Harbour 2006). Consider this, in 2006 for each Toyota
car sold customers encountered 1.06 problems within 90 days of the
purchase. The industry average is 1.24 problems. As for the other
carmakers: Volkswagen rated 1.71. Nissan rated 1.21 (Initial Quality, J.D
Power 2006). What is the key of Toyota’s success? Of all the factors that
could explain Toyota’s growth:
(i) labour productivity
(ii) capacity utilization
(iii) product quality
none of them seems more correlated with Toyota’s progression than
product quality. On the other hand, if we compare quality at Toyota,
Nissan and Volkswagen, (1.06, 1.21 and 1.71) the spread does not seem so
big. It is just 0.65 more problems per every one car sold. 65 per cent points
does not seem a big figure, but Toyota sold 10 million cars last year so
that's 6.5 million problems less to take care of.
Taxi of choice
Lets take a look at taxi fleets in free markets such as Abu Dhabi, UAE.
The Toyota Camry is 70% of the total fleet:
Taxi Driver – These cars are driven 24 hours continuously in two

shift drivers. The company provides accommodation for the
drivers. Two drivers are assigned per car. When one driver works
the other sleeps, so the car is always driving. At this rate each
taxi logs 900 km per day, it can produce a daily income of
400-800Dhs (100-200$). Most taxis will reach the 600,000km
mark after two years. After they reach this mark, they are sold or
scrapped.
Author – What about the other cars such as the Nissan Sunny or
the Hyundai Sonata?
Taxi Driver – Hyundai is not a bad car. It is good for family use,
but only Camry can go up to 600,000 km.
In the end, this tinny quality gap has had a clear effect for Toyota:
(i) The hoarding of huge capitals
(ii) Sustained growth
Therefore reducing (the causes of) such gap should be a top priority for
any manager that wishes to survive let alone succeed. But, how to close
the quality gap? How to be efficient without compromising on quality?
32h
Assembly Hours per Vehicle
24h
GM
21.4h Toyota
19.2h Nissan
19h
1999 2002 2005

Figure 2 Labour productivity evolution in North America (Harbour 2006).
Toyota is not the most productive maker in manpower terms.
1.2 Size Matters
Once mass-production of a new product commences a law, as precise as

Moore’s law can approximate the cost of producing an additional unit.
According to this law, the cost decreases exponentially not with time but
with the cumulative number of units produced. A way of being more
efficient is gaining size to reach the so-called scale economies. There are
two ways of doing that:
(i) Organically
(ii) Merger and Acquisition
Organic growth refers to the growing of a plant: slow but steady. A

paradigmatic example of organic growth can be found in Inditex S.A of
Spain. The rationale behind most M&A is that the combination of two
entities in a bigger one results in an entity with larger operations and thus
able to undertake bigger economies of scale. That is the idea behind being
the cost leader. In the light of this reasoning an M&A operation is justified
if the future savings due to future scale economies are bigger than the cost
of transaction plus integration.
Are Future Savings larger than acquisition price + integration costs?
As we will see later M&A is a concept with no traction inside the Toyota
philosophy. Nevertheless, this does not mean that at Toyota they ignore
the importance of being big. On the contrary, an illustrative example can
be found in the battle that Toyota and Honda held for the hybrid market
some years ago. You probably remember the Prius: the best selling hybrid
car in history. Maybe the Honda Insight does not sound so familiar. Honda
Insight is also a hybrid car (less popular than the Prius) but that was first
to market. If you see a 1999 Honda Insight on the street you will quickly
realize the reason why it was less popular than the Prius: it is smaller and
just two persons can fit in.
Figure 3 Layout of the two-seater Honda Insight of 1999. There was not enough
space for additional seats. Source: Honda/cartype.com.
The reason is that the rear of the Insight hosts hybrid components.
Couldn’t Honda in the 90s develop a hybrid car for four passengers? The
answer is no. Honda (because of it smaller size) did not have enough
resources at that time to develop a specific platform for a larger hybrid.
Faced with the dilemma the Honda engineers had no choice but to reuse
an existing platform (the one of its bestselling compacts). This left no
space... Put in words by a Honda chief engineer:
“I already told (the higher ups) that by using such platform there
would not be enough space for 5 seats, but we already had been
told that there was not enough money to develop a specific
platform…” (Nikkei 2006)
On the other hand, Toyota due to its larger size could afford the risks (and
costs) of designing a Prius from zero including a new brand platform.
Building a hybrid was a direct order from at the time Toyota CEO, the
genial Hiroshi Okuda. The order was given in 1996 to a staff in a rather
casual way:
“Well, now you don't have an excuse not to make a hybrid”

(Nikkei 2006)
A decade later, the result is clear: Prius won, and the conclusion of the
Insight-Prius battle is that size matters. Every body knows it. In the
following section we will examine how this idea coupled with greed and
fear shaped the industry during the 90s.
1.3 The consolidation wave of the 90s
In the post-war era automobile industry, M&A was a fairly rare

phenomenon until the decade of the 90s when the sector enters a very
active phase believed to start with the acquisition of Rover by BMW. The
operation would later turn sour and would end up in BMW selling Rover.
Nevertheless, a cunning BMW would retain the rights to the Rover-owned
Mini brand and would successfully re-launch it some years later. Since
then, only a select bunch of deals has had positive returns on investment:
The re-purchase by General Motors of Hyundai Motor after the Korean
Won devaluation in 1997. The acquisition by Ford of Mazda by which
Ford through Mark Fields brings to Mazda a much-needed management

expertise that traces its origins to Mr. McNamara’s Whiz Kids. The
agreement between Nissan and Renault by which a “literally” desperate
Nissan, that had just been turned down by Daimler, (in the wake of the
Daimler-Mitsubishi alliance), accepts the management leadership of
Carlos Goshn in management matters (not technology):
“You tell us how to organize ourselves. But please... don’t tell us

how to make a car”. (Magee 2005).
Is Nissan a proud company? The acronym stands for Japanese Productions,

in Japanese: Nippon Seisan.
NISSAN = NIP-PON + SEI-SAN
Nissan started producing cars in Yokohama at the same time as Toyota but
that ended up in a very different philosophical silo. Nissan grew out of
agglutinating smaller makers such as Datsun under Japanese government
directions. From the rest of the consolidation wave (read fear) that swept
across Detroit and Western Europe during the 90s few other deals had
positive returns on investment. An iconic example of a failed acquisition is
the takeover of Chrysler by German Daimler. Chrysler, as they say, was
the queen of Detroit in 1998. It had become thanks to the success of the
Chrysler voyager:
“Voyager was the first minivan that could hold the bites and
parts of the extended family, dogs etcetera together” (Blue Ocean
Strategy, 2005).
Daimler paid 36 billion dollars for it. In 2008 some analysts estimated that
it was worth less than 12 billion. The explanation offered by Liker on this
loss of value is as follows: at the end of the 90s Chrysler had managed to
establish Toyota-style relations with its supplier network. They had
succeeded in replicating what in Toyota they call an extended supplier
network (Liker 2003). This was starting to bear fruits with cars such as the
Chrysler Neon (a car that even sold some units in Europe during the 90s)
and the PT Cruiser (a car that looks like a shoe but that is popular among
consumers because of its usability). However, after the Germans took over
Chrysler they imposed cost cutting drives that destroyed whatever
provider-relations Chrysler had built.
“At the Toyota Head Quarters they were really alarmed by the
progression of Chrysler” (Liker 2007)
Figure 4 More powerful but cheaper than the competition, the 1996 Chrysler
Neon revolutionized the car industry with powerful base engines. An example of
value innovation is shown here: the famous three clips instead of the customary
four helped cut costs at no visible loss for the customer.
On one occasion Toyota did buy one Chrysler Neon car. It was
disassembled in-house. Then it was shown to the press in the following
way:
Ah… but look here. This panel is attached with clips! And only
three of them.
Years later, the value destruction at Chrysler became apparent and

questioned the long-term logic of the Germanic cost cutting drives. The
lesson here is clear: it is better to treat your suppliers as part of your
family. If you squeeze them too much today, tomorrow they will lack
competitive capacity.
Teaching
A healthy provider is more useful than a zombie one

at Toyota they say:
Treat your suppliers as an extension of your own

company
1.4 Organic growth vs. Acquisition
The 90s lesson is that slower organic growth seems to be the only credible
ways to gain scale in order to survive in a globalizing market. It is the way
chosen (willingly or unwillingly) by Honda, BMW and Suzuki.
Additionally, in this framework of global overcapacity (currently
estimated at 75% in 2006) appears Toyota with record profits and its
production system. The visionary book The machine that changed the
world by Womack in 1990 and more recently the bestseller The Toyota
Way (Liker 2003) have decisively contributed to popularize the Toyota
production techniques in the West. All this factors have put Toyota and in
particular its production system in the spotlight. Not only due to financial
reasons but also because its long-term thinking rings a bell with
sustainable thinking. This is a remarkable fact because it is the first time
since Kung Fu made it to Hollywood that a thinking based on Confucian
principles has been so widely studied in West. Never the less, the Toyota
Production System is traditionally absorbed in the West under the names
such as Lean Management or GE’s Black Belt certification system. In fact,
there is no shortage of firms that try to import, copy or adapt the Toyota
Production System (from now on referred as TPS). However, experience
tells us that implementing TPS in the West is no easy task. In fact, it is not
even an easy thing to do in Japan. In spite that, several carmakers have
named its production systems after Toyota: Ford has its own FPS: Ford
Production System. Nissan has its own NPS: Nissan Production System.
Moreover, General Motors has a 50% joint venture with Toyota at the
NUMMI factory in California but for years has been unable to transplant
the experience of NUMMI to the rest of its factories (Liker 2003). At the
end NUMMI was a factory failure. The site is now the main site of Tesla
Motors.
The teaching that we can extract from the 90s is that size does matters, but
there are no shortcuts. In the following chapters we explain the basics of
the TPS: its origins and concepts such as waste (muda) that stem precisely
from the Zen thinking of Less is More.
Brief History of Toyota | 21
2 Brief history of Toyota
2.1 Origin
Hamamatsu, Shizuoka Prefecture. 200 km South of Tokyo. A white

minibus drives along a winding road that runs along hills covered of
bamboo and green tea fields. It is a road of brand new black tar. The
traffic is heavy. It leads to the Suzuki Motors factory number 1: the oldest
and biggest of the group. Six hundred meters before reaching the factory
gates the bus guide (a Suzuki employee) points out through the minibus
window. His finger is pointing to an old traditional house made of wood.
It seems abandoned.
Author – What is it?
Driver – It is the former Toyoda clan house, the founders of

Toyota Motors.
Author – You mean they come from this area?
Driver – Yes, didn’t you know that Hamamatsu is the homeland of

many entrepreneurs? Suzuki, Toyota, Yamaha, and Honda
founders were born around here.
Next to me a professor from TokyoTech smiles and adds: must be the

DNA of Hamamatsu! Hamamatsu means literally the “coast of the pine
trees”. (The coast is home to extensive pine wood that extend from
Yokohama down South up to Nagoya Prefecture...)
2.2 The Beginnings
The history of Toyota begins in the Japan of 1868, the era where samurais
and shoguns rule comes to and end with the so-called Meiji Restoration.
Restoration means to put an emperor back in power. Therefore, the Meiji
Restoration installs an emperor back in power and phases out the samurai
system, but more importantly, it ends the isolation in which Japan had
lived for centuries. The reader should note that Japan was to1868 what
North Korea is to 2012. This change was largely forced by the famous
Perry US Army Steam Boat expedition to Yokohama. At the time, Japan’s
technological time lag with the West had become very large. Perry’s
expedition goal was to open Japanese ports to US trade. The Japanese
bowed to US pressure and Japan opened its doors to the world. This
opening of the country is referred in Japanese as kaikoku (kai-open
koku-country). The kaikoku allowed the entry of western technology. It
was a catch-up race with the rest of the world and the ensuing social
changes would westernize Japan in its own particular way. Furthermore,
many of the Japanese industrial fortunes have their origin in this point in
history. Their wealth accumulation based on the import of products,
technology or business models common in the West but at the time little
known in Japan. Today a similar business model is Softbank. Softbank
wealth creation did not come from inventing anything. They just
introduced Japan to the Internets in 1990, to Yahoo, to broadband later on
and to the iPhone4 in 2010. In 1868 the same was being done with:
1. Beer
2. Diesel motors
3. Cabaret showbiz
The years following 1868 were years of transformation comparable to the
birth of the Internet and the mobile phone revolution of today. In this
context, the archetypical agent of change is embodied in a young
entrepreneur that after a brief stage in Europe (usually on study trip)
comes back home with ideas that he has seen succeeding there. Another
example of this is the General Merchandise Department Stores. General
Merchandise Department Stores (GMDS) where prices of goods are fixed
with no bargaining were unknown in the Japan of the Meiji era. GMDS
appear in Japan thanks to a Japanese young man who staged at Harrods of
London. When this young man came back home, he carried the GMDS
idea with him. Other companies that emerge in the same fashion (all in the
Osaka area) are:
1. Asahi Beer
2. Suntory
3. Panasonic
4. Sanyo
5. Nomura Securities
6. Trading houses Marubeni, Itochu
7. Kubota
8. The Takarazuka railway line
Why Osaka? Osaka was the Silicon Valley of Japan. If an entrepreneur
wanted to succeed, it was the place to be. Many entrepreneurs such as
Glico’s founder, moved into the city for that single reason.
However, the process of importing foreign business models was not
limited to just cut and paste. In many cases, it involved a product
improvement and adaptation to the local tastes. One example of this is
Asahi Beer:
Asahi Beer
Asahi was a company incorporated by businessman named Tori Komachii.

Mr. Komachii in one of his trips abroad realizes that a yellowish
carbonated liquid is popular abroad. Mr. Tori starts by importing beer but
soon manages to brew locally. With German technology, he starts
producing a “drier” beer more in line with the local food taste and high
humidity. Then, in a dash of geniality, names its beer Asahi, which means
the beer of the land of the rising sun. Asahi grew and even reached the
milestone of exporting beer to Korea and Manchuria.
Department stores and Asahi Beer represent two typical patterns of the
industrialization that started as all industrializations do, by the textile
industry. Japan was no exception to this rule but textile operations started
in Japan in a very curious way.
At the time when, in Europe, the textile industry was in full throttle, Japan
lacked any spinning machine on its own territory. This posed a heavy
burden for the local economy since all cotton yarn had to be imported. To
mend this situation a group of Osaka businessman drafted a plan by which
they would balance the country’s commercial deficit. This group of
businessman (led by a man named Eiichi Shibusa) decided to send a
young man named Take Yamanobe (1851-1920) to the, at that time, most
important textile centre of the World: Manchester, England. Mr.
Yamanobe spent various years in Manchester not only learning the “ropes”
of spinning machines but also learning about labour management of textile
factories. His coming back to Osaka marks the start of the first textile
operations in Japan (with machines imported from Manchester) and the
start of the industrialization of the country by the well-known spill over
mechanism. (OCI 2006)
As we will see later, the origins of Toyota lay in textile industry too.
Nevertheless, they are based on internal innovation and are thereof are of a
more endogenous kind. It all starts with a young-man called Sakichi
Toyoda (1867-1930). Sakichi would reveal itself a high calibre inventor.
He was a robust man of exceptional calligraphy. He would invent an
automatic loom and a circular loom. Sakichi would also invent a word:
jidouka, which some authors translate as autonomization. We will se more
about jidouka in Section 3. (TM 2006)
2.3 Mommy’s Loom
In the Japan of the Meiji era there was no textile industry as the one we
take for granted nowadays. Clothing was expensive. It was a status symbol.
There were no automatic looms. Garments were woven in primitive looms
were a thread would go left and right trough two alternating sets of
pre-tensed strings. Making a garment was a painstaking task that required
perseverance and patience (women were in charge of it).
At Toyoda’s clan things were not much different from other houses and
Sakichi’s mother spent long hours weaving at the loom. Sakichi had seen
his mother spend many hours in the loom and he started tinkering with the
idea of how to free her mother from it. It would be the starting point of a
series of inventions that would lead to the creation of multiple companies
and textile operations. Three decades later the capital accumulated would
allow the family to undertake the production of automobiles.
However, before all this happens lets go back to the house where a young
Sakichi is observing her mother working non-stop. Sakichi, out of filial
pity, starts thinking of a way to automate the loom and thereof improve the
quality of life of her mother. This stellar moment embodies the reason and
purpose of why Toyota officially exists. It is also the underlying idea in the
production philosophy and it is what in the end differentiates Toyota from
the rest of the pack. It is important to note here that Toyota started with
looms, today makes cars and tomorrow it will probably market domestic
robots that help with the house chores.
Based on an invention by Sakichi to automate a loom the family starts an
enterprise: Okkawa Menpu (Cotton Garments Co.). There, garment
production starts in a more efficient way than in other factories. The
business expands. Additional factories and enterprises are established.
Among others, Toyoda Automatic Loom Works Ltd. is born. Sakichi
becomes famous and important to the point of receiving two medals (of
rank 5th) from the government in 1912 and 1924. (TM 2006)
2.4 From the Loom to the Automobile
In 1926, Sakichi sends his son to a famous textile powerhouse (Platt

Brothers & Co.) to study the real-deal of textile businesses (as formerly
Take Yamanobe did). Three years later, in 1929, Sakichi sends his son
(Kiichiro Toyoda) again to England. This time, the mission is to sell one
of the patents on an automatic loom invention to the same Platt Brothers &
Co. for a substantial sum. It is during this second trip that the automobile
idea sticks to Kiichiro. During this second trip, Kiichiro is exposed to the
booming automobile market in England.
The income of the sale of the patent would provide in 1936 enough capital
to start automobile production, exactly 32 years later after the
establishment of Ford Co. Incidentally, that very same year, Toyoda
Motors changes his name to Toyota Motors to improve the sonority of the
name. The current name (with two Ts) was picked-up by employees in a
public contest.
The first car that Toyota Motors manages to build is the model Type AA:
a black car shaped like the modern Chrysler PT. Type AA was a luxury
car at the time. It had a foot-bar for the rear passenger’s feet to rest, hand
holders and carpet.
Figure 5 Back to basics? Profile of a 2007 PT Cruiser. Easy to get into and get
out of, this car was a success with consumers because of its usability.
The man responsible of the repositioning of Toyoda Looms from a mature

loom industry into a nascent automobile business was no other than
Kiichiro (1894-1952). In his aforementioned second trip to England, it is
said that Kiichiro understood that the car was the future when he saw how
its use thrived in London. Incidentally, at that time, England was going
though a depression and many people were out of job. When Kiichiro
came back to Japan, he convinced the family of the new direction that the
company should take: automobiles. This was not easy. A parent-son
discussion illustrates this: Kiichiro is trying to convince his father:
Kiichiro – The question is not whether we can build cars or not,

the question is who will do it!
Finally, the family bends to the will of Kichiro. In 1933, the board of
directors of Toyoda agrees to officially create an “automobile section”
inside Toyoda Automatic Loom Works Ltd. That same year Kiichiro buys
a Chevrolet model Airflow and disassembles it to examine how it is built.
At the beginning of 1934, a workshop is built. A small steel blacksmith
and expensive precision machinery tools imported from the West are
installed.
Figure 6 Left: An original Toyota AA. Right: A restored Chrysler Airflow.

Original photos by Chris_73, Trekphiler (Wikimedia)
However, Kiichiro did not know at the time how to produce the
automobile’s critical element: the internal combustion engine with pistons,
cranks and an iron cast body. Anyway, undeterred and armed with an
engineering handbook, Kiichiro orders a bunch of workers to start
building a prototype engine (called type A). For months, the craftsmen try
but fail to produce a working engine. It is also a time when Kiichiro
himself rolls up the sleeves of his white shirt and joins the craftsmen side
by side in the floor shop. His face red and sweating from staring at melt
iron pouring repeatedly into moulds. Months go by. Lost production
mounts, but no positive result comes out of it. It is a critical moment of
great tension. In an episode similar to Akio Morita’s during the beginnings
of Sony, (Nathan 1999) Kiichiro loses his temper at least once in front of
the employees. Note that compared to Steve Jobs temper, Kiichiro and
Morita were refined ladies. By the end of 1934, the workshop manages to
complete a rudimentary combustion engine: the prototype ‘type A’ finally
works and yields enough power. In 1936, Toyota starts commercializing
the grand sedan ‘Type AA’ – inspired in the Chrysler Airflow.
The ‘Type AA’ car mounts a very much-improved ‘type A’ engine. Five
years later the ‘AA’ becomes the best selling car in Japan and the Type
AA domestic car sales surpass for the first time sales of imported brands
(including Chrysler). However, far from Sakichi’s vision, the AA a car is
not a car for the masses but a hefty car for the elites. It is used mainly for
taxi and by government officials. Sakichi’s vision of emulating Ford’s
model T success will have to wait until the end of World War II (WWII)
because during war time the government will demand total dedication of
resources the all-essential production of war trucks. Automobile

production won’t resume until the end of WWII.
2.5 Taiichi Ohno or the birth of TPS
Who was Taiichi Ohno? Taiichi was a charismatic engineer with an

interesting moustache. He was also a maverick. An outsider whose soul
would definitely die in the stiff middle management structure of nowadays
Toyota. May be Taiichi was bidding his time, may be not. Certainly, what
we can say is that his chance came the day Kiichiro, disheartened by the
low productivity of an incipient truck assembly line, asks Taiichi to
increment the productivity. Hands-on Taiichi immediately starts working
on his new challenge. He starts by proposing common sense but novel
ideas such as economy of movements and so on. However, the experienced
craftsman working on the assembly line didn’t exactly welcome a young
brat telling them how to do their job (an issue TPS today has already
solved). The old-line-workers were extremely reactive to Taiichi’s
proposals and were not exactly happy about them. If he survived the
flames of ire was only because of his boss (Kiichiro) liked Taiichi’s
proposals. In fact he was enthusiastic about them. The birth of TPS can be
traced to the moment that Taiichi begins thinking in a way of how to
improve productivity of that truck line. Summarizing, Ohno was to
Kiichiro Toyoda what Wozniack was to Steve Jobs.
Putting TPS into Words
One thing that the readers are surprised to learn about TPS is that TPS was
never put down into words. This was an explicit wish of Ohno. Even
though he wrote some books, he firmly believed that if TPS was put into
words it would easily become something sclerotic. He said TPS should
rather be something dynamic and alive, not the kind of things one puts into
books. The things being, Toyota won’t print an internal handbook of TPS
until 2006, when a stretched Toyota due to decade long of uninterrupted
expansion and net fix-manpower decrease, (10% in the last 10 years in
Toyota Japan), produces an internal handbook on TPS. It is trying to make
up for the internal lack of TPS teachers (sensei). This issue was widely
commented by the domestic press. Incidentally, 2006 was also the year
that Toyota did recall more cars than it did sell in the US and also the year
that for the first time temporary staff were allowed to work in its Japanese
factories after a law banning temp staff in Japanese car assembly lines was
abolished. Note also that it took only 4 years from 2006 to 2010 for a big
quality crisis to hit Toyota with the US accelerator scare and only 2 years
for the stock to drop to half price thus vaporizing half of its value. See
Figure 22.
Oil-Shock and the rise of Toyota
The first time that TPS gets public awareness is during the fall of 1973
right after the first oil shock. From that time are the mythical pictures of
Japanese housewife’s scrambling in supermarkets for a WC paper roll.
Due to the shock, WC-paper became scarce in Japan. The scenes are
depicted in some films of the era. That year many companies logged red
numbers in their Profit Loss statements, but not Toyota. In fact, that year
Toyota boasts yet again record profits. It is then that many companies
realize that there might be something to be learned about Toyota’s TPS.
Many consider the possibility of copying Toyota. The first TPS
consultants are born. Management consultants at Chubu Seisanrenmei
create TPS kenkyukai (study group) where even Taiichi himself would
give some talks. Is in the second half of the 70s when the perception that
the idea that Toyota’s production technique multi-product mini-batch is
efficient diffuses through the Japanese industrial tissue.
The Production System | 31
3 The Production System
3.1 Underlying Principles
According to the experts the Toyota Production System (TPS) is a work

philosophy where all decisions are made on a long-term basis even if that
results in short term pain. Therefore, it is a philosophy in line with the
Epicurean thinking in the sense of sacrificing immediate pleasure
(benefits) in favour of future but larger pleasures (returns). TPS, as a
philosophy, takes shape in patterns (techniques) that we can group in four
main points. The purpose of these techniques is producing things
efficiently in order to assure a cash flow that ensures the company survival.
(Toyota’s mission is to make a better world). The company not only
contributes to society through stable qualified jobs but it also does so
through the tax on its huge income. Toyota techniques can be grouped in:
1. Creating a continuous flow of products in the value chain (so that
problems surface). This concept is related to:
a. Instil a sense of crisis (urgency), tension and importance to
the employees.
b. Sustaining the moral and motivation of the employees.
c. Kaizen.
2. Avoiding doing unnecessary things (muda), from what derives:
a. Just-in-Time: Producing only the necessary and in the right
moment.
b. Jidouka, automation of the automatable tasks
c. Minimizing all the risks (see 4).
3. Standardizing tasks so that people have a target. (A stable target to
achieve perfection). A concept derived from standardization of
work/task is: Equalization of daily production – Heijunka and Takt
time.
4. Decisions are “consensus” based. An exhaustive examination of all

possible options is the rule. In contrast to other management styles,
consensus minimizes all long-term risks including the risk of being
the first. (First mover advantage). It is a paradox that Toyota, the
company that can develop a new car model faster than anybody else
in the world (18 months), is usually so slow and prudish to
incorporate new tech.
These are the basic principles. They wield a strong hands-on influence on
the every-day life of the Toyota employee. Kaizen psychology, motivation,
sense of crisis and consensus influence the mind set 24/7.
Teaching
The Toyota Production System is not about things but

people and how to use them efficiently
Theory is very well. However, it is necessary at this point to not to forget

the following. A thing Toyota managers bear present in their minds:
Teaching
A production system cannot be theory but practice!
You will never be able to say you understand TPS unless you experiment
by doing. Hence, the managers at Toyota are action men and they spend a
good deal of their time in the factory floor shop (more than the equivalent
managers at Ford o General Motors).
3.2 Operative Targets
According to TPS expert Igarashi Ryou, we can synthesise TPS in the

following way: The purpose of TPS is:
To improve Productivity, Quality, Lead time,

reduce Stock level and Inventory
through:
The elimination of waste
By means of two fundamental guiding principles:
Just-in-Time & jidouka
that express through the following techniques:
5S, equalization of production (heijunka),
multi-product mini-batch & Visual Management
(VM).
In the next chapter, we visit these concepts and how they inter-relate.
3.3 The difference between “Lean” and “TPS”
So, How does then TPS fit with the concept of Lean? Lean in English
refers to something thin, without fat and/or superfluous elements. A Lean
production environment refers to a place with no superfluous things, and
thereof more efficient, where we consider superfluous all those things that
are irrelevant for production. In some way, the idea of Lean corresponds
with the ascetics of the XVI century. The word ascetic comes from the
Greek: professional, athlete. Two high calibre ascetics San Juan de la Cruz
(1542-1591) and Santa Teresa de Jesús (1515-1582) advocated for the
detachment from the worldly since they believed worldly things to be a
superfluous distraction to what really mattered to them: their religious
faith. Another influent ascetic was San Ignacio de Loyola (1491-1556), an
entrepreneur that founds what is probably the first transnational company
based on a Lean philosophy: La Compañía de Jesús.
More recently, McKinsey points that the purpose of Lean as the same
of TPS: to be efficient. The difference lay in how it is explained.
McKinsey explains Lean in terms of its enemies. Lean has three enemies:
(i) Waste  of resources.
(ii) Inflexibility  of productive processes that cannot follow
changes in demand.
(iii) Variability  as the no-stability of a process that precludes
improvements.
The difference between Lean and TPS is the form, not content, and lays
in how they see the world: In Lean reality is explained through the good vs.
evil. Meanwhile in TPS, reality is explained through a Confucian lens of
heuristic nature. Thereof Lean can be summarized in terms of a dualism:
the fight of the good against evil where we define evil as (i), (ii) and (iii).
Pokémon tale
It is easy to underestimate the importance of the above. I propose the

reader an experiment: The Pokémon experiment. Watch the Japanese
version of Pokémon and then watch the American-English version: a
version specially adapted to the American public. When the Pokémon film
was first distributed in American theatres the version shown was a direct
translation of the Japanese original. The reaction of American kids
surprised the distributor. The American kids reacted in a very different
way to the movie compared to their Japanese counterparts: The
inexistence of a clear good protagonist and a clear bad character overly
confused them. That made the simple translation of Pokémon to English a
big fail in USA. (Nikkei Weekly 2006).
To solve this problem the distributor decided to Americanize the film up
to a point that would be considered ridiculous by a Japanese audience. The
film version that finally was distributed in US was one with many
modifications and more non-verbal cues. The kind of setting that lets the
American kid discriminate the good from the evil in films. After these
modifications, Pokémon became the USA success it was. This episode is
just an example of the deep cultural differences that run deep between
Eastern and Western educated people. As we will see in the following
section TPS confronts the very same socio-linguistic issues when it tries to
be taught in the West.
3.4 Sociolinguistic barriers
Apart from Pokémon, there are other sociolinguistic issues worth

considering when thinking of deploying TPS to other countries. For one,
scientists have produced (particularly since 2005) several studies that
seem to evidence the fact that the language we use in our daily life
influences not only how we think but also what we can think. On the other
hand, the whole Neuro-linguistic Programing Literature is based on the
claim that words can change thoughts. This is,
Language  can shape  Thinking
Here we have an example from Nissan; Japanese managers are known for
being polite and exquisite in manners but take a look at this:
“When Goshn enters Nissan he declared that all internal memos

and papers would be written from then on in English language.
Then something interesting happened. In a meeting, the usually
soft-spoken Japanese manager would morph into a ruthless
go-getter: No. Give me that. I want that...” (Nissan Turn Arround,
Magee 2003)
It is clear that not only the traditionally accepted cultural differences are
going to affect any adaptation of TPS but also that linguistic factors are
going to play a role. Table 1 compares a list of linguistic factors for
English and Japanese. It shows to which extent a language can shape a
culture.
Table 1 Language shaped Cultures. Comparison of social-linguistic factors and

associated cultural trait between standard Japanese and English. (Ismael Funes
& Jose Berengueres 2007)
Japanese English
(Trait→symtom) (Trait→symptom)
Primitive regular grammatical rules but More complex grammar with irregularities.
associated to a foreign writing system English is associated to a phonetic writing
(Chinese). While grammar is simple the system of medium sound-graph
writing system requires memorization of correspondence. Grammar requires
numerous exceptions and characters (Chinese memorization of verbs. Concordance. Explicit
writing system was merged with the pre difference between the abstract and the
existing Japanese oral language that used a concrete concepts.
different grammar). Low grammatical
concordance. No distinction between the
abstract and the concrete concept.
 To learn = to memorize  To learn = to reason
 To ask = to question authority  To ask = to show interest
 To understand (wakaru) = to divide  To comprehend (com-prehendere) =
the whole among its parts. to unify small elements to make a
whole
 Dialectic = defiance of authority
 Dialectic = an intellectual excercise
 Confucian teaching system
 Negative side of discipline
High homophony Low homophony

 A presentation without graphic  Verbal communication is potent
support is weak.
 Drawings are not considered a
 Fax/drawing success
serious communication tool
Lacking of relative pronoun that. Low Pronoun that and relative particles.
conjunction number (~30). No prepositions
Low number of postpositions (~10)
 The grammar processes can be done
 The grammatical process comes after after or before the radix. Prefix,
the radix. No existence of prefix or suffixes
suffix
 The nucleus precedes the
 Complements before the word
complements
 Difficult to link ideas without context
 Easier to reason explicitly
 Difficult to discuss
 Joy of discussion
In an explanation:
 The cause precedes the effect  The effect precedes the cause
Use of Chinese letters kanji (composed of Use of Latin alphabet. Less information
pictograms, ideograms). High density of density.
information per cm2.
 Difficult to condense
 Condensable. Acronimizable
 Reading is a process that flows from
 Reading is a flow from meaning to sound to meaning
pronunciation
 Reading = Synthesis
 Reading = Analysis
3.5 A visit to Denso Academy
Located in Anjo County, 90 Km South-East from Nagoya there is a big

factory of Toyota affiliate Denso. Toyota owns 50% of Denso. Next to it
sits a white building built to the image of a Japanese High School. It is the
famous Denso Academy. A place closed to the press. It is 7:58am. In front
of the main entrance a brand new asphalt parking lot. There, under a clear
blue sky two groups: ten boys and ten girls exercise their bodies to the
tune of the celebre morning music of NHK calisthenics. In spite of the side
wind, laughter and an occasional conversation reach my ears. Obviously,
they are having fun. A few meters away inside the inner’s Academy giant
back yard a group of 200 young men do the same routine with military
discipline. Two youngsters fly be my side and rush inside the yard. They
have overslept. I turn my sight to the former group. Not far from them an
old employee is observing them too.
The man is old but his skin is smooth as if he were 30. He is also short.
Like all those born in post war Japan. When the NHK tune comes out of
the loudspeakers, he, like the group, performs the calisthenics too. One,
two... one... two... It feels good. When the routine ends, we start a casual
talk. I ask if there are many foreigners in the Academy:
Sensei – Oh... yes. Most of them are American. Last month

somebody from Denso Barcelona came too... Normally… the
guys come in for 3 weeks.
Author – And do they learn what you teach them... You see, I
recently read an article in the newspaper about Toyota having a
hard time teaching TPS to foreigners. Is it the same here?
Sensei – Mmmhhh.... You know kid, when they come here they are
pretty good students. They do everything as told. Even the
morning routine. However, the moment they go back to their
original plant... they stop doing what we taught them.... – a
resignation edge in the voice.
I thank the old man and say good-bye. He really projected an aura of
sensei. In the evening I meet and old contact who works in Denso. I tell
him about the meeting with the sensei. My contact’s eyes light up...
Denso Employee – Ah... you don’t know how lucky you are... you
can learn so much from those “old” guys. Those ones really cut
it.
Considering the above, one might conclude that one of the causes why it is
hard to make TPS “stick” in factories outside Japan might be the lack of
critical mass of TPS-minded people in those factories. Right? The
following conversation took place during a PechaKuchaNight in Tokyo in
2011. There I met Michael a bright American ex-Toyota employee,
Michael (not his real name) worked at Toyota for one year and half before
quitting. He is now happily working at Apple (not his real company) in the
design department.
Author – Did you work at Toyota USA?
Michael – Yes, for 18 months.
Author – Did you quit? (Toyota seldom fires anyone)
Michael – Yes. Because they were treating me (non-Japanese) as

a robot. My job was to schedule some supply-chain orders. We
used Excel with some macros to do that. My job was to fill the
Excel and send it to the provider. One day I found a way to do
things better (kaizen), but my manager just wouldn’t listen. He
repeated follow the rules by the book. Follow the rules by the
book. There was no expectation for us to grow our careers, or

any sense to improve the processes.
Author – Wow. What a waste.
Michael – Well it was not a waste. Those were very well invested
months of my life, because I learnt where I did not want to work
never ever again. I learnt that Toyota was not for me.
Michael is co-author of several design patents. His job is to travel the

world scouting future hi-tech providers.
TPS step by step | 41
4 TPS step by step

In this chapter, we examine the production system
concept by concept as they appeared in time. From

simple to complex.
Video 1 Toyota Loom
http://goo.gl/fvXWn
4.1 Poka-Yoke and Jidouka
Poka Yoke
Poka-Yoke
What is poka-yoke? Poka-yoke translates into English as fail-proof, but

the original Japanese can as well translate as fail-safe. In spite the fact that
poka-yoke is nowadays one of the least known aspects of TPS, it was one
of the first to appear. Poka-yoke links directly with that stellar moment
where Sakichi Toyoda creates an automatic loom to free his mother from
the boredom of the manual labour.
At the beginning, when water powered looms became widespread in Japan
they became a great development. However, such looms had a slight
inconvenient. If during the weaving process a single thread broke, then a
garment with a defect would result or worse there would be a malfunction
of the loom. For this reason, in loom factories, each loom had to be
constantly monitored for safety and quality. Then, when a thread would
break the operator would stop the loom. Repair the broken thread before
garment would build / or break the loom. Then it would re-start the loom
again as if nothing had happened. Sakichi (or somebody in the Automatic
Loom Company, it is not clear) invents a simple mechanism as follows: a
small weight was attached to each thread feeding into the automatic loom.
The tension of the feeding thread is enough to support the weight (floater).
Each weight is linked to a stop mechanism. When a thread breaks, the
weight would go down and stop the machine automatically. Thanks to this
breakthrough, it became possible for a single operator to control 20 looms
simultaneously instead of the standard one or two up until that time. This
meant a manpower productivity increase of the order of 10. The
importance of poka-yoke is not that the owner of the factory could now
fire nine workers out of 10 but that these nine workers were now
effectively free to engage in tasks that are more productive rather than
monitoring threads. You will find that most poka-yoke actions are used to
prevent the assembly of a part in the wrong sense. This can be prevented
by modifying the part by slightly changing its shape so it only fits if it is
oriented in the right way.
Figure 7 Microsoft x-Box rear. (A/B) Is a good example of poka-yoke. It not only
tells the user that an hdmi type socket (B) cannot be used if the (A) cable is
plugged-in but the lid (A) physically prevents any hdmi cable to be inserted. (C)
Is a notorious example of Intel’s poor poka-yoke. There is one Murphy
possibility to insert the usb the wrong side and it is hard to for the user realize
that unless they actually insert it.
Teaching
Asymmetry is Poka-Yoke’s best friend
Jidouka
Later the poka-yoke ethos evolves into what today is known as jidouka.
Jidouka is a word composed of three kanji that bundled together means
automation.
Ji (auto) + Dō (move) + Ka (transform) = Automation
However, Kiichiro modified the (middle) kanji by adding the man radix on
the left. By doing so the move kanji morphs into a different kanji that in
Japan usually means work: a man moving. Kiichiro did that to stress the
point of automating manual work. (both kanjis are pronounced the same).
In other words: automation with a human touch. Some experts translate
this concept as autonomization - to free up manpower from automatable
tasks. The word invented by Sakichi Toyoda is as follows:
Ji (auto) + Dō (work) + Ka (transform) = Autonomization
Ergonomy at work
According to Canadian ergonometric provider Visualeyez Corp., from all

the car manufacturers it is Volkswagen not Toyota the one obsessed about
making its processes ergonomic.
“At Toyota they obsess about the process, at VW about the

ergonomics of the process”
Jidouka links directly with the western concept of ergonomics and safety.
Ergonomics equals safety. The worker that works in an ergonomic
environment is less susceptible to fatigue and therefore can be more alert
and concentrated. This leads to a decrease in accidents and to an increase
in quality. At Toyota, they are not ashamed to use scotch tape seats so they
are ergonomic. In the Tsutsumi factory (the one they show to the tourists),
one can see many examples of scotch tape applied on seats. These
personalization techniques can get quite creative at times.
The Silent factory
An example of ergonomics at Toyota is the project about adapting work

environments to old people. In this direction, an interesting step has been
the consecution of the so-called silent factory. Kyushu in the South of
Japan hosts a factory that produces the Lexus cars. (Toyota’s best and
brightest engineers have been sent to Toyota’s Lexus division). The
factory has a level of noise of around 63dB similar to that of busy office.
This noise level has been achieved by substituting the air power tools by
electric (but more expensive) tools. In words of factory staff:
“How can one produce nice cars if your factory is not a nice
place to work? Now finally we can use the sense of hearing to
check the quality of the cars... We can finally check for click of a
door slam as a quality check.”
On adoption of New Technology
How does the concept of jidouka fit with the adoption of new technology
at Toyota? As we mentioned in section 3.1, Toyota is a company that tries
to minimize all risks. The incorporation of new technologies is not an
exception. Toyota has never been an early adopter of technology but a
tardy one. This does not mean Toyota is not an innovation leader.
Example: In 2005 Fanuc Robot (The world champion of industrial robots)
starts commercializing robotic arms that can pick up components placed
randomly in a basket by means of a camera and a laser range. (As opposed
to the components having to be feed in an orderly way). The trick is based
on using a quick database of images. While in 2005 Ford had already
installed some of the robots in their assembly lines, Toyota did not.
Moreover, they wont do it until they are sure it is worth it. In Toyota they
say:
Buy technology that serves your people and processes
(Not the other way around)
4.2 Muda - Waste
What is it?
Waste
Muda is a Japanese word formed by two kanji Mu (the-no-thing) and Da
(payload, represented by a fatty horse). It means at the same time: waste,
underuse and/or useless action. In TPS, the best translation is waste. Waste,
refers to the waste of physical resources: time, space or materials; that in
reality do not serve any useful purpose. This is, they don’t add value for
the customer of the product. For example, movement economy (in
Japanese ugoki no muda) is based in sorting out the number of useless
and/or superfluous movements Eliminating waste around us has two
consequences:
+ productivity
– clutter
Humans often underestimate the benefits of reducing clutter. It turns out
the human brain tends to overweight frequent events and tends to
underweight infrequent events (such as tsunamis and earthquakes). Now
visualize two production lines: A and B. In A, the processes and elements
necessary to build an automobile are mixed with a 10% of superfluous
elements that add no value at all. Parallel to A lays B. There are no
superfluous elements in B, just the necessary processes and elements to
produce an automobile. From the two lines, exactly the same automobile
model comes out. From which of the two lines would you buy your car?
Now recall the urban-story about the patient that after a surgery operation
hears a tic-tac inside his belly.
Teaching
Do not under-estimate complexity: Less is (really) more
Fewer elements are conducive to more quality-friendly-environment but

we do not realize it until things go really wrong. Steve Jobs knew that
much. In Lean, what it is done is to subdivide big and long processes
(complex) into smaller but more manageable ones. Exactly the same sort
of thing that software industry has been doing by componentizing its
source code. After a typical Lean treatment, four big long processes are
typically split into ten more manageable sub-processes.
Teaching
First know your waste.
These are the seven major types of waste:

Table 2 The seven fundamental kinds of waste of TPS (according to Igarashi
2007 )
Seven typical kinds of Waste found in the Workplace
This is the queen of waste. It is the waste that stems from

1 Over believing that producing in big batches is more efficient
production than producing in small batches. Huge costs are incurred
in unsold items.
2 Waste due to Waste due to the existence of unnecessary things: such

Superfluous as personnel, machines, and non-adequate machines.
It is the waste due to the lack of flow. Stop and go in

3 No flow production and/or suboptimal line layout, lack of
synchronization, changeover times.
4 Operational Waste of doing unnecessary work. Due to ignorance,

lack of training, lack of technological expertise, lack of
planning and/or automation
5 Waste of These comprise all the movements done during a work

shift that do not add value: Ex. a bolt picked up from an
Movement unnecessarily low recipient, transportation.
6 Defect It is the waste due to production of defects caused by:

lack of training, not enough poka-yoke, quality controls,
Production and poor/inadequate maintenance.
The waste related to the cost of maintaining oversized

7 Overstock warehouses that act as a buffer between poorly
communicated processes.
Overproduction costs
Overproduction can be an exacting mistake. Particularly taxing in places

such as Japan where consumers are flicker and raw materials and
manpower is not cheap. In Toyota (and in the whole Japan),
overproduction is considered the area with the highest cost-savings
potential. At an individual level, it is easy to under-estimate how sensitive
domestic businesses are to overproduction. Example: Supermarkets, for
instance, face every day huge overproduction problems: what to do with
the fresh products that must be sold or thrown away at the end of the day
(fish, vegetables...). In Japan, this problem is bigger than in Wal-Mart
because the share of fresh produce in the shopping basket is larger than in
western supermarkets. Sushi, o-bento and fresh produce have a higher
weight in the shopping basket than the typical 30% in the West. Given that,
every day, in Japan, when the evening comes... at around (20:00)
supermarkets find themselves with the tough question of what to do with
all those o-bento, sushi and other perishable food waiting on the shelves. If
they fail to sell them they will not only lose the cost of the goods but also
they will incur additional loses (of manpower and money) of disposing of
those items. In Japan, waste disposal is not cheap. So, every evening, in
every city, in every neighbourhood every supermarket starts what is called
the “hangaku” hour (a kind of happy hour where sushi and unsold o-bento
can be bought half price). The hangaku time is blessing for many sectors
of society. (Particularly cash strapped students).
Japanese society due to its cost structure is quite sensitive to

overproduction. If the management of a company is diligent there should
not be overproduction, but if on the contrary overproduction occurs it can
be inferred that either:
(a) Management is not competent, or
(b) Management does not control the productive processes.
Either of which sheds bad light on management. This is the rationale

behind the so-called and often misunderstood Japanese style strikes of the
70s where the employees protested by overproducing. Therefore,
avoidance of overproduction is one of management most important roles.
Over-stock
Over stock is probably the second class of waste (muda) in cost-saving

potential. Its elimination offers a way, an entry door, to reach a true
Just-in-Time culture. On the other hand, it is considered that stored
“overproduction” hides or helps to hide underlying problems. Look at
Figure 8. Imagine a warehouse that is a lake. The level of water being the
stock level. In the bottom of the lake lay problems hidden by the water
level. For example, a batch of defective products. Spending money storing
defective merchandise does not seem a bright idea. The smaller the
warehouse the better. The larger it is the more it will take to find out about
the problems at the bottom of the lake. In the end, if there is a problem the
faster it is identified the cheaper. On the other hand, the smaller the
warehouse the easier to detect problems early.
Let’s examine one by one each of the six problems that lay hidden at the
bottom of our lake of stocks. A reduction of stocks levels will evidence
problems whose gradual solution can get the company closer and closer to
a truly Just-in-Time culture. Thereof, one of the key benefits of stock
reduction is not the reduction of stock in itself but the fact that it will force
the organization to adopt a “0” tolerance culture to problems. Tight stock
levels also make it easier for management to instil a sense of crisis into the
employees. Figure 8 shows how to arrive to a Just-in-Time by “problem
surfacing” stock level reduction.
A high level of stocks “hides” problems
Freed Resources
What if the stock
level drops?
> Stock level
A low stock level surfaces problems ?
A Problem
Figure 8 Analogy between stock level and a lake level. Comfort zone: What
happens when the water level drops?
Table 3 Pattern of Stock level reduction. How to arrive to an authentic

Just-in-Time by stock level reduction?
Problem Surfacing
 Hypothesis  What happens when we reduce stock levels?
  Effect  A “problem” surfaces

  Visualization  Identification of problem
  Solution  Once visualized, we can try to solve it
   What happens when we reduce stocks a bit more?

   A new hidden problem surfaces
...
 Just-in-Time CultureVisualization of problems:

Culture of tolerance ‘0’ to problems
Liberation of resources
Reduction of lead times
 Sense of crisis (0)

Table 4 Six problem visualization examples related with excess of stocks.
Visualization of problems when stock level drops
Ex.1: Excess of Stocks

 Action  What happens when we reduce stock levels?
  Effect  When a part (the last left in stock) has a defect and feeds in to a
process, the process will stop due to the defective part and no
more available parts.
  Visualization of underlying problem  Defects stop processes (!)
  Solution  Increase quality control

Start kaizen in operations
Ex.2: Reduction of the number of maintenance parts in stock

 Action  What if we reduce the replacement parts/machine in stock?
  Effects  The malfunctioning of a machine will make a line stop

  Visualization of problem  Machine malfunctioning stops processes
  Solution  Improve maintenance / Monitoring of machines
improves breakdown probability. (Most breakdown are
related to inadequate maintenance)
Ex.3: Excess of Stocks

 Action  What happens when we implement a one-piece-flow production
system? Reduction of buffer among processes?
  Effect  If processes that compose a production line are not

synchronized wait times will appear between given processes and
accumulation of parts will surface in other places.
  Visualization of problems  The line was in fact unbalanced

  Solution  Re-balance, re-distribute workers along the line
Table 5 Six problem visualization examples related with excess of stocks

(continued…)
Visualization of problems when stock level drops

(continued...)
Ex.4: Excess of personnel

 Action  What happens if production is planned based on purchase orders not on
previsions of demand?
  Effect  We avoid overproduction risks but workers will be idle

  Visualization of problem  Actually, there is excess of manpower (!)
  Solution  Reduce personnel.
Ej.5: Long Change-over

 Action  What happens when we reduce the size of batches and increase the number
of change-overs?
  Effect  If the time wasted in doing a changeover (no production) is long. The
productivity will suffer.
  Visualization of problem  Changeover time is too long (!)
  Solution Decrease the change-over time

(image: tyre change in Formula 1)
Ej.6: Excess personnel

 Action  What happens when reducing the safety margin of a given stock?
  Effect  A delay of a provider stops a process, a factory.
  Visualization of problem The current management of the supply
chain involves line stoppages.
  Solution Improve the way the supply chain is managed*.
*
Toyota provider management is notoriously tough and intrusive. Providers must periodically
pass exhaustive controls.
4.3 Standardization of Work
The detailed standardization of processes/tasks is interesting because it

reduces incongruence: standardization defines a standard way of how a job
should be done. It enables workers to aim for (a fix target of) perfection.
Existence of standards also enables processes to give objective feed-back
to the employees on how well are they doing their job. The problem with
standards is that if complicated they are hard to follow. This idea links
directly with the concept of visual management. The job of
standardization is to fix targets so that the employees can aim at perfection
easier.
4.4 Visualization
Visualization, in Japanese, Mieruka is a word formed by two kanji and

two kana:
Visualization
Mi (look) + eru (can do) + Ka (transform) = Visualization
Visualization is a powerful tool that enables to express scenarios and
complex data in a way the brain is particularly adapted to understand: the
visual language. (See also Andon 4.10). Thus Visual Management VM
was born. VM is a field dedicated to visualize data to manage people and
processes more efficiently.
Example of VM, the Roland case
In 2006, large format printer maker Roland made a great discovery.

Roland makes large printers using the cell production method and “the
meister” method (in which one employee assembles a printer from zero by
himself). The problem of both methods is that assembling a whole printer
involves many operations... each printer model being different from the
rest. How to achieve small-batch multi-product without compromising
mass-production efficiency? What Roland did is to attach an LCD monitor

to each cell. The monitor showed to each worker a small animation of
each step of the assembly process. This (visualization of the instructions)
reduced training times, lead-time and increased quality of the printers.
Roland’s visual support of assembly is a huge success reported widely in
the domestic press.
Production Cell
What are
you doing!
stress…
I see…
Visual
support
(a) V erbal Management (b) Visual Management

Figure 9 Visual management minimizes interpersonal frictions. Image is free
from personal connotations.
4.5 Itsutsu no Naze
The Five Why’s
Itsutsu no Naze means in Japanese The Five Why’s. It is an expression

born in Toyota that has been popularized recently by popular magazines
and newspaper press. It is a technique based on searching relentlessly for
the root cause of problems (it requires stepping out of the comfort zone). It
also means that if we want to solve a problem properly in a permanent
manner it is necessary to focus on the root cause not in its sprawling
branches.
Example Problem:
 Boy, I have a headache...
 Why does it ache? Because I have a cold.
Solution: Take an Aspirin.  Wrong.
Meanwhile at Toyota’s...
 I have a headache...
1  Why? Because I have a cold.
2  Why did you catch a cold? Because yesterday I spent time
in the cold1
3  Why? Because I didn’t take my coat.
4  Why? Because I didn’t think that it would be so
cold outside.
5 Why? Because in the morning I don’t check the
weather report.
Solution
Install a thermometer in the balcony and watch it before going out. 
The intake of an aspirin is just a superficial counter-measure. The

thermometer, on the other hand, would solve the problem permanently.
However, it requires two things: The creation of a rule (watch the
1
Why do we catch colds? The body is continuously generating antibodies that must be
replaced continuously in its war against microbes. The microbes try continuously to
invade our warm body. When it is cold, the body stops manufacturing antibodies as an
energy saving measure. If the cold period is long, the defence level drops and the risk of
infection rises.
thermometer before going out) and discipline. As in real factories, success

depends on how motivated and disciplined the work force is.
But, Why five and not another number? It is curious but at Toyota they
wonder the same. It turns out that if one asks repeatedly five seems to be
the magic number of steps. Itsutsu no naze is a powerful tool that can help
to solve problems long term.
4.6 Heijunka and Push/Pull
Push means to push something. Pull means to pull from. Both refer to the
flow (like a string) of the production line. Push production or a push
process refers to the fact of producing according to some parameter, which
is not demand itself. For example a schedule. A pull process refers to the
idea of producing in response to downstream demand. In a production line
composed of a concatenation of processes, it is interesting to link them in
a pull fashion. This minimizes the risk of buffers filling up or process wait
time due to lack of feeding input.
Heijunka is a word formed by three kanji:
Level out
Hei (flat) + Jun (level) + Ka (transform) = level out
Then, Heijunka means levelling out of production. If the production level
fluctuates (McKinseys’s variability) it is not possible to be efficient
(utilization capacity). How to conjugate this with Just-in-Time?
Just-in-Time tells me to produce what is demanded when the market
demands it: pull. But if we level (stabilize) production there will be
moments with gaps between demand and production. It’s a little drawback
compared with the benefit of having a stable production schedule.
Heijunka is complementary to the concept of Standardization, but in a
time frame. The work rhythm is standardized by the takt time.
It is one of management’s most important responsibilities to try to level

out production. To do that management is not alone but has some levers.
One is the capacity of influencing demand by means of advertisement. The
second one is the control over its sales force.
The Lexus push case
When in the fall of 2006 Toyota launches the Lexus brand for the first
time in Japan, initial sales were less than foreseen. In line with the
officially expected demand but in fact quite disappointing. The problem of
Lexus, a new brand in Japan, was that it was new. Not hitting even the
“official” sales target posed a prestige problem to risk adverse Toyota. So
the HQ mobilized their sales force. Salesmen began contacting previous
owners of Toyota high-end models (the Crown and Mark models), which
were susceptible of replacing their cars. While cannibalizing its own sales,
at the end Toyota achieved the “official” sales target by a thin margin, and
Lexus didn’t loose face in Japan. They managed to level out.
4.7 Just-in-Time
Just-in-Time, (JIT) means that things must be done at the right moment in
the right quantity. It is a concept that links with the elimination of
superfluous things of the production environment, in particular delivery
times. By JIT it is possible to lower the stock levels provided there exists a
reliable supply chain. JIT is not possible if communications between
plants are poor or in case of unstable environments. To realize JIT a
certain degree of synchronization is necessary between plants and
providers. Some researchers have pointed out that JIT is easier in Japan
because mean distance between factories is shorter than in Europe. As we
saw, JIT is a basic principle not a concrete technique. Additionally,
Heijunka and JIT are not opposed concepts but one is a precondition of the
other. Another precondition for JIT is synchronization between processes
(kanban). The reader can figure out by now that JIT has no sense without
kanban or a non-stabilized production.
No (Levelling or Kanban)  No JIT culture

An epic example of Just-in-Time
In 2006 (not 20102) a great earthquake hit Yamagata prefecture in

northern Japan. The quake not only stopped trains and Sanyo
semiconductor factories but many houses were damaged or destroyed.
Many people had to go to live for months in schools and army camps. The
supermarket supply chain was also affected. In some zones supermarkets
shelves went empty. However, there was a retail convenience store whose
supply chain continued to flow uninterrupted: the 365 days 24 hours a day
chain of 7 Eleven stores. 7 Eleven stores are typically supplied twice a day
by truck. They are part of a truly JIT supply chain. In the earthquake
aftermath 7 Eleven had the wit to supply by helicopter the shops that had
become isolated by wreckage of bridges or roads. An example of
flexibility and social responsibility that will long be remembered by the
local people.
4.8 Gemba & Genchi Genbutsu
The factory smells not of roses, but machine oil!

Osamu Suzuki, Suzuki Motors,
2006
The Scene
Gemba is a word formed by:
Gen (real, authentic) + Ba (place) = the real place
This is, the place where the action goes on. In Toyota that place is no other
2
During the 2011, earthquake 7Eleven could not manage to repeat the same feat in
Yamagata prefecture.
than the production line.
Go and See the Real Thing

Gen (real, authentic) + Chi (location) + Gen (real, authentic) +
Butsu (thing)
On the other hand, genchi genbutsu, usually translated as Go and See. It is
a word that refers to the fact that there are things one has to find out by
oneself. Working with second hand information has its risks. It means that
it pays off to be hands on. Going to the gemba is about to get information
first hand. This does not mean that delegation of tasks does not exist at
Toyota. On the contrary, decades of growth have created an environment
where young employees have had the chance of undertaking big
responsibilities. What genchi genbutsu tries to convey is that being far
away from the gemba is to be far removed from reality. And the reality is
that cars are made in factories, not offices. Closeness of management to
the action scene (gemba) not only is good for employee morale but it is
also a common point of excellent organizations. When management eats
in the same place that employees do, I can attest that food is usually not so
unpalatable. At Denso they say:
Are you genchi genbutsu?
4.9 Kanban
Kan Ban
Kanban is a word composed of two kanji: Kan + Ban. Kan means to look,
look afar. It is composed of a picture of hand on top of an eye. Imagine a
Chinese farmer who is looking afar and protects the eyes with the shade of
the hand. Ban means poster or wooden plate. Kanban together means sign
board. The kanban system started as a hardcopy reliable way of
communication (a la poka-yoke). By design, it is very difficult that a
misunderstanding occurs in a kanban system. The idea of kanban is based
on empty return-way container boxes. Example, assume that a provider
has completed production of a box full of parts for Mr. Toyota. When
should he send the box to Mr. Toyota? If he sends it too soon and the other
providers do the same, a considerable number of boxes will pile up in
front of Mr. Toyota creating a logistic problem. But if the box arrives late
it will provoke a line stoppage. The ideal solution would be to wait for a
call from Mr. Toyota. But Toyota can’t bother calling the providers. He is
busy making cars! Once a parts box has been consumed at Toyota, the
empty box is sent back to the providers (and the empty box means = one
more box of the same please). This is in simplified version the essence of
kanban. By design kanban automatically adapts to changes in rhythm of
production. It prevents overproduction by design. Decentralizes the
ordering system. Mistaking an order is very difficult. Kanban nowadays is
mostly digital and wireless. What matters is the essence.
The kanban method assures that
no more parts than the consumed ones are ordered
4.10 Andon
Visual Signal
An (event) + Don (lamp) = light that goes on when something happens
If the reader examines an assembly line at Toyota it will see that there is
always a thin thread hanging overhead. Anyone can pull it. It is the line
stop thread. Additionally, in each work place there is an additional orange
light. If a given worker lights his orange light it might mean: that I have a
problem or I think I might have detected a problem. An orange light might
indicate: “Hey, I need to go to the restroom, take over” or “This panel
can’t be assembled as easily as the others”. When a worker lights on the
orange light the line supervisor goes to check, assess the problem. When a
really grave problem arises one pulls the line stop thread. I have never
seen anybody pull the line stop thread but it must be a spectacular event. A
few things we can learn from Andon: the flashy lights linked to strings are
a way to visualize the status of a line...
(i) Broadcast. When there is a problem let the world know about
it. When there is a problem, by just pulling a thread all factory
knows. It is an efficient way of communicating.
(ii) Excite. The gemba becomes a more exciting place. Where
before there was just an assembly line now by attaching some
simple lights it has turned into an interactive communication
place.
(iii) Empower. Just because the employees are given the right and
duty to stop the line they feel and behave more responsibly.
(iv) Peer pressure. Imagine the line is stopped one morning. What
is the talk during lunch? Who stopped it? Why? Whose fault?
Teaching
Andon is to an assembly line what music is to a videogame

…TARGET =9/h…
…ACTUAL=6.2/h…
(a) V erbal Management (b) V isual Management

Figure 10 Broadcasting a message. In (b) the hurry up message is broadcasted
efficiently, in (a) it is subject to interpretation
4.11 Multi-product mini-batch
Multi-production (product mix) in mini-batches (small batch) is a natural

consequence of: Minimizing overstock. One of the advantages of having a
line capable of a product mix in the same line such as:
Car model: ABAABACBCAAB...
As compared to,
Car model: AAAAAA(changeover)BBBB(changeover)CC...
where A,B,C are three different car models, and changeover is the time
required to perform a changeover of model, is that the former
(multiproduct) is less cumbersome (because the variety) for the line
worker, and therefore becomes less boring for the line worker. Another
advantage is that there is no changeover time (see Honda case in Seiri).
When the batch size becomes minimal, this is “1” we call it
one-piece-flow. The advantages of one-piece-flow production as compared
to large batch system are summarized in the following table.
Table 6 Comparison of two work philosophies (Adapted from Igarashi 2007)
Flow vs. Batch
Production type One-piece-flow Batch (Large)
Wait time (must be) short or zero

proportional
Warehouse size Minimizes stock level
to batch size
Orders More continuous
Pauses at work Minimal Large
Defects One piece A whole batch
Employee Mass production

(forced to) High
Motivation boredom
Hidden inside the

Kaizen Problem visualization
batch
4.12 Sense of Crisis
Only the paranoids survive

Andy Groove, Intel
Yes, there is manpower excess (but I wont fire anybody),

In exchange I ask you just one thing: try your best
Denso Corp. president (while visiting
a factory floor) during hard times, 1996
Andy Groove once said, only the paranoid survive. Once you reach the top
it easy to slow down and take a rest in the summer shade: complacency.
At Toyota, the responsibility of this not happening lay in management.
The way they do it is by stirring the waters when they seem too calm...
(See Chrysler Neon episode). The sense of crisis, the drive to improve and
the rat-race mentality are profoundly embedded at all levels in Toyota.
Compared with other cultures, one is inclined to believe that the average
Toyota employee is very sensitive to mistakes and criticism. But at the
same time the organization provides tools and procedures to respond to
criticism (5S, kaizen). The employees have resources and standard ways to
respond/improve.
4.13 5S – Kaizen
Video 2 the 5S
http://goo.gl/ZzYcK
Continuous Improve
Again + Improve
There are many ways to improve a business. Usually a fast way is to listen
to the people close to the gemba itself: the employees. Recognized tools to
generate improvement ideas are:
 Suggestion boxes
 Idea contests
 Brainstorming sessions
 Kaizen drive
However, the typical issue with all these tools is not the idea itself but the
execution. As we saw in section 4.5 it usually requires iron discipline to
stick to the rules. It is imperative to fire the workforce who cannot observe
the rules agreed.
Seat Belt Fired
Schlumberger S.A is one of the top oil-consulting firms. They take rule
observation very seriously. They have many safety rules. One of them is to
fasten the seat belt before starting the engine. This happened circa 2011:
“One guy was fired on the spot. He was inside the Land Cruiser.
His seat belt was not fastened. No warning letter. A boss just fired
him on the spot.”
Historical Origins of 5S
As we said 5S was not born in Toyota, but in Japan Inc. 5S is a set of tools
that unblock improvement processes (kaizen) in a work environment by
providing the employees a mental setting in which social inhibitions are
neutralized. The origins of 5S lay in the years of rapid growth
(kousokuseichou). Rapid growth peaked at the Olympics of Tokyo ’64. It
during this years (1955-1970) when many companies start implanting 5S
because reality demanded adapting post-war production processes to high
growth demand. Nowadays, 5S is popular in many companies. Famous
companies where 5S thrives are: Matsushita denki, Mitsubishi denki,
Aisin, Denso, Inax (WC), Duskin (cleaning products). Depending on the
company 5S becomes 4S or 6S. As with Itsutsu no Naze a precondition for
the success of 5S is manpower discipline.
5S explained
The target of 5S is plainly to improve the bottom line. The way to

increase profit is to do kaizen on:
 Total Quality
 Production Costs
 Lead Times
 Safety
 Employee Morale
5S is named after:
• Seiri – Sort. Reorganize work.
• Seiton – Straighten. Having everything tidy.
• Seiso – Sweep. Clean.

• Seiketsu – Standardize the change.
• Shitsuke – Discipline - build men that observe rules.
A key factor of a 5S-kaizen drive is:
Trust in the common sense of employees so that

the employees (by themselves) decide
how to improve their own output
There are three golden rules on how to carry on successfully a kaizen-5S

drive:
 When there is a 5S activity (such as a meeting) all the employees
from the boss to the newest employees are engaged and on an
equal footing.
 Things are decided by consensus. Consensus decisions are sacred.
 The directives of Kaizen committees’ actions must be followed up
by controls and inspections.
Seiri
Reorder, Sort
Sei (to order) Ri (logically) = (reordering, readjustment)
Seiri should be the first S. If you cannot do Seiri you won’t succeed with
any of he other S’s. Seiri is related with the concept of muda. Definition –
Seiri is about discriminating the superfluous things from the strictly
necessary things needed to perform a task, job or project. In this way the
work environment is simplified, things are found faster, it is harder to
make mistakes and productivity increases. Seiri = using the trash bin. Seiri
= providing a place for things to be stored. Example in Figure 11: a small

pot for pencils is added to keep a pencil/s in place.
Figure 11 A desk before and after seiri. Just providing pots for pencils and cards
is great way to sort things.
Seiri at Honda
Honda, in contrast to Toyota has a production system very different to the

Toyota one-piece-flow. Lets assume a Honda assembly line has to produce
500 automobiles a day: 300 Civic and 200 Fit. In Toyota we would see Fit
and Civic mixed and advancing in the line in a ratio more or less 3:2. At
Honda they don’t do that. In the morning they might produce the 300
Civic. And then in the evening they might produce the 200 Fit. Along the
assembly lines there are racks and racks with wheels (shelves with parts).
When is changeover time something spectacular happens: The employees
push back the Civic racks and move in the Fit racks. A giant example of
Seiri that probably does not fit in Toyota. Of course, at parts supplier
Denso (the Toyota subsidiary) they believe that at Honda they are crazy.
Honda is also a customer of Denso and its orders are big and spaced in
time. Toyota orders are always levelled out: small in size and numerous in
time.
“Dude... you can learn a lot in a company like Denso because we

supply to companies (Nissan, Honda, Toyota...) so different in
nature!”
Seiton
Tidy it / Straighten
Sei (to order) Ton (diligently) = (tidy up)
Figure 12 Seiton. A desk before and after seiton. Aligning things is great way to
find things faster.
Seiton is the second S. It means to align things. Definition – Seiton means

to have the work environment ordered and tidy (everything labelled...) so
that anybody that needs something (for example, a tool) does not waste
time looking for it.
Seiso
Clean
Sei (pure) So (polish)= (to clean)
Seiso (to clean). It comprises those measures to prevent and avoid dirtying.
The aim of seiso is to kill the generation of dirtiness at the source.
Figure 13 Doritos leftover. The point of seiso is not to clean one time but to
prevent dirtiness at the source by adopting counter measures.
Definition – Seiso means to have the work environment as clean as

possible always. A typical seiso measure is to attach a vacuum cleaner to
and electric saw or grinding machine so that waste is collected instantly.
Killing the source of dirt.
Seiketsu
Standardize
Sei (pure) Ketsu (right, gallant)= (keep clean of impurity)
Seiketsu (Standardize/ Maintain) is the fourth S. It means to try to make

the improvements of the preceding S’s permanent and sustainable.
Figure 14 Establishing rules is a great way to encourage good habits. Works

better is the employees are involved as stakeholders. This poster serves as a
reminder that no Doritos are allowed, that the pen should be returned to a pot and
that a clip should bound loose cards.
Definition – Seiketsu means to make the changes “sticky”. In other words,

to standardize. One way is to create “rules”. Here is another example:
Imagine you own a laundry shop and you have many laundry carts. If your
carts are aligned not only your laundry looks nicer and orderly but also
your employees will be able to spot abnormalities faster. But, How to keep
all the karts in line? Very simple: Just mark (standard) locations on the
ground with scotch tape.
“After marking karts places with scotch tape the place became
nicer”, TNT Logistics employee, Belgium, circa 2010.
Shitsuke
Discipline
Shitsuke (Discipline/ Impose) is the last and fifth S. It means to create a
culture where the own rules are respected. A culture where decisions stick.
Posters, marketing, singing a song to memorize rules, prizes or rankings

are some of the common tools used to achieve this.
Figure 15 Displaying a poster with the new rules is a great way to encourage
good habits every day.
Definition – Shitsuke the things (rules, way of doing) that the own
employees have decided should be respected and obeyed without
exceptions. Shitsuke is about the battle for the minds and hearts of the
employees.
So far, in this section, we have seen five tools that can be used to start a
continuous improvement culture, but How-to start kaizen activities from
scratch? Here is one way:
4.14 How-to Organize a Kaizen committee
How to initiate kaizen activities in your company? The easiest way is

through the creation of a kaizen committee of employees.
First: Choose a leader of the committee
In each production unit/section choose two persons. The first will be

leader. The second will be the sub-leader (just in case the leader gets ill).
Make sure women are included in the committee. Women have a better
critical eye than men do.
Second: Decide roles in the committee
You will confer authority to the committee to conduct study/observation

activities. In the committee there will also be a secretary (to take minutes).
A cameraman will take pictures during observation activities. The role of
the leader is to facilitate, moderate. The secretary will take notes and
makes a summary at the end of each month. The cameraman takes pictures.
For example, of how messy is section B on Friday evening.
Third: Make responsibilities clear
Visualize in a wide poster the work place layout and assign

responsibilities to each person and area. Who is the responsible of this or
that area. Include also the parking the stairs and shelves areas. For
common areas install a rotation system of responsibilities.
Inspections
Every month the committee chooses an area and inspects it. Asses key
points, take pictures for later reference. Detected problems and issues can
be written in the layout so everybody can see them (Visual Management).
Month by month compare the evolution of each area to see if there are
improvements linked to recommendations of the committee: (Suggestions
on how to use things, layout changes, rules, safety...) A kaizen committee
is not like the Gestapo but letting know the employees that someone cares
about how things are done will keep them motivated too.
Darling... today, we were inspected by the kaizen committee.
Making a ranking
With data from the inspections you can make a ranking (checklists) by
points and even a graph that shows the evolution in each area. Prizes and
medals are also effective. Do not underestimate the effect of prizes on
adults. (The Power of Ranking, 2007)
“Our team won the best team-ranking award”
Checklists
A checklist is a very useful tool widely used in companies like GE. The
following table shows a small questionnaire. A checklist example of a 5S
progress assessment.
Table 7 Five S Self-assessment. Adapted from (Matsuzaki 2006)
Self-assessment of 5S – Rank and check

Points
5S My Check List
43210
There are no unnecessary things
There are no useless/malfunctioning tools
Seiri
Sort
There are no tools unused for more than 6 months

The existence of apparently useless object can be justified
Everything has its place
Everything is in its place
Seiton
Sweep
Things are returned to its place every time

Everything is labeled
The windows are clean
The machines are clean
Seiso
Clean
No dust on the LCDs

No dust under the desk
You could eat in the floor
There are surprise inspections
Standardize
There is periodical maintenance for everything

Seiketsu
There are periodical checks for everything

The content of PCs is checked
Division lines between work areas are visible
Employees are on-time
Discipline
Shitsuke
Documents are complimented according to rules

Safety rules are observed
All rules are observed
Total3 =
_____________
3
More than 82 : Good. 81 to 76: Improve. Less than 76: Keep reading about 5S.
Begin the difficult as it was easy

and the easy as it was difficult
Baltasar Gracián
Example of Kaizen at Denso
The reader might think that all this is very well. But how to start a kaizen
in a company where it has never been done before? Below we depict how
Denso usually starts a kaizen drive:
The first thing we do is to identify some line with poor

performance. Then we call in the line manager.
Let’s assume that the given line should have met a production
target of 10 units a day. (Well, in Denso-Japan targets change
every hour but lets assume that a line in Denso-Indonesia has a
fix production target of 10 units a day). You call in the line
manager and you tell him: You are going to make a
dekidakakanrihyo for me.
This is, a Production Management Sheet (PMS). You write here

the target production, the actual production on a given day and
reasons why the target was not met that given day. Lets assume a
given day the actual production was only 8 units. Then the
manager would write on the PMS:
We were short 2 units because... A machine was poorly adjusted,

3 defective units where produced...This sheet is hanged up in a
visible public space and is updated daily... So every body sees
what is going on.... Other team members can then: Add
suggestions, reflect on how to solve problems that prevent
reaching targets and exert peer pressure
Dekidakakanrihyo (PMS) is a simple method that can initiate the

personnel (painlessly) to kaizen and TPS concepts in a very natural way:
(i) Standardization of work
(ii) Visualization of problems (targets are not fulfilled)
(iii) Tools such as the Five Why’s

(iv) Sense of Crisis
4.15 The P.D.C.A method
Plan  Do  Check  Act
The key is separating each phase
P.D.C.A stands for Plan-Do-Check-Act. The virtue of P.D.C.A is not in

the Planning, Doing, Checking or Acting but in the separation of Planning
from Doing, Doing from Checking and Checking from Acting. It is a
methodology that ensures that a change to a process such as one
improvement is isolated from the following change. If you change a
process very often, as in kaizen/continuous improvement, the hygiene of
your process might suffer. If changes are applied randomly or not
managed properly it can be hard to track which of them improved the
process and which didn't. PDCA solves this by:
1. Plan = Think of one potential improvement
2. Do = Try it
3. Check = Measure the “effects”
4. Act = Adjust. Evaluate. Fully implement the proposed change OR
discard change.
5. Go to step 1 and repeat cycle.
Tracking a PDCA initiative can be done by using the A3 method. A3
method is very simple: you need to be able to display all the information
regarding your project in one single A3 size paper. This space restriction
will help you focus on the essential information only. The A3 method can
be seen as a reporting method. The idea is to access all the essential

information regarding a project with a single look. A3 reporting is
commonplace in Toyota and at many other Japanese corporations. Since
Japanese language is twice as dense as English you might need to use
smaller 8-point size typeface to be on an equal density footing.
Summarizing: A3/PDCA is about quantifying the effects of change and
the time-evolution of the change process itself. The ultimate goal is to
have total control over the change process so it leads to steady and reliable
improvements. This cannot be insured if one change is not separated from
the other changes. The following figures are three examples of PDCA
carried using the A3 method
Concrete
Start counter-
measures
Background
Check the
effects
Current
status
Follow up
(Shitsuke)
Root cause
Analysis
Figure 16 A3/PDCA case study by Staffan Nöteberg. The countermeasures

section must specify who is the owner of each countermeasure.
Figure 17 Example of a female student’s A3 Reporting. A wind car was built.

The sheet depicts an improvement plan for the design and construction process.
Uses root cause analysis, value stream mapping and PDCA.
Figure 18 PDCA using Microsoft Excel. Origin: Brazil.

78 | Staffan Nöteberg
4.16 How–to A3 Report and Value Stream Mapping
By Staffan Nöteberg,
author of the personal productivity book
Pomodoro Technique Illustrated:
http://www.pomodoro-book.com
A3 Report is a terrific way to implement Deming’s PDCA
(Plan-Do-Check-Act). Toyota uses it for problem solving. You can use
this technique too. Here goes an example:
Figure 19 A3 Report
Theme: Stress free morning procedures
Background: School starts at 8.20. The children need to sleep as long as
possible. They must leave home at 7.45 in order to catch the school bus.
Current Condition: Lack of time almost every morning. Stress creates

bad atmosphere in family. Value stream map (see fig. 20) indicates that
value adding processes only takes 17 out of 45 minutes.
Figure 20 Value Stream Map
Goal: Ready to leave for the bus within 45 minutes without stress.
Root Cause Analysis: Why stress? Because a considerable amount of
time is spent on T2. Why is so much time spent on T2? Because Groa has
to wait for the hair brush. Why does she have to wait? Because her sisters
use the hair brush.
Countermeasures: 1) Mother buys two more hair brushes. Due Friday. 2)
Father reserves space for new hair brushes, when they are not used. Due
Saturday. 3) Father will measure if T2 decreases after (1) and (2) is done.
Effect Confirmation: T2 decreases. The whole value stream shrinks in
time. Stress is gone.
Follow-up Actions: 1) Mother will buy another two hair brushes. It’s a
backup in case of one ordinary is lost. Due Tuesday.

Appendix | 81
5 Appendix: Fun facts about Japanese

carmakers
What does the Toyota logo symbolize?
The logo of Toyota is composed of two ovals in T formation embedded

inside a bigger oval. The T stands for the Toyota T. The big oval
represents the world. The two spaces below the T wings represent the
space that Toyota needs to expand (a kind of vital space). Toyota produces
1 out of 2 vehicles sold in Japan. In all Toyota cars except the Lexus, this
logo is found in the rear trunk and never on the front. Each model has its
own logo for the front.
Figure 21 A Toyota building in Takashimaya Times Square, Shinjuku. 2007

(Toyota Rent-a-car & Lease)
What is the jewel of the crown of the Toyota group?
It is not Toyota. It is Denso. It has grown twice as fast as Toyota in the last
decade. Denso employees smile more, are younger and seem happier than
its Toyota peers. They also own more BMWs. The gossip has it that many
Toyota employees recommend its offspring to join Denso rather than
Toyota. Denso freshman employee salary is around 10% lower than at
Toyota but Denso dorm’s rooms at least have kitchen. (But girls are not
permitted to visit the boys dorm, and boys are not permitted to visit the
girls dorm, same gender visits are permitted)
Why there is no railroad connection in any Denso factory?

Because the management thought that better no train so employees buy

cars.
What is the most desired car-brand by the Denso employee?
BMW. And the most owned actually? Toyota. (If you buy a Toyota the
company will waive the highway fee)
Dress code
At Toyota temp staff employees can dress casual in the assembly line.
Uniform is not compulsory except for the safety items.
Is Toyota a centralistic organization?
Yes. No place for cowboys. It is also an elitist organization where personal

connections matter and elite tracks are not institutionalized yet.
What language do Japanese engineers use with local engineers to
communicate?
In Toyota Turkey they use Japanese.
What is the Toyota employee most common complain about Toyota
cars?
Omocha kusai – it feels like a toy.
What sets apart Honda Suzuki Nissan Toyota from each other?
Honda, freaks
Appendix | 83
Honda is a company that actively seeks to recruit automobile freaks. With

decoys such as bringing free F1 tickets to classrooms...
– Tanaka-san, do you want to work at Honda?
– Ho..Ho.. Honda? No thanks. DO you want to spend the rest of

your life surrounded by car freaks?
Nissan, a bureaucracy
A high executive at Nissan is paid much more than a Toyota exec: 3 and 4
times more, meanwhile the average worker at Nissan is paid 10% less than
at Toyota. How can this be if once the management of Nissan almost
bankrupted the company? Moreover, one day of 2006, Carlos Goshn
decided to increase a bit more the already higher retribution of Nissan
executives. This prompted some angry responses from small-shareholders.
Then asked a girl who worked in Nissan marketing... How could that be
happening?
– My dear, Carlos had no election. Nissan is a burocracy.

Dominated by it. Carlos needs their support to continue
governing. He bought them
Suzuki, the cost conscious
Suzuki is what they call a one-man-company. The founder, a big man

called Osamu Suzuki still at the helm. Suzuki is a more shrewd company
than Toyota. Its market value has grown faster than Toyota’s. Suzuki cars
are leaner than Toyota. Suzuki was the delocalization leader in Spain in
the 90s. The top sold (light car, 600cc) model in Japan in 2006 was a
Suzuki. It has a big market share in India (Suzuki is synonymous of “car”
there). It has assembly lines where cars advance backwards.
84 |
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Jose Berengueres
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Toyota Recall Time-line
Nov-04
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Jul-06
Correlation does not implicate causality.

Nov-06
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Figure 22 Toyota Recall time-line. March 2006 was the first time in history that
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REFERENCES
Harbour Report Presentation (2006) Harbour Consulting
HCI (2002) Human Computer Interface, McGraw-Hill
Igarashi Ryou (2007) Nikkei Monozukuri 2006.01, p.138-142, Nikkei Publishing Group
J.D Power (2006) Vehicle Dependability Study 2006
Liker Jeffrey (2003) The Toyota Way, McGraw-Hill
Magee David (2003) Turnaround: How Carlos Goshn Rescued Nissan, Harper Collins
Matsuzaki (2005) Matsuzaki Hisafumi and Toshifumi Yamana, SanShuSha
OCI (2007) Osaka Entrepreneurial Museum of Challenge and Innovation, Osaka
R25 (2004) R25 Aruniju’go 2004.10.07 Recruit Ltd.
The Nikkei Weekly (2006) December 2006, Nikkei Publishing Group
The Japan Times (2006), The Japan Times
TM (2005) Toyota Commemorative Museum of Industry and Technology, Nagoya
Nathan John, (1999) Sony the private life, BPI Communications
Womack (1990) Womack James, Jones James and Roos Daniel. The Machine the
Changed the World, Simon & Schuster
Industrial & Manufacturing Engineering / Manufacturing Process
Five years, 100 interviews. The adventures of a

Barcelonian in the depths of corporate Japan,
T.O.Y.O.T.A.... Now, its secrets revealed to you. The
culture, the history and why it has become a global
powerhouse.
How this book can help me?
Jose Berengueres is PhD in This book will help you understand how to successfully
engineering by Tokyo Institute of deploy the Toyota Production System in a non-Japanese
Technology, has worked in Japan
work place. Whether you are Japanese manager or not if
for five years. He speaks fluent
you struggle deploying a true Toyota culture this book is
Japanese. Currently is Assistant
for you:
Professor at UAE University.
Best practices on
With Visual Examples! ü Poka-yoke
ü 5S
ü Push / Pull
Contains Wikimedia Content
ü Kanban
ü The A3 / P.D.C.A method
ü Visual Management
ü Waste
ü Genchi-Genbutsu
ü Production Management Sheet
ü How-to A3 report - Value Stream Mapping

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THE TOYOTA

Jose Berengueres, Ph. D

Copyright © 2007-2012 by Jose Berengueres.

All rights reserved.

Revised 4rd English Edition,

Dubai October 2012

1 Industry Framework ................................................................. 11

1.2 Size Matters ............................................................................... 13

1.3 The consolidation wave of the 90s ............................................. 15

1.4 Organic growth vs. Acquisition ................................................... 18

2 Brief history of Toyota .............................................................. 21

2.2 The Beginnings .......................................................................... 21

2.3 Mommy’s Loom .......................................................................... 24

2.4 From the Loom to the Automobile .............................................. 25

2.5 Taiichi Ohno or the birth of TPS ................................................. 28

3 The Production System ............................................................ 31

3.2 Operative Targets....................................................................... 33

3.3 The difference between “Lean” and “TPS” ................................. 33

3.4 Sociolinguistic barriers ............................................................... 35

3.5 A visit to Denso Academy .......................................................... 37

4 TPS step by step ...................................................................... 41

4.2 Muda - Waste ............................................................................. 45

4.3 Standardization of Work ............................................................. 52

4.4 Visualization ............................................................................... 52

4.5 Itsutsu no Naze .......................................................................... 53

4.6 Heijunka and Push/Pull .............................................................. 55

4.8 Gemba & Genchi Genbutsu........................................................ 57

4.9 Kanban ....................................................................................... 58

4.10 Andon ....................................................................................... 59

4.11 Multi-product mini-batch ........................................................... 61

4.12 Sense of Crisis.......................................................................... 62

4.13 5S – Kaizen .............................................................................. 63

4.14 How-to Organize a Kaizen committee ...................................... 70

4.15 The P.D.C.A method ................................................................. 74

4.16 How–to A3 Report and Value Stream Mapping ........................ 78

5 Appendix: Fun facts about Japanese carmakers ..................... 81

There is only one way... to be the best,

1.1 Toyota: Growth and efficiency

1st Oil shock

1960 1970 1980 1990 2000

Taxi Driver – These cars are driven 24 hours continuously in two

1999 2002 2005

1.2 Size Matters

Once mass-production of a new product commences a law, as precise as

Organic growth refers to the growing of a plant: slow but steady. A

Are Future Savings larger than acquisition price + integration costs?

“Well, now you don't have an excuse not to make a hybrid”

1.3 The consolidation wave of the 90s

In the post-war era automobile industry, M&A was a fairly rare

Ford through Mark Fields brings to Mazda a much-needed management

“You tell us how to organize ourselves. But please... don’t tell us

Is Nissan a proud company? The acronym stands for Japanese Productions,

NISSAN = NIP-PON + SEI-SAN

Years later, the value destruction at Chrysler became apparent and

A healthy provider is more useful than a zombie one

Treat your suppliers as an extension of your own

1.4 Organic growth vs. Acquisition

2 Brief history of Toyota

Hamamatsu, Shizuoka Prefecture. 200 km South of Tokyo. A white

Author – What is it?

Driver – It is the former Toyoda clan house, the founders of

Author – You mean they come from this area?

Driver – Yes, didn’t you know that Hamamatsu is the homeland of

Next to me a professor from TokyoTech smiles and adds: must be the