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TOYOTA PRODUCTION SYSTEM A system or a philosophy?

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TOYOTA PRODUCTION SYSTEM
A system or a philosophy?

Arikkök, Merih
Merih.Arikkok@kamk.fi
Contents
Introduction ......................................................................................................................................... 2

What is Toyota Production System? .................................................................................................... 2

TPS, TQM and Lean Production ........................................................................................................... 3

TPS elements in a nutshell ................................................................................................................... 4

Just-in-time (JIT) ................................................................................................................................... 4

Levelling the flow- Heijunka ............................................................................................................. 5

Elimination of waste- Muda ............................................................................................................. 5

Takt time .......................................................................................................................................... 5

Kanban Card ..................................................................................................................................... 5

Jidoka.................................................................................................................................................... 6

Genchi Genbutsu- Going to the source ........................................................................................... 6

Andon Board .................................................................................................................................... 6

Mistake proofing and Labelling- Poka Yoke ..................................................................................... 6

Kaizen ................................................................................................................................................... 6

Does it worth it?................................................................................................................................... 7

1
Introduction
The popular wisdom has always been this meteoric rise is the direct result of Toyota’s mastery of
lean production but it turns out this is only a small part of the story. A much larger factor in
Toyota’s ongoing success in the marketplace is the impact of its deep-seated and unique corporate
culture.1 In this case study research I tried to give an overview of the Toyota Production System
and its main pillars. I tried make sense of the concepts and the effects of implementing TPS in
Toyota’s current success.

What is Toyota Production System?

Lean production is basically doing more with less aiming to reduce waste and use less of
everything to produce quality. The Toyota Production system is a production method that strives
to improve processes, reduce waste in resources which leads to better efficiency, quality and
profitability therefore we can place it under the lean production philosophy. TPS involves the firm
as a whole and defines how things should be done, who has what kind of responsibility and how to
react in certain situations. It requires commitment, responsibility, and initiative from every
employee of the firm as does total quality management philosophy.
TPS was originally developed by Toyota Motor Company however it is currently used around the
world with variations. Numerous companies including the General Motors have tried to learn TPS
and implement it. As usual with total quality management, successful implementation of TPS
requires support from everybody top to the toe and long term vision. It is more of a culture than a
system that brings significant change to doing things.
When we talk about TPS we should emphasize two items of its core which are “jidoka” which
means automation with a human touch and JIT production method which focuses on producing
what is needed, when it is needed and in the quantity needed. It is acceptable to think about
Toyota Production System as an ecosystem of a successful quality management system consisting
of different modules improved over decades that work together as a whole, deeply rooted in the
corporate culture. As Toyota was seeking to improve their production efficiency, Taiichi Ohno was
given the task to make this a reality and was sent to the US to have a look at Ford's processes.
During his visit, Ohno had the insight that a supermarket was essentially a well-run warehouse,

1
David Magee, How Toyota Became #1: Leadership Lessons from the World's Greatest Car Company, (Portfolio: 2008)

2
with ‘goods-in’ closely matching ‘goods-out’, and no space for long-term storage. On his return to
Japan, Ohno developed the same idea into the kanban concept2 which we will discuss later in the
text.
As a result of the TPS, Toyota name is widely associated with quality and efficiency. There are
many manufacturers who have studied and adopted the system, created variations and academic
studies made on the system.

TPS, TQM and Lean Production

Total Quality Management is a program adopted by institutions that aims to create customer
satisfaction which translates into quality while reducing costs. Total Quality Management’s success
depends on the commitment of the entire firm, awareness and a well implemented system
striving to achieve preselected targets. TQM is about constantly looking ways to improve
processes leading to quality.
Lean production, strongly embedded in the Toyota Production System aims to produce with less of
everything. A company that uses lean production methods will be aiming to use less waste, less
effort, less production, and warehousing space and typically less engineering. Lean production
aims for perfection which means minimal defects e.g. per 100 units produced and tries to reduce
the number of errors to zero. Lean production, and of course TPS sees everything that doesn’t
create value for the customer as waste and tries to eliminate them. As TPS culturally runs through
Toyota’s veins, their executives have a habit to think long term, with two things in mind, quality
and providing what customers want.

2
How Toyota Production System (TPS) benefits your organization, http://www.toyota-
forklifts.eu/SiteCollectionDocuments/PDF%20files/Toyota%20Production%20System%20Brochure.pdf, (4.1.2017)

3
TPS elements in a nutshell

Figure 1. http://www.toyota-forklifts.eu/en/company/Toyota/Production/System/Pages/default.aspx

Toyota Production System strives to achieve the best quality with the lowest costs possible while
being precise and on time with deliveries to its customers. Within the TPS Toyota understands its
customers’ environmental concerns and strives meet their environmental demands from
production till recycling of the product. Toyota ensures its employees’ and customers’ safety and
takes it as a top priority. As seen in Figure.1, JIT and Jidoka act as the two pillars of Toyota
Production System. Below we will take a look at JIT and Jidoka separately.

Just-in-time (JIT)
Just -in-time production is a lean production method that aims to reduce waste and use less of
everything to product quality, It is an essential practice when it comes to applying TQM and it
reduces costs and time spent in production. In a company applying JIT, a product is produced only
if it is needed, when it is needed and in the exact quantities needed. Let’s keep this in mind to see
how all the elements of JIT contributes this separately. JIT reduces the need for keeping inventory
thus saving money and material stocks for the production process are replenished only when they
are low. JIT brings efficiency to the entire production floor, reduces time and error risks.

4
Levelling the flow- Heijunka
Heijunka, the core of JIT from TPS point of view is about reducing inventory costs as required parts
will arrive on the production floor only when they are needed and in the right quantity. It
eliminates waste such as mura which means unevenness in workload. It ensures that a product is
produced when it is needed, in correct numbers and the spare parts only arrive at the right time in
the right quantity. Heijunka also contributes to overall production quality and safety by eliminating
muri- strong effort without need. With Heijunka, the production plan works efficiently and
according to the demand whereas in other production practices companies may produce in a way
of pushing, producing in preplanned quantities without having data on demand and then trying to
sell those products using marketers' assistance. This of course increases inventory needs and
create additional costs which do not create any benefit for the customer.

Elimination of waste- Muda

Muda means waste in all forms that doesnt add any value to the final product which is useless for
the customer. Muda can involve overproduction, inefficient inventory keeping, time wasted due to
errors and waiting idle.

Takt time
Time has a direct impact on efficiency whether this be about production, service or our personal
lives and time planning is very important in TPS. In order to achieve efficiency, the company
should only produce when something is demanded and in the right quantity in order to avoid
producing too little or too much. Produce too little and you’ll miss your customer’s expectations,
produce too much and you will need a larger inventory. Takt time determines how much of the
demand can be fulfilled in a certain amount of time. Takt time and heijunka mean having the
ability to be flexible according to demand and ensuring the process is smooth, continuous and
measurable.3

Kanban Card
In the Kanban Card system, an employee can call in more parts to the production floor when
needed which ensures keeping minimum stocks. This way the stocks are replenished according to

3
http://www.toyota-
forklifts.eu/SiteCollectionDocuments/PDF%20files/Toyota%20Production%20System%20Brochure.pdf, p9

5
the just-in-time principal, right at that moment. In TPS it means having just the right components
to build the product.4

Jidoka
The TPS principle of jidoka builds quality checks into each step of the production process. By
ensuring that all processes are visible, jidoka helps ensure that abnormalities 5

Genchi Genbutsu- Going to the source

Per Genchi Genbutsu, solutions should occur as problems are discovered. In order to find a correct
solution one must fully understand the problem. Going to the source here means going and seeing
it yourself instead of relying information for others. In his book "How Toyota Became #1" David
Magee says Toyota uses 5 Why technique in order to identify the root source of a problem. By
asking "why" five times regarding an issue it is much easier to identify the rootcause and find a
solution, an accurate one.

Andon Board
Andon board is an electronic sign that displays live information from the production lines and
enables every employee to be aware of any production issues faced.

Mistake proofing and Labelling- Poka Yoke

In order to avoid mistakes and make it easier for the employees which increases efficiency and
quality, every item is labelled in TPS. With items being labelled with the correct names and
information, employees can easily access the tools and items they need without losing time.

Kaizen
Kaizen is the continuous improvement process in the Toyota culture where every human asset of
the company keeps looking ways to improve. White collar and blue collar workers are all
encouraged to contribute their views for achieving better. At Toyota, thanks to the Kaizen
philosophy everybody is encouraged to share information at all times and they do not report to a
single boss which helps ideas gets noticed easier. The 5 Whys is an important practice of Kaizen
that enables better root cause identification leading to better solutions problems.

4
http://www.toyota-
forklifts.eu/SiteCollectionDocuments/PDF%20files/Toyota%20Production%20System%20Brochure.pdf, p9
5
http://www.toyota-
forklifts.eu/SiteCollectionDocuments/PDF%20files/Toyota%20Production%20System%20Brochure.pdf, p10

6
 While doing all these TPS is actively concerned with environmental protection and safety of its
employees as well as its customers. International occupational health and safety standards are
followed in order to reduce potential risk factors and prevent accidents. Despite the automation
level at Toyota plants, employees are continuously trained on occupational safety and Toyota
contributes this by keeping the tools and the working environment as simple as possible.

Does it worth it?

Toyota has had invaluable benefits from its TPS and the culture it brought to the company. Both
JIT and Jidoka are contributing to quality in terms of good quality management. The company has
sold only 1500 cars in its first seven years and only 300 card in its first year in the USA. In 2007
they became the largest car maker in the world and today Toyota stands for quality, reliability and
innovation. If Toyota had not created the Toyota Production System and lived by it I believe none
of this would have happened. Toyota managers believe in hands on training, importance of
identifying the root cause, seeing it for yourself instead of relying on others and this is the result of
the TPS culture. Toyota thinks that their sales will go up and success will be consistent as long as
they produced what customer demanded, in better quality and lower costs and this has proved
itself true. There are numerous studies made on the TPS and numerous successful applications of
TPS by other companies. The Freemont Assembly employees of General Motors or “NUMMI” after
GM- Toyota went into a joint-venture were considered the worst workforce in the automobile
industry in the United States according to the United Auto Workers. 6 GM- Toyota joint-venture
reopened the factory with the same employees, trained some of the staff and implemented TPS
with success. Under TPS, NUMMI was able to produce with very similar error rates to Toyota’s
Japanese plants and typical employee and production issues were tackled.
In order to conclude, it is viable to state that TPS brings in a culture that promotes efficiency,
accuracy, quality control and continuous improvement which are invaluable to an organization
and costs much less to implement than fixing errors and dealing with problems in a haystack.
Toyota Production System is a philosophy consisting of invaluable concepts that requires a total
commitment from the employees and a welcoming attitude towards change. It is a way of doing
things that should set its roots in an organization so deeply that it becomes second nature over
time which will bring the actual success.

6
Wikipedia, https://en.wikipedia.org/wiki/NUMMI, (5.1.2016).

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