Toyota's All-Out Drive To Stay Toyota.

Business Week Article

I have a number of "Toyota is struggling" articles in the backlog to work through. Maybe I'll dump the rest of those later in a single post. This was a good article from BusinessWeek (actually a weekly publication, unlike IndustryWeek), thanks to Mike T. for sending it my way.

Is Toyota sitting idly by? Not at all, they are stepping up training:

"...management has launched a slew of education initiatives, and even uses a business school in Tokyo to teach Toyota to be, well, more like Toyota. "We are making every effort not to lose our DNA," says Shigeru Hayakawa, president of Toyota Motor North America."

"And in the past three years, Toyota has hired 40,000 workers new to the company's culture. "It isn't an immediate problem; it's like a metabolic disease you don't know you have before it's too late," says Tatsuo Yoshida, an analyst at UBS in Tokyo."

"When Steve St. Angelo was hired from General Motors in 2005, the executive immediately found himself back on the assembly line for several weeks. It didn't matter that he had spent almost 10 years at a plant in Fremont, Calif., jointly owned by GM and Toyota, where the Toyota Way has been alive and well for decades. The company figured an outsider hired to a management jobâo[per thou]a rarity at Toyotaâo[per thou]would need schooling in the basics. "They assumed I knew nothing about Toyota's production system," says St. Angelo, who in June was promoted to North American manufacturing boss."

PFI 'forcing public service cuts'. Some councils are cutting services because private firms are exploiting a Treasury scheme to push up prices, MPs say. [BBC News | UK | UK Edition]
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Fascinating Article on Bad Decision-Making by the Israeli Defense Force.

Northern Rock shares fall again. Shares in troubled bank Northern Rock fall by up to 25% as uncertainty about a buyout continues. [BBC News | UK | UK Edition]
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Automotive Overproduction Comparison. How GM Handles a Hit: Build Fewer - WSJ.com

The WSJ had an article today about how GM is trying to avoid overproduction of hot new vehicles (like the Buick Enclave) so that they don't have to dump inventory to rental fleets or resort to using incentives and discounts to move metal. Both of those practices harm resale value, which is one buying point for many customers.

I read recently how Toyota's goal is to build one car less than customer demand, always keeping that in balance.

So how does Toyota compare to the "Detroit Three" in terms of inventory levels and avoiding overproduction? This graphic from the article tells quite a story.

Toyota has half the inventory of GM, Ford, and Chrysler, not just in total numbers, but in adjusted "inventory per market share point." Toyota carries fewer days of inventory than their competitors, clearly.

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The Seventh Flow

Those of you who are familiar with Shingijutsu’s materials and teaching (or at least familiar with Nakao-san’s version of things) have heard of “The Seven Flows.” As a brief overview for everyone else, the original version, and my interpretations are:

1. The flow of people.
2. The flow of information.
3. The flow of raw materials (incoming materials).
4. The flow of sub-assemblies (work-in-process).
5. The flow of finished goods (outgoing materials).
6. The flow of machines.
7. The flow of engineering. (The subject of this post.)

A common explanation of “the flow of engineering” is “the footprints of the engineer on the shop floor.” I suppose that is nice-sounding at a philosophical level, but it doesn’t do anything for me because I still didn’t get what it looks like (unless we make engineers walk through wet paint before going to the work area).

Common interpretations are to point to all of the great gadgets, gizmos and devices that it does take an engineer (or at least someone with an engineer’s mindset, if not the formal training) to design and produce.

I think that misses the point.

All of those gizmos and gadgets should be there as countermeasures to real, actual problems that have either been encountered or were anticipated and prevented. But that is not a “flow.” It is a result.

My “put” here is that “The Flow Of Engineering” is better expressed as “The Flow of Problem Solving.”

When a problem is encountered in the work flow, what is the process to:

• Detect that there even is a problem. (”A deviation from the standard”)
• Stop trying to continue to blindly execute the same process as though there was no problem.
• Fix or correct the problem to restore (at a minimum) safety and protect downstream from any quality issues.
• Determine why it happened in the first place, and apply an effective countermeasure against the root cause.

If you do not see plain, clear, and convincing evidence that this is happening as you walk through or observe your work areas, then frankly, it probably isn’t happening.

Other evidence that it isn’t happening:

• People working around or improvising “to get the job done.”
• If you have andons, they are never pulled, or they go off quickly every time.
• No line stops. (Yes, this is a very, very bad thing.)

At the cultural and human-interaction level:

• Leaders saying things like “Don’t just bring me the problem, bring a solution!” or belittling people for bring up “small problems” instead of just handling them.
• People who bring up problems being branded as “complainers.”
• A system where any line stop results in overtime.
• No simple, on/off signal to call for assistance. No immediate response.
  • If initially getting help requires knowing who to phone, and making a long explanation before anyone else shows up, that ain’t it.
• “Escalation” as something the customer (or customer process) does when the supplying organization doesn’t respond. Escalation must be automatic and based on elapsed-time-without-resolution.

Go look. How is your “Flow of Problem Solving?

Getting A Plant Tour

A couple of days ago I wrote about how to host a tour. Here are some thoughts on how to get one. As always, I’d love to hear your comments and experiences.

Don’t expect your hosts to change your “cement heads.” I have had requests from groups who wanted to send their “resistant managers” to our factory so we can show them things that will change their minds. Doesn’t work. Sorry, that is your job. My experience is that people who don’t want to see the benefits will always find all of the things that are “unique” about their circumstance, and special case reasons why the other place is doing so much better.

Go to learn, not to look. In my last post I made reference to “industrial tourists.” Those are groups that are more interested in the layout and clever gizmos than in the thinking behind them. They are, at best, looking for ideas and your technical solutions to their problems. Copying others’ solutions is not thinking.

Going to learn is a different attitude. When you look at a layout, or other technical solution, ask yourself this: “What problem does that solve?” How does it save time? How does it remove variation from the process? What did the operation look like before they did that? Force yourself to think in four dimensions. Not just what you see now, but what it would have looked like in the past. WHY did they do this?

Although many people think lean manufacturing is counter-intuitive, I think that with this line of thinking you will find it actually is just common-sense solutions to the problems that everyone has, every day.

Nobody is perfect. Even a Toyota plant has obvious issues. If you end up fault-finding, you will miss the good stuff. I was touring a Toyota plant with a group a couple of years ago and it had obviously slipped. This is old news, and one of the reasons for their internal back-to-basics approach. But two things came to light: The rich visual controls made it easy for total strangers on the 1 hour tour to SEE the difference between “what should be” and “what is.” Wow. Try that in YOUR factory. And, reading the news stories, it was a problem they were taking very seriously and doing something about it vs. not noticing the deterioration and just letting things go.

Every plant has issues. Some have great material flow and pull systems, but only average problem solving. Others have a great technical base for home-grown tools, fixtures and machines. A few have great problem solving (They seem to be doing better than others.) Take in what is working, and what is holding them back. What would be the next problem they are working on?

Pay attention to the people. People are the system. How do they interact with the physical artifacts (layout, machines, etc.) An operation that has their stuff together will have people who are obviously comfortable with the pace of work. It will be obvious they get support when there are problems.

Don’t ask too many questions. What? Aren’t you there to learn? Yes. But try to learn with your eyes first. Even if you are moving, “stand in the chalk circle” and see the problems and the solutions. Sharpen your observation skills before you take the tour. Practice in your own plant. When I am hosting visitors and we have the time, my response to a question is to show them where to look for their answer, then ask them what they saw.

If allowed, make sketches. Most operations will have a prohibition against photographs. Even if they allow photos, however, you will capture much more if you stand and sketch what you see. You don’t have to produce a work of art. The purpose is to force your eye to pay attention to the small details. You will see much more through the eyes of the artist than you will through a camera.

Remember they are in the business of production, not consulting.
“Be a good guest” and remember that everybody there has a real job.

Edit 5 Sept: And Jon Miller correctly pointed out something I missed:

Give Back. You will bring “fresh eyes” to their environment and see things they do not. Everyone suffers from a degree of blindness to the familiar. If you are really going to see and learn, you will gain insights that can help your hosts in their own improvements. Ask them the questions that will help them see what you see.

Why Rewarding People for Failure Makes Sense: Paying "Kill Fees" for Bad Projects.