The Machine That Changed the World
Learn how Toyota’s lean production system revolutionized manufacturing.
“The car in front is a Toyota.” Do you recall this infamous ad slogan from the 90s? For many years, Toyota, a Japanese car manufacturer, has held onto a stable reputation with regards to both innovation and quality. The business’s vehicles sell abundantly around the globe as they are known for being efficient and reliable.
TPS, which is their legendary production system, laid the foundation for their success as a global company. Known better as lean production, this method has gained so much success that since that time, they’ve been able to implement it in other industries like design, programming, as well as startup management.
In this text, you will get the insider details into how lean production came about as well as outline in detail how that system immensely helped Toyota reach global success.
You will also find out:
- How come a lot of car companies would rather ignore issues instead of solve them;
- How come each Toyota staff member is allowed to stop a production line;
- How come Toyota is always almost running out of stock on purpose.
From the “horseless carriage” to the modern assembly line, the automobile industry has evolved.
The automobile industry has grown immensely since its first days of the “horseless carriage”, which had been first patented by Karl Benz back in 1886.
Often times, the automobile industry is called “industry of industries” and with good reason. In just 2014, around 90 million vehicles and commercial ones were made. The automobile industry in its entirety represents the world’s biggest manufacturing movement. Let’s take a look at how this ended up occuring.
In the first days, the auto industry was described by craft production which meant that very skilled engineers as well as manufacturers custom-made each vehicle to a client’s style. This was very time-consuming and pricey, though, which is why not that many people were able to pay for cars and only a few 1,000 cars were made each year.
Today, only luxury vehicles are made by craft production. Overall, the industry has ended up moving to mass production. Henry Ford encouraged this change at the end of the twentieth century.
Henry Ford had just been trying to make more cars in a smaller amount of time. He understood that he could accomplish this by creating cars with identical, interchangeable pieces and creating the pieces on their own instead of working on making the car all at one time.
The creation of the assembly line helped advance the manufacturing process. The first assembly line had been a moving belt and had workers placed at different positions all along it. Every staff member had to do one or a couple of easy jobs continuously. Those simple tasks did not need very specialized skills. In fact, a lot of the assembly-line staff were immigrants that didn’t speak much English.
The automatization of the production process caused vehicles to no longer be customized, or they were hardly customized at all. However, it did provide a big advantage: anyone was able to drive or even repair them as they just had to follow a standard 150-page manual.
Assembly line production grew in the US and in Europe, but the process wasn’t foolproof.
Thanks to the innovation of mass production, an outpour of cheaply made American vehicles were sold around the globe. By the beginning of the 1930s, around 32 million cars were being used around the globe where 90 percent of them were American.
The majority of those cars were made by the three top US businesses which were known as the Big Three: Ford, Chrysler, and General Motor. Henry Ford’s assembly-line process controlled the automobile sector for around 50 years. However, this ended up changing with time as European businesses started to compete as Germany created Volkswagen, France created Renault, and Italy came out with Fiat.
As those European businesses began to impede, Ford, Chrysler, as well as General Motors started to lose the leadership positions that they had. In the end, even the assembly-line production process ended up becoming too old.
The issue was that mass production required a tight set of rules and didn’t provide much reward to the staff that had to work the line’s annoying and tedious works. Just as you’d think, employment turnover ended up being quite high.
The thing is, the assembly line couldn’t be stopped since every process depended on the next one and time was always of the essence. Therefore, if a staff member had found an issue, they may not report it as it ended up being easier to just move the defective part down through the line.
In addition, the performance of the assembly-line manager was measured by the amount of cars that the line made, therefore, the workers were basically encouraged to disregard the flaws in order to reach the quotas set out.
Mistakes were captured and then fixed in an area called the rework area which was located in the spot after a vehicle had been removed from the assembly line. At times, the whole car would have to be disassembled and then rebuilt which was an expensive and annoying process which would cause delays. Since there were so many moving parts to examine, even the rework staff weren’t able to see each issue and therefore a lot of defective vehicles would end up being sold.
Mass production didn’t take off in Japan because it wasn’t suited to market demands or the labor force.
The process of mass production waxed and waned with businesses in America as well as Europe, but it didn’t ever really take off in Japan.
That was in part due to the fact that the demand in the Japanese automobile market was a lot more diverse. In the states and Europe, the bigger part of the market looked for cheaper vehicles whereas in Japan, the market was broader and they had more specific demands.
Politicians craved luxury vehicles while farmers as well as entrepreneurs needed little trucks. Product sellers on the other hand needed big trucks in order to transport merchandise. People who had been living in congested cities were looking for smaller vehicles that needed less oil. Therefore, these one-size-fits-all vehicles made in the West just didn’t work for the Japanese market.
That being said, between 1925 and 1936, America’s Big Three ruled the Japanese market, where they were making around 200,000 cars each year. The Japanese businesses only made around 12,000.
However, the foreign impact was limited on purpose. In 1936, the Japanese government ended up passing the Automobile Manufacturing Industry Law. This ended up forcing American companies along with their mass production techniques out of the Japanese market.
In addition, this mass production process just didn’t fit the design of the Japanese workforce. On the contrary to America and Europe, Japan didn’t have either an immigrant or a “guest worker” labor class and therefore businesses had difficulties in finding staff who’d work for a low pay while doing annoying and tedious jobs that the assembly line needed.
Overall, Japanese employment depended on long-term contracts which was another obstacle in the success of assembly-line manufacturing. The Japanese work environment had a hierarchical structure, so if a staff member had left their job and went to another business, they’d have to start over from the bottom despite having 20 years of experience at another location.
As a result, when a staff member began with one business, they’d rather stick with them which didn’t offer much flexibility in the work environment in regards to the demands of assembly-line manufacturing.
After discovering flaws in Ford’s manufacturing process, Toyota developed its own innovative plan.
Back in 1937, the Toyoda family created the Toyota Motor Company. They were worried, though, that their family name sounded too classic. In Japanese, it means “abundant rice field”. They just ended up changing the “d” for a “t” in order to come up with Toyota.
They didn’t reach success that easily. In fact, Toyota ended up laying off much of its staff by the end of the 1940s. However, changes began to take place when Toyota engineers Taichii Ohno and Eiji Toyoda came to visit the Ford Rouge Factory over in Michigan.
Both Ohno and Toyoda analyzed Ford’s mass production methods in order to figure out whether they could use them over at home. With time, they came to the realization that Ford’s process didn’t work well with the Japanese market as it wasn’t able to create a big enough variety of cars. In addition, they came across a few inefficiencies where time as well as resources were lost.
Therefore, Ohno and Toyoda ended up coming up with what they have believed would be a better process for manufacturing vehicles: the Toyota Production System, also known as TPS.
TPS was based on the principles of today’s lean production which is the constant improvement or kaizen in Japanese while also respecting both staff and customers.
The Japanese concept of kaizen claims that processes aren’t ever perfect, therefore, they can always be made better. This idea conflicts with their assembly line process as it values constant production above everything else.
In TPS, production is stopped whenever an error arises and then the system gets reexamined as well as refined. That’s one of the reason why Toyota’s to this day, are known for how safe they are.
It’s important to note that TPS does not only pay attention to how customers feel but it also makes sure that the company respects its staff as well as its business partners.
Toyota provides on-site development programs that assist staff in moving up the company’s career ladder. Those type of programs help create a sense of loyalty in the workplace as well as help move people up with time.
Lean producers leverage the benefits of both craft production and mass production.
Toyota’s lean values, to this day, make an impact all around the world and not only in the automobile sector. Why does this process ensure so much success?
Lean production has such positive results mainly since it focuses on getting rid of mistakes. Assembly lines, on the contrary, focus on what is produced, therefore, mistakes end up being dismissed.
In lean production, the objective is perfection. The perfect lean production process doesn’t make any errors, doesn’t have extra stock, nor does it add restrictions to innovation.
In reality, there has never been a single lean-production process where flaws weren’t produced and there most likely never will be. However, those types of systems make much better future outcomes.
For instance, the lean principle of decreasing waste has allowed Toyota to spend more time putting their efforts into innovation. The business holds every single one of its car models in production at an average of four years. Western businesses, on the other hand, make a car model at an average of about ten years.
In addition, lean principles use the top features in craft production as well as mass production.
Lean automobile production pays attention to purchaser's demands such as craft production. The production process revolves around what customers want, causing costs to decrease and to keep from overproducing.
Toyota is constantly altering its market goals. They monitor customers to know about their income levels, their family size, as well as their driving preferences. Afterward, it customizes its production output to consumer’s certain needs.
However, mass production methods aren’t able to do this. These kinds of systems make as many vehicles as they can and on occasion, there just aren’t enough buyers.
In the 1980s, the lean production system ended up finally taking over and so the Japanese manufacturers took over their American sides. Today, Toyota continues to be the biggest car manufacturer worldwide.
The lean-production process is founded on maintaining a happy and knowledgeable workforce.
In mass production, staff aren’t any more than just cogs inside of a machine. The only thing that they have to do is do that same simple thing over and over again.
That is not the way Toyota rolls. The business truly cares about the well-being of their staff. This is why their main principles revolve are staff happiness: teamwork as well as personal respect.
Toyota staff are promised a lifetime of valuable employment. Both their salaries and their bonuses are raised as they become more experienced and offer more profits to the business. Staff also get to use Toyota’s many facilities including housing and recreational rooms.
Toyota makes sure that its staff’s professional development never ends from when they first started working, which is typically around 18, all the way to retirement. Staff are supported in enhancing their skills by giving them access to trainings, seminars, as well as lectures.
The system ends up benefiting each side; staff have more job satisfaction while the business’s staff have more knowledge and motivation.
The system also lets Toyota offer its staff a greater amount of responsibility. Staff are put into teams which are headed by a team leader. They are then asked to look over parts throughout the production line.
The entire teams works as a whole to make the process as efficient as possible instead of simply getting the leader to tell everyone what to do. Therefore, if one team puts on the car wheels, the team is allowed to play around with it until they figure out what is the most efficient way to do so. The leader assists with the coordination instead of simply commanding everyone.
Should the team come up with a bigger idea to enhance the process, such as a new way to repair wheels for instance, they can let the company’s engineers know about the idea in quality circles.