Lean Management: Understanding the Toyota Production Principles

First published in 1990, The Machine That Changed the World is a bestselling book that documents the transition from mass manufacturing to lean manufacturing. But is it still relevant in today's manufacturing landscape? Absolutely.

The book still serves as a meaningful lean management guide for transforming businesses into models of supply chain success. Based on the principles of the Toyota Production System (TPS), the book chronicles the management process which propelled Toyota from a Japanese auto producer that was half the size of General Motors to the world’s largest automotive manufacturer.

This article looks at the production process Toyota used to produce such great effects and highlights five key principles of the Toyota Production System.

Toyota Production Goals

Developed from 1948 through 1975, the Toyota Production System (TPS) is built on the management philosophies and lean manufacturing practices of the Toyota Motor Corporation. TPS precisely organizes both logistics and manufacturing and addresses interactions with customers and suppliers. The core principles of The TPS has since evolved to serve as the foundation for today’s Lean Six Sigma process improvement strategy. Manufacturers should seek continuous improvement, or kaizen, to maintain minimal inventory and to deliver just-in-time production results to the end customer.

Based on Japanese culture, TPS seeks to design systems that eradicate muri (overburden), mura (inconsistency), and muda (waste). There are eight kinds of waste in lean production:

1) Overproduction (Product Waste)

This waste results from making more products than the customers want or need. Mismanagement of the assembly line results in goods being produced that cannot be immediately shipped. It goes against the lean JIT, or just-in-time production philosophy of only producing goods to meet customer requirements. The result is an uneven workflow, higher storage costs, increased capital expenditures, and excessive lead time.

2) Time Waste

Also known as "waiting," time waste refers to idle human and equipment resources that are not being used efficiently. Wasting time can often be caused by an uneven production line or overstaffing, resulting in either an excess or shortage of inventory.

3) Transportation Waste

Money and resources go to waste when raw materials and finished goods aren't moved efficiently. Transportation inefficiency can be especially dangerous in today’s environment, where higher fuel and personnel costs are hitting many businesses' bottom lines particularly hard. Excessive movement can also lead to greater wear and tear and increased product damages or defects.

4) Overprocessing

Extra processing, or overprocessing, is when more steps go into producing something than what's needed to meet the customer's needs. This might mean that equipment or human resources are wasted doing tasks that are essentially unnecessary.

5) Inventory Waste

Supply chain issues involving excess inventory mean too many raw materials (or too many completed products) are sitting in a warehouse, wasting space and money. These items may be defective, might never be used, or that they could become damaged or obsolete while sitting on the shelf.

6) Excessive Movement

Movement waste is unnecessary movement—among people, equipment or machines—to accomplish a given task. This includes excess walking, stretching, lifting, and bending. A simple example would be an employee walking to retrieve materials that they could store closer to their workstation.

7) Defective Products

Producing defective items or parts that do not meet customer specifications means that the product will either have to be reworked or just scrapped. Both results are forms of waste, as they add costs without delivering value.

8) Underutilizing Workers

Perhaps the biggest waste is not utilizing workers to their maximum ability. Lean thinking dislikes wasting human potential. This type of waste occurs when there is a disconnect between management and employees—or when insufficient training does not give employees the necessary skills to complete a task. Knowledgeable, involved, and engaged employees are critical to achieving the goal of continuous improvement.

5 Key Principles of the Toyota Production System

Toyota developed five key or underlying principles to avoid or eliminate these wastes, called the Toyota Way. Combined, these lean principles reduce inefficiencies and provide a continuous flow of materials and products that considers the needs of employees and customers. The five key principles of the Toyota Production System are outlined below.

Continuous Improvement

This means that a company has a long-term vision of its future and believes in implementing small, positive changes to meet challenges with courage and creativity. At the core of lean manufacturing is the Japanese term kaizen, or using “good change” to continuously improve operations, while striving for innovation.

Under the principle of Genchi Genbutsu, or “go to the source yourself,” managers at Toyota are encouraged to get out of their office to “go and see” operations. With the experience of seeing the situation firsthand, they should be able to understand how it can improve. The main guidelines are to take full advantage of the wisdom of others and to think outside the box to innovate solutions to challenges.

Hold Respect for People (and Teamwork)

In a 1983 publication, “Toyota Production System: An Integrated Approach to Just-in-Time,” Professor Yasuhiro Monden writes, “At Toyota, respect for humanity is a matter of allying human energy with meaningful, effective operations by abolishing wasteful operations. If a worker feels that his job is important and his work significant, his morale will be high; if he sees that his time is wasted on insignificant jobs, his morale will suffer as well as his work.”

At Toyota, respect means making every effort to understand each other and taking responsibility to build mutual trust and foster improved teamwork. This key principle includes respect for others' opinions, suggestions, work, abilities (and limitations), and their right to challenge yours.

Use the Right Process To Produce the Right Results

Learning is a continuous process that selects a methodology, tests it, and then moves on if it's not successful the first time. It doesn't do any good for problems to remain hidden, and a continuous process flow brings problems to the surface that can then be solved.

An example of a "right process" would be Toyota’s “pull method.” In this process, products are pulled from the upstream process to the next downstream process in exactly the right quantity at precisely the right time.

Toyota used this production methodology to reduce inventory waste. This expanded to suppliers and eventually evolved into their “just-in-time” system. Another example of right processing would be the concept of heijunka, which is a lean method of leveling out production by ensuring that the necessary number of parts needed for production are on hand.

Add Value to the Organization by Developing Your People and Partners

The principles of continuous process improvement must be thoroughly engrained in employees, work teams and partners for the company to survive. In fact, Toyota treats business partners much like employees, constantly challenging them to do better and become more robust suppliers.

An example of adding value would be to nurture exceptional leaders within the organization and provide them with the training needed to teach the Toyota Production Principles to others. You might also arrange continuing education training to allow shop floor workers to expand their skill sets and learn from more experienced members of the company.

Solve Root Problems Continuously To Drive Organizational Learning

Problem-solving is not a one-time event. Toyota looks at a problem as an opportunity for improvement. The company continuously looks for and solves root problems, adding to organizational learning. It is searching for waste: anything that does not advance the lean production process or add value.

Solving root problems requires a willingness to search for them through Genchi Genbutsu, a spirit of hansei (continued reflection), a consensus-based approach to problem-solving (Nemawashi), rapid implementation of solutions, and a commitment to kaizen, or continuous improvement. A learning organization continually reflects on its practices and is willing to analyze or “criticize” them to identify areas of improvement.

When it decided to take on the principles of lean management in 2018, General Electric (GE) began taking proactive steps to improve its operations and adopt innovations. The management team turned to the lean manufacturing technique of "gemba" to evaluate the processes they used on the work floor and learn more about the issues operators were facing.

Essential Tools and Concepts Within TPS

The most essential tools in the Toyota Production System (TPS) are jidoka and just-in-time. Jidoka, or autonomation, is “automation with a human touch.” This is the autonomous ability for operators or machines to immediately stop work when an issue or error crops up.

This approach automatically builds in quality at each step of the process because your teams can address problems when they are first noticed. Just-in-time means making only what is needed—at the right time and quantity—to meet customer needs. Each process produces only what is needed for the next process in order to achieve a continuous flow.

Toyota relies on the TPS philosophies of jidoka and just-in-time to quickly and efficiently produce vehicles of sound quality, one at a time, so it can fully satisfy customer requirements. Other key tools and concepts that relate to Toyota Production Principles include:

  • Kanban: Related to overproduction, kanban is a system that conveys information between processes. It automatically orders parts as they deplete. Toyota has six rules for effectively applying kanban: never pass on defective products to the next step; take and use only what is needed; produce the exact quantity required; even out the production workflow; fine-tune production standards; stabilize and rationalize the process.
  • Andon: This is any type of visual aid that highlights where corrective action or maintenance is needed — typically activated by a button or pull cord. Under the principle of jidoka, production automatically stops when a staff member activates the andon system.
  • Poka-Yoke: This simply means "to avoid mistakes." The TPS employs many devices to spot and avoid mistakes.
  • Gemba: This is the physical place where work is done, where all actions and processes must be as transparent as possible. (Check out this essential Gemba walk checklist!)

Employ Essential Principles for Better Productivity with Amper

Amper is a factory operating system that factories use to manage and streamline their operations, see real-time manufacturing analytics, and achieve operational excellence. Our software provides a suite of lean production management digital tools to identify bottlenecks and maximize capacity, thereby eliminating waste.

Learn more about how our machine monitoring tools can help your facility stay on top of equipment maintenance and avoid costly repairs.

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