By Anant Gupta
Taiichi Ohno once famously remarked that if a person is required to man a machine, the machine is not doing its job. As someone who always wanted to extract maximum work from each floor worker, Ohno spent countless hours on the shop floor, guiding managers to smoothen the production process.
With notorious roughness and relentless pursuit of cost reduction, Ohno persisted in reducing the number of men by half, for any process. If the task was achieved, he asked the team to do it again with half the number of men, pushing his team to improve efficiency and allotting the men left to other tasks. Such singular focus on waste reduction and improving efficiency led to development of the Toyota Production System (TPS), now better known as Lean Manufacturing.
Taiichi Ohno was born in 1912 in Manchuria, China, and graduated from the Nagoya Institute of Technology. He joined the Toyota family in 1932, initially as part of its Automatic Loom Works, which later started to manufacture cars under the Toyota Motor Company.
Ohno worked his way up the firm, from production engineer to shop manager. However, crisis struck the firm during World War II. With oil prices skyrocketing, car sales crashed drastically in Japan. What seemed like a doomsday call for Toyota, gave way to the TPS, pioneered by Ohno.
The birth of the Toyota Production System
After the war, Japan was still reeling under financial pressure to support its industries. The automobile industry in particular, was under tremendous pressure to sustain itself with limited resources, falling demand, and poor output. Though on the verge of bankruptcy, Ohno’s boss wanted Toyota to catch up with Ford, the leading carmaker at that time. He gave Ohno three years to achieve the ambitious target.
Then an assistant shop manager, Ohno immediately got to work, and identified the pressure points in the production process. He realised that an immense amount of waste was being generated, not only physical, but, also in terms of manpower or ideal time. Ohno decided to obliterate the inefficiency and wastefulness to compete with the best car company in the world—Ford Motors.
The invention of the ‘Just-in-Time’ method
At the time, Toyota, like most car companies, used to follow Henry Ford’s method of assembly line production. Ohno pointed out that such a method required the factory to hold large spaces of inventory, around two months’ supply of parts, to support the car manufacturing process. To increase inventory efficiency, Ohno introduced the ‘Just-In-Time’ stock control method.
Under this method, parts of a car—a door or an engine—were supplied in strict accordance with the rate of the production of the cars. Unlike Henry Ford’s method, where parts were stored months ahead of schedule “just in case” an unlikely requirement surfaced, Ohno’s method freed up the much needed inventory space. By keeping spare parts to a bare minimum, not only did he ensure the capital was infused into manufacturing cars rather than buying inventory space, he also made sure the parts were of top quality to eliminate the need for any spare parts.
Ohno attributed this technique to, ironically, the American supermarket system itself. At the supermarket, during one of his trips to the US, he observed the practice of customers buying goods off shelves and floor workers replenishing the items right away. On returning to Japan, he implemented the same technique by introducing ‘kanban’ or tags, to notify suppliers of the items to be replenished. Now, only sufficient parts would hold up warehouse space, and as the number dipped to a certain level, the kanban was used to notify of the amount by which the item needed to be replenished.
One major factor which worked in Toyota’s favour was the central location of its main factory (near Nagoya) to all the suppliers and vendors. Since the factory was within a few miles radius of all the vendors, any immediate requirement could be fulfilled quickly and efficiently.
Muda, mura and muri
Although the original idea of the TPS was borrowed from an American supermarket, it was rooted in the Japanese concepts of ‘muda’ (waste elimination), ‘mura’ (unevenness in workload) and ‘muri’(overburden on production process). Muda is any activity or process that does not add value to the production process. Ohno identified seven such mudas—transportation, inventory, ideal time, waiting time, defective products, over-production and over-processing. Each of these seven processes were seen as wastes and Ohno swiftly moved to eliminate or reduce them to a minimum. Mura occurs when there is a gap in the demand and supply, thereby leading to overburden on supply side when demand is high, or inefficiency in supply when demand is low. Such mura was thought to drive muda. Muri occurs due to improper training of floor men, staff or team members, which leads to unfulfilled expectations, low quality products and consequent muda. Muda, mura and muri later became the cornerstone of Toyota’s production process, which still thrives to date.
Impact of TPS: then and now
The TPS was not an instant success. In fact, it was met with some resistance from the floor workers and upper management alike, who questioned the tactic of keeping inventory to the bare minimum. However, Ohno’s habit of repeatedly questioning Toyota’s strategy of stocking spare parts finally gave way to implementation of TPS. Once production picked up and sales grew, the impact was palpable. Toyota went from producing mediocre cars to world class quality cars with Ohno’s stamp of quality on each one of them. The TPS provided a counter to Ford’s assembly line technique with less dependence on stockpiling and higher productivity. Toyota was able to capitalise the market with many models of cars using the same parts.
By 1956, Toyota exported its first car to US shores. For a company that was on the verge of bankruptcy and delivered low quality cars a decade back, this was a paradigm shift that also signaled the arrival of Japan as a producer of top quality automobiles. Internally also, its changeover time in metal stamping—time required to shift production from one running line to another—reduced to 15 minutes. By 1971, the changeover time further reduced to three minutes. The TPS was soon adopted in all production processes, not only Ohno’s, and new processes were also developed keeping the TPS as the benchmark.
Toyota went from producing unreliable cars to becoming the first automobile company to produce 10 million cars annually. It produced its 200th million car in July 2013. Now a symbol of quality and excellence, the company still relies on the TPS to produce cars with the Toyota quality.
Anant Gupta is a writing analyst at Qrius.
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