Key Messages
How To Streamline Business Processes With The Toyota Production System: A Guide To Kaizen
The strategic success of Toyota in the postwar era proved that lean production was the way to go.
By focusing on efficiency and timeliness, Toyota revolutionized the automotive industry with their Toyota Production System—which emphasizes kaizen or “continuous improvement”.
Strategic Kaizen™ is a book outlining this powerful, transformative principle which can be applied to any business process, demonstrating how even small changes can have a big impact on an operation.
This book will take you through the secrets of lean production by showing readers how supermarkets taught Toyota to build cars, handling corporate PR nightmares correctly, and more!
The Competition Between Short-Term Profits And Long-Term Customer Satisfaction: The Bp Deepwater Horizon Disaster
The short-term profitability of a company does not guarantee that it will remain profitable over the long term.
This is an important lesson which was learned from the BP oil spill in 2010.
The CEO Tony Hayward was unapologetic for the damage inflicted by BP, claiming that it wasn’t BP’s fault and that the amount of oil being pumped into the ocean was insignificant compared to its size.
However, this approach led to a public backlash against BP and their shares dropped correspondingly.
It was clear that Hayward had prioritized protecting shareholder interests over customer satisfaction, but it appears that neglecting customer satisfaction can have more than just PR costs associated with it.
If customers are unhappy with a company, they will simply take their business elsewhere – this means lower revenue, potentially leading to business failure.
This serves to emphasize why it is so important for companies to measure and strive for both short-term profitability and long-term customer satisfaction simultaneously in order to ensure success and longevity.
The Separation Thesis: Business And Ethics Are Not Mutually Exclusive
The importance of serving stakeholders in order to serve shareholders is a key message given by Strategic Kaizen™.
This thought process originated from an unfortunate event in 1982 when seven people in Chicago died after taking tablets from a bottle of Johnson & Johnson’s Extra-Strength Tylenol.
The manufacturer responded to the crisis by suspending production, implementing a nationwide recall, warning customers across the country, and committing to releasing all future products in tamper-proof packaging.
This response was unlike BP’s handling of Deepwater Horizon years later as Johnson & Johnson had their stakeholder at their forefront when making decisions.
Robert Wood Johnson, the legendary chairman of J&J highlighted this point when he stated that the company’s first responsibility must be to their customers: doctors, nurses, patients, and parents who use its products.
Following this means that shareholders will also be served well because sustainable success requires taking care of those who benefit from a company: its key stakeholders.
In other words, companies must focus on stakeholders first if they want to best serve their shareholders too.
The Better Way To Serve Today’s Savvy Customers: “Build It When They Come”
When it comes to understanding customer preferences, second-guessing them can be an expensive gamble.
We’ve seen this in action with the traditional approach to mass-producing products.
Companies build up a factory, hire workers and fire up the assembly line with no real idea of who they’re producing for or when they’ll buy.
The result? They spend on storage and land just to keep all their stock until an order is placed – only then do they ship out.
Overly optimistic sales forecasts lead to mountains of unsold that require more storage, more land and more costs.
And with long lead times, it’s costly to keep enough raw material and parts on hand at all times.
In conclusion, second-guessing customers is expensive!
How Just-In-Time Manufacturing Allows Automakers To Generate Profits In Difficult Conditions
When it comes to profitably making cars, context plays an important role in determining the production process.
For most of American history, Henry Ford’s factories used expensive machines and lots of resources to create cars in bulk.
This worked well because there was easily enough demand and resources available in the United States at that time so there were no real costs associated with warehousing large amounts of parts and materials.
However, in postwar Japan where resources were scarce and the automobile market was much smaller, Taiichi Ohno – an industrial engineer from Toyota – had to look for more cost-effective solutions.
He found a better way when he visited a self-service store in America – why should cars be made based on generic factory lines when you can produce them specifically for customers’ orders?
That’s how just-in-time production came about; cars are only produced when customers take one off the shelf and pay for it, thus eliminating all guesswork related to mass production of parts and materials – reducing overheads by not having excess stockpiles of inventory waiting around!
Working to order reduces costs and overhead since you’re only paying for what you need when you need it.
The Benefits Of Pull Systems Over Push Systems In Manufacturing
The Strategic Kaizen™ system developed by Toyota has revolutionized the way we think about production.
Instead of pushing raw materials along the production line according to forecasts and predictions, the pull system allows machines to set their own pace via signals.
This creates a much more efficient and reliable environment in which widgets can be produced.
When it comes down to it, pulling is definitely easier than pushing when it comes to manufacturing processes.
By letting each machine set its own pace based on customer orders, you no longer have overly-optimistic forecasts that lead to overproduction or bottlenecks due to different machines working at different speeds.
Plus, you don’t need kanban boards filled with information that can easily become outdated; all the data is right there in the signals between your machines.
Muda, Mura, And Muri: Understanding The Different Forms Of Waste That Cost Us Money
Taiichi Ohno loathed “muda” or waste in all its forms, and it’s not hard to see why.
Waste is always costly; whether in the form of unused space and capital, absenteeism due to stress or overwork, or bottlenecks that slow down production.
In order to identify and eliminate muda in his factories, Ohno defined the concept with three distinct words: muda, mura, and muri.
Muda naturally covers all elements of wasteful behavior that ultimately lead to a drain on resources.
Mura can refer to unevenness created by sudden increases in demand or large numbers of mistakes during quality control.
Muri is most easily explained as “overburdening,” where machines are pushed too far or workers are asked to do more than they are capable of completing on time.
When these issues occur together (which they often do), they can cause serious problems in production– resulting in muda or waste.
To put it simply: any type of waste is expensive and needs to be avoided at all costs.
Kaizen: A Principle Of Continuous Improvement For More Efficient Work Processes
Kaizen, a Japanese word meaning “change for the better”, is all about making many small improvements in order to create big overall improvements.
This philosophy has been adopted and implemented by Parts Seikou, a Japanese company manufacturing precision metal products across three Asian countries.
The result of many small improvements? Lean work processes that maximize efficiency and minimize waste.
At this company, each morning shop-floor employees discuss their work and suggest tweaks to what they’re doing.
Then, teams of 20 people from each location travel to Tokyo every other month to show off the most successful ideas to their international colleagues.
Take the example of tools that were stored haphazardly in large boxes on workbenches in different colors.
In order to identify them and retrieve items from this tangle of metal, workers wasted time on this every day instead of producing goods.
This was addressed with minor changes like tool hanging above their benches for easy access.
Additionally, heavily used items were placed in the center for even quicker access, a photograph of the shelf was pinned next to it so workers could keep track of where everything belonged – creating leaner processes with greater speed and accuracy.
Clearly, there is always value to be gained when an organization adopts Kaizen principles – many small improvements lead to big rewards!
Wrap Up
Strategic Kaizen™ is an incredibly valuable book for any company leader looking to optimize their operation in order to provide the best quality products and services for their patrons.
It starts with a clear message: companies should pour all of their efforts into simultaneously improving both the shareholder experience, as well as the overall customer satisfaction derived from the company.
The bulk of this book summarizes Toyota’s approach to operational efficiency and waste-minimization, which involves deep reflection on existing practices and a mentality focused on long-term success.
In terms of an executive summary, it can be stated that such an approach reflects what type of success any company wants to strive for inorder to offer customers quality products or services.
