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Did Toyota fool the lean community for decades?
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Did Toyota fool the lean community for decades?
1.
© Emiel van
Est Did Toyota Fool the Lean Community for Decades? Emiel van Est & Pascal Pollet March 2014
2.
© Emiel van
Est In the Lean community we admire Taiichi Ohno for his role in the development of the Toyota Production System.
3.
© Emiel van
Est Get ready to admire him even more!
4.
© Emiel van
Est Hi I am Emiel van Est Toyota Kata ambassador The Netherlands I am Pascal Pollet Toyota Kata ambassador Belgium emiel@leanmanagement.nl pascal.pollet@sirris.be
5.
© Emiel van
Est Yes we both speak Dutch!
6.
© Emiel van
Est Recently we read something amazing. Near the end of his life Taiichi Ohno said in an interview:
7.
© Emiel van
Est “I’m proud to be Japanese and I wanted my country to succeed. I believed my system was a way that could help us become a modern industrial nation. That is why I had no problem with sharing it with other Japanese companies, even my biggest competitors.” - Taiichi Ohno - Source: Profitability With No Boundaries P99
8.
© Emiel van
Est “But I was very, very concerned that you Americans and the Europeans would understand what we were doing, copy it, and defeat us in the marketplace.” - Taiichi Ohno - Source: Profitability With No Boundaries P99
9.
© Emiel van
Est Hey, wait a minute, I thought Toyota had been very open to us…
10.
© Emiel van
Est “I did my best to prevent the visitors from fully grasping our overall approach.” - Taiichi Ohno - Source: Profitability With No Boundaries P99
11.
© Emiel van
Est Okay…
12.
© Emiel van
Est “I explained it by talking about … reduction of the seven wastes (muda)” - Taiichi Ohno - Source: Profitability With No Boundaries P99
13.
© Emiel van
Est WHAT?
14.
© Emiel van
Est Talking about the 7 Wastes was a way to confuse his visitors?
15.
© Emiel van
Est Even today for many people Lean = Eliminating Waste
16.
© Emiel van
Est His strategy to confuse us is still effective almost 25 years after his death! RIP Taiichi Ohno February 29, 1912 – May 28, 1990
17.
© Emiel van
Est Just an empty slide for you to fully grasp this… Take your time….
18.
© Emiel van
Est As said, we are Toyota Kata ambassadors
19.
© Emiel van
Est With the improvement kata it can be explained why the 7 wastes was a way to confuse.
20.
© Emiel van
Est The improvement kata is a pattern of thinking and acting we can practice to meet challenges.
21.
© Emiel van
Est Just like in martial arts
22.
© Emiel van
Est As you can see, the improvement kata starts with understanding the direction.
23.
© Emiel van
Est Eliminating waste lacks direction 1 2 3 45 6 7 Overproduction Inventory Waiting MotionTransport Rework Overprocessing
24.
© Emiel van
Est What to do? Logistics Manager Production Manager We need smaller bins to reduce travel distance for our assembly people We need bigger bins to reduce travel distance for our logistics people Example from Toyota Kata P40
25.
© Emiel van
Est What is the right direction?
26.
© Emiel van
Est “All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.” - Taiichi Ohno -
27.
© Emiel van
Est That’s where kanban comes in right?
28.
© Emiel van
Est “I explained it by talking about techniques … with Japanese names like kanban…” - Taiichi Ohno - Source: Profitability With No Boundaries P99
29.
© Emiel van
Est Kanban was another way to confuse us?
30.
© Emiel van
Est YES!
31.
© Emiel van
Est By focussing our attention on the tools Ohno could hide the most important: his way of thinking and acting. Lean solutions (tools, techniques and principles) to improve quality, cost, delivery • A systematic, scientific routine of thinking & acting • Managers as the teachers of that routine Visible Less Visible Image by Mike Rother
32.
© Emiel van
Est We just copied the solution without understanding the thinking that created the solution.
33.
© Emiel van
Est We misunderstood the purpose of kanban.
34.
© Emiel van
Est The purpose of kanban is to eliminate kanban!
35.
© Emiel van
Est The best number of kanban cards is 0
36.
© Emiel van
Est Ah I understand. We do not want material to stop; we want it to flow continuously so we get the shortest lead times.
37.
© Emiel van
Est Well, Yes and No… Stay with us, we will explain.
38.
© Emiel van
Est First, lets talk about making money.
39.
© Emiel van
Est “Costs do not exist to be calculated. Costs exist to be reduced.” - Taiichi Ohno -
40.
© Emiel van
Est Who has used these graphs? Traditional Thinking Price = Cost + Profit This worked when supply was lower then demand Lean Thinking Profit = Price – Cost That changed to a situation with more competition and the market dictating the price Cost Profit Price Cost Profit Price Value in Market
41.
© Emiel van
Est Don’t be shy, we did it too!
42.
© Emiel van
Est What’s wrong with these graphs? Cost Profit Price Cost Profit Price Value in Market
43.
© Emiel van
Est These graphs hide some important information!
44.
© Emiel van
Est Over the years the portion of fixed costs has risen.
45.
© Emiel van
Est Leaving us with less to improve 1920 1960 Fixed Cost Profit Price Variable Cost
46.
© Emiel van
Est These graphs lack a second dimension.
47.
© Emiel van
Est Variable costs vary by volume Volume $ Fixed Cost Profit Variable Cost
48.
© Emiel van
Est Profit = Price – Cost Profit = Sales – fixed cost – variable cost Volume $ Fixed Cost Profit Variable Cost
49.
© Emiel van
Est We were directed to improve an ever smaller portion of variable costs to improve our margins.
50.
© Emiel van
Est The better way to improve margins is…
51.
© Emiel van
Est …to increase volume with the same fixed costs and less variable costs.
52.
© Emiel van
Est So Ohno directed us in this direction… $ Fixed Cost Profit Current Condition Volume
53.
© Emiel van
Est … while he spurted in this direction! $ Fixed Cost Profit Current Condition Volume
54.
© Emiel van
Est Sorry to bother you with another book but we do not want you to think we make this all up…
55.
© Emiel van
Est From the very beginning Toyota set course to beat GM Source: Inside the Mind of Toyota P58
56.
© Emiel van
Est Imagine the difference at the time!
57.
© Emiel van
Est So, back to continuous flow and kanban. What were we thinking?
58.
© Emiel van
Est Were we thinking this?
59.
© Emiel van
Est Or this? Ohno frequently referred to his river system Source: Profitability With No Boundaries
60.
© Emiel van
Est Ever used this image? No worries, this is one of our own… Waiting Inventory Transport Over- production Rework Over- processing Waiting Inventory Transport Over- production Rework Over- processing
61.
© Emiel van
Est It is not about the boat, it is about the water! Waiting Inventory Transport Over- production Rework Over- processing
62.
© Emiel van
Est It is not a lake, it is a river. Waiting Inventory Transport Over- production Rework Over- processing
63.
© Emiel van
Est It is not about less water. It is about more water flowing faster.
64.
© Emiel van
Est That is why the rocks have to move!
65.
© Emiel van
Est Is there more we misunderstood? What about quality?
66.
© Emiel van
Est Is quality “Job One” at Toyota?
67.
© Emiel van
Est “There are two reasons we try to improve quality.” - Taiichi Ohno - Source: Profitability With No Boundaries P101
68.
© Emiel van
Est “If our product is better more people will buy it.” - Taiichi Ohno - Source: Profitability With No Boundaries P101
69.
© Emiel van
Est “Also, bad quality causes big disruptions in my river system.” - Taiichi Ohno - Source: Profitability With No Boundaries P101
70.
© Emiel van
Est “When the experts from your country visited, they noticed that our machines were very dependable, our quality was high... I understand that many went back … and suggested you implement preventative maintenance programs, quality circles, and other programs in order to copy our results.” - Taiichi Ohno - Source: Profitability With No Boundaries P101
71.
© Emiel van
Est “I do not think that they understood why we did these things, which might explain why these changes often weren’t very helpful. I tried to prevent them from understanding why we wanted a river system, and I think I was successful.” - Taiichi Ohno - Source: Profitability With No Boundaries P101
72.
© Emiel van
Est Oh yes!
73.
© Emiel van
Est While Ohno pointed us to the rocks in the water
74.
© Emiel van
Est He hid his river system plans…
75.
© Emiel van
Est Now we understand this we can create more value for everyone on this planet.
76.
© Emiel van
Est So, lets make a deep bow for Ohno
77.
© Emiel van
Est He was truly brilliant!
78.
© Emiel van
Est Want another quote? Here is one more for you to chew on…
79.
© Emiel van
Est “Where there is no Standard there can be no Kaizen” - Taiichi Ohno -
80.
© Emiel van
Est Thank you for staying with us!