Toyota – The Japanese Car Company is a corporate behemoth – but it’s done much more than just give us Corollas or Land Cruisers. It’s changed the way the world makes products. Here’s how.
Toyota knows how to make cars.
It does it so well it became the first company to produce more than 10 million a year.
Its success is rooted in a special system and began what is now known as ‘Lean Manufacturing’, an ethos emulated by companies around the world to make products faster, cheaper and better.
Following the Second World War, Japan was left in a precarious economic position. Steel and other metals are scarce. Already disadvantaged by lacking natural resources, materials were hard to come by and companies had to be creative to compete.
Toyota’s founder Sakichi Toyoda had started a loom business, but it was his son Kiichiro who founded the motor company in 1937. They were used to working within narrow margins – as the shortage of materials increased during
the war, the number of headlamps on its Model K truck was reduced to one and it only had brakes on one of the axles.
The turning point for Toyota’s Production System would come in the early fifties, when Kiichiro’s cousin Eiji would travel to the U.S. with a veteran loom machinist, Taiichi Ohno.
They visited Ford’s River Rouge plant in Michigan and were impressed by the scale of the operation, but knew that in cash-strapped Japan companies didn’t have the resources for such a system; Having months’ worth of stock sitting in a warehouse would tie up precious capital they didn’t have.
Instead, what truly impressed Ohno was a visit to a supermarket, a Piggly Wiggly, according to legend… Japan didn’t really have self-service stores at this point – and he was struck by the way customers could choose exactly what they wanted, when they wanted.
He decided to model his production line on a similar idea; With a “supermarket formula,” only enough parts were produced in the first phase to replace what was used in the second, and so on.
This is where the ‘Just In Time’ system really took shape. Toyota was able to eliminate much of the waste in Ford’s system, making smaller numbers of parts to be used when it needed them, allowing the company to operate on a tighter budget. As part of this Ohno developed ‘Kanban’ – a sign-based scheduling method which shows goods in, goods in production, and goods out. It’s now seen as a precursor to bar codes.
Ohno and Toyoda also noticed that American car companies were still employing many of Henry Ford’s early production techniques – They kept operations at full tilt in order to maximize efficiencies of scale, and then
repaired defective cars after they rolled off the line.
Ohno believed this caused more problems and didn’t encourage workers, or machines, to stop making the mistake. So he placed a cord above every station which any worker could pull to stop the entire assembly if they spotted a problem. The whole team would work on it, to prevent it from happening again.
As teams identified more problems, the number of errors began to drop dramatically. Combined with a culture of continuous, incremental improvement — called `Kaizen‘ — the Toyota Production System built a brand known for making reliable and affordable cars.
But Toyota was also getting good at producing cars quickly. In 1962, the company had produced one million vehicles. By 1972, they had produced ten million. It was around that time the efficiencies of their factories enabled Toyota to produce a car every 1.6 man hours – much lower than their competitors in the U.S., Sweden and Germany.
And as the oil crises of the decade sent gas prices higher, cheap-to-run Japanese cars became much more appealing to Americans, whose powerful, but gas-guzzling vehicles suddenly became very expensive to run.
Today, Toyota has made over 250 million vehicles…Others have looked to them to learn the lessons of ‘Lean’- combining craft with mass production,
avoiding waste, while striving for constant improvement.
Boeing is perhaps the most famous, restructuring a plant to better suit TPS.
Intel is another long-time lean ambassador, and is exploring the principles in the context of AI and IoT. A Canadian Hospital even used Toyota’s system to decrease wait times in its ER.
The Toyota Production System changed not just how cars are made globally but how we approach making things full stop. It also showed there is always a better way to make a product.