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This post is for Kike, my faithful university class mate

[Today] the challenges that so many companies are making are more than a response to “globalization”. They denote nothing less than the obsolence of the corporate model many of us have grown up with. For some pople it won’t be easy to let go of old concepts, old hierarchies, old sources of power-but it’s mandatory to think anew.

-Vernon R. Loucks, Jr. Chairman and CEO

Baxter International, in Review, 1990.

Taylorism and Professional Education.

“Objective observers are becoming increasingly aware of the need to consider the manufacturing process as a whole rather than as an object for piecewise suboptimizaition. This holistic, or system viewpoint must include manufacturer’s relations with subcontractors and suppliers as well as customers… If manufacturing engineers and manufacturing operations managers are to contribute effectively to the redesign of the workplace, it seems obvious that their professional training must include a recognition of the new integrated manufacturing system reality and how to deal with it effectively…

The American manufacturing environment is now in a rapid state of change. Yet, our business schools and engineering schools have not yet begun to provide the leadership that this restructuring of the American manufacturing environment demands. Some observers believe that American manufacturing managers have been late coming to the party, that they have been slow to recognize the advantages of Japanese and, to a lesser degree, European developments… As I see the situation, American business leaders are now well in advance of engineering and business schools in recognizing and practicing total quality principles, participative management, worker empowerment, and the like. If this perception is correct, why is it so? My answer will be that American professional school faculties have not abandoned Taylorism.”

Taylorism

Frederick Winston Taylor is high in the pantheon of American engineering heroes (Copley, 1923). In his obsessive optimization of individual rigid separation of thinking from doing, Taylor is the paradigmatic manufacturing engineer. Taylor is important, not merely because he made revolutionary contributions to the manufacturing canon, but also because the general style he set became the universal paradigm for American engineering practice and for engineering education, and remains so even today.

I intend in this paper to focus on how the elements of Taylorism are applied in the workplace and in the engineering classroom and why this environment is no longer right for modern America. I hold that Taylorism continues to be a major obstacle in our path to manufacturing efficiency and that it must be replaced as the central element of our engineering educational philosophy as well.”

The essential elements of Taylorism

“What are the essential elements of “Tayloristic” engineering practice that currently inhibit technical progress? I suggest that the following seven are critical:

  1. Analytic bottom-up approach, where analytic here is used in the classical sense of “breaking into components parts or elements.”
  2. The absence of goal-definition phase in normal engineering design practice.
  3. Engineering practice in a vacuum, without regard to human factors.
  4. The hierarchical, nonprofessional style of current American engineering practice.
  5. The fantasy of “value-free design”.
  6. The traditional Taylor practice of separating thinking from doing
  7. Strong emphasis on individual reward for individual effort.

Analogous to Taylor’s procedure of breaking down the manufacturing process into elemental steps, the first step in the engineering design process is the careful division of the overall task into simple sub elements and assigning these parts to individuals or teams for detailed design. This is so simple and obvious, and it works so well in certain practical design tasks and in engineering design education, that we may fail to understand the deeper implications of this step.

But these are only a few of the more obvious implications of the analytic “bottom-up” Tayloristic approach to engineering. One other implication may be somewhat less obvious. The classically trained engineering “bottom-upper” accepts the goals of a project as given. Such engineering goals are embodied in the “specification sheet”. How could it be otherwise? The classically trained engineer may ask. How can one design or manufacture something without a specification sheet or a blueprint? This question may be perfectly logical when applied to a conventional, well understood object but irrational when we face the unknown. By insisting on a well developed and complete set of specifications before one can begin the design and production of a new and untried object, the engineer removes himself from the most exciting, creative step; helping to set the specifications in the first place. But this is exactly the way we currently tech engineers to think and to design.

In engineering education, the Tayloristic approach seems so obvious that it is universal. We begin with the simplest mechanisms and equations, then proceed step-by-step to more complex devices and mathematics, in a bottom-up manner. Thus, the budding engineer is taught without words to accept engineering reality as susceptible to decomposition into simpler sub-units best handled in isolation, a hierarchical management approach with professors as “bosses” who “think” and students as “workers” who “do,” and an absence of discussion of goals, except for questions that are meant to elicit what the boss wants.

If engineering educators inculcate reverence for inviolate specifications, as we continue to do, we are also implying that goals are external to the design process and are to be set by someone else. This absence of the goal-definition phase is the second major distinguishing feature of conventional Tayloristic engineering practice that is crippling our national attempt to regain manufacturing leadership in world markets.

The third crippling attribute is the engineering practice in a mechanistic vacuum, without regard to human factors. Human factors must enter into the design, production, use, and especially product retirement. Yet, none of these essential steps is considered currently in engineering education. Humans will use the objects we design and build, but we engineers easily divorce ourselves from responsibility to these human users if we can.

A fourth debilitating attribute of current American engineering practice is its hierarchical, nonprofessional attitude. Conventionally trained engineers accept that they do not have a say in setting specifications for the design object, or in how the product may be manufactured, or in providing graceful retirement from service. They accept that they are not professionals with an overarching professional responsibility to society for their work. They accept the fact that they are employees and thus should be told what to do. And we engineering educators seem to agree. For the mots part, we are not registered professional engineers, and we do not encourage our students to look upon themselves as professionals in training, with professional registration as the confirmation of professional status.

The fifth element in current American engineering practice that gives me concern may grow out of the dehumanizing attitude mentioned as number three above. It is the fantasy that engineers are engaged in value-free design. This can lead to the belief that designers and builders have no responsibility for the use to which our products are put.

One of the primary features of Taylorism is insistence on a rigid separation of thinking from doing. Taylor prohibited participation by production workers in the organization, planning and direction of the manufacturing process. Taylor required his workers to do exactly as they were told to do and no more. This authoritarian stance is carried over into engineering education through its rigid exclusion of students from participation in the planning, organization, and direction of the education process. We all learn by example, and this is one of those debilitating attitudes engineers learn without being conscious of it.

Individual reward for individual effort in the marketplace implies an emphasis on piecework, separate post production quality inspection, and a resistance to the team concept. For example, auto factory line foremen long waged war on any sort of worker interaction on the line. Even talking was forbidden in the early days, and this clash with the traditional American value of mutual support no doubt hastened unionization. IN engineering education, this attribute causes us currently to focus excessively on individual student performance and active discouragement of student team formation. As a result engineering graduates have little or no experience in team building or cooperative effort. Thus, when they do run into the need for team effort, many engineers exhibit resistance, discomfort, and clumsiness at interpersonal professional relationships. Engineers feel the “need” to know who is the boss and for a strong management structure. The “leaderless group” leaves them distinctly uncomfortable (Gibson, 1981). Engineering faculty members often carry this individualism even further. I have been present at a number of faculty promotion and tenure committee meetings at which it was seriously proposed to discount publications according to the number of authors on the paper. Under this concept a two author paper would find each author awarded half a publication, and so on. Unconscious Taylorism in engineer is, I believe, responsible for the sabotage of many participative management programs”

This text has been extracted from John E. Gibson (1992) Manufacturing Systems; foundations of world-class practice. Pp 149-157.  National Academy Press; Washinton, 1992.

 
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Posted by on February 25, 2010 in efficiency, Management, Manufacturing

 

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Market will decide on Toyota recall

The company’s proactive and unprecedented recall and sales halt, while expensive in the short term, may protect its image.

As in any good relationship, open communication is vital and Toyota Motor Corp., which recently suspended production and sales of eight models suspected of having sticky accelerator pedal problems, now has the perfect chance to show the world how healthy a relationship it has with its customers.

The recall and sales halt, which most industry observers agree was the right move, has generated different discussions about the company’s renowned quality expertise.

“Toyota has built this reputation on quality and reliability and safety and being a practical choice. When consumers start questioning that, it really can damage them in terms of reputation, especially when Hyundai, Ford, Honda, Subaru, and Nissan offer great choices and are coming up in quality ratings,” Jake Fisher, an automotive engineer for Consumer Reports, told Reuters.

floormat

However, Toyota could minimize the adverse effects of the recall and sales halt depending on how well the company communicates with its customers, according to Dave Sargent, vice president of the global automotive division at J.D. Power and Associates.

“We feel that Toyota is taking the right steps here,” says Sargent. “It is critical that they also focus on communications with customers and dealers. There appears to be some uncertainty right now. This is understandable, but Toyota needs to be as clear as possible around what consumers should do, what dealers should say to customers and potential customers, and (when they know) when sales and production will restart. This is obviously a hugely complex challenge. Action is critical, but clear communication is also important.”

As far as the impact on overall customer satisfaction of the Toyota brand is concerned, Sargent isn’t convinced Toyota will take that big a hit.

“Historically, vehicle recalls have minimal effect [as far as customer satisfaction ratings go] as only a very tiny percentage of owners actually experience the problem,” Sargent explains. “For the majority of owners, the most significant impact will be the inconvenience of taking their vehicle in to the dealer to be fixed. The high volume of recall work is also likely to affect other owners trying to get a dealer service appointment. The effect will be largely dependent on how well Toyota and the dealers manage this process. There may also be an indirect effect coming from some consumers’ residual concerns about the general reliability of their vehicle and potential effect on the resale value. Overall the impact is likely to be less profound than might be expected.”

floormat2

It’s still unclear what Toyota is going to do as a definite measure to fix the problem, but Sargent is certain that Toyota is not going to risk it’s highly valued reputation by releasing the affected vehicles before the problem has been clearly identified and fixed.

“The actions that Toyota have taken this week are clearly designed to fix the problem (and the perception of a problem) once and for all,” says Sargent. “It is highly unlikely that they will move forward without being completely satisfied that the problem is fixed. Their long-term reputation is more important to them than losing a few weeks of sales, however painful that is in the short term.”

Meanwhile, The National Automobile Dealers Association (NADA) is encouraging Toyota dealers to verify whether or not they have business interruption insurance that might help them endure this crisis.

“This is creating a very difficult situation for dealers, in an already tough market. NADA is working with Toyota to identify a plan to help get dealers through this,” the association said in a statement.

Last year, the Japanese automaker issued a recall of vehicles to reduce the risk of pedal entrapment by incorrect or out of place accessory floor mats, according to a company statement. Approximately 1.7 million Toyota Division vehicles are subject to both separate recall actions.

Toyota’s accelerator pedal recall and suspension of sales is confined to the following Toyota Division vehicles: 2009-2010 RAV4, 2009-2010 Corolla, 2009-2010 Matrix, 2005-2010 Avalon, Certain 2007-2010 Camry, 2010 Highlander, 2007-2010 Tundra, 2008-2010 Sequoia.

From Quality Digest

 
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Posted by on February 1, 2010 in Toyota

 

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Is it time for TPS II?

What the world’s biggest carmakers can learn from other corporate turnarounds.

“Less than two years ago Toyota swept past an ailing General Motors (GM) to become the world’s biggest carmaker. Now its newly installed boss, Akio Toyoda, the 53 year old grandson of the founder, says that the firm could be locked in a spiral of decline. Toyota is still a hugely formidable company, and some within the industry (and inside Toyota itself) believe that Mr Toyoda may be overstating the case. Yet there is no shortage of signs that all is not well.

Toyota’s story has implications beyond the motor industry, for it is not just a car company; it is the model for manufacturing excellence whose “lean” techniques have been copied by countless firms. How it slipped up –and how it may right itself –carries lessons for others.

Falling giants.

Althought some of its rivals, notably Volkswagen of Germany and Hyunday of South Korea, have come through the terrible past year relatively unscathed. Toyota’s market-share has either fallen or been flat in every region in which it operates except Japan—a market that was shrinking well before the crisis struck.

In America, its biggest and normally most profitable market, Toyota has been plagued by highly publicised recalls that have raised embarrassing questions about the safety of its vehicles. In China, India and Brazil, the big emerging markets that will provide nearly all the industry’s future growth, Toyota has been slow of the mark. Its lead in hybrid technology is under threat as other big carmakers scramble to bring low –and zero –emission vehicles to market before low –carbon legislation bites. Astonishingly, in the first three months of 2009 it made an even bigger loss than GM, which was then on the verge of bankruptcy. Underlying all these problems is an uncomfortable truth: Toyota’s rivals have now caught up. They now offer cars that are just as reliable but far more exciting than the rather dull vehicles Toyota has concentrated on producing in ever –larger numbers.

A bit of vroom needed.

Toyota can also learn from the woes of other carmakers. A decade ago Ford thought it had found a saviour in the dynamic Jac Nasser, who declared his intention to transform the firm from an old –economy carmaker into a nimble, internet-savvy, consumer powerhouse that managed brands and sold services. He also went on a wild acquisition spree, paying huge sums for Volvo and Land Rover. Unfortunately, amid Mr Nasser’s cultural revolution, Ford lost sight of its main purpose: building decent vehicles as efficiently and profitably as possible. That is what Ford is reaping the rewards for doing now, under the less exciting but steadier leadership of Alan Mulally.

Toyota, too, has a good chance of putting things right. It is no GM, which had far deeper structural problems before it used bankruptcy to off-load some of them. It has a boss who understands what has gone wrong –namely, that it has jeopardized its formerly stellar reputation for quality by pursuing volume at all costs and by failing to put the needs of its customers first. It has started to sort out some of its problems. Quality and reliability are getting back up to the mark. Now it needs to make more exciting and innovative cars.

Mr Toyoda’s approach is not visionary. It is simple, incremental and requires painstaking attention to what the customers want. That is its virtue.”

Extracted from: The Economist December 12th-18th 2009. Pp 69-71. The Economist Print Edition

 
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Posted by on December 16, 2009 in Lean Manufacturing, Toyota

 

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Takt Time: The time it takes to finish a product.

Takt is a German word for the baton used by maestros. Just like the musicians must be synchronized with the conductor, the rate of production within an organization must be synchronized with the rate of its delivery. In a nutshell, takt time is a theoretical figure that indicates how much time is needed to finish one product. The goal is to precisely define takt time to meet customer demand, and then run the production line to meet that takt time. Once takt time is defined, the processes of the entire organization should be adjusted to keep up with it. If any process exceeds the takt time, there will be shortage of product, if it is faster than takt time, there will be product surplus. A simple way to find takt time is to divide the total production time by the number of units required by the customer. This can be expressed in seconds, minutes, or hours per produced item, depending on production speed. To achieve the ideal takt time, it is important to take into account all the irregularities that are part of each step of a process.

References:

Gemba Kaizen: A Commonsense Low-Cost Approach to Management, by Masaaki Imai (McGraw-Hill, 1997) Quick Response Manufacturing: A Companywide Approach to Reducing Lead Times, by Rajan Suri (Productivity Press, 1998) A Lean Guide to Transforming Healthcare: How to Implement Lean in Principles in Hospitals, Medical Offices, Clinics and Other Healthcare Organizations, by Tom Zidel (ASQ Quality Press, 2007)

Extracted from; Qualipedia

 

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Did Quality Programs kill GM?

Are Quality Methodologies All Smoke and Mirrors? Part One

Can we blame quality programs for GM’s demise?

World War III has begun. This time it’s not a war of battleships, bullets and bombs—this is an economic war. The weapons are televisions, steel, cars, and clothes. This is a war where we have no allies. Every nation is out to capture more of its share of the U.S. and world’s market. We are being attacked with tires from Brazil, cars from Japan, radios from Taiwan, clothes from China, cosmetics from France, shoes from Italy, and beef from Argentina and Australia.

Businesses in the United States entered the 1980s with a deep-seated resolution to stop the flood of import products and as a result, a group of “new admirals and generals” took over to reestablish our industrial leadership. These were people such as John Akers of IBM, F. James McDonald of General Motors Corp. (GM), Jim Olson of AT&T, and John Young of Hewlett-Packard. Industrial leaders like these laid out strategies to thrust the United States back to the prominence it once had. But it takes years to reestablish a reputation once it has been destroyed or at least tarnished.

General Motors—one of the most powerful and respected organizations—is now in bankruptcy. Why did this happen? What did they try to do that didn’t work? To help understand this, I will report on an interview I had in 1988 with GM’s corporate president, F. James McDonald, which was documented in my book, The Quality/Profit Connection (American Society for Quality Control, 1989).

General Motors celebrated its 100th anniversary on September 16, 2008. It was on this date in 1909 that William C. Durant founded. General Motors Co, predecessor of the current GM. The first motor company acquired by Durant was the Buick Motor Co.

In 1988, GM had 151 facilities operating throughout the United States, in 26 states and 90 cities; in Canada, there were 13 GM plants. It had assembly, manufacturing, distribution, sales, or warehousing operations in 37 other countries. GM also had equity interest in associated companies, which conducted assembly, manufacturing, or distribution in several countries. The average worldwide employment totaled approximately 748,000 men and women in 1984.

Following is an excerpt from my interview with F. James McDonald, president of GM from 1981 to 1987.

H. James Harrington: What were the circumstances leading to the current focus of GM on quality improvement?

F. James McDonald: Efficient, small, high-quality vehicles from Japan, and the availability of these vehicles at just the right time in history were watershed events in the U.S. auto industry. Their perceived quality became the benchmark for all cars—in effect, customer standards changed dramatically. And that change swept through the entire line of products.

HJH: Do you have an official quality policy?

McDonald: Actually, the new quality consciousness at GM began with the development of a quality ethic for all GM units and operations. The essence of this ethic boils down to this: Quality is the number one operating priority at GM today.

HJH: To what sections of the business is it being applied?

McDonald: Quality improvement is being applied to all areas of our business. Specific quality objectives and strategies must be included within each unit’s five-year business plan. All departments within a business, and of course, each employee, contribute to meeting those quality objectives.

On new product programs, resources are allocated very early when our ability to influence the outcome is greatest. This includes the front-loading of people from all disciplines including marketing, product engineering, manufacturing, assembly, quality assurance, financial, and materials management. This includes early sourcing decisions so our suppliers can work with product development teams on potential problems and improvement.

HJH: What activities were undertaken to start the quality improvement process and when did it start?

McDonald: At GM today, we have this kind of strategic vision, and that vision is simply to offer world-class quality in every market segment. By world-class, we mean parity with, or superiority to, the best in the field—product for product.

To assist the operating units in this effort, the corporation has issued four key success factors for quality, which help focus the GM quality ethic and its six mandates. Research has shown that these key success factors must be addressed in business planning and implementation strategies if meaningful quality improvement is to occur.

Let’s take a look at what the key success factors and the associated objectives are.

  • Management commitment. Managers at all levels must be committed to continuous quality improvement and demonstrate their commitment by word or action.
  • People development process. Every employee, regardless of function or level, must have the encouragement, support, and opportunity to be a contributing member of the quality improvement effort.
  • Quality performance processes. Each task and activity must have processes and tools to ensure conformance to specifications and to provide for continuous quality improvement.
  • Customer satisfaction. General Motors must be the world leader in quality, reliability, durability, performance, service, and value, as confirmed by customer-defined measures and marketplace response.

We have also identified the major steps to carry out improvements on any given project and have found that they work quite well.

HJH: What is the role of top management in the improvement process?
McDonald: Achieving true quality maturity is totally the responsibility of top management in our company. Others may carry it out to one degree or another, but those at the top must be willing to go the whole route.

We believe that the whole top management team must be aboard. Even the most inspiring leader can’t hope to reach the organization without total commitment from everyone at the top.

HJH:
What is the role of the employees and the union in the improvement process?

McDonald:
We are absolutely convinced that eventual success depends heavily on the employees. As we discussed, one of our key success factors for quality improvement concerns people-development processes.

For instance, we’ve trained more than 30,000 GM workers in statistical process control techniques. And I must say, to see these tools put to work right on the line is one of the most rewarding experiences I’ve had at GM. So, I think we’re on the right track on the employee side—even though we still have a ways to go.

HJH:What problems did you have in implementing the improvement process?
McDonald: Prevention within manufacturing can take you only so far along the journey. Greater success must come from moving the focus upstream, to design and engineering, for example, by combining the talents of design engineering, processing, and manufacturing, and having them work together as a team instead of individually. That’s the place to start if you’re serious about doing everything right the first time. Our product development teams on new products that we have previously mentioned are addressing this in a fine manner. We are also initiating this concept in our daily operations.

General Motor’s reorganization of its North American passenger cars and its worldwide truck and bus operations addressed changes necessary to ensure quality improvement, accountability for results, and effective allocation of resources. The reorganization was quality-driven from the beginning.

On reviewing McDonald’s comments, I see he was saying all the right things and doing all the right things, but the results have been disastrous for GM investors, employees, suppliers, and the United States.

H. James Harrington; Quality Digest; Are Quality Methodologies All Smoke and Mirrors? Part One

 
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Posted by on August 4, 2009 in Total Quality Management

 

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Was Henry Ford a true Lean thinker?

Do not forget that Today and Tomorrow was written in the 1920s, over a half century ago when Ford’s career was at its peak.  Shortly, he would face his first failure and discouragement even though the Ford Motor Company ultimately survived.

As I said earlier, I have long doubted that the mass-production system practiced in America and around the world today even in Japan, was Ford’s true intention. For this reason, I have constantly sought the origin of his ideas. For example, take a look at the American social environment of the 1920s when Ford was prospering

“But are we moving too fast – not only merely in the making of automobiles, but in life generally? One hears a [great] deal about the worker being ground down by hard labour, of what is called progress being made at the expense of something or other, and that efficiency is wrecking all the finer things of life.

It is quite true that life is out of balance – and always has been. Until lately, most people have had no leisure to use and, of course, they do not know how to use it. One of our large problems is to find some balance between work and play, between sleep and food, and eventually to discover why men grow old and die. Of this more later.

Certainly we are moving faster than before. Or, more correctly, we are being moved faster. But is 20 minutes in a motor car easier or harder than four hours solid trudging down a dirt road? Which mode of travel leaves the pilgrim fresher at the end? Which leaves him more time and more mental energy? And soon we shall be making an hour by air what were days journeys by motor. Shall we all then be nervous wrecks?

But does this state of nervous wreckage to which we are all said to be coming exist in life – or in books? One hears of the workers nervous exhaustion in books, but does one hears it from workers?…

The very word “efficiency” is hated because so much that is not efficiency has masqueraded as such. Efficiency is merely the doing of work in the best way you know rather than in the worst way. It is the training of the worker and the giving to him of power so that he may earn more and have more and live more comfortably. The Chinese coolie working through long hours for a few cents a day is not happier than the American worker with his own home and automobile. The one is a slave; the other is a free man.”

There have been many changes in the last half century. Circumstances in China have changed drastically, for instance. Recently, between September 1977 and September 1978, I visited many Chinese industries trying hard to promote modern industrialization.

From the Ford’s time to the present, through our postwar period when we began work on the Toyota production system, and within the industrialization that China is trying to achieve, there is one universal element – and Ford called it a “true efficiency”. Ford said efficiency is simply a matter of doing work using the best methods known, not the worst.

The Toyota production system works with the same idea. Efficiency is never a function of quantity and speed. Ford raised the question: “Are we moving too fast?” In connection with the automobile industry, it is undeniable that we have been pursuing efficiency and regarding quantity and speed as its two major factors. The Toyota production system, on the other hand, has always suppressed overproduction, producing in response to the needs of the marketplace

In the high-growth period, market needs were great and losses caused by overproduction did not appear on the surface. During slow growth, however, excess inventory shows up wether we like it or not. This kind of waste is definitely the result of pursuing quantity and speed.

When describing the characteristics of the Toyota production system, we explained the concept of small lot sizes and quick setup. Actually, at the heart of this is our intention to reform the existing and deeply rooted concept of “faster and more” by generating a continuous work flow.

To be truthful, even at Toyota, it is very difficult to get the die pressing, resin modelling, casting, and forging processes into a total production flow as streamlined as the flows in assembly or machine processing. For example, with training, setup of a large press can be accomplished in three to five minutes. This is shorter than that of other companies by a surprisingly large margin. In the future, as work flow is perfected, we could slow down and still keep it under 10 minutes.

This explains why the Toyota production system is the opposite of America’s system of mass production and quantity sales – the latter system generates unnecessary losses in pursuit of quantity and speed.

Ohno, Taiichi. 1988. Toyota Production System. Beyond large-scale production. Pp 107-109. Productivity Press. New York.

 

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Maasaki Imai reviews Kaizen and Just in Time 23 years later. It is time to meet the challenge for surviving

The 73-year-old mind of Masaaki Imai runs razor sharp belying the frailty of his small frame. He talks with sincere conviction, pausing to select the right words.

He has to be careful, after all, his words have been changing the way the corporate world talks, and more important, acts.

When he first threw the word ‘Kaizen’ at the corporate world through his book Kaizen: The Key to Japan’s [ Images ] Competitive Success in 1986, it was swallowed hungrily by a world in the throes of transition. Translated in fourteen languages, Kaizen became a fad the world over.

Toyota [ Images ], the outstandingly successful Japanese carmaker, became one of his most committed followers.

However, Imai, the founder of a leading international management and executive recruiting firm, and consultant to over two hundred companies, realized that the concept had neither been digested nor well implemented.

He introduced an evolved form of Kaizen in 1997 in his book Gemba Kaizen: A Commonsense, Low-Cost Approach to Management, to reassert the importance of the shop floor in bringing about continual improvement in an organization.

Today, the father of ‘Kaizen’ and ‘Gemba Kaizen’ is convinced that to survive in an increasingly competitive world, top management must adopt a just-in-time approach and drive change down the hierarchy without yielding to resistance.

Forget forecasting, concentrate instead on crashing the time taken to execute orders. According to Imai, 90 per cent of all corporate problems can be solved using common sense and improving quality while reducing cost through the elimination of waste is the only option for survival.

In an exclusive interview to The Smart Manager, Imai explained the principles underlying his just-in-time philosophy:

Kaizen is about constant continual improvement but in today’s world, are small improvements enough? What if you need to make big, radical changes?

Kaizen is the means to achieve a corporate strategy, not the strategy. Every corporation needs to make a radical change, or some change at least, to survive in this very competitive, rapidly changing world.

The most important challenge facing top management today, especially in a manufacturing company, is to establish a target about where they want to take the company in the next two, five and ten years.

In manufacturing, there are only two systems. One is the batch or queue production system, and the other is what we call just-in-time (JIT) or the Toyota production system.

One of the most urgent tasks for top management is to choose the strategy, and say that we have decided to change to the just-in-time production system to be able to survive in the new millennium.

Kaizen is misunderstood by most people. They say Kaizen is small step improvement and this is the age of big jumps, but in my way of thinking, the biggest jump is making the transformation from the batch mode to JIT.

Why should companies move away from the batch mode to just-in-time?

The batch production system, to which almost 99.9 per cent  of all manufacturing companies subscribe, is destined to perish. It is the most inefficient way to make products.

It is prone to all kind of shortcomings: it is almost impossible to build quality in a product and it defeats the purpose of making products at low cost.

It also makes it very difficult to meet customer requirements, which come in different orders, like different volumes in different time frames and so on. On the other hand, JIT production system is the opposite of the batch system.

The batch system derives from the agricultural mentality. When the industrial revolution took place in the nineteenth century, managers adopted the pattern of production from agriculture: first you sow seeds, then harvest and store. The more wheat you had, the more secure you were, so everything was made in big batches.

Similarly, in the batch system, you purchase material and produce in big batches and there are many processes. At every process, you accumulate the batch and at the end you accumulate the finished product in a batch, which is stored in the warehouse.

Which is very efficient, offers standardization. . .

This kind of production system is based on market forecast. You say, this year we will sell half a million cars, so you plan according to that and start making half a million cars. What happens if your forecast is wrong and you manage to sell only quarter million cars?

You are left with quarter million cars unsold and a chunk of cost — labour, raw material, etc — is in it. What are you going to do? You think it is the most efficient production system?

Batch system is good when there is demand. As a company begins to acquire the capacity to produce faster and faster and more and more, eventually there will come a time when its production capacity goes above what the market can bear.

Today, several Japanese electronic companies are in big difficulty. What do you think happened to these companies?

These are the companies that didn’t know that they should have introduced JIT. Most of the electronic companies have a production system based on assumption of the market and market forecast.

The same thing happens in the computer chip industry. You end up with huge inventory of unsold products and excess capacity, then you borrow money to carry that inventory. By that time you have acquired too many people for every process.

Do you think that is a very efficient way of making a product? Eventually the company will have to restructure or go bankrupt.

And what is the solution? Just-in-time. The starting point of JIT is to pull from the market. The market should always come first and production later.

How long would the customer have to wait for the product?

In some cases, only a few hours. In the case of a car, maybe a few days.

But it is a competitive market, why would a customer wait? There are lots of car manufacturers, there is lots of choice, I can walk into any showroom and buy a car. Why should I wait?

In batch system, the company has to anticipate that the customer will request this kind of a model. Right? And it will have to build an inventory of this kind of car, but they don’t know how many orders are coming. They have to have so many cars waiting for your order to arrive, which is very inefficient.

The customer may not know that she wants a product. The inventor has to estimate the market for it. It is the role of marketing to define the product and the role of production to make the product.

Well, I think it is the other way round. The role of marketing is to dig out the potential or hidden requirement that the market has.

You don’t follow the product out approach but first find the need of the market and then make the product. If you don’t have technology, you have to develop it and if you don’t have the machinery for such a product, you have to design it.

Managers today are obsessed by a ‘growth’ mentality? Do you think growth is a smart strategy?

I can say that 99.9 per cent of all companies in the world today are obsessed by a growth mentality. These are companies that can make profits only when the market is growing.

In real life, market demand always fluctuates. The only companies that will survive in to the next millennium will be the ones that have the flexibility to produce according to fluctuating demand.

I read that Kaizen works most effectively in the time of crisis. Why?

During a crisis, everyone understands the urgency of the situation. The transformation of the production system is a massive physical operation, like operating on the bone structure itself, which is why it is very important that top management be committed to make such a transformation.

That is the only way to survive in the new millennium because it is the most effective way of making a product. It also increases your cash flow immediately, so when companies are faced with crisis, it is the best time to introduce Kaizen.

For instance, in India, there are many situations emerging, like China exporting products far below the cost price.

In this age of global supply chain management, being the best in India is not enough, you have to be the best in the world.

Do you have a Kaizen institute in China? What makes China so efficient?

No, we don’t have an institute in China. What makes China superior is its labour cost, which is 1/50th of Japan’s labour cost.

But lower labor cost does not equal efficiency. What makes China so efficient?

I wouldn’t call the country very efficient. They can produce a certain product, particularly consumer-related products, at a lower cost in mass production because so far many western and Japanese companies have transferred technical know-how to them.

China has acquired the basic production capacity. Earlier the same thing happened with Malaysia, Korea, Taiwan. Today it is China’s turn.

What happened was that Japanese, American and European people have transplanted technology, they hired local people and brought machines there and trained them to do the job. So that’s how they can produce.

So, would you call China a superior manufacturer?

Not superior, but they can produce at a far more competitive price. Superior has many connotations, in terms of design, efficiency, etc. I certainly wouldn’t call China superior.

They also have efficient processes. . .

But so far, those processes have been given to them from Japan and the western world.

The price of labour is cheaper in China, but would the productivity of a Japanese worker be higher than that of a Chinese worker?

I am talking about labour cost. Of course, you have to make quality products and in order to make quality products, you must have quality conscious employees. How do you develop quality conscious employees?

Most Japanese companies when they went to China had a hard time training them, the people didn’t have quality consciousness.

The Japanese spent a lot of time selecting the right people and training them in production procedures. So this kind of training has been provided along with some basic principles of quality assurance.

These managerial practices can be transferred, but you see in China, they are paying the equivalent of one Japanese worker’s wages to fifty people. Quality control has been introduced and can be exported in any country.

Japan was at its peak in the 1980s but now China is far ahead, does this suggest that the Japanese model is invalid?

We need to distinguish between external circumstances (social, cultural and political infrastructure) and internal circumstances (like how business is conducted within the company).

The recent negative reports about Japan relate to the external circumstances, such as governmental regulations, overprotected market in some sectors, aging society and the Big Bang needed by the monetary institutions.

There is a realisation that Japan Inc may not be functioning as efficiently as it used to. This in no way means that Japanese management practices (internal management of the company) have proven to be inferior.

The Japanese companies developed a very effective system of management, particularly in the manufacturing sectors, and the rest of the world has much to learn from these practices.

What are your views about management practices in the Indian corporate sector?

I see that Indian managers are extremely intelligent. They are abreast with latest technologies and developments. But the problem is that they completely isolate themselves from reality.

They are under the impression that real knowledge can be gained only by reading books and attending lectures. How often do they actually roll up their sleeves and get into some action?

They really need to make more effort [at getting into the thick of action]. They have immense knowledge, but what they lack is wisdom that comes by doing things yourself.

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Published with the kind permission of The Smart Manager, India’s first bi-monthly management magazine.

 
 

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