The Toyota Production System (TPS) maintains a legendary reputation in the auto industry. For the past 70 years, this socio-technical practice has set a high standard for other car manufacturers.
The TPS continues to offer lessons that can propel other domestic and global companies to new heights.
The Toyota Production System Overview
TPS is an integrated production system that represents the philosophy and practices of the company’s managers and owners. The goal is to reach the best productivity and decrease waste.
In the late 1940s, the company founder Sakichi Toyoda and his son Kiichiro developed the Toyota Production System, together with the executive Taiichi Ohno. At first, they referred to it as just-in-time manufacturing.
As TPS evolved over the years, it became known as The Toyota Way and lean manufacturing. The Toyota Way addresses the common theory that car making involves 50 percent science and 50 percent trial-and-error.
It seeks to cut the trial-and-error part by making sure every car that comes off its production line is an ideal creation that will exceed the consumer’s needs.
The system is renowned for its ability to organize manufacturing and logistics and make them highly efficient.
Its history, design, and method offer critical advice from which other company executives around the world can benefit.
Lesson #1: Drive to Always Improve
One of the first lessons to pick up from TPS is the concept of Kaizen or continuous improvement. This philosophy translates to business operations.
The market and the competition is changing and keeping up with others calls for improvement of one’s work processes.
Kaizen doesn’t function without employee engagement. Employees are both encouraged to suggest improvements in their divisions and given tasks to improve their own skills.
After reaching a series of set goals, Toyota’s employees receive another round of milestones to work toward and meet in the next few weeks and months. It compels them to always strive for improvement and guard against complacency and permanent satisfaction.
Kaizen also encompasses respect for employees, especially workers on the production lines in the factory. It helps them feel vital to the company’s success and not just paid labor. This appreciation and care make sure they are happier at work and stay loyal to the company.
Finally, Kaizen compels company executives and employees to always be on the lookout for ways to improve their performance and rate their satisfaction and efforts in different categories.
For example, employees can rank themselves in categories like:
- Human Development
When you set up such practice and your team gets in the habit of self-evaluation, they become proactive. We love to be good at our jobs. Let’s say the work safety benefits the product quality, then it should be on the improvement to-do list.
An honest, self-reflective analysis helps employees discover what it takes to close the gaps and drives the company to a higher operational level.
Lesson #2: Cut Waste Across All Functions
Toyota shows that their system (TPS) is a versatile business strategy, applicable to other divisions.
In the Toyota Corporation, we find the same philosophy applied through:
- Finance and financial services
- Dealer networks
- Production control
In applying the concepts behind TPS to other parts of the company, Toyota makes it a priority to perfect its operations at every level before it grows any of them.
This ensures the division expands on solid foundations and growth doesn’t cause future breakdowns. The rule applies to many businesses and industries.
We can see the TPS at work in Toyota’s manufacturing operations including any serious design changes. Every four to eight years when the company undergoes major model transformations, it makes it a priority to change all the stamping dies, welding points, locations, and painting and assembly processes.
By implementing TPS into its manufacturing procedures, Toyota has cut in half the time to do a complete model change.
Regardless of where you apply it, TPS always aims to eliminate seven wastes to achieve higher productivity.
These wastes include:
- Overproduction (this includes exceeding the quality)
- Waiting (wasting time)
- Transporting (wasting time)
- Inappropriate processing
- Unnecessary inventory
- Excess motion (another time-based waste)
One example of how they reduced waste (in shipping costs or wasted time and money) in their European factories is to produce cars in the country that buys that model the most.
Implementing TPS across the board at Toyota also has allowed the company to enter an era of being able to anticipate the customer’s needs.
Lesson #3: Embrace Rapid Innovation
While TPS favors slow, continuous improvement, it doesn’t shy away from radical innovation either. Rather, it embraces rapid innovations as soon as they are available.
To stay competitive, Toyota relies on the concept of Kakushin or rapid innovation.
They showed their commitment to rapid innovation using the latest technology when they applied for a patent for the world’s first flying car.
Toyota’s flying car that will use the same drive mechanism for both road and air travel. Its rotor hubs will fold into the wheels when the car is on the ground, allowing it to roll freely. The driver will steer and brake by applying differential power among the individual wheel rotors. The company hopes to reveal its first flying car at the 2020 Olympics in Tokyo.
Because of that balance of always improving and innovating, Toyota remains one of the fiercest competitors in the auto industry by establishing itself in every major auto market around the world.
They have manufacturing plants not only in Japan and the U.S. but also across Europe in countries like Poland, France, Portugal, and the U.K. Eight out of 10 Toyota cars sold in Europe are made at one of their European factories.
Lesson #4: Strive for Market Domination
TPS teaches automakers and other industries on how to dominate the market. Toyota remains one of the world’s most popular and successful car brands thanks to several factors.
It garners high marks from consumers and auto industry insiders for its cars’:
- High resale value
Good product quality is Toyota’s competitive advantage. Eighty percent of Toyota cars are still on the road 20 years after production. And they only get better with time. Toyota maintenance schedule is also improved on a regular basis. Analyzing performance and reliability is only one of the tools that the car manufacturer is using to keep building better cars with time.
Knowing the ideology behind the manufacture and the fact that the first Yaris and the one-millionth Yaris are not the same, we see the improvement system in action.
This doctrine gained them some of the highest reviews from the Insurance Institute for Highway Safety and auto reviewers like J.D. Power. Used Toyotas also have the best resale values quoted by Kelley Blue Book.
Toyota production system offers important lessons that other companies can use to reach new levels of success.
If your company, no matter how big, strives to continually improve the processes, tries to cut unnecessary waste and innovates when possible, it will come closer to market domination. These principles underly the popularity Toyota continues to experience today.
Heather Redding is a content manager for rent, hailing from Aurora. She loves to geek out writing about wearables, IoT and other hot tech trends. When she finds the time to detach from her keyboard, she enjoys her Kindle library and a hot coffee. Reach out to her on Twitter.