“We place the
highest value on actual implementation and taking action.
There are many things one doesn’t understand and therefore, we
ask them why don’t you just go ahead and take action; try to
do something? You realise how little you know and you face
your own failures and you simply can correct those failures
and redo it again and at the second trial you realise another
mistake or another thing you didn’t like so you can redo it
once again. So by constant improvement, or, should I say, the
improvement based upon action, one can raise to the higher
level of practice and knowledge.?/font>
President, Toyota Motor Corporation, 2002
Boyce is in the manufacturing business and we should look at
the Company always in that perspective? The manufacturing
sector owes a lot of current work practices to Toyota. Hence,
let’s talk of some of the work practices at Toyota…”
Changing and Growing
The Toyota Way
“I recommend you read The Toyota Way. You
will learn a lot of work practices followed by Japan’s top automotive
manufacturer Toyota,?said Takao Kasahara, in a matter-of-fact way. He is
Consultant, Godrej & Boyce Mfg. Co. Ltd.
Kasahara has helped bring numerous
improvements/changes in Godrej and believes in value-based, long-term
philosophies, which aid organisations to prosper globally. Small wonder he
recommended the University of Michigan professor of industrial
engineering, Jeffrey K. Liker’s The Toyota Way for the very first
principle of Toyota’s success in the book states Long-Term Philosophy.
Let’s look into the four basic principles or
the 4P model of Toyota.
Long-Term Philosophy: Toyota drives
a long-term approach to building a learning organisation, one that can
adapt to changes in the environment and survive as a productive
The Right Process Will Produce the
Right Results: Focus on process is built into Toyota’s DNA, and
managers believe that using the right process will lead to the results
Add Value to the Organisation by
Developing Your People and Partners: The Toyota Way includes a set
of tools that are designed to support people continuously improving and
Continuously Solving Root Problems
Drives Organisation Learning: Identifying root causes of problems
and preventing them from occurring is the focus of Toyota’s continuous
learning system. Tough analysis, reflection, and communication of
lessons learned are central to improvement as is the discipline to
standardize the best-known practices.
Toyota’s sales and market share rose last
year in North America, Asia, Europe and every other region, helping push
the company to No. 2 in global vehicle sales and production. New assembly
plants are under construction or about to come on stream in Texas, the
Czech Republic, China and Russia. Its cash balance of more than
$14-billion (U.S.) is almost equal to the market capitalization of GM. The
Company’s Chairman Hiroshi Okuda has taken the extraordinary step of
saying he’s prepared to increase prices in the U.S. market in order to
give the battered Detroit-based rivals some breathing room. Toyota is, in
short, a juggernaut.
How did Toyota achieve such great heights of
Toyota started good work practices in the end of 1950s. They were already
working for nearly 13 years at the time and continue to be the best
automotive performing company in the world. Finding low-cost and yet
reliable alternatives to expensive new technology is just one of the ways
Toyota improved production. According to most automotive critics, Toyota,
over the next 20 years, would dominate the automotive technology. Toyota’s
profitability is much higher than the total profitability of General
Motors, Ford and Chrysler. “One good thing I see in the Toyota management
is their humbleness,?says Kasahara. “The Toyota Chairman Hiroshi Okuda
and President Katsuaki Watanabe as also its Past President Fujio Cho have
never ever said we are number one in the business. They keep saying:
Dare to Change
Even after achieving such good results, they still dare to challenge to
reduce the cost of cars by 10 per cent in the next three years. They are
materializing that. Toyota had started to manufacture and sells
commercially a hybrid car called Prius in 1997. Explains Kasahara: ?i>Prius
is one of the breakthroughs in car technology industry since the last
decade. Its electric motor drives the car from the battery at low speed
running through congested traffic in the town area. The tundem gasoline
engine which has a computer control system, starts to work when the speed
is increased. Furthermore, when the brakes are pressed, the energy is
recovered by the battery.
Toyota plans to make the hybrid Prius in
china and has an assembly plant under construction as part of Cho’s goal
of capturing 10 per cent of that market by 2010. But simmering hostility
toward Japanese companies still remains from the Second World War and has
raised its head in recent months. That could stifle growth for Toyota in a
market that is expected to boom during the next few years. Toyota could
also be vulnerable to competition from low-cost Chinese manufacturers,
although, according to Liker, it has undertaken a major cost reduction
effort to make itself less vulnerable.
Ideas And Their
Toyota continuously improves by generating ideas and implementing them.
Right from the top management to the shop floor worker, ideas are written
down on paper by employees. Good ideas are adequately rewarded. Besides,
good ideas don’t remain on paper. They’re implemented. Toyota has
continued this practice for more than 45 years without stopping. “The
Toyota culture is about pausing ?pausing to plan improvement and make
In the beginning of the 1950s, workers went on strike against layoff.
Toyota went almost bankrupt because of the recession after the World War
II. After that experience, Toyota focused more on its employees working as
a team, taking care of people properly which had been the culture of the
company since its founder Sakichi Toyota invented the automatic loom. “In
the manufacturing business no one person can produce everything by
himself/herself. Many people have to work as a team to make a single
product. But if people are segregated as executives, managers, engineers,
operators…then there can be no good manufacturing,?warns Kasahara.
Japan has seen numerous strikes until mid
1970s. But, recently strikes are rare in that country. All depends on the
way you build relationships between employees and with the Company that
makes teamwork successful. The structure is the same everywhere. There are
teams, team leaders and a supervisor. There’s always internal competition
since, as a team, they have to show improvement. The team or team member
who does not perform, is removed.
The Japanese Kaizen system says gives no power without responsibility. ?I
have never heard of layoffs in Toyota. Toyota does not employ unnecessary
people or create positions unnecessarily. But, once employed, the Toyota
employee works for a lifetime,?says Kasahara. The level of job security
runs high. But that does not mean that they continue with redundant people
or that non-performers can stay.
On the other hand, John Shook, former Toyota
manager and a life long student of TPS, described the system in Liker’s
book as “responsibility without authority? “At Toyota, formal authority
is typically one level up from the responsibility.?This, readers may feel
is unfair, but not from the overall Company’s point of view. Liker
continues: ”It forces the person responsible, who has no formal authority,
to defend his or her ideas, work through other people, and convince the
person with formal authority that the ideas are correct. The only defense
for taking action is to present the real facts of the situation to the
formal authority. This process forces managers to uncover the facts and
develop a strong case for their position or to go out on limb and prove
they are right through demonstrated success.?Irrespective of whether it’s
kaizen or TPS, it would be interesting to note that while
competitors—notably GM and Ford Motor Co.?are retrenching employees, the
Japan-based manufacturer is building its seventh North American assembly
plant near Woodstock, Ontario, boosting its production capacity in the
world’s most competitive market even further. That represents a $
600-million (Canadian) injection to the Ontario economy and the first new
auto plant in Canada since 1995, when Honda Motor Co. Ltd. unwrapped plans
for a new minivan factory in Alliston, Ontario.
To rise up to the Toyota management level,
even a potential senior executive, while he/she is young, goes through the
“Union?experience. The first thing he learns is that a company is an
organisation where they come to learn new things. A company growing its
own leaders and defining the ultimate role of leadership as “building a
learning organisation?lays the groundwork for genuine long-term success.
In Japan, most school graduates start their careers by becoming union
members and then grow to become managers. They learn the organization’s
culture by becoming union members and working as a team. This has
strengthened Toyota. Adds Kasahara: “Soon after graduating in Tokyo, Past
President Fujio Cho started to work on improvements at the Toyota
shop-floor. Initially, I thought he was an engineer. I had read a couple
of his articles. Later, I got to know that he had graduated in Economics!
Before becoming President, he was in charge of the Toyota USA venture. He
established the Toyota factory in Kentucky right from scratch?The new
Toyota President Katsuaki Watanabe started his career in Human Resources.
However, his first job was to improve Canteen operation! His efforts in
running the Canteen were recognized by the company. Then he was put in
charge of HR activities, then in charge of a Toyota factory and, before
becoming president, he was in charge of Purchase. Thus, people who become
part of top management are generalists, not specialists. They go through
different roles in the Company and finally head the Company. Besides, a
Company like Toyota with employees strength of 2,60,000 across the globe,
specialists cannot head the Company.?/font>
Toyota factories exist all across the globe.
Irrespective of the country they operate in, Toyota never comprises its
values and principles. “That’s a big difference between Toyota and many
companies in India. In Toyota and many Japanese companies, a person
working at the shop-floor can grow to become manager and even to become
manager and even to become the top executive. In this country, future
prospects of growth are limited,?says Kasahara.
The Will To Change
Initially, Toyota employees showed a lot of resistance and were
apprehensive of change. But gradually their ways of working and their
thinking did change. They realized that only hard work and change would
yield positive results. “The manufacturing environment is the watch of the
society. The operators, engineers?come to the factory for eight hours and
make their products. The environment of engineering is artificially
created. Relationships with employees are also artificially created. What
we have created artificially can be changed by thinking in the right
direction. Many Godrej & Boyce businesses have turned around today and are
growing. Employees who do not think and try to work in the same direction
or who do not try to change their way of thinking are struggling,?remarks
In Toyota even the lowest level employee
such as an Assistant Manager, thinks from the Company’s perspective and
not just from his/her job point of view
Focus On The Job
Generally, big Japanese companies have a 5-day week with 8-hour work
schedule. But the Japanese staff and management employees do work extra
for two to three hours. Kasahara opines: “I personally feel that overtime
is necessary from time to time when work is urgently required or to be
done in a short span of time. But sitting late should not be a habit as
you cannot work proactively and your health gets affected. This mindset is
not just in India. It prevails even in Japan, that because the boss is
sitting late, employees also have to sit late hours. More often than not,
it is the individual is doing the right job not because the manager or the
top boss is staying longer? Appraisals play and important role here.
Whether you stay long hours or complete the job in time, he/she should be
able to identify clearly that the appraisal is based on performance and
not by the number of hours you work. Assessment should be based on real
By the way, in Japan bosses sit along with
the staff members. They don’t have cabins because Japan doesn’t have
enough space for cabins.
Good HR Practices
It would have been tough for Toyota to sustain such good performance for
so many years, traversing generations and countries, had they not
implemented the right practices. “They picked up the right people from
each generation. That is very important. That I call as real Human
Resources activity ?identifying good people and training them properly,
grooming them and placing them in the right position?Hr needs to improve
in many Indian organisations. In the HR field you are dealing with hearts
of employees and not with administration. Administrative work can be taken
care of with the help of computers. Two aspects are important: People
Management and Job management. Good managers take care of both these
aspects equally well,?remarks kasahara. Small wonder a common phrase
heard in the Toyota is “Before we build cars, we build people.?/b>
Kaizen is a cornerstone of the vaunted Toyota Production System other
auto-makers have tried to copy. The Toyota Production System is usually
seen as focusing on eliminating waste and improving efficiency, but it
encompasses more than that. Says Liker, “The TPS is a total system of how
you manage and think about people and technology and your processes.?The
system has all but perfected, for example, just-in-time delivery of parts
to workers on a vehicle assembly line, a practice that reduces inventory
and means less wasted movement of workers fishing for the parts they need.
Just-in-time delivery is now standard
throughout the auto industry. “That hasn’t stopped Toyota from striving to
improve even upon that system, ?President Fujio Cho said in one of the
presentations. “Engineers have developed a new assembly process in which
the parts are delivered along the assembly line with the vehicle. That
eliminates the need for parts shelves, simplifies vehicle assembly and
requires less training of workers?
The major types of non-value adding waste in
business or production are:
||Waiting or time on hand.
||Unnecessary transport or
||Over processing or
Thus Toyota creates an ideal environment for
implementing lean techniques and tools by fostering an atmosphere of
continuous improvement and learning, satisfying customers and eliminating
waste at the same time, getting quality right for the first time, grooming
leaders from within rather than recruiting them from the outside, teaching
all employees to become problem-solvers and growing together with
suppliers and partners for mutual benefit.
There are several good practices, which
Toyota had started in the past, are being followed by manufacturing
companies as also the service industry. As Kasahara sums it up: “The
manufacturing sector owes a lot of current work practices to Toyota.?/font>
1) Mode of
working-1 Shift / 2 Shifts / 3 Shifts
Ans. - 2
of working days / year
250 days / year
3) Loss of
mandays per year (accidents / strikes / unavaoidable
Percentage of bought out parts / components from vendors in
total yearly production output (in monetary value).
generation per year per unit factory area (consolidated or of
major manufacturing unit).
(yen) 244,000 / sq.m.
percentage utilisation of machines (idle time / planned working
Assets employed per employed person.
(yen) 31,900 / person
Percentage of exports in total yearly sales (monetary value).
and development expenditure expressed as percentage of yearly
spent on training and education of employees as percentage of
yearly sales revenue.
Inventory turnover ratio (Inventory-raw material + Finished
goods + Work in progress + Spares.) (base=Sales revenue).
Ans. - About