Ten Common Misconceptions About Toyota

Story update 10/22/2009: We added a reference to Toyota Kata in the first paragraph.

The tools and techniques of what is commonly called “lean manufacturing” have their origin in the Toyota Production System (TPS). While the lean movement deserves much credit for popularizing these tools and techniques, a number of misconceptions appear to have developed about how Toyota itself actually practices continuous improvement. This article looks at some of these misconceptions. Readers should note that this article is not meant to be a definitive study of Toyota, nor is it meant to supplant the excellently detailed analyses of Toyota in the books, The Toyota Way, by Jeffrey K. Liker (McGraw-Hill, 2004), or Chasing the Rabbit, by Steven J. Spear (McGraw-Hill, 2009) and others. Rather, it offers the author’s own personal perspective and insights on Toyota, drawing from observation and study of Toyota production and distribution operations, supplemented by interviews with Toyota employees, managers, and suppliers held over the years. Some of the thoughts expressed below also find deeper expression and treatment in Mike Rother’s excellent new book, Toyota Kata [1] (McGraw-Hill, 2009), and readers are referred to that book for a full exposition of Toyota’s thinking and behaviors.

First, let it be said at the outset that the word “lean” is not one that is often seen or heard at Toyota. Rather than applying lean tools and techniques, Toyota focuses instead on establishing and propagating a basic pattern of thinking and behavior which makes the tools of TPS effective. Toyota’s basic pattern for improving a process is based on a simple three-part model:

1. Understanding the current condition
2. Developing and defining a target condition
3. Understanding and tackling problems which need to be overcome to move from the current condition to the target condition

This model has learning at its heart. Within the context of this model, at Toyota the tools and techniques of lean only find life and expression as countermeasures or actions that need to be taken to solve problems in the current condition. This approach is in contradistinction to those companies who are applying lean tools first and solving problems second.

So, without further ado, let’s look at some well-held misconceptions about Toyota and how the company operates and improves its processes.

Misconception No. 1: Toyota hunts for waste in all its processes.

While the concept of “the seven wastes” is still well understood and practiced at Toyota, searching for waste is not the primary means by which the company improves its processes. Rather, as I noted in the introduction to this article, Toyota uses a basic paradigm of first understanding the current condition of any process it wishes to improve, and then develops a target condition for the process—a description of how the process should operate. With the current and target conditions understood and defined, problems and obstacles that prevent the target condition from being achieved are identified and then moved into problem solving. During the problem solving effort, waste is identified and then addressed through appropriate countermeasures. The key focus is on moving from the current condition toward the target condition by understanding and eliminating problems and obstacles, not necessarily by trying to identify waste as the first step: a subtle difference that is not often highlighted in the lean press.

In addition, while the lean press has devoted much attention to the waste of nonvalue-adding activity, or muda as it is known in Japanese, Toyota also places equal emphasis on identifying and eliminating the other two forms of waste that may be present in a current condition: mura (unevenness) and muri (strain or overburden).

Misconception No. 2: Toyota operates a just-in-time system.

This misconception probably had its origins back in the 1960s when Japanese manufacturing was associated with just-in-time (JIT) inventories. In fact, Toyota is not so much focused on JIT production as they are on creating a continuous and uninterrupted flow in operations. Thus, for many of their processes, they are continually striving toward a target condition of single or one-piece flow, sometimes known as “make one, move one.” Where this can be achieved, work-in-process inventories are naturally reduced and velocity is drastically increased as a result of the single-piece transfer batch size. Where continuous flow cannot be achieved, pull systems are used, with work being pulled forward by downstream resources at a pace synchronized with their rate of production The use of continuous flow and pull principles may give the appearance of JIT, but this is an outcome, not a desired state.

In all operations, Toyota uses an approach to production where it strives to supply each process with the required items, in the required quantity, at the required time. Thus, for Toyota, timeliness alone is not enough, and the company strives for just-on-time as opposed to just-in-time production.

Misconception No. 3: 5S is the basis of Toyota’s world-class processes.

Perhaps no TPS tool or technique has been so promoted as a stand-alone tool as much as 5S (sort, set in order, shine, standardize, and sustain). For Toyota, 5S—and other lean tools such as single minute exchange of dies (SMED), total productive maintenance (TPM), and so forth—is a countermeasure, not a target condition to be pursued in its own right. Pursuing 5S as anything other than a countermeasure to remove problems in a current process condition, and move toward an improved future state, represents a profound confusion between target conditions and countermeasures.

As noted in Misconception No. 1, a target condition is a description of how a process should operate in its ideal state. Toyota manages all processes by first understanding their current condition, developing a target condition, and then identifying the problems and obstacles that need to be overcome to move from the current condition to the target condition. Countermeasures are the actions that need to be taken to reduce and eliminate problems in the current state. For some processes, this may mean that 5S needs to be implemented to address problems in workplace layout, organization, safety, and cleanliness. But Toyota never pursues 5S as a stand-alone tool to be used apart from its focused use as an appropriate countermeasure.

Misconception No. 4: Toyota processes are fully standardized and never degrade.

While Toyota does believe in and practice creating standardized processes, they also realize that even a standardized process will deteriorate over time. This happens for a variety of reasons—people forget to follow the standardized work procedures, the optimal operating conditions decline over time, etc. Thus, Toyota takes the view that if a process is not improving, then it is impairing; there is no state in between that can be indefinitely maintained, even with standardization in place. Because all processes will regress, Toyota always insists on moving toward the next target condition once a previously-set target condition has been achieved and the new condition stabilized. Toyota managers will always restandardize a process after every improvement, but they will not be content to rest there, since they know the new condition will deteriorate unless daily improvements are made.

Misconception No. 5: Toyota’s shop floor is linked to and controlled by a powerful IT system.

Toyota does not connect its shop floor to an IT system for direct control and feedback purposes. Toyota uses IT systems with discretion to support its operations, primarily using such systems in the areas of supplier interface and control, and outbound distribution logistics. For example, Toyota may use material requirements planning logic in some facilities, but it may only use this technology to schedule raw material from suppliers onto the factory floor, not to schedule or control shop-floor execution routines or operations.

Similarly, within its core plant operations, Toyota factory managers do not rely on accounting, financial, or operational data supplied from an IT system to make their decisions. Rather, Toyota personnel rely on first-hand knowledge gleaned from “going and seeing” the actual conditions in a process. Improvements are driven from being directly in touch with a process, not from data provided from computers.

Misconception No. 6: Toyota uses one-piece flow in all processes.

While one-piece flow represents an ideal target condition for Toyota, it remains practical about it and never tries to force it where it cannot currently be done. For example, Toyota would like to flow, one piece at a time, out of stamping and onto the line, but presently it is not able to achieve a one-by-one flow in stamping, so small batch production with a buffer remains the rule there. However, despite not being able to operate some processes in a continuous flow, Toyota still moves aggressively and constantly to reduce the batch sizes and buffers in these processes and move closer to its ideal of continuous flow.

Misconception No. 7: Empowered operators are the source of most improvements at Toyota.

While Toyota does encourage all production associates to become involved in kaizen thinking and practice, probably less than 20 percent of Toyota’s total improvement effort is carried out by production associates. This makes sense when you consider that a major focus for Toyota is to operate any process at the planned cycle time and with the correct number of operators. Thus, in most Toyota processes, operators are fully utilized through work balancing and have little headroom for conducting process improvements because, were they to do so, their process would stop.

This does not mean that Toyota production associates have no responsibility for process improvement. All production associates are encouraged to bring forward ideas for improvement, and many production associates volunteer for quality circle activities held off shift to make improvements. These type of activities, however, only account for a relatively small portion of Toyota’s overall process improvement effort.

To support widespread problem solving and continuous improvement, Toyota structures its resources differently than most other companies. Toyota does not use autonomous, self-directed work teams. Rather, small teams of production associates work under the guidance of a team leader. Unlike production associates, the team leader does not perform much production work and his or her primary responsibility is to monitor the process, ensure that standard work is being followed, and coach and mentor the work team in improving the process.

Team leaders receive special training in process improvement and problem solving, and are the first line of defense when abnormal conditions arise. Team leaders and their teams, in turn, report to a group leader, and it is team leaders and group leaders, supported by specialist personnel such as manufacturing and process engineers, who carry out the majority of process improvements as part of their job function. Thus, the team leader serves to orchestrate problem solving by bringing appropriate resources to bear on abnormal conditions and support the work team in its ongoing efforts to improve the process. This structure for response and intervention to abnormal conditions enables fast cycles of improvement to be undertaken, with minimal adverse impact on normal production operations.

For Toyota, form (or structure) never drives function, rather, it is the reverse. That is, the company never lets its organizational structure and form constrain the ongoing problem solving; and learning that is what is needed to enable and support the key function of quality. So, as if to underscore the continuous in continuous improvement, Toyota organizes and structures its resources appropriately to build quality into processes by making fast and numerous cycles of improvement.

Misconception No. 8: Toyota does kaizen better than anyone else.

Contrary to popular opinion, Toyota does not “practice” or “do” kaizen. Rather, kaizen at Toyota is an outcome—the result of a culture and context created by the company’s leadership, which emphasizes continuous problem solving and learning. This culture of continuous problem solving and learning is how Toyota develops people, perhaps its greatest source of organizational strength.

In this respect, kaizen is not so much about what you do, it’s about what you don’t do. Working around problems and assigning blame for abnormal conditions are common behaviors that do not establish the proper context for kaizen. Toyota leadership takes great care to ensure that the fundamental conditions which are necessary for kaizen to flourish are established and sustained. This is different than doing kaizen blitzes and the like. While these types of events can yield results, and even Toyota itself has formal kaizen activities, the company puts more effort in creating the conditions for kaizen rather than on the events themselves. As former Toyota executive Teruyuki Minoura was wont to say, “An environment where people have to think brings with it wisdom, and this wisdom brings with it kaizen.”[1] [2]

In this sense, kaizen as understood and practiced by Toyota, addresses the critical issue of how contribution and cooperation is elicited from all members of an organization—not just specialists or project teams tasked with solving problems or improving processes. This is the embodiment of what Chester I. Barnard held to be the key element for assuring the life and vitality of an organization: “The life of an organization depends on its ability to secure and maintain the personal contributions of energy… necessary to effect its purposes.”[2] [3]

Misconception No. 9: A3 reports are the secret of Toyota’s superior problem solving

The Toyota A3 report mirrors the plan-do-check-act (PDCA) cycle and is used to document the PDCA improvement cycle applied to a process. It is called A3, because it fits on single size sheet of A3 size (11 in. x 17 in.) paper. In effect, the A3 document is a storyboard and captures the thinking used in the various stages of a problem solving as it moves through the PDCA cycle. Due to its limited space and brevity, the A3 document forces those performing the improvement to distill and present their thinking and learning with the utmost clarity and precision.

Toyota is less concerned with how an A3 document looks than with the thinking that lies behind it. Toyota mentors want to see that the basic improvement pattern of current condition problems/obstacles vs. target condition has been truly understood and applied by those making the improvements. This is in contrast to some companies that have copied the A3 process and have turned it into a bureaucratic exercise whose main aim is to produce reams of A3 reports. At Toyota, the emphasis is never on completing an A3 report—rather, the objective is to go through the iterative, step-by-step thinking process that is necessary to solve the problem at hand.

Misconception No. 10: Toyota assembles vehicles on its production line in the order in which customers buy them.

This misconception represents a profound misunderstanding of the concept of production leveling, or heijunka, as Toyota calls it. Toyota runs its assembly operations by leveling the mix and quantity of vehicles that need to be built. When a customer’s purchase, or a pull, removes a car from the finished goods inventories, a kanban signal to replenish the inventory is not sent directly to the assembly line. Rather, the kanban are routed into a sorting process which rearranges customer orders into a predefined sequence that specifies the type and quantity of vehicles to be built. The production pattern developed by the heijunka process represents a target condition for Toyota—a level production schedule to be achieved that allows the company to better serve a variety of customers within a short lead time, and to eliminate any unevenness in assembly line operations.

[1] [4]Teriyuki Minoura, Automotive Parts System Solution Fair, Tokyo, 2003
[2]  [5] The Functions of the Executive, by Chester I. Barnard (Boston: Harvard University Press, 1968) p. 92. [First publication—Harvard College 1938]