Lean Manufacturing Made Toyota the Success Story it is Today

Investing in our Economy

By:Laquita Harris

Issue:Spring 2007 : Features


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It is only by capitalizing on employees’ creativity that Toyota can continuously improve.


One of the world’s great manufacturing success stories is the Toyota Production System (TPS) — the philosophy which organizes manufacturing and logistics at Toyota, including its interaction with suppliers and customers.

TPS is known more generically as “lean manufacturing.” It was largely created by Toyota founder Sakichi Toyoda, his son Kiichiro Toyoda and Toyota chief engineer Taiichi Ohno. The primary goal of TPS is to eliminate waste, called “muda.” The “seven wastes” is a tool to further categorize “muda.”

To eliminate waste, it is important to understand exactly what waste is and where it exists. While products significantly differ between factories, the typical wastes found in manufacturing environments are quite similar. For each waste, there is a strategy to reduce or eliminate its effect on a company, thereby improving overall performance and quality.

The seven wastes are:

  1. Overproduction — Simply put, overproduction is to manufacture an item before it is actually required. Overproduction is highly costly to a manufacturing plant because it prohibits the smooth flow of materials and actually degrades quality and productivity. The Toyota Production System is also sometimes referred to as “Just-In-Time” manufacturing because every item is made just as it is needed. Overproduction may create excessive lead times, result in high storage costs and make it difficult to detect defects. The simple solution to overproduction is turning off the tap; this requires a lot of courage because the problems that overproduction is hiding will be revealed. The concept is to schedule and produce only what can be immediately sold or shipped.
  2. Waiting — Whenever goods are not moving or being processed, the waste of waiting occurs. Much of a product’s lead time is tied up in waiting for the next operation; this is usually because material flow is poor, production runs are too long and distances between work centers are too great. Linking processes together so that one feeds directly into the next can dramatically reduce waiting.
  3. Transporting — Transporting products between processes is a cost incursion which adds no value to the product. Excessive movement and handling cause damage and are an opportunity for quality to deteriorate. Transportation can be difficult to reduce due to the perceived costs of moving equipment and processes closer together.
  4. Inappropriate Processing — Many organizations use expensive high precision equipment where simpler tools would be sufficient. Toyota is famous for its use of low-cost automation, combined with immaculately maintained machines. Investing in smaller, more flexible equipment where possible will greatly reduce the waste of inappropriate processing.
  5. Unnecessary Inventory — Excess inventory increases lead times, consumes productive floor space, delays the identification of problems and inhibits communication.
  6. Unnecessary/Excess Motion — This waste is related to ergonomics and is seen in all instances of bending, stretching, walking, lifting and reaching. These are also health and safety issues, which in today’s litigious society are becoming more of a problem for organizations.
  7. Defects — Rework or scrap have a direct impact to the bottom line and can result in a tremendous cost to organizations.
  8. The first step in achieving the goal of becoming a lean manufacturer is to identify and attack the seven wastes. As Toyota and other world-class organizations have come to realize, customers will pay for value-added work, but never for waste.

    Toyota has long been recognized as the automotive industry leader in manufacturing and production. This system, more than any other part of the company, is responsible for having made Toyota the company it is today.

    It’s ironic that Toyota got its inspiration for the production system in the United States. This occurred when a delegation from Toyota visited the United States to study its commercial enterprises. They first got inspiration for their production system at an American supermarket — a Piggly Wiggly, to be precise. They saw the value in the fact that the supermarket only reordered and restocked goods once those items had been bought by customers.

    Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold to a level that its employees would need for a small period of time, and then subsequently reorder. This is highly representative of a Just-In-Time inventory system.

    An overall objective is to limit resources used in the manufacturing system to only those needed. There are six other objectives that are a key to obtaining the overall objective.

    First — Optimize each individual step of the manufacturing system. In other words, make each part as efficient as possible to get the most from the least.

    Second — Make a product with no flaws or defects. This ensures that each part of the production line will go as planned.

    Third — Reduce the manufacturing cost. The cheaper it is to make the product the larger the profit for the company.

    Fourth — Make a product that is demanded by consumers. If there is no demand then there is only money lost.

    Fifth — There needs to be flexibility in the system. Things will not always go as planned and the system must be flexible enough that it can be modified easily.

    Sixth — There needs to be a strong and reliable relationship between customers and suppliers. Since Just-In-Time manufacturing means there is virtually no extra stock or materials on hand, companies need to rely on each other to be reliable and on time.

    While having low inventory levels is certainly a key component to the Toyota Production System, just as important are the simple and low-tech fundamental pillars of the system — strict adherence to procedures, constant improvement (called “kaizen”), getting to the root of problems and respect for line workers.

    Toyota officials say the key to the system is that it taps the knowledge and insights of team members while providing them with a lot of training and responsibility. It is only by capitalizing on employees’ creativity that Toyota can continuously improve.

    The fact remains that in manufacturing some jobs are dangerous or difficult. The Toyota Production System reduces waste by focusing on “reducing difficult jobs.”

    Difficult jobs are identified as those tasks that require special skills from team members. Those requiring special skills cause variation and inconsistent work resulting in safety or quality issues.

    All jobs are ranked in three categories — green, yellow and red. The goal is to improve jobs to the green category which means the difficulty has been eliminated.

    Some of these kaizens (improvements) have been achieved through simple process improvements, such as moving assembly tools to a proper location. Other processes – such as loading raw material — have required utilization of robots to eliminate the difficult job altogether.

    Simply put: Advanced flexible manufacturing is having a workforce that’s trained and able to compete in a high-technology economy, using “flexible manufacturing” techniques that take advantage of computer and robotics technology to respond instantly to changing needs.

    Clearly, Toyota is doing something right. As any business leader knows, success does not happen by accident. It is the result of commitment, passion and the pursuit of excellence.