Taiichi Ohno and the Toyota Production System

Introduction

The Toyota Motor Company is one of the most successful automobile companies in the world. The firm’s prominence in the global automobile industry has originated from the adoption of effective operational practices.  The firm redesigned its mass production system by entrenching the Toyota Production System (TPS), commonly referred to as the lean production system (Black 2007).  Taiichi Ohno is one of the notable architects of the TPS.  Taiichi Ohno's motivation to entrench the TPS was due to insights drawn from the concepts of just-in-time, lean manufacturing, reduction of waste, standardized work, and continuous flow originally formulated by Henry Ford, an American entrepreneur (Strozniak 2001). For example, Ford’s adoption of the concept of continuous flow significantly reduced the effort required to successfully assemble Ford’s Model T by 90% (Towil 2006).

 This underlines the efficacy of Henry Ford’s approach to production. However, Henry Ford revealed that continuous flow was only possible under circumstances of mass production. Thus, the application of Henry Ford’s concepts was characterized by challenges. This gap is underlined by Toresko (2007) who accentuates that even though different manufacturers in the US have applied the TPS to boost performance, most of the firms have improperly applied the TPS. However, Taiichi Ohno in collaboration with Toyota’s technical team developed an approach that contributed to the successful application of Henry Ford’s concepts. For example, Taiichi Ohno successfully designed an approach to achieve continuous flow under low-volume of production (Towil 2006).  This indicates Toyota Company’s optimal application of the concepts stipulated by Henry Ford. Toyota's Production System is based on four main components that include total quality control, just-in-time production, total productive maintenance, and computer-integrated manufacturing.

Purposes and objectives  

This paper entails an analysis of the contribution of the TPS to the company’s astronomical performance. The paper intends to evaluate some aspects that include;

1. Evaluation of the factors that have motivated Toyota Motors to deviate from Henry Ford’s mass production system.

2. Examination of the benefits that Toyota Motors derives from its focus on people as opposed to technical systems.  

3. Analysis of the primary differences between Japanese companies and their Western counterparts about industrial culture and the advantages and challenges related to the adoption and implementation of the TPS.

Literature review

Toyota Motor Corporation has over the years employed the TPS in its operation. This approach has remarkably contributed to improvement in the firm’s performance and long-term sustainability. For example, the firm was slightly impacted by the 1970 oil crisis compared to its competitors (Lander & Liker 2007).  Fujimoto (2012) asserts that the firm has experienced 60 years of uninterrupted profits.  However, the firm was slightly affected by the collapse of the US automobile market and the busting of the US financial bubble in 2009 (Fujimoto 2012).  This indicates that Toyota Motors has succeeded in developing key capabilities that have contributed to the attainment of stable long-term performance despite the rapid changes in the ever-growing competition in the global automobile industry.

Traditionally, most production applications or models were based on high volume and standardized production (Lander & Liker 2007).  Before the adoption of the TPS, Toyota Motors' operations were based on the concept of mass production which was pioneered by Henry Ford. The mass production philosophy entailed the production of limited product lines in large quantities. The rationale of this approach was to maximize economies of scale.   Hill, Jones, and Schilling (2014) assert that the economies of scale arose from ‘spreading the fixed costs involved in setting up the specialized requirement required to stamp body parts and manufacture components over as large production runs as possible’ (p.228).  Yamada (2014) refutes the claim that mass production can lead to the attainment of economies of scale.  In his opinion, Yamada (2014) accentuates that economies of scale can only be achieved through optimal coordination of a firm’s operation activities and employees in different departments and integration of effective management practices as opposed to mass production or expansion of company size.  The mass production system is further based on the integration of task specialization (Cunningham & Wood 2003).  

 Under the TPS, production activities are highly standardized which leads to the attainment of a balanced production system.  Toresko (2007) emphasizes that the lean production system has resulted in improved performance benefits such as efficient delivery, cost reduction, and attainment of high quality.  One of the factors that have contributed to the success of the TPS entails the integration of two main aspects including cost reduction and full utilization of the employees’ capabilities.  Toyota Motors recognizes the importance of employees in achieving long-term sustainability as opposed to over-reliance on the technical aspects. As a result of its focus on employees, Toyota Motors has been able to succeed in entrenching the concepts of learning and continuous improvement, which constitute a fundamental component of the TPS (Liker & Morgan 2006).   

The firm has entrenched the concept of TPS philosophy as one of the core components of its industrial culture. Hellriegel and Slocum (2009) assert that there is a positive correlation between organizational culture and performance.  In their view, Hellriegel and Slocum (2009) affirm that ‘organizational culture will probably be an even more important factor in determining the success or failure of firms during the next decade’ (p.473).  One of the core aspects that Toyota Motors as one of the most renowned Japanese car manufacturers has entrenched in its organizational culture entails the incorporation of teamwork. Contrary to Japanese companies, the operation of Western companies is based on a competitive approach. Hellriegel and Slocum (2009) assert that competition within the workplace limits teamwork because the employees focus on becoming ‘stars’ by employing different mechanisms such as politics.  

Additionally, Liker and Morgan (2006) assert that Japanese employees are expected to offer suggestions and opinions on how to improve their operational efficiency and hence the firm’s overall productivity. This aspect is underlined by the fact that the concept of continuous improvement or ‘kaizen’ is widely recognized and applied by firms in Japan.  Hill (2012) argues that the US companies appreciate employee suggestions, they are mainly perceived as a threat to the top management. Another area of cultural difference between Japanese and US companies is related to inventory management (Liker & Meier 2006). Japanese companies largely emphasize efficiency, which is evidenced by the application of the concepts of just-in-time and minimum number of highly skilled employees. On the other hand, US firms are characterized by the integration of the concepts of just-in-case which emphasis son keeping lots of inventory and resources.

The rationale of the lean production system is to eliminate waste within an organization’s value stream (Lander & Liker 2007). Amongst the notable benefits of lean production entail improvement in product quality, cost reduction, and improvement in product and service delivery (Lander & Liker 2007).    Toyota Motors has entrenched ‘jidoka’, which means build-in quality, as one of the core pillars of the TPS. In actualizing ‘jidoka’, the firm focuses on two main aspects that include the separation of human capital from the machine in the work process and entrenching quality as one of the dimensions of its production process. Monden (1993) asserts that jidoka largely emphasizes on automation of production processes to minimize quality defects. Hill (2012) asserts that ‘integration of the concept of jidoka causes work to stop immediately when a problem occurs so that defective parts are not created’ (p.178). In entrenching the concept of jidoka, Toyota Motors is focused on eliminating quality defects. Despite the automation of the production process, Toyota Motors has recognized the value of human capital.  By automating some of its production processes, the firm can assign employees activities that contribute to value addition hence eliminating monotony.

Discussion and Results

The review of the literature shows that Toyota Motor Corporation's decision to integrate the Toyota Production System was motivated by the need to eliminate the flaws associated with mass production.   Taiichi Ohno challenged Henry Ford’s mass production system based on several issues. First, the mass production system was characterized by long production runs, which led to the creation of massive inventories that were stored in large warehouses (Hill, Jones & Schilling 2014; Liker 2004). Thus, mass production contributed to the incurrence of the high cost of warehousing in addition to tying up capital (Lancaster 2005).  The fact that mass production entailed task specialization significantly reduced the employees’ productivity due to the monotony of undertaking a particular task within the assembly line. Hill, Jones, and Gareth (2014) assert that the repetitive nature of tasks led to laxity amongst employees hence affecting the quality of the final product.

 The mass production system was further characterized by task duplication as a result of extensive division of labor.   For example, the assembly line was characterized by different specialists such as quality inspectors, foremen, and tooling specialists. However, most of the tasks performed by the specialists could be undertaken by the assembly line employees. Based on the TPS, the firm has been able to overcome these challenges. This arises from the fact that the firm has entrenched the concept of Just-In-Time under the TPS approach. Hill (2012) asserts that ‘the JIT concept aims to produce and deliver the right parts, in the right amount, at the right time using minimum necessary resources’ (p.137). Therefore, TPS has enabled the firm to overcome the challenges of overproduction which is inherent in the mass production system. Additionally, the decision to produce the right volume has positively contributed to the identification of possible problems and gaps within its production system. Thus, the firm can undertake the requisite adjustments hence eliminating quality problems.

 Even though Toyota Motors has automated its operations to eliminate quality defects, the firm recognizes the value of employees in ensuring that the problems identified under the concept of ‘jidoka’ are optimally resolved. This outcome is achieved through the inclusion of human capital. Liker and Morgan (2006) assert that ‘the surfacing problems identified under jidoka is only valuable if people working on the process have the tools that are motivated to first contain the problems and then solve them at the root cause’ (p.8). This indicates that the firms recognize the value of human capital in enhancing the effectiveness of the TPS despite automating some of the production processes. The inclusion of human capital in the TPS has enabled Toyota Motors to be successful in undertaking continuous improvement.  This arises from the fact that the firm emphasizes on the importance of creating a continuous and fast flow of information and establishing a link between people and processes. Consequently, the application of the TPS has enabled Toyota Motors to succeed in bringing potential production problems to the surface (Lander & Liker 2007).

Taiichi Ohno noted that it was relatively difficult to meet the customers’ product preferences under the mass production system due to a lack of product diversity. Taiichi Ohno further revealed that the likelihood of quality flaws under the mass system is substantially high. Hill (2012) asserts that Ohno was of the view that ‘if the initial machine settings were wrong, long production runs resulted in the production of a large number of defects’ (p.137). In the course of implementing the TPS, Toyota Motors Corporation focused on achieving four main goals including positioning the firm as a world-class automobile company with the provision of high-quality products (Black & Hunter 2003). The rationale of this move was to promote the level of customer satisfaction.

By employing the TPS, Toyota has succeeded in managing the cost of production and minimizing the lead time required in delivering products to the market. Therefore, one can argue that the adoption of a holistic approach, viz. inclusion of human capital despite the automation of production processes has positively contributed to Toyota’s competitiveness in the global automobile market. Toyota Motors' inclusion of the concept of teamwork in actualizing the TPS approach has enabled the firm to succeed in identifying quality problems within the production system. This arises from the fact that the employees can collaborate in identifying and sharing information on quality across the system.

Conclusion

The analysis shows that Toyota’s need to overcome the quality, cost, and efficiency problems associated with mass production largely motivated the firm to entrench the TPS.  As a result of its commitment to actualizing the TPS, Toyota Motors has been able to successfully overcome the problems associated with mass production. This has been achieved by ensuring that TPS is based on the provision of quality products, inclusion of employees in the production process, elimination of waste, and integration of flexible production standards that is based on the prevailing market demand. The analysis further shows that the integration of an effective organizational culture has significantly improved the effectiveness of the TPS.

Introduction

The Toyota Motor Company is one of the most successful automobile companies in the world. The firm’s prominence in the global automobile industry has originated from the adoption of effective operational practices.  The firm redesigned its mass production system by entrenching the Toyota Production System (TPS), commonly referred to as the lean production system (Black 2007).  Taiichi Ohno is one of the notable architects of the TPS.  Taiichi Ohno's motivation to entrench the TPS was due to insights drawn from the concepts of just-in-time, lean manufacturing, reduction of waste, standardized work, and continuous flow originally formulated by Henry Ford, an American entrepreneur (Strozniak 2001). For example, Ford’s adoption of the concept of continuous flow significantly reduced the effort required to successfully assemble Ford’s Model T by 90% (Towil 2006).

 This underlines the efficacy of Henry Ford’s approach to production. However, Henry Ford revealed that continuous flow was only possible under circumstances of mass production. Thus, the application of Henry Ford’s concepts was characterized by challenges. This gap is underlined by Toresko (2007) who accentuates that even though different manufacturers in the US have applied the TPS to boost performance, most of the firms have improperly applied the TPS. However, Taiichi Ohno in collaboration with Toyota’s technical team developed an approach that contributed to the successful application of Henry Ford’s concepts. For example, Taiichi Ohno successfully designed an approach to achieve continuous flow under low-volume of production (Towil 2006).  This indicates Toyota Company’s optimal application of the concepts stipulated by Henry Ford. Toyota's Production System is based on four main components that include total quality control, just-in-time production, total productive maintenance, and computer-integrated manufacturing.

Purposes and objectives  

This paper entails an analysis of the contribution of the TPS to the company’s astronomical performance. The paper intends to evaluate several aspects including;

1. Evaluation of the factors that have motivated Toyota Motors to deviate from Henry Ford’s mass production system.

2. Examination of the benefits that Toyota Motors derives from its focus on people as opposed to technical systems.  

3. Analysis of the primary differences between Japanese companies and their Western counterparts regarding industrial culture and the advantages and challenges related to the adoption and implementation of the TPS.

Literature review

Toyota Motor Corporation has over the years employed the TPS in its operation. This approach has remarkably contributed to improvement in the firm’s performance and long-term sustainability. For example, the firm was slightly impacted by the 1970 oil crisis compared to its competitors (Lander & Liker 2007).  Fujimoto (2012) asserts that the firm has experienced 60 years of uninterrupted profits.  However, the firm was slightly affected by the collapse of the US automobile market and the busting of the US financial bubble in 2009 (Fujimoto 2012).  This indicates that Toyota Motors has succeeded in developing key capabilities that have contributed to the attainment of stable long-term performance despite the rapid changes in the ever-growing competition in the global automobile industry.

Traditionally, most production applications or models were based on high volume and standardized production (Lander & Liker 2007).  Before the adoption of the TPS, Toyota Motors' operations were based on the concept of mass production which was pioneered by Henry Ford. The mass production philosophy entailed the production of limited product lines in large quantities. The rationale of this approach was to maximize economies of scale.   Hill, Jones, and Schilling (2014) assert that the economies of scale arose from ‘spreading the fixed costs involved in setting up the specialized requirement required to stamp body parts and manufacture components over as large production runs as possible’ (p.228).  Yamada (2014) refutes the claim that mass production can lead to the attainment of economies of scale.  In his opinion, Yamada (2014) accentuates that economies of scale can only be achieved through optimal coordination of a firm’s operation activities and employees in different departments and integration of effective management practices as opposed to mass production or expansion of company size.  The mass production system is further based on the integration of task specialization (Cunningham & Wood 2003).  

 Under the TPS, production activities are highly standardized which leads to the attainment of a balanced production system.  Toresko (2007) emphasizes that the lean production system has resulted in improved performance benefits such as efficient delivery, cost reduction, and attainment of high quality.  One of the factors that have contributed to the success of the TPS entails the integration of two main aspects including cost reduction and full utilization of the employees’ capabilities.  Toyota Motors recognizes the importance of employees in achieving long-term sustainability as opposed to over-reliance on the technical aspects. As a result of its focus on employees, Toyota Motors has been able to succeed in entrenching the concepts of learning and continuous improvement, which constitute a fundamental component of the TPS (Liker & Morgan 2006).   

The firm has entrenched the concept of TPS philosophy as one of the core components of its industrial culture. Hellriegel and Slocum (2009) assert that there is a positive correlation between organizational culture and performance.  In their view, Hellriegel and Slocum (2009) affirm that ‘organizational culture will probably be an even more important factor in determining the success or failure of firms during the next decade’ (p.473).  One of the core aspects that Toyota Motors as one of the most renowned Japanese car manufacturers has entrenched in its organizational culture entails the incorporation of teamwork. Contrary to Japanese companies, the operation of Western companies is based on a competitive approach. Hellriegel and Slocum (2009) assert that competition within the workplace limits teamwork because the employees focus on becoming ‘stars’ by employing different mechanisms such as politics.  

Additionally, Liker and Morgan (2006) assert that Japanese employees are expected to offer suggestions and opinions on how to improve their operational efficiency and hence the firm’s overall productivity. This aspect is underlined by the fact that the concept of continuous improvement or ‘kaizen’ is widely recognized and applied by firms in Japan.  Hill (2012) argues that the US companies appreciate employee suggestions, they are mainly perceived as a threat to the top management. Another area of cultural difference between Japanese and US companies is related to inventory management (Liker & Meier 2006). Japanese companies largely emphasize efficiency, which is evidenced by the application of the concepts of just-in-time and minimum number of highly skilled employees. On the other hand, US firms are characterized by the integration of the concepts of just-in-case which emphasis son keeping lots of inventory and resources.

The rationale of the lean production system is to eliminate waste within an organization’s value stream (Lander & Liker 2007). Amongst the notable benefits of lean production entail improvement in product quality, cost reduction, and improvement in product and service delivery (Lander & Liker 2007).    Toyota Motors has entrenched ‘jidoka’, which means build-in quality, as one of the core pillars of the TPS. In actualizing ‘jidoka’, the firm focuses on two main aspects that include the separation of human capital from the machine in the work process and entrenching quality as one of the dimensions of its production process. Monden (1993) asserts that jidoka largely emphasizes on automation of production processes to minimize quality defects. Hill (2012) asserts that ‘integration of the concept of jidoka causes work to stop immediately when a problem occurs so that defective parts are not created’ (p.178). In entrenching the concept of jidoka, Toyota Motors is focused on eliminating quality defects. Despite the automation of the production process, Toyota Motors has recognized the value of human capital.  By automating some of its production processes, the firm can assign employees activities that contribute to value addition hence eliminating monotony.

Discussion and Results

The review of the literature shows that Toyota Motor Corporation's decision to integrate the Toyota Production System was motivated by the need to eliminate the flaws associated with mass production.   Taiichi Ohno challenged Henry Ford’s mass production system based on several issues. First, the mass production system was characterized by long production runs, which led to the creation of massive inventories that were stored in large warehouses (Hill, Jones & Schilling 2014; Liker 2004). Thus, mass production contributed to the incurrence of the high cost of warehousing in addition to tying up capital (Lancaster 2005).  The fact that mass production entailed task specialization significantly reduced the employees’ productivity due to the monotony of undertaking a particular task within the assembly line. Hill, Jones, and Gareth (2014) assert that the repetitive nature of tasks led to laxity amongst employees hence affecting the quality of the final product.

 The mass production system was further characterized by task duplication as a result of extensive division of labor.   For example, the assembly line was characterized by different specialists such as quality inspectors, foremen, and tooling specialists. However, most of the tasks performed by the specialists could be undertaken by the assembly line employees. Based on the TPS, the firm has been able to overcome these challenges. This arises from the fact that the firm has entrenched the concept of Just-In-Time under the TPS approach. Hill (2012) asserts that ‘the JIT concept aims to produce and deliver the right parts, in the right amount, at the right time using minimum necessary resources’ (p.137). Therefore, TPS has enabled the firm to overcome the challenges of overproduction which is inherent in the mass production system. Additionally, the decision to produce the right volume has positively contributed to the identification of possible problems and gaps within its production system. Thus, the firm can undertake the requisite adjustments hence eliminating quality problems.

 Even though Toyota Motors has automated its operations to eliminate quality defects, the firm recognizes the value of employees in ensuring that the problems identified under the concept of ‘jidoka’ are optimally resolved. This outcome is achieved through the inclusion of human capital. Liker and Morgan (2006) assert that ‘the surfacing problems identified under jidoka is only valuable if people working on the process have the tools that are motivated to first contain the problems and then solve them at the root cause’ (p.8). This indicates that the firms recognize the value of human capital in enhancing the effectiveness of the TPS in spite of automating some of the production processes. The inclusion of human capital in the TPS has enabled Toyota Motors to be successful in undertaking continuous improvement.  This arises from the fact that the firm emphasizes on the importance of creating a continuous and fast flow of information and establishing a link between people and processes. Consequently, the application of the TPS has enabled Toyota Motors to succeed in bringing potential production problems to the surface (Lander & Liker 2007).

Taiichi Ohno noted that it was relatively difficult to meet the customers’ product preferences under the mass production system due to a lack of product diversity. Taiichi Ohno further revealed that the likelihood of quality flaws under the mass system is substantially high. Hill (2012) asserts that Ohno was of the view that ‘if the initial machine settings were wrong, long production runs resulted in the production of a large number of defects’ (p.137). In the course of implementing the TPS, Toyota Motors Corporation focused on achieving four main goals including positioning the firm as a world-class automobile company with the provision of high-quality products (Black & Hunter 2003). The rationale of this move was to promote the level of customer satisfaction.

By employing the TPS, Toyota has succeeded in managing the cost of production and minimizing the lead time required in delivering products to the market. Therefore, one can argue that the adoption of a holistic approach, viz. inclusion of human capital despite automation of production processes has positively contributed to Toyota’s competitiveness in the global automobile market. Toyota Motors' inclusion of the concept of teamwork in actualizing the TPS approach has enabled the firm to succeed in identifying quality problems within the production system. This arises from the fact that the employees can collaborate in identifying and sharing information on quality across the system.

Conclusion

The analysis shows that Toyota’s need to overcome the quality, cost, and efficiency problems associated with mass production largely motivated the firm to entrench the TPS.  As a result of its commitment to actualizing the TPS, Toyota Motors has been able to successfully overcome the problems associated with mass production. This has been achieved by ensuring that TPS is based on the provision of quality products, inclusion of employees in the production process, elimination of waste, and integration of flexible production standards that is based on the prevailing market demand. The analysis further shows that the integration of an effective organizational culture has significantly improved the effectiveness of the TPS.

References

Black, J & Hunter, S 2003, Lean manufacturing systems and cell design, SME: Dearborn, MI.

Black, J 2007, ‘Design rules for implementing the Toyota Production System’, International Journal of Production Research, vol. 45, no. 16, pp. 3639-3664.

Cunningham, J & Wood, M 2003, Henry Ford; critical evaluation in business and management, Taylor & Francis, London.

Fujimoto, T 2012, ‘The evolution of production systems exploring the sources of Toyota’s competitiveness’, Annals of Business Administrative Science, vol. 11, pp. 25-44.

Hellriegel, D & Slocum, J 2009, Organizational behavior, Cengage Learning, Mason, Ohio.

Hill, 2012, The Encyclopedia of operations management; a field manual and glossary of operations management terms and concepts, FT Press, Upper Saddle River, NJ.

Hill, C & Jones, G. 2014, Strategic management; theory and cases; an integrated approach, South-Western Australia.

Hill, C, Schilling, M & Jones, G. 2014, Strategic management; theory and cases; an integrated approach, Cengage Learning, New York.

Lancaster, G 2005,  Research methods in management: a concise introduction to management and business consultancy, Elsevier Butterworth-Heinemann, Oxford, UK.

Lander, E & Liker, J 2007, ‘The Toyota Production System and art: making customized and creative products the Toyota Way’, International Journal of Production Research, vol. 45, no. 16, pp. 3681-3698.

Liker, J & Meier, D 2006,  The Toyota way field book: a practical guide for implementing Toyota’s 4ps, McGraw-Hill, New York, NY.

Liker, J & Morgan, J 2006, ‘The Toyota way in services; the case of lean product development’, Academy of Management Perspectives, vol. 5, pp. 6-20.

Liker, J 2004, The Toyota way: 14 management principles from the world’s greatest manufacturer, McGraw-Hill, New York, NY.

Monden, Y 1993,   Toyota Production System; and integrated approach to Just-In-Time, Springer, Boston, MA.