Instituto Tecnologico y de Estudios Superiores de Monterrey Campus Santa Fe Manufacturing Strategies (IN3016) Profesor: Dra. Maria Teresa Del Carmen Ibarra Santa Ana Carlos Agami Zaga A01014834 Reading Report: The Machine That Changed The World Article Report: “The Contradictions That Drive Toyota’s Success” Introduction The book in question is the presentation of a 5 year study made by a team of specialists of the Massachusetts Institute of Technology through the International Motor Vehicle Program, which pursued to find an outlook on this world transcendent industry which causes considerable impacts on the countries development.
The study was conducted with the aid of automobile companies which not only provided in the whole 5 million dollars for the researches to be done but gave their facilities and opened up their operations and intellectual assets to the IMVP team because they were really interested in the results that may come from the program. Summary This book, by which Daniel Roos, Daniel T.
Jones and James P. Womack, and their team of specialists in many areas analyze the differences in the automobile industry in North America, Europe and Japan and compare their practices in order to find the most efficient ones as well as communicate to the world the, so named by them, lean production that may be applied to any industry.
Initially the authors make a little bit of history on the car producing development which starts in the city of Paris where the company P & L (Panhard et Levassor) devoted its operations to the production of fully customized cars for each customer and his preferences, creating each automobile separately in a craftsmanship based system. This production strategy had important problems in what relates to quality and efficiency, but represents the main base for the development of mass production.
The ideologies of Henry Ford which pursued the minimization of costs in a automobile production system through volume producing of standardized products in assembly lines, with parts that are consistently interchangeable and easy to attach to each other. The whole system he created was owned by him and his family in a pursuit of more control of the total operation. In the mass production system set-up times were reduced substantially through the utilization of single purposed machines, which even though occupied a lot of space and required more capital investment, ermitted low trained employees to load them and operate them easily. The product for this mass production system was also directed to mass thus be limited to standardized car models, which were inspected jus before being sent to the market in the end of the line. In what refers to management of the work force to meet the market demand the mass production systems considered the workers as an interchangeable part, so when they are not needed they can be released with no consequences for the company, apparently.
In Japan, where the mindset is very different naturally from the Western cultures, in 1950 Eiji Toyoda, then Toyota’s CEO, return from a voyage to the Detroit motor companies triggered the begin of the development of the Toyota Production System led by Taichi Ohno. The implementing of mass production in Japan was not feasible due to many situational circumstances of the moment and the place like the market which needed a wide variety of cars and was not as easy to satisfy through the production of a mass model, as well as the lack of spaces and capital like those available in North America.
These facts caused Toyota to think deeper and develop a more suitable and success tending system. A basic example of the principles of Toyota Production System that were developed by Taichi Ohno is the stamping process and all of the activities surrounding it. In the mass production system considering the high demand rates and the high cost of changing the dies of a press to produce a different model the decision was to maintain a certain model of the longest time possible, months or even years.
However this was not feasible in Japan due to a much smaller demand rate and less available space, so Taichi Ohno devoted himself to the design and creation a more intelligent dies system in which the changeover times were reduced substantially thus permitting the more frequent change of model in production, the smaller batches and an important reduction in production, inventory and work in progress costs.
In lean production systems the whole operation in every aspect is “pulled” by the customer demand, permitting the reduction of inventories in all of its types, thus the operations must be very precise and specific to allow a satisfaction of customer needs. Considering that any production process may have problems or not expected obstacles one of the main assets of the Toyota Production System is the creation of quality on the first place and the improvement of the system to prevent in a higher level each time the presenting of mistakes that cause collapsing of the system.
In Toyota the work force is the main tool for problem solving, which makes the process each time more robust and firm, and because of that the employees are taught in the application of problem solving principles and techniques but not only on an ideological basis but also with concrete and practical means to apply them such as the implementation of a rope in each process step that allows any worker to stop the line whenever he finds a mistake or problem and have the attention of his team leader immediately.
This practice in the beginning makes the production line to be stopped continuously at the same time it increases each time the workers abilities for identification and tracking of problems to its root cause, thus giving the line the skills to develop intrinsically with the work of the most specialized and experienced in the job: the employees. Considering that the work force is the mean by which the company grows each day, Toyota has a particular way of dealing the relations with it.
The policy for human resources at Toyota considers first of all that no worker would be fired due to market contractions and that the wages must be proportional to the seniority of the employee with the company. Besides, the employee receives bonus payments in terms of company profitability. With these means Toyota creates a community with its workers and provides them of responsibility and ownership of the processes they do habitually.
The career ladder in Toyota is not just a vertical way towards direction, which in other companies frustrates employees when their climbing opportunities are limited by the companies necessities, is considers an horizontal development in which every distinguished collaborator gets the opportunity to work in many aspects of the company achieve higher personal satisfaction through the continuous growing of his/her knowledge and problem solving skills.
In what refers to product procurement Toyota utilizes a system that considerably reduces its paperwork and administrative costs: it creates tiers levels of suppliers each one of them responsible for the proving of a specific part of component of the car. For example the first tier suppliers take responsibility of buying all the components required for the assembly of a particular part of the final product, assembling them and providing the final assembly plant of finished goods to be installed in the car.
Component procurement in lean is very different to mass production systems where the big companies due to their high level of importance and their domination of the market have the power to bargain its suppliers to the least, obligating them to compete between them to provide the assembler of a low cost product. In mass production systems the assembling companies and their suppliers see each other as enemies and do not permit the other organization any access to information of how they do things in their facilities, thus limiting completely the growth due to collaboration.
In lean companies collaborate to grow and develop together, they consider each other as partners permitting the total access to information on costs, operation, strategy among other aspects. This level of cooperation permits companies to even share personnel to it supplier firms. Knowing that the assembly companies share will share a destiny with its suppliers the Toyota Production System motivates the diversification of the market of their suppliers to other industries to increase their profitability.
In what refers to pricing the lean production systems approach is to determine in terms of the target market price what should be the costs for each one of the parts and manufacturing processes. In this aspect, considering that Toyota wants its commercial partners to earn more and grow, it has a system in which any reduction of the costs made by improvements to the system in the supplier operation should not affect their final price to the assembler and thus give them the economical benefit of their performance upgrade.
Another aspect in which lean companies collaborate with their suppliers it’s the product design and engineering, leaving them an important percentage of total engineering time and using a system that instead of giving them the specification of what’s needed for a part or subassembly asks them for components that satisfy certain performance indicators.
The new product design and engineering in lean production is made by teams conformed by collaborators who are not only specialized in a determined aspect of the automobile but also know have worked in all of the other areas and have important team working skills that are the base for effective product development.
In contrast to mass production where product engineering is done in a linear way in which each area provides the next one of the work related to it, in lean production product engineering is concurrent with projects that are created with a simultaneous work of the involved areas. All the efforts for product design in lean are orchestrated by the shusa, large project leader, who is in charge of the coordination of all the team’s skills to make a “… wonderfully complex manufactured product…”. (Womack et al. , 1990, p. 13) In the teams created for product design in lean production systems the members are evaluated by their work on the development of the product, thus resolving the traditional mass production problem in product design teams where the members belong to the mentioned group as well as to their original working area and are evaluated by the work done in the latter thus limiting their effort in the design project. One of the most important concepts of lean, presented in the book in question, is the approach on value adding activities, which are those for which a customer is willing to pay for.
Analyzing mass production systems the IMVP researchers realized that there were many people working in the plant who were no adding any value to the product, for example, people devoted to cleaning or inspection. In lean production systems multi skilled workers must be able do all of the tasks to be performed in their department, having a team leader that, instead of just “supervising the work” has the capacity and responsibility to act whenever a team member is missing and substitute him as well as to help the team to identify and realize problems that may be presented.
The motivation aspect in a lean production system is another aspect discussed in the book. The comparison between a mass production worker motivation and that a lean production worker is made. While the first one is going through the motions with his head down and mind somewhere else, the second one must be alert to take initiative and responsibility in the continuous improvement of the system, which requires its full attention to succeed in its objective due to the lack of inventory buffers in lean.
All the employees at a lean production system, no matter what their professional origin or formation is start their career “… in a very interesting way at many of the Japanese lean producers. They assemble cars. ” (Womack, 1990, p. 129). The collaborators when begin working at the companies roll through its various areas considering assembly, marketing and the various activities involved in designing the car. This gives them a holistic approach of the operations of the company to be considered for their everyday work.
The problem solving approach of the lean producers helps them to convert the problematic situations into opportunities while using the restrictions and limitations of a certain situation as the root to creating new work methods and products which then become a competitive advantage. The practitioners of lean production are very focused on the pursuit of production smoothing that permits the continuous flow of work through the production line. This concept refers to keeping as constant as possible the volume of products that the assembler manufactures.
In the reviewed book it is also presented and analyzed the way lean production systems approach the contact with customers and dealerships in contrast to the way mass producers do. The latter are used to sending to the dealer the cars “they want them to sell” and having a more than sixty days inventory in each one of the dealers, while having in occasions to push products into the dealerships through obligatory contracts that limit the best selling products acquiring with the amount of the low flow products.
The lean systems base all their success in the market on the constant and near contact with their customers, who are the trigger for the production and logistic processes required to satisfy their needs. In lean dealerships the only inventory that is held are the exhibition cars and the selling team acts exactly as one working together to achieve the sales objectives as a whole.
With this last policy lean systems avoid the robbing of customers between sales executives. Another aspect to be analyzed and admired of the lean production systems is their aggressive sales process which contemplates the management of relationships with customers even though they’re not even interested in buying a car at a determined moment. They keep a record on each household’s needs and characteristics and keep a very close contact with the customers.
Point of view The mindset that the lean production systems state in their managers, team leader and general workers are basic fundamental roots that if are well implemented and utilized can provide important benefits to an organization on what refers to it productivity and business practices towards many improvements in concrete numeric indicators such as costs, revenues, and profits as well personal realization and satisfaction through the achieving of goals and skills and abilities development throughout all the organization.
I believe that the fundamental root of the whole system is the culture of cooperation and lack of procrastination of problems and situations that the Japanese have in their blood from ancient time’s wisdom. Probably the capitalism and all the situations it has carried to society throughout the world, specially the Western world has changed the culture of the people towards a more egocentric and vain perspective of life which affects all of its aspects, including the way we work, in all levels of business and roles.
It is impressive when we understand how Japanese and the lean producers in the world have focused their attention only on the value adding activities and have succeeded in providing the customer of much better products and services. I consider that we should not disrespect o underrate the achievements made by previous production philosophies such as mass production, created by Henry Ford. I believe that each one of the strategies implemented in history has been the base for the next one and has achieved an important and transcendent advance in comparison to the previous systems.
I find myself very interesting the way in which lean production systems handle and plan their employees career path and ladder by permitting them growing in the same concrete role they perform through the development of their skills and the continuous acquiring of knowledge by which they can also achieve their personal satisfaction and motivation. The handling of wages in terms of the seniority of the employees provides a considerable level of importance to company loyalty.
I believe that the roe of team leaders in lean, in contrast to the one we are accustomed to I Western cultures, is a real humble enhancer of the productivity of the group, by being a real support to its operations and really adding value to it. The benefits of having a constant workflow of products in the production line can be determined by the fundamental concepts for Heijunka of lean and throughout the aggressive selling strategies of the system lean producers can handle their demand level to keep it in a steady state as well as having a vast flexibility with prices due to their efficient production system.
Application to professional life All the philosophies on which the Toyota Production System is based can be utilized in the modern professional world in many industries when the implementer comprehends fully their root and reason for appearance as well as the effect it has on the specific task it tackles.
For the application of the key concepts of “The Machine That Changed The World” in our country the path is specially challenging due to the actual mindsets and culture Mexico and its people which sometimes perceive work as an obligation and do not give to it their whole effort and creativity, as well as it is sometimes not possible to do it due to a lack of opportunity provided by managers and directors.
I’m sure that, for example, the basic concepts of procurement and relations with suppliers are an amazing fundamental that can provide any organization and its business partners of a much efficient relation in which all the involved win in productivity in the normal operation which also provides them of available energy to improve the system and their relation instead of being focused on seeing how can I “win” the other company?
Also I consider that the customer relationship management is a jewel to be utilized for assuring their satisfaction and keeping them close to the company, obviously with the goal of becoming their choice anytime they require any of services/products that the company sells. Being so close to the customer all the time to comprehend their actual status and necessities keeps the company in focus of the activities and operations it should do to achieve better performance in its main objective: satisfy its consumers.
Relation to previously acquired knowledge Most of the basic concepts that we have been analyzing and comprehending in the classroom and through many of the article reviews we’ve done so far appear on the book in question in a more concrete and applied way, that shows how they were implemented in reality and what were the benefits and impact of their use in a concrete numerical way, which ratify much more to us, from a deeper perspective the important uses of this production system bases and practices.
Perceiving the actual application in concrete activities of each of the main principles of lean helps us to comprehend better their goals and effects as well as the details that have to be considered to apply principles to reality where there is resistance of the systems and its surroundings, for example the employees accustomed to a different system or the market which has uncontrollable properties and behavior.
Conclusions Having read this book and confronting it with the knowledge seen in class has permitted me to comprehend the development of these production and management strategies from a higher point of view considering their concrete application and understanding that even though we as humanity have advanced a lot in terms of productivity, cost efficiency and management and business practices we are, as Toyota Production System states, to be constantly improving and pursuing new ways of working that surely will beat the performance of actual systems.
It is very important to understand the fundamentals of each one of the theories and philosophies on lean in order to be able to apply them to the particular industry in which we will or already are developing nowadays or in the future remembering that none of them is a recipe and to apply it a vast and extensive analysis must be made. Sources of information Womack, James P. , Daniel T. Jones, and Daniel Roos. The Machine That Changed the World: Based on the Massachusetts Institute of Technology 5-million Dollar 5-year Study on the Future of the Automobile. New York: Rawson Associates, 1990.