Nobu Kawada: A representative misunderstanding of the Toyota production method (lean manufacturing) by Chinese companies

Introduction: Toyota Production Method (TPS), as a very successful (arguably the most successful) production organization in the manufacturing industry, has long attracted the attention of the world's leading enterprises in the industry, and then developed into Lean Production. However, the understanding of TPS, more than twenty years later, is still caught in the misunderstanding of over-evaluation and over-evaluation. This article specially excerpts four more representative misconceptions of Professor Nobu Kawada, a Japanese TPS research expert 5 years ago, hoping to help us in the manufacturing industry understand TPS from more perspectives.

Myth 01

Myth: TPS is a very special and complex production system

Solution: TPS is a common sense and is a very simple system that anyone can implement

The principle of TPS is actually a collection of common sense that we know every day. In this regard, Mr. Ohno Noichi once expressed: "TPS, as long as you can count your own 10 fingers, anyone can import." ”

Each process is produced at the same pace as possible with the next process, and the resulting concept of "beat time" is similar to the way old people play tai chi every morning in Chinese parks. The so-called "creation of streams" of "not letting objects stop" actually originated from Lao Tzu 2500 years ago. This was originally a very natural thing, but because modern people learned from the United States OR (Operations Research) and EOQ (economic order volume) and other knowledge and cost calculation methods, so that the common sense of TPS has become more and more blurred. This also proves Lao Tzu's saying: "Wisdom comes out, there is great hypocrisy", that is, the more people learn, the more stupid they become.

Toyota Motor corporation realized a joint venture with FAW in September 2003 and established Tianjin FAW Toyota Motor Co., Ltd. It is worth noting that this joint venture company only retains 5% of the former Tianjin Automobile's employees, and the rest are all hired from ordinary citizens living in Tianjin with no experience. Why? This is because considering that it is very difficult to completely change the "DNA" that has been accustomed to production inventory and planned production when you are in Tianjin Automobile, it is easier to change to the "DNA" of TPS limited production than to start from scratch. As a result of this, Tianjin Toyota's current cycle time is no less than that of its japanese parent factory. If you know too much, it is difficult to achieve this goal. Here, starting from the "nothingness" taught by Lao Tzu, that is, thinking that you know nothing, and facing it with this humble attitude, TPS is indeed a simple common sense that anyone can achieve.

Myth 02

Myth: TPS is a field job

Solution: TPS is the work of headquarters and non-manufacturing departments

TPS is indeed a limited production idea that starts from the production site (only the quantity required by the order is produced), but without the assistance of headquarters, sales, procurement and other departments, it will soon hit a wall.

As long as the production site realizes small batch production, the process flow will be levelized, which is good, but this is not fundamental, because if there is no order for this small batch production product, although it has been completed, not to say that it cannot be turned into money immediately, what you get will only be the backlog of inventory. After the subprime debt crisis, due to the rapid decline in U.S. orders, the ports on the west coast of the United States were filled with Japanese car inventory, including Toyota, which also proved that when the production instruction batch of the sales department and the production instruction cycle were one month, the response time in the face of rapid changes in the market seemed too long. From this point of view, TPS is also the job of the sales department.

In addition, when mass production is stopped and reduced production is introduced, the cost of production will rise. As long as there is a change preparation time, this is bound to be the case. Headquarters must not criticize, but must praise, not only the reduction in profits resulting from the shift to limited production. Why? Because of this result, the cash in the pocket increases.

On the contrary, when centralized purchasing reduces the cost of unit procurement, resulting in an increase in profits, as long as it is accompanied by an increase in inventory, headquarters can not only not praise this procurement method, but must instead be strictly monitored or criticized. If the company's headquarters cannot make this judgment corresponding to TPS, the import of TPS will fail. Even Toyota Motor, although the TPS in the factory has achieved the point of being unique in the world, if the scope of TPS is expanded to the sales department, procurement department, headquarters, and overseas subsidiaries, etc., and the scope is expanded to the world, it can only be said that the process of its efforts has just begun.

Finally, whether the operator can correctly plan out the ultimate goal of their company (called True North/True North in this case). Whether the operator can correctly define the true north, or the "mountain bag" when "taking down that mountain bag", this is the key. I've heard things like this from Takeshi Uchiyamada, vice president of Toyota, and other Toyota executives: "TPS is really implemented because it will be economically effective." However, this economic effect is much more limited when compared to cultivating talent or analyzing things from a long-term perspective. ”

Such a "mountain bag" is undoubtedly the most valuable true north.

Myth 03

Myth: Profits increase immediately after switching to JIT

Positive solution: The first year profit of the transition to JIT will be reduced

The costing method corresponding to the heyday of the Model T Ford believes that the more it is produced, the cheaper the "Cost per Unit" and the more profitable it will increase. In the early days of Ford, which can certainly be sold after production, this calculation method is still valid. However, with the outbreak of the oil crisis and the beginning of a low-speed growth period, a large backlog of inventories due to the recession, at this time, the profits brought about by the increase in inventories will not be recovered, resulting in the bankruptcy of the black word. More seriously, once caught in the trap of this method, when changing from mass production to limited production OF JIT (Just In Time), the resulting inventory reduction will lead to a reduction in book profits, which will confuse operators, which will lead to the tragedy of terminating JIT from then on. Especially in Europe and the United States, the reason why JIT cannot be popularized is precisely this.

However, if not from the perspective of profit, but from the perspective of cash flow, when the introduction of JIT reduces the intermediate inventory, the expenditure on the purchase of raw materials decreases, and the cash on hand increases because the sales remain unchanged.

Operators should have welcomed this reduction in profits, which accompanied the increase in cash. In addition, tax expenses can also be reduced due to reduced profits. Companies that are constrained by Wall Street, which are oriented toward short-term profits from shareholder value management, are hesitant to reduce profits due to inventory reductions, making it difficult to make up their minds to limit production.

Therefore, the consultant or supervisor responsible for the introduction of TPS should first visit the CEO and CFO at the headquarters and explain to them in advance what the profit will be if the limited production of the JIT is introduced, so that they can understand it. In this way, when profits are reduced, the CEO and CFO will not blame and pessimistic, but on the contrary, will congratulate the scene.

Myth 04

Myth: What is not in stock is TPS

Positive solution: The flexible holding of the necessary minimum inventory is TPS

Mr. Ohno Once Said: "I hope you don't get me wrong, I never said that I must have zero inventory or anything like that." ”

First of all, hold the safety stock according to your own strength. Second, efforts to reduce this safety stock should be made through improvement efforts. Toyota calls this pre-determined minimum inventory the necessary on hand. For example, the standard inventory on hand for a certain process is 10, when this inventory is reduced to 7, it is necessary to produce 3 to supplement it, and it is absolutely impossible to produce more quantities, which is TPS. It is characterized by the establishment of the amount of recognized safety stock as a "Standard Intermediate Stock" (SWIP), which is followed by efforts to improve this SWAP.

In this way, it measures and clarifies its own strength, and according to the existing strength, keeps its own process to the minimum necessary inventory, and then begins to improve, but also to reduce its standard inventory step by step - this is TPS.

Relevant author: Nobu Kawada, professor at Meijo University in Japan, chairman of Meijo Process Management Research Institute, has long been engaged in management accounting, Toyota systems and JIT management accounting, TPS overseas portability and manufacturing enterprise management system redesign and other aspects of research, "Toyota System and Management Accounting", "Back to the Origin" and other research.

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