What was the secret behind Toyota’s rise from a family run loom manufacturer to one of the world’s biggest and best auto brands? Some even claim it has been the best brand of all. Whatever the ranking may be, Toyota managed to rise from a negligible market participant to a serious, at times even scary competitor for both Europe’s and America’s old and well established car manufacturers.
Is there anything which can be applied to other industries?
The short answer is: Yes, there is a lot! Read on to find out more.
The Toyota Motor Corporation was founded in 1930 and struggled through WWII and its aftermath – with very low post-war demand and the entailing financial squeeze. However, the Toyoda family always looked at long term goals and put company targets above personal gains. Starting with a cost saving programme Toyota started to develop what is nowadays known as TPS, the Toyota Production System, which prepared the company to take the world by storm. By 2003 their earnings were larger than those of General Motors, Chrysler and Ford combined – supported by the outstanding profit margin TPS had managed to yield, much to the satisfaction of the share holders.
What is so special about TPS?
TPS is probably more a corporate philosophy rather than a rule set to abide by. It provides high level management guidelines, which, if implemented thoroughly, result in continuous and relentless improvements for the company. As it is such a fundamental approach, its complete implementation cannot be expected to be quick. In all reality it took Toyota decades to develop and implement it. And I’m sure, they are still working on improvements today.
How does TPS make sense outside of the automotive industry?
Because of its general and high level approaches, its applicability is fairly universal, no matter what field of business is being considered. All it needs is the determination to continuously improve rather than delivering short-term shining show-offs.
From personal experience I can assert that Software and data/information production is no different and can benefit tremendously from even a small fraction of TPS’ concepts.
Applying TPS to an average company may require quite radical changes to most people’s work, attitude, way of thinking, processes and almost every bit of daily occupation. The gain can be of similar significance as it has proven to be for Toyota. Consequently, I regard it well worth the while!
Although TPS is a broad management approach, it is still easy to get started. Applying simple principles at operational level will show short-term improvements, which will make people come back asking for more. And there is no need for all of it to be realised, even if it is most advisable to do so, as also parts of it provide significant gains. One of the best known partial application of TPS is probably what is known as LEAN production. Lean is a fundamental part of TPS and may help leapfrog the business. Many western companies are proud of having implemented lean processes to their comparisons. Having this implementation reviewed by a Japanese professional in the field has often been eye-opening for westerners.
The bottom line is: It never ends. There’s always something that can be done in a better way. But TPS is far more than “Lean”.
For a deeper dive in the subject, I recommend the book “The Toyota Way” by Jeffrey K. Liker. He managed to convey the deeply Japanese approach to business to a western auditorium. For those more familiar with Asian philosophies and those who can read Japanese language, I am sure there’s even better literature out there.
I am a believer in the TPS and I have seen what miracles it can do even when only applied in parts. If I’ve kindled your interest, let’s discuss what to do next.