Launching a Toyota Facility in North America: One Shot at Getting the Culture Right

April 4, 2009 - Tags:

By the time Toyota began setting up its service parts facility in Hebron, Kentucky, the management team had learned from experience that a successful startup depended much more on creating a Toyota culture than on building a facility with the right technology. Years earlier, Toyota set up a global service parts distribution center in Ontario, California. While a lot of planning and thought went into the launch of the Ontario, California, facility and how to develop the people there, the management team believed it could build on that experience and improve on the launch. The long-term vision for Hebron was to have a service parts operation driven by empowered work teams, as is the case in Japan. But the experience at Ontario taught them that “empowering” employees too quickly when setting up the facility can be premature. Until individuals and teams really understand the Toyota Way and TPS, they are not in a position to be empowered.

I visited the Hebron facility about three years after it was launched. Manage-ment was still in the process of slowly implementing work teams and granting autonomy to workers. What are these people doing that is so complex that they need over two years to be ready to contribute as work teams? According to the manager of the facility, Ken Elliott, “We are not building a warehouse; we are building a culture. This is why we have been as successful as we are.” He believed it was worth the time to develop the culture early on because “we have one shot at this to get the culture right.”

At Hebron, they began building a culture by using a three-stage process to select the best associates. It took about one year to do the bulk of the hiring. First was the written application process. Getting people to apply was not difficult. An announcement was made to the local press that Toyota would be opening the facility and there would be new jobs. The resulting newscast, not a paid advertisement, resulted in 13,500 applicants for 275 jobs. Second, from this pool they randomly selected a subset to attend a job fair where there were opportunities for informal meetings and assessments. Third, a random sample of those who passed the job fair were invited to three one-hour meetings for interviews. Randomness was used to ensure fairness and diversity. After a background check, drug test, and physical exam, the finalists were offered jobs.

The early stages of the selection process were designed to winnow down the applications to a reasonable number. The job fair was designed using Toyota Way principles. The goals were both to educate the applicants in Toyota’s philosophy and to see who fit in. The fair included presentations on Toyota’s history and culture and that of service parts operations, a realistic videotape of what it is like to work in the facility, a review of Toyota benefits, an overview of the selection process, and finally a written test. The most important process was the third stage of face-to-face interviews to determine whether Toyota could mold the individual’s values and personal characteristics into the Toyota Way. In the year prior to full launch, 37 associates were hired to be on the design team to develop the operational processes and 20 others were assigned to support roles. These hourly associates then helped in the interviewing of other hourly associates who would later join their teams. Some associates had to wait a year or more to get their actual job offer. Yet this process was relatively quick and informal process compared with the process at other facilities, like Toyota, Georgetown, where aptitude tests were given and applicants were put on teams to solve problems while being videotaped and then often waited one to two years to get their job offers.

Elliott had learned from his experience at the Ontario facility the importance of ramping up gradually and systematically. So, the Hebron team developed a four-phase implementation process over an 11-month period.

In phase one, the facility operated at a very low volume level, so there was a lot of slack time to get the job duties and responsibilities right. The teams worked out the basic operational procedures, often in a crude form, tested standard operating procedures, and trained and taught some more. In phase two, management picked the best suppliers to ship low-volume parts to the operation, and there were only a few resulting problems receiving the parts on time. In phase three, the teams added smaller suppliers that were not as sophisticated in their manufacturing and logistics systems. This added variability to the process, which further challenged associates. In phase four, they finally brought high-volume suppliers on line. At each phase, management took the time to teach more of the Toyota Way. This staged process also allowed for bringing on hourly associates gradually over time, so all 230 did not have to be trained at the same time. Even within each of these phases, there were multiple live simulations before going live with a new process. Each stage posed new challenges, but the earlier stages built a set of skills and routines, along with confidence.

The result was a very smooth ramp up. Using metrics like fill rate (percent of parts available when customers wanted them), the Hebron facility was the best launch of any such Toyota facility in North America.