The ingredients of the Toyota Way are unique and effective. To sequence their description, this chapter’s layout follows Liker’s approach. Examples specific to how Toyota applies these principles to managing its supply chain are drawn from previous chapters in this book. The trade-offs that are implicit in making these decisions are also illustrated. Long-Term Philosophy [...]

The Toyota Way is made up of four major elements: long-term philosophy, right process, development of people, and continuous solving of root problems. Taken together, they are the secret recipe for continuous improvement, for creating value, and for developing people that will continue the mission of creating value into the future. In the paragraphs that [...]

Why would Toyota need to be concerned about crisis management when it has implemented processes throughout the supply chain that are synchronized and integrated to function like a fine Swiss clock? The reality is that Toyota is not immune to disruption of its operations because of natural disasters, strikes, fires, bankruptcies, and the like. Because [...]

Dealers use a number of different processes to fulfill retail customer demand. This chapter will explore the major ones; it will be subdivided into three areas: vehicle allocation, demand fulfillment options, and dealer operations. Vehicle Allocation At Toyota, vehicle allocation in North America is a two-step process. In the first step, the national sales company [...]

Logistics is an extremely important component of the supply chain. It has two roles: (1) inbound logistics, which is responsible for transporting parts and materials from the tier 1 suppliers to the OEM plants; (2) outbound logistics, which is responsible for the distribution of vehicles from the assembly plants to the dealers. In this article [...]

Imagine you are a supplier to Toyota. What is your role in the Toyota supply chain? What is your expected productivity improvement over time? How would your experience as a part of Toyota’s supply chain differ from your experience supplying other auto original equipment manufacturers? How would your processes have to operate to synchronize with [...]

Toyota adopts different planning methods depending on which types of parts are involved. Some of the planning processes are unique to Toyota and so are worth contrasting with general practice. There are many parts ordering processes for the different categories of parts. The four broad part categories are local parts, long lead time parts, in-house [...]

Production scheduling requires close coordination between sales and plant operations. In Toyota Learning, we will explain how the production schedule is used to provide consistent and continuous flow of materials and vehicles throughout the supply chain. In Sales and Operations Planning we described how information is gathered, both top-down and bottom-up, to create a three-month [...]

Sales and operations planning (S&OP) is a critical component of the supply chain planning process. It is linked upstream to the mix planning process and downstream to the production scheduling process. The goal of S&OP is to generate a production plan that balances demand and supply in a profitable way. The end point of this [...]

Mix planning is an important process for companies that manufacture and distribute products to retailers in multiple market areas. For vehicle manufacturers, this decision is extremely important because of the complexity of a vehicle. This complexity creates millions of possible vehicle build combinations or variants. The objective of mix planning is to reduce the variants [...]

The Toyota Production System (TPS) is the benchmark used throughout the world as the foundation for “lean” thinking. At Toyota, the TPS practices and principles extend well beyond the factory walls to include the extended supply chain and require some crucial choices to ensure supply chain efficiency. This chapter explains how Toyota plans and operates [...]

Toyota is well known for its approach to problem solving and continuous improvement. Articles by practitioners, researchers, and participants have made the tools and techniques of continuous improvement familiar to every business executive. For example, phrases such as andon, heijunka, and kanban have become part of the day-to-day vocabulary of managers. In an insightful commentary [...]

We can learn a great deal from the few companies out there run by experienced and talented lean leaders who have really been successful at effecting change at the cultural level. It is clear there are a variety of ways of doing this. At Wiremold, the CEO, Art Byrne, started by personally leading kaizen events [...]

Culture change is a complex topic in its own right and the subject of many articles. This became most evident to Toyota in its efforts to globalize in the 1980s. To Toyota, globalization did not mean purchasing capacity in other countries. Globalization meant exporting the Toyota culture to build autonomous divisions in other countries that [...]

There are many “tools” approaches to organization improvement. One very popular program, which General Electric adopted with great success, is Six Sigma, an extension of Total Quality Management (TQM). Six Sigma refers to a goal of 3.4 defects per million units produced, and the focus is on training green belts, black belts, and master black [...]

The first example is the Wiremold Corporation, which was showcased by Womack and Jones in Lean Thinking as a lean exemplar and more recently has been documented in detail by Emiliani et al. (2003) in Better Thinking, Better Results. Wiremold makes “cable-management solutions” that enclose various kinds of cables. This was a family-owned business, started [...]

The toughest and most basic challenge for companies that want to learn from Toyota is how to create an aligned organization of individuals who each have the DNA of the organization and are continually learning together to add value to the customer. Will Rogers, American social commentator, said, “We are a great people to get [...]

I have illustrated throughout the article applications to service operations. Some of the specific, detailed tools of TPS may be harder to apply. It would not make sense, for example, for a lawyer to sit at his or her desk waiting for a material handler to deliver a kanban asking for the next legal brief. [...]

A central issue for many service processes is controlling the process. Some successful kaizen workshops have focused on creating the system of tracking and controlling the process using visual controls. Genie Industries is an example of this. Genie makes many different kinds of lift devices, like the hoist device phone company service people use to [...]

Northrop Grumman Ship Systems Ingalls shipyard in Mississippi began aggressively implementing lean in its operations areas in the summer of 2000. Since engineering is critical to shipbuilding, it soon expanded its transformation to lean to include engineering processes. The issue of label plates, the responsibility of engineering, had been a perennial problem in getting compartments [...]