The Toyota Production System (TPS) is an early form of lean manufacturing created by auto-manufacturer Toyota. Created by the Toyota Motor Corporation in the 1940s and 50s, the Toyota Production System seeks to manufacture vehicles ordered by customers most quickly and efficiently possible.
Understanding the Toyota Production System
The TPS is based on underlying principles called the Toyota Way:
Continuous improvement
Challenge
Or the courage and creativity to meet challenges and realize their long-term vision.
Kaizen is a process developed by the auto industry. Its roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. The word Kaizen is a hybridization of two Japanese words, “kai” meaning “change” and “zen” meaning “good.” Two of the basic tenets of Kaizen involve making small incremental changes – or 1% improvement every day – and the full participation of everyone.
Or the continuous improvement of business operations.
Genchi Genbutsu
Which advocates going to the source to fact-find and make informed decisions.
Respect for people.
Respect
Every effort is made to respect and understand each other.
This means taking ownership of personal work and building mutual trust.
Teamwork
Employees must be stimulated to achieve personal and professional growth.
Opportunities for such growth should be shared throughout the organization to maximize performance.
The two core concepts of the Toyota Production System
Jidoka was first used in 1896 by Sakichi Toyoda, who invented a textile loom that would stop automatically when it encountered a defective thread. Jidoka is a Japanese term used in lean manufacturing. The term describes a scenario where machines cease operating without human intervention when a problem or defect is discovered.
A Japanese word loosely translated to “automation with a human touch”.
For Toyota, this means that automated systems (machines) must be built and improved by hand until they are reliable and safe.
Machines built by hand to very high standards become simpler to use and less expensive to run.
This results in simple, slim, flexible, and lean manufacturing processes that are adaptable to fluctuating production volume.
Within Jidoka, there are various quality control methods, such as Andon, also defined as “intelligent automation” or “automation with a human touch”.
The andon system alerts managerial, maintenance, or other staff of a production process problem. The alert itself can be activated manually with a button or pull cord, but it can also be activated automatically by production equipment. Most Andon boards utilize three colored lights similar to a traffic signal: green (no errors), yellow or amber (problem identified, or quality check needed), and red (production stopped due to unidentified issue).
Just-in-time (JIT)
where each part of the manufacturing process produces what is needed for the next process to facilitate continuous flow and improve productivity.
Toyota describes the JIT concept as making only “what is needed, when it is needed, and in the amount needed.”
The three categories of waste products in the Toyota Production System
In the introduction, we noted that the elimination of waste was integral to lean manufacturing at Toyota.
Waste that can potentially hinder process improvement is divided into three categories.
“Mura”
Mura is translated as unevenness, non-uniformity, and irregularity.
When a production line work station has a higher capacity than other stations, waste in the form of overproduction and delay-causing bottlenecks occur.
Muri can be mitigated by using Kanban or Just-In-Time manufacturing to limit the accumulation of excess inventory.
“Muri”
Muri encompasses overburden, excessiveness, unreasonableness, or something that is beyond one’s power.
Muri is evident when machines or human operators are forced to work beyond their capacity.
Machines inevitably fail, causing delays and costing money.
Overworked employees cause a lack of productivity owing to illness and absenteeism.
“Muda”
Muda is defined as wastefulness, uselessness, and anything that hinders the creation of value that the customer is willing to pay for.
Muda Type 1 processes do not add value directly but are required by law – such as the passing of safety tests and emissions standards.
However, Muda Type 2 processes are non-value-adding activities that are also unnecessary.
These activities are further categorized into seven types of waste:
Transport
Or wastage resulting from the excess or unnecessary movement of people, tools, equipment, or products.
Inventory
Excess inventory can lead to an inefficient allocation of capital or occupy valuable space that could be better utilized elsewhere.
Large amounts of stock sitting idle is also prone to damage or spoilage.
Here, defects are also more difficult to detect and address.
Motion
This is wastage that results from walking, lifting, reaching, double-handling, and so forth.
Motion should be limited or redesigned to increase occupational health and safety and improve productivity.
Waiting
This includes people waiting for materials or equipment.
It also includes equipment waiting because of input delays caused by uneven production.
Overproduction
Or the manufacturing of a product or component before it has been asked for, required, or ordered.
This results in excess inventory and increases lead-time.
Over-processing
Defined as doing more work or adding more product features or steps than is necessary.
In manufacturing, this might encompass the over-engineering of a solution or adjusting a component after it has been installed.
Defects
Or products not fit for use that must be scrapped or reworked.
Both outcomes require an extra allocation of resources which reduces productivity and profit margins.
Toyota Production System vs. Six Sigma
Six Sigma is a data-driven approach and methodology for eliminating errors or defects in a product, service, or process. Six Sigma was developed by Motorola as a management approach based on quality fundamentals in the early 1980s. A decade later, it was popularized by General Electric who estimated that the methodology saved them $12 billion in the first five years of operation.
The Toyota Production System focuses on continuous improvement via just-in-time, thus becoming a holistic approach to business improvement.
Six Sigma looks and focuses primarily on reducing defects in the manufacturing process via a process of:
The lean methodology is a continuous process of product development to meet customers’ needs. It was in part borrowed by the auto industry and its roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. The lean methodology is, therefore, an evolution from lean manufacturing, based on continuous improvement.
The lean methodology is definitely a method derived from the Toyota Production System.
Yet while the Toyota Production System is primarily skewed toward manufacturing, the lean methodology has been successfully adapted to software development via a process of lean thinking which moves along:
The whole lean manufacturing method, derived from the Toyota Production System, also led to an incredible wave of new theories around software development.
In short, the software development industry borrowed many concepts from the lean manufacturing process, creating a framework that today is quite popular among startups.
This also led to an approach, which combines the lean and agile software development mindset with entrepreneurship, and that can be defined as continuous innovation.
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
Continuous innovation is one of the main distinguishing elements between a startup and a traditional corporation.
Key takeaways
The Toyota Production System is a pioneering form of lean manufacturing developed by the Toyota Motor Corporation.
The Toyota Production System is based on continuous improvement and respect for people. In manufacturing, it favors just-in-time (JIT) production and automation with a human touch.
The Toyota Production System categorizes waste into three categories: Muri, Muda, and Mura. Each category is defined by specific adjectives that clarify potential sources of process inefficiency.
What are the three principles of Toyota Production System?
The three core principles of the Toyota Production System comprise the three categories of waste reduction:
Kaizen is a process developed by the auto industry, and it is a hybridization of two Japanese words, “kai,” meaning “change,” and “zen,” meaning “good.” Two of the basic tenets of Kaizen involve making small incremental changes – or a 1% improvement every day – and the full participation of everyone.
What is Gemba work?
A Gemba Walk describes the personal observation of work to learn more about it. Gemba is a Japanese word that loosely translates as “the real place” or, in business, “the place where value is created.” The concept was created by Taiichi Ohno, the father of the Toyota Production System of lean manufacturing.
AIOps is the application of artificial intelligence to IT operations. It has become particularly useful for modern IT management in hybridized, distributed, and dynamic environments. AIOps has become a key operational component of modern digital-based organizations, built around software and algorithms.
Agile started as a lightweight development method compared to heavyweight software development, which is the core paradigm of the previous decades of software development. By 2001 the Manifesto for Agile Software Development was born as a set of principles that defined the new paradigm for software development as a continuous iteration. This would also influence the way of doing business.
Agile Program Management is a means of managing, planning, and coordinating interrelated work in such a way that value delivery is emphasized for all key stakeholders. Agile Program Management (AgilePgM) is a disciplined yet flexible agile approach to managing transformational change within an organization.
Agile project management (APM) is a strategy that breaks large projects into smaller, more manageable tasks. In the APM methodology, each project is completed in small sections – often referred to as iterations. Each iteration is completed according to its project life cycle, beginning with the initial design and progressing to testing and then quality assurance.
Agile Modeling (AM) is a methodology for modeling and documenting software-based systems. Agile Modeling is critical to the rapid and continuous delivery of software. It is a collection of values, principles, and practices that guide effective, lightweight software modeling.
Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.
Agile leadership is the embodiment of agile manifesto principles by a manager or management team. Agile leadership impacts two important levels of a business. The structural level defines the roles, responsibilities, and key performance indicators. The behavioral level describes the actions leaders exhibit to others based on agile principles.
Bimodal Portfolio Management (BimodalPfM) helps an organization manage both agile and traditional portfolios concurrently. Bimodal Portfolio Management – sometimes referred to as bimodal development – was coined by research and advisory company Gartner. The firm argued that many agile organizations still needed to run some aspects of their operations using traditional delivery models.
Business innovation is about creating new opportunities for an organization to reinvent its core offerings, revenue streams, and enhance the value proposition for existing or new customers, thus renewing its whole business model. Business innovation springs by understanding the structure of the market, thus adapting or anticipating those changes.
Business modelinnovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
A design sprint is a proven five-day process where critical business questions are answered through speedy design and prototyping, focusing on the end-user. A design sprint starts with a weekly challenge that should finish with a prototype, test at the end, and therefore a lesson learned to be iterated.
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
DevOps refers to a series of practices performed to perform automated software development processes. It is a conjugation of the term “development” and “operations” to emphasize how functions integrate across IT teams. DevOps strategies promote seamless building, testing, and deployment of products. It aims to bridge a gap between development and operations teams to streamline the development altogether.
Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.
Feature-Driven Development is a pragmatic software process that is client and architecture-centric. Feature-Driven Development (FDD) is an agile software development model that organizes workflow according to which features need to be developed next.
eXtreme Programming was developed in the late 1990s by Ken Beck, Ron Jeffries, and Ward Cunningham. During this time, the trio was working on the Chrysler Comprehensive Compensation System (C3) to help manage the company payroll system. eXtreme Programming (XP) is a software development methodology. It is designed to improve software quality and the ability of software to adapt to changing customer needs.
The ICE Scoring Model is an agile methodology that prioritizes features using data according to three components: impact, confidence, and ease of implementation. The ICE Scoring Model was initially created by author and growth expert Sean Ellis to help companies expand. Today, the model is broadly used to prioritize projects, features, initiatives, and rollouts. It is ideally suited for early-stage product development where there is a continuous flow of ideas and momentum must be maintained.
An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.
According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.
The Agile methodology has been primarily thought of for software development (and other business disciplines have also adopted it). Lean thinking is a process improvement technique where teams prioritize the value streams to improve it continuously. Both methodologies look at the customer as the key driver to improvement and waste reduction. Both methodologies look at improvement as something continuous.
A startup company is a high-tech business that tries to build a scalable business model in tech-driven industries. A startup company usually follows a lean methodology, where continuous innovation, driven by built-in viral loops is the rule. Thus, driving growth and building network effects as a consequence of this strategy.
Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.
RAD was first introduced by author and consultant James Martin in 1991. Martin recognized and then took advantage of the endless malleability of software in designing development models. Rapid Application Development (RAD) is a methodology focusing on delivering rapidly through continuous feedback and frequent iterations.
Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.
The Spotify Model is an autonomous approach to scaling agile, focusing on culture communication, accountability, and quality. The Spotify model was first recognized in 2012 after Henrik Kniberg, and Anders Ivarsson released a white paper detailing how streaming company Spotify approached agility. Therefore, the Spotify model represents an evolution of agile.
As the name suggests, TDD is a test-driven technique for delivering high-quality software rapidly and sustainably. It is an iterative approach based on the idea that a failing test should be written before any code for a feature or function is written. Test-Driven Development (TDD) is an approach to software development that relies on very short development cycles.
Timeboxing is a simple yet powerful time-management technique for improving productivity. Timeboxing describes the process of proactively scheduling a block of time to spend on a task in the future. It was first described by author James Martin in a book about agile software development.
Scrum is a methodology co-created by Ken Schwaber and Jeff Sutherland for effective team collaboration on complex products. Scrum was primarily thought for software development projects to deliver new software capability every 2-4 weeks. It is a sub-group of agile also used in project management to improve startups’ productivity.
Scrumban is a project management framework that is a hybrid of two popular agile methodologies: Scrum and Kanban. Scrumban is a popular approach to helping businesses focus on the right strategic tasks while simultaneously strengthening their processes.
Scrum anti-patterns describe any attractive, easy-to-implement solution that ultimately makes a problem worse. Therefore, these are the practice not to follow to prevent issues from emerging. Some classic examples of scrum anti-patterns comprise absent product owners, pre-assigned tickets (making individuals work in isolation), and discounting retrospectives (where review meetings are not useful to really make improvements).
Scrum at Scale (Scrum@Scale) is a framework that Scrum teams use to address complex problems and deliver high-value products. Scrum at Scale was created through a joint venture between the Scrum Alliance and Scrum Inc. The joint venture was overseen by Jeff Sutherland, a co-creator of Scrum and one of the principal authors of the Agile Manifesto.
Stretch objectives describe any task an agile team plans to complete without expressly committing to do so. Teams incorporate stretch objectives during a Sprint or Program Increment (PI) as part of Scaled Agile. They are used when the agile team is unsure of its capacity to attain an objective. Therefore, stretch objectives are instead outcomes that, while extremely desirable, are not the difference between the success or failure of each sprint.
The waterfall model was first described by Herbert D. Benington in 1956 during a presentation about the software used in radar imaging during the Cold War. Since there were no knowledge-based, creative software development strategies at the time, the waterfall method became standard practice. The waterfall model is a linear and sequential project management framework.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
