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The Toyota Production System and art: Making highly

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The Toyota Production System and art:

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a b
E. Lander & J. K. Liker
a
University of Michigan, 3248 Potomac Ct., Ann Arbor, MI, 48108,
USA
b
University of Michigan, 1205 Beal Avenue, 2863 IOE Building, Ann
Arbor, MI, 48109-2117, USA

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 International Journal of Production Research,
Vol. 45, No. 16, 15 August 2007, 3681–3698

The Toyota Production System and art: making highly customized

and creative products the Toyota way

E. LANDER*y and J. K. LIKERz

yUniversity of Michigan, 3248 Potomac Ct., Ann Arbor, MI 48108, USA

zUniversity of Michigan, 1205 Beal Avenue, 2863 IOE Building,
Ann Arbor, MI 48109-2117, USA

(Revision received January 2007)

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The Toyota Production System has led to a movement of ‘lean production’

focused on taking waste out of value streams. Most applications have been to
high volume, and relatively standardized products. Under this system work
becomes highly standardized specifying to the second what the operator should
do. Buffers are precisely sized and controlled through various types of pull
signals. When possible, use of one-piece flow cells result in a completely balanced
production line. The performance benefits of these lean systems are often
remarkable, greatly improving quality, cost, and delivery. But what of companies
that are not making standardized products at high volume? What can they learn
from lean? In this paper we argue there is a fundamental misunderstanding of
TPS, viewing it as a specific tool kit technically implemented in a formulaic way
to achieve pre-specified results. In fact, TPS is a philosophy that can be better
described as a set of general principles of organizing and managing an enterprise
which can help any organization get on a path of positive learning and
improvement. A case example of a low volume, highly customized artistic clay tile
company illustrates the process by which the firm used TPS to learn how to
understand its process, gain stability and control, empower its workforce, and
become far more profitable.

Keywords: Toyota way; TPS; Learning organization; Lean manufacturing;

Custom manufacturing; High variability manufacturing

1. Is TPS universally applicable?

After the first oil crisis in the early 1970s Toyota began to draw attention as people
noticed that it suffered less during the downturn and recovered much faster than
its competitors. The key to its success was the Toyota Production System (TPS),
which was described by four Toyota managers, in the first paper on the topic in this
journal, as being based on two basic concepts: ‘Cost reduction through the
elimination of waste’, and ‘Full utilization of worker’s capabilities’ (Sugimori et al.
1977). They further explain that, cost reduction is achieved through the use of
just-in-time production (comprised of pull systems, one-piece flow, levelling) and
jidoka, the main components of what is today recognized as the TPS house

*Corresponding author. Email: [email protected]

International Journal of Production Research

ISSN 0020–7543 print/ISSN 1366–588X online ß 2007 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/00207540701223519
 3682 E. Lander and J. K. Liker

(Japan Management Association and Lu 1989, Shook 2002, Liker 2004). Fully
utilizing worker’s capabilities requires a system of respect for people based on
minimizing wasted movements of workers, ensuring their safety, and giving
them greater responsibility by allowing them to participate in running and improving
their jobs.
Thirteen years later, The Machine that Changed the World introduced the term
‘lean’ as the next paradigm of manufacturing beyond mass production (Womack
et al. 1991). The Toyota Production System was the best-known example of lean and
the model on which the book’s description was based. Since then lean has taken on
a life of its own and has been applied by many organizations throughout the world,
including manufacturing and service firms. Most success stories however, come from
the Toyota group or from firms operating under similar market and product
technology conditions to those for which Toyota has already developed lean
solutions. These conditions include a limited product offering with little to no
customization (other than cosmetic), production in high volume resulting in
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repetitive manufacturing, and a relatively stable (or predictable) demand.

Many companies deciding to ‘go lean’ have struggled to figure out what that
means in their type of business. They may build to order or have highly engineered
products or be in a pure service organization like healthcare or banking and desire a
vision for what lean looks like in their business. One approach to getting a vision is
to go and see. But when they go and see a Toyota plant they find it difficult to relate.
They see a highly repetitive and standardized process and cannot imagine how they
can replicate what they see. We believe the problem is in the way companies are
looking at TPS and how they are trying to approach implementation.
In practice, TPS is most often viewed as a set of tools to remove ‘waste’ from
processes. Individual tools have been explained exhaustively (Shingo 1985, 1986,
Japan Management Association and Lu 1989, Hirano 1995, Rother and Shook 1999,
Smalley 2004) and yet companies often struggle when attempting to apply lean to
novel circumstances. This is particularly true for the firms operating in high
variability, low volume environments where the general belief is that lean is not very
helpful (the research that led to this paper focused on such firms). ‘We are different’
is a commonly heard refrain. Of course the answer is that every company is in fact
different. But that is not the problem. Difficulties arise from trying to apply tools in a
formulaic way when they were never intended to be used as a cookie cutter template.
In fact, the perspective of lean as a toolkit in which to reach to grab the most
applicable or handy tool represents a fundamental misconception of TPS.
The next level of understanding comes when the tools are seen as an integral part
of a wider system (Suzaki 1987, Shingo and Dillon 1989, Monden 1993). This
perspective, although still mostly focusing on the technical aspect, usually leads to
better results but still allows for little adaptation to conditions different from those
for which the TPS tools were developed.
Adaptation to new environments starts to become possible when the purpose
of particular tools and of TPS in general is understood. At this level it is possible
to define rules about the behaviour of the system (Spear and Bowen 1999) and
methods (Womack and Jones 1996) that can guide the development of Toyota-style
systems in different environments. For example, Womack and Jones (1996) advise
us to: define customer value, identify the value stream, to make it flow, pull,
and strive for perfection. Although procedures like this are powerful for their
 The Toyota Production System and art 3683

simplicity, these approaches remain formulaic and leave out important features of
Toyota’s system.
On the opposite end of the spectrum from the tool-based perspective, Toyota’s
system can be seen as a set of principles (Liker 2004) that define the thinking that led
to the development of the TPS tools. It is interesting to note that even though Ohno
is credited with developing most of the tools that enabled the ideas behind TPS to be
implemented in practice, his books (Ohno 1988a, b, Ohno and Mito 1988) remain at
a philosophical level and provide only superficial descriptions of the tools. Instead of
providing a solution, his intention seems to be to help the reader develop the mental
models that will enable her to devise her own countermeasures. Perhaps then, the
critical features of TPS are the ideas it supports, while the tools that comprise its
current form should be adapted as needed for the particular conditions the
organizations operates in.
In this article we argue that the only way to develop true Toyota-style systems in
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environments vastly different from those for which the lean solution has already been
developed, is to apply the same principles that people in Toyota have used to shape
what is recognized today as TPS. Applying the same thought process to a novel
environment will result in a Toyota-style system customized for the particular
conditions the firm faces. This is not to say that the other perspectives described
above are wrong or useless. On the contrary, a thorough understanding of how the
tools work, their purpose, and how they fit together to form an integral system is
what will enable us to develop Toyota-style systems in less than the 70 years it took
Toyota.
We will illustrate this perspective by looking at a firm that is very different from
a Toyota assembly plant. The case study is based on a custom artistic process rather
than mass production of standardized products. If the approach had been to simply
imitate Toyota’s solutions in this environment it would have been an exercise in
frustration. In contrast, by understanding the actual situation in great detail and
then flexibly applying the principles that define Toyota’s thinking, it was possible to
fundamentally transform this craft-based company making it far more productive
and profitable. The principles of flow and pull and levelling and team associate
involvement in problem solving were all used, but the way they were implemented
was customized to fit the environment and the peculiarities of the organization.
The case illustrates that lean is a way of thinking about people and processes aimed
at creating a high-performance learning organization.

2. True Toyota-style systems result from applying the principles behind Toyota’s
thinking and lead to the development of learning organizations

The tendency when a tools approach is taken is to define problems in technical terms.
If the intention is to improve productivity, isolated processes can be transformed into
one-piece flow cells building to takt time. Then if the process is a natural batch one,
or if there is so much variability in demand that it is difficult to calculate a stable takt
time, or if products differ so much that it is not possible to balance the workload,
it becomes frustrating and we hear the common mantra ‘lean does not apply because
we are different’.
 3684 E. Lander and J. K. Liker

A principle-based approach provides an understanding of why things are being

done and a basis for judging whether the progress made is consistent with the
principle. That enables the creative adaptation of the tools to meet the requirements
of the environment, as long as their application is consistent with the principle.
To illustrate this point, let us look at one of the 14 principles defined in The Toyota
Way (Liker 2004):
Principle 2: Create continuous flow to bring problems to the surface—Create flow to
move materials and information fast as well as to link processes and people together so
that problems surface right away.

Note that this principle does not say to make a cell or how to make a cell. The
principle is to move material and information faster while linking processes and
people. Thus, when studying the current situation the idea is to look for areas where
people and processes are disconnected and material stagnates. Then, find creative
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ways to increase the flow and connect processes better. That could be a cell or could
be a first-in, first-out lane or could be reducing inventory or improving
communication between two steps in the process. Furthermore, this is being done
to ‘surface problems’. So even if inventory is reduced and material is flowing more
quickly, but problems are not being surfaced and solved (not specifically stated in
this principle) the solution is not being true to the principle. Simply eliminating
inventory is not sufficient to satisfy the principle.
Furthermore, compliance with the principles necessarily leads to the implementa-
tion of technical solutions (the tools of TPS) as well as the development of the social
system necessary to make them effective. Therefore, understanding lean as a wider
socio-technical system (Trist and Bamforth 1951, Cherns 1976) is a more accurate
view than the predominant tools-based view that focuses mostly on the technical
aspect alone.
Ohno always emphasized understanding the true purpose of the system, implicitly
highlighting the need to understand the principles guiding the changes being
implemented. He focused on the core transformation process of converting inputs to
outputs distinguishing value-added from non-value-added steps and developing
technical solutions to eliminate the latter and facilitate the former. And yet, he also
had a clear vision for the human role as problem solver and enabler of further
progress. The Sugimori paper (Sugimori et al. 1977) emphasizes this socio-technical
perspective by describing TPS as based on two concepts, one technical that includes
JIT and jidoka, and the other one focusing on the social aspect of fully utilizing
workers’ capabilities. Ohno’s approach was never to implement a particular tool,
but to build appropriate social and technical capabilities to fit the circumstances.
Based on this system’s concept of fit we would not expect a ‘one-size fits all’ set of
solutions to all manufacturing problems. We would expect to flexibly use tools based
on a set of principles to accomplish the intended purpose. We would also expect that
people involved in doing the work should be engaged in controlling variances in their
process. We would expect ownership by those inside the system to be a necessary
precondition for high performance. And we would expect that understanding and
adapting to dynamic external environments is a prerequisite for success.
Another perspective that fits this need for adaptability and is compatible
with TPS as a socio-technical system, is that of a learning organization (Senge 1990).
 The Toyota Production System and art 3685

The concept of kaisen at Toyota requires learning at an organizational level, which is

ensured by establishing known standards, preferably visible ones (Liker and Meier
2006). If there is no agreed upon standard a new way of doing a job is simply one
more version by some individual—it is individual learning. Most companies have
smart individuals who come up with clever ways of doing things but they are poor at
capturing that knowledge into a reusable standard (O’Dell and Grayson 1998). But if
we agree on a standard and then find a new and better way of doing a job that we all
follow then the organization has learned. This change in work routines (and the
corresponding improvement in performance) is the true hallmark of organizational
learning (Fujimoto 1999).
Going back to Ohno and his passion for reducing the time line by eliminating
waste we find that lead-time reduction was not his only goal. He often used the
analogy of water as inventory and rocks as problems and said that when he reduced
the water level (inventory) he was exposing the rocks (problems). This forced the
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organization to respond with real problem solving or the process would constantly
be shut down. What Ohno discovered was quite profound. An organization with
processes that are disconnected by big inventory buffers tends not to improve or
learn. When processes are tightly connected problems surface quickly and must be
dealt with, thereby driving the organization to learn. Similarly, reducing waste and
learning go hand in hand. This suggests that it is the learning process itself, not a
particular tool or technique, which is at the centre of TPS.
This view is supported by Spear and Bowen who found that the core feature of
TPS is the prevalent use of the scientific method. By engaging people in problem
solving where they view any potential improvement as a testable hypothesis Toyota
promotes experimentation. The resulting learning is what sets it apart from other
organizations (Spear et al. 1999).

3. Research method

Socio-technical systems research has been based on studying real organizations to

understand the embedded nature of their complex dynamics, making action research
the preferred mode (Pasmore 1988). Following this tradition, the research work at
Motawi Tileworks was performed within the framework of action research (Lewin
1946) and action science (Argyris 1983). Under this approach, the researcher shifts
from passive observer to active participant, often leading the transformation of the
host organization. As Argyris explains, ‘the action scientist is an interventionist who
seeks both to promote learning in the client system and to contribute to general
knowledge’ (Argyris et al. 1985). The main characteristics of action research (Argyris
1983, Lomax 1989, Lancaster 2005) are that it is problem-driven, client-centred, the
researcher is an active participant in seeking the solution to the problem, it is cyclical
and responsive (meaning that a feedback loop is used to ensure learning from
previous actions and to adjust future ones to improve even further), and it follows
a systematic process based on the scientific method (identify a problem, imagine
a solution, implement it, evaluate the outcome, act upon the knowledge gained).
This method leads to learning by doing and fits well with Toyota’s own approach to
learning by experimenting and reflecting on the results obtained.
 3686 E. Lander and J. K. Liker

Specifically at Motawi, the research was structured around weekly meetings used
for general instruction and discussions on TPS, to identify and analyse pressing
problems (going to the gemba as needed), to design countermeasures to solve them,
and to develop the methods and structure that would make Motawi self-sufficient in
its lean efforts once the research engagement ended. In some instances physical
changes to the process were made. For the most part, however, the focus was on the
conceptual development of the solution while the physical implementation was
performed by Motawi employees to ensure that they learned from the process and to
guarantee that Motawi developed the capability necessary to sustain, replicate, and
continue to improve any system developed.
The intention with this approach was to develop within Motawi the capability to
identify and solve problems while at the same time providing them with a holistic
view of the tools that were being used to make improvements. By holistic we mean
providing a complete picture of the tool, starting with very specific ‘how to’
instructions (how to calculate the number of kanban needed), while also explaining
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why the tool is important in the context of a lean system (kanban is an autonomic
real-time scheduling system that ensures processes work on what is really needed),
how it supports the improvement process (kanban makes it easier to understand the
flow of parts and information and create a clear connection between processes that
can be tightened to show problems and drive improvement), and the philosophical
reasons why it is needed (kanban is used to implement a pull system and enable the
facility to approximate JIT production thus eliminating sources of waste such as
overproduction).

4. Case study: TPS at Motawi Tileworks

4.1 Background
Motawi Tileworks is a manufacturer of high-end, handmade decorative tiles with
sales closing on the $2 million mark per year. It makes a high variety of parts in
relatively low volumes, including both standard products from a catalogue
offering over 6400 different end items, and custom made parts ranging from slight
adaptations of existing items (a custom cut) to completely new ones designed and
made to customer specifications. Product can be grouped into two families according
to the glaze method: dip and bulb. Field (including flat tiles in many different shapes
and sizes as well as mouldings and edge pieces) and relief (having a bas-relief pattern
to them) tile are dipped manually in a single colour glaze and have no additional
decoration. Polychrome tile (pressed with an embossed design) are hand glazed
in different colours to produce remarkable decorative pieces. Customers include end
users, designers, and distributors (showrooms and art galleries). Figure 1 shows
a value stream of the process before the lean initiative began.

4.2 The technical challenge of developing a Toyota-style system at Motawi

Motawi operates in a very different environment to that for which Toyota developed
TPS and so it faces a set of challenges that make the translation of lean to its
operations far from trivial. Table 1 shows a summary of the main environmental and
technical differences and the challenges that result.
 The Toyota Production System and art 3687

Yearly contract Order processing Daily

Order & scheduling
Supplier (as they come in) Customers

Weekly order

Dip Glazing Dept.

Weekly Pressing Dept. Daily

Dip glazing family Dip Glaze Kiln

Check availability Sort

Batch by color
QC &
Press Dryer Kiln Allocate
Ship
Clay Batch by Sort Bisque Batch by color Orders
type of tile Edge Shipping Dept.

Bulb glazing family Bulb

Kiln
Glazing
Extras
Bulb Glazing Dept.

Yearly contract Order processing Daily

Order
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& scheduling
Supplier (as they come in) Customers

Weekly order

Dip Glazing Dept.

Weekly Pressing Dept. Daily

Dip glazing family Dip Glaze Kiln

Check availability Sort

Batch by color
QC &
Press Dryer Kiln Allocate
Ship
Clay Batch by Sort Bisque Batch by color Orders
Edge Shipping Dept.
type of tile
Bulb glazing family Bulb
Kiln
Glazing
Extras
Bulb Glazing Dept.

Figure 1. Initial state value stream map.

Moreover, these challenges also interact with each other to make implementation
even harder. For example, TPS seeks to define highly specified standardized work to
remove seconds of waste per cycle. This assumes that cycle times are fixed for a
particular task, that takt time is stable, that work can be clearly specified, and that
there is a clear way to measure whether the product meets the standard. But what if
none of these are true?
The artistic mentality predominant in the studio also imposes its own challenges
on the transformation process. Things at Motawi are hardly ever black or white.
The grey area of ‘maybe’ characterizes a lot of what might ordinarily be thought of
as good or bad practice. For example, motion and transportation waste are
frequently perceived as necessary breaks for operators and defects are not necessarily
bad. ‘After all, those parts are still sold, and in fact some of them are more interesting
than the originals. Some customers come looking exclusively for them.’ This
ambivalence makes it hard to impose a tight and disciplined lean system where all
the cogs need to be carefully synchronized and work as expected.

4.3 Physical transformation and use of TPS tools at Motawi

The biggest problem identified initially at Motawi was the prevalence of a push
system that promoted batching in each department in an attempt to optimize
 Downloaded by [Afit -ENWL] at 07:04 03 October 2012

3688

Table 1. Differences in the environmental and technical conditions faced by Motawi and the challenges they impose.

Characteristic Traditional TPS Motawi Challenge

Demand variability Low Very high Variable takt time and

unlevelled schedule
Cycle time Fixed Variable (different for each item) Hard to balance work and
standardize jobs
Product variety Low High (many custom items as well) Hard to standardize, cannot
hold all items in inventory
Production runs Long with stable batch size Short with variable batch size Hard to plan for and
unlevelled schedule
Job of operators Repetitive Different for each product Hard to standardize
Work knowledge Structured Tacit Hard to standardize
(routine procedures)
Specialization of High (separate cells Low (volume does not justify Single line has to deal with
people and equipment for different parts) separate lines) the full product variability
E. Lander and J. K. Liker

Quality standards Metric driven Aesthetic Hard to standardize

Feedback loops Short (if system Long (kilns introduce days of delay) Hard to learn from past actions
in production is well designed)
Predominant paradigm Steady and efficient production Craft production of few and/or Low process discipline, no standard
of few items in high volume unique items methods, and low drive to eliminate waste
 The Toyota Production System and art 3689

individual processes. This meant that more parts were made than were immediately
needed (utilizing scarce capacity that could be used to make items already sold), that
lead-times were long since orders were not worked on as a unit, and that significant
handling and sorting was required to deal with all the orders that were open at once.
With this in mind, the main objective for lean became to improve flow by developing
a system that processed whole orders and got them out the door faster. Implementing
a pull system became the backbone of the transformation (see figure 2), with many
other improvements made in support of this main initiative.
Instead of segregating product into different lines as is typically done in lean
initiatives (Conner 2001), all products were kept in the same value stream, using high
runners to store capacity (Sox et al. 1997) and level production. In this approach,
high volume items with regular demand are made to stock while low volume ones are
made to order. In periods of slow demand, excess capacity is used to build inventory
of fast moving items. These are then consumed as needed when demand is high,
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allowing production to focus on the slow demand items that are made to customer
orders. This approach introduces a self-regulating effect that increases the flexibility

Yearly contract Order processing Daily

Supplier process boxes & scheduling Customers

Other orders Gift catalogue orders

Weekly order (daily batch) (daily batch)

Dip Glazing Dept.

Bisque
Weekly Daily
kanban
Dip glazing family Dip Glaze Kiln
boards

MTO

QC &
Press Dryer Kiln Allocate FG Ship
Clay
Edge FG Shipping Dept.
Bisque
Bulb
Pressing Dept. Bulb glazing family Kiln
Glazing

Flow of dipped glazed tile Flow of kanban Bulb Glazing Dept.

Flow of bulb glazed tile Flow of order tickets

Yearly contract Order processing Daily

Supplier process boxes & scheduling Customers

Other orders Gift catalogue orders

Weekly order (daily batch) (daily batch)

Dip Glazing Dept.

Bisque
Weekly Daily
kanban Dip Glaze Kiln
boards Dip glazing family

MTO

QC &
Press Dryer Kiln Allocate
FG Ship
Clay
Edge FG Shipping Dept.
Bisque
Bulb glazing family Bulb
Kiln
Pressing Dept. Glazing

Flow of dipped glazed tile Flow of kanban Bulb Glazing Dept.

Flow of bulb glazed tile Flow of order tickets

Figure 2. Final state value stream map.

 3690 E. Lander and J. K. Liker

of the system to respond to fluctuations in demand and helps maintain processes

working at a levelled schedule.
Motawi’s pull system was designed to support this solution and thus combines
build-to-order and build-to-stock production on the same value stream. The bisque
and finished goods inventory hold only a fraction of the items (those with high and
steady demand) and are replenished using regular kanban. Items not in stock are
pulled using make-to-order kanban generated at allocation. However, since these
are created ‘as needed’ an additional mechanism is required to prevent the make-
to-order side of the business from behaving as a push system. Limited size
process boxes achieve this by controlling the flow of orders through the facility and
limiting the amount of WIP allowed in the system. The size of each box is given by
the days of work that each process needs to have access to (this is similar to the
standard WIP level in traditional lean applications) and is translated into volume
using the daily takt rate (as takt time, it defines the rate of production required to
meet demand). Jobs in the boxes are processed in release date order (or ship date
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order at shipping), which translates into a self-regulated and autonomously

expedited system that ensures that higher priority items (reworks or rush orders)
go to the front of the queue and get processed first.
By controlling the WIP, the process boxes also maintain a stable production
lead-time. This greatly facilitates scheduling, which is also tied to the pull system.
The schedulers have their own boxes divided into fixed size daily slots. When a new
order comes in it is dropped into the next open slot and the corresponding date
becomes the order’s release date. The ship date quoted to customers is calculated by
adding a standard lead-time to the release date. The schedulers reshuffle
their boxes daily to compensate for differences between the planned takt rate and
what production took.
Other TPS tools have also been adapted to work at Motawi, but will not be
described in such detail. Table 2 summarizes how the main ones are typically used in
traditional applications, the problems encountered at Motawi, and how they have
been adapted.
Even though these TPS tools have been adapted to Motawi’s conditions, the
philosophy behind them and their purpose remain the same. For example, in a
traditional environment, the purpose of using a pull system is to put a cap on the
WIP level, provide real-time usage information to tell suppliers what to work on, and
establish clear supplier-customer links that help surface problems. All these
objectives are satisfied by the pull system used at Motawi.

4.4 Results of using TPS at Motawi

In 2.5 years, the transformation process at Motawi produced significant performance
improvements as can be seen in table 3.
The focus on improving flow has greatly reduced the time jobs spend in the
studio, allowing Motawi to transform orders into cash much faster than before
and improving customer service (shorter lead-times and higher on-time deliveries).
The use of inventory and time (variable lead-time quoted to customers) buffers has
enabled levelled production, greatly facilitating managing the system, identifying
problems, and reducing waste. Reducing defects, besides reducing costs, has
increased the reliability of the production process and reduced variability.
 Downloaded by [Afit -ENWL] at 07:04 03 October 2012

Table 2. Use of TPS tools at Motawi.

Tool Use in traditional TPS Complications at Motawi Use at Motawi

Pull system Markets hold all items and Cannot hold 6400 catalogue items Stock items with high and steady
kanbans trigger replenishment in inventory; custom pieces are demand and replenish them using
of what is used common; over 2/3 of the volume kanban; use make-to-order cards
made to order for other items; limited size
process boxes regulate the flow
of orders between departments;
production pulls orders from
scheduling boxes
Takt time Takt time ¼ Available time/Demand. Variable takt time due to high Takt rate ¼ Average demand.
Defines the maximum time demand variability; with many Defines the parts per day that
(measured in seconds) that items having different cycle times processes need to make to
processes have to make a part and made in the same line, takt satisfy customer demand
and still satisfy customer demand time becomes an average with little
meaning for daily production
Levelling (heijunka) Establish a daily production rate Only a fraction of all items can be in Daily production target defined by
equal to the average expected finished goods; different items with takt rate (revised monthly); ratio
demand (volume levelling); different workloads are made of polychrome to field tile defines
define a production sequence every day making it impossible the mix (mix levelling at the
that minimises work overloads to develop a mixed schedule family level only); items in
and pulls components from finished goods and bisque market
suppliers at a steady rate (mix help buffer production from
The Toyota Production System and art

levelling); use finished goods demand variability; variable

inventory to buffer production lead-times quoted to customers
from demand variability provides additional buffering
Continuous flow Group similar products into families Low volume precludes the use of Links to help surface problems
and assign them to cells; locate separate lines; batch processes established by limiting WIP
processes next to each other in between departments (kilns) within and between departments
sequence, balance the workload and required drying time
precisely, and eliminate inventory (within departments) impose
between processes; tight connec- delays between processes
tions help surface problems
3691

(continued )
 Downloaded by [Afit -ENWL] at 07:04 03 October 2012

3692

Table 2. Continued.

Tool Use in traditional TPS Complications at Motawi Use at Motawi

Jidoka Build quality into the process; stop The majority of defects can only be Do in-station inspection; eliminate
production to solve problems detected in final inspection sources of defects by looking at
when defects appear; error proof main problem found in final
jobs; do in-station inspections inspection
Standardized work Specify work sequence, expected Standard cycle time cannot be Specify work sequence; extensive use
cycle time, and allowed WIP; defined since there are too many of ‘tips’ to indicate how to handle
proposed improvements compared parts with different work content different types of items; proposed
E. Lander and J. K. Liker

against standard to approve or running in the same line improvements accepted only after
reject running a before and after test
 The Toyota Production System and art 3693

Table 3. Performance improvement at Motawi Tileworks.

Metric Before After Per cent change

Profit and owner’s compensation 1 2.79 179.2

(August 2003 to December 2005)a,b
Profit and owner’s compensation 12.3% 20.1% 63.4
(August 2003 to December 2005)a
[per cent of sales]
Labour cost $0.44 $0.39
11.3
(August 2003 to December 2005)a
[$ salary/$ sales]
Productivityc $41.63 $61.34 47.4
(January 2003 to December 2005)
[$ sales/labour hour]
Average customer lead-timec 17.4 10.7
38.5
(January 2003 to December 2005)
[days]
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Quoted customer lead-time 6 to 8 1 to 5
50.0

(August 2003 to December 2005)
[weeks]
On-time deliveries 79.0% 93.1% 17.9
(July to December 2005)d
[per cent of total orders]
Average lateness 8.2 6.0
26.8
(July to December 2005)d
[days]
Inventory 3.75 1.30
65.3
(August 2003 to December 2005)
[months]
Inventory turns 3.2 9.2 187.5
(August 2003 to December 2005)
[turns per year]
Per cent defectivec 9.8% 7.5%
23.5
(August 2004 to December 2005)
[feet2 defective/feet2 sold]
a
Compares the average for a full year closing on the specified dates.
b
Data disguised at the request of Motawi Tileworks.
c
Based on trend line to avoid monthly variability.
d
Data is not available prior to July 2005.

Finally, even with a 70.5% increase in sales, by ensuring that everyone works on
what is needed and improving productivity, demand continues to be met without
major capital expenditures or expansions to the facility.

4.5 The rest of the system: improvement, learning, and the shift in mental paradigms
Even though the implementation of TPS tools resulted in significant performance
improvements, the physical changes were only one part of a wider transformation.
The evolution of the prevailing mental paradigms and the development of a
continuous improvement system that promotes organizational learning are at least as
important.
 3694 E. Lander and J. K. Liker

Continuous Improvement
&
Organizational Learning

Environment A way to
conducive to People capture new
experimentation knowledge

Structured
Drive for
improvement
improvement
process
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Shared
Direction for
understanding
improvement
of situation

Continuous Improvement
&
Organizational Learning

Environment A way to
conducive to People capture new
experimentation knowledge

Structured
Drive for
improvement
improvement
process

Shared
Direction for
understanding
improvement
of situation

Figure 3. Continuous improvement system.

The continuous improvement system deployed at Motawi followed the general

model shown in figure 3. A no-blame environment where problems are seen as
opportunities for improvement is necessary to ensure that people can experiment and
make mistakes as they learn. They must be willing and feel the urgency to make
things better to achieve an overall objective they support. Visual systems and
 The Toyota Production System and art 3695

standards are needed to highlight problems and promote a shared understanding of

the current situation. A structured process must be used to ensure that improvements
happen continuously and that results are consistently good. Finally, there must be
a way to capture knowledge to ensure that individual learning results in
organizational learning. The purpose of such a system is to support the people in
their daily efforts to improve their jobs. If properly deployed, this system becomes a
key mechanism for employee development and growth.
All elements depicted in figure 3 have been addressed to some degree, with the
most effort expended in defining and tracking metrics to identify problems and in
creating a structured improvement process. The most effective metrics have proven
to be at the department level reviewed daily, weekly, or even monthly. All are plotted
through time to display their trends and focus on production volume, defects, lead-
time, delivery, and profits. This approach was chosen since looking at trends helps
mitigate part of the performance volatility coming from excessive variability in both
demand and the products made. The improvement process has been structured
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around weekly meetings following the PDCA (plan-do-check-act) approach and

using genchi genbutsu (go see), 5-why, and hansei (reflection) to ensure that problems
are understood thoroughly, that their root causes are eliminated, and that learning
occurs. Standards are then used to capture the new knowledge and ensure that the
organization learns as well.
As Motawi’s Toyota-style system evolved it imposed changes in the work
environment. It went from having departments work independently choosing and
batching work for their own convenience, to having processes linked and working
together to drive whole orders through the studio as fast as possible. From having
employees choose what to make and work at their own pace with little feedback on
their performance, to having the system tell them what to make, the pace set by a
daily takt rate, and performance closely monitored and displayed publicly. From
having unclear goals, to having unambiguous targets, defined from clear business
needs and tracked frequently; and from improving sporadically, to improving
continuously as part of everyone’s job.
As people got used to working with the new system and began to understand it,
their mental models began to change. The batch-and-queue mentality where large
batches are more efficient was replaced by a small-batch JIT philosophy where
overproduction is not tolerated. The pursuit of local optimization was replaced by a
quest for company-wide performance improvement. Instead of fighting fires to get
through the day, the focus turned to planning for the future to make sure that the
required capabilities will be in place when needed. Instead of ignoring problems
and trying to work around them, they are now actively sought and their root causes
eliminated. The previous acceptance of waste and variability as a natural
consequence of the business was replaced by the need to reduce them.
The shift in paradigm was paralleled by an evolution in the understanding of
Toyota’s system. Initially the focus was exclusively on the tools and how each one
affected the physical process. This soon evolved to a system perspective where each
tool was seen as an integral part of a wider whole. As the implementation progressed
and tools needed to be refined, it became necessary to look beyond their physical
aspect to truly understand how they work and why they are needed. At this point
understanding the principles that define the thinking behind the tools became
necessary. As an example, the view on kanban evolved from seeing it as a mere way
 3696 E. Lander and J. K. Liker

to control production to an autonomic system that tied processes together to

highlight problems, synchronized their production, responded to fluctuations in
demand, and ensured that only needed parts were processed. After this shift in
perception, implementation of the pull system changed from following a recipe and
mechanically putting cards in inventory boxes to pursuing the development of a
holistic system critical to the performance of the firm and requiring constant tending
and continuous fine-tuning.

5. Implications

As the case illustrates, it is possible to adapt the tools of TPS and use them in novel
environments. However, it is not the use of a particular tool that makes the
difference in the long run. It is the deep principle-based understanding of Toyota’s
system, combined with a structured method for improving and learning, what will
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make Motawi self-sufficient in sustaining its lean journey and enable it to survive in
the future. Without them, the tools implemented would deteriorate or fail to adapt to
changing conditions and performance would degrade.
Focusing exclusively on the TPS tools, even if they are understood as part of a
wider system, can lead to the belief that lean is not usable in certain situations.
The tools commonly recognized as lean are just countermeasures developed by
Toyota in response to specific problems. Anyone dealing with problems that differ
from those will find that the tools, implemented exactly as Toyota uses them, do not
work or are not as effective. Should the conclusion be then that TPS does not work?
This has been a commonly held perception and perhaps the reason why TPS is not
more pervasively used. Even if the problems faced are exactly the same as those
Toyota found solutions for, copying the tools will at best result in the
implementation of a technical system that physically looks like TPS. But Toyota,
as any other organization, is the result of complex interactions between its technical
and social systems. One cannot work effectively without the other. Imitating
the technical solutions without a deep understanding of why they work and without
the social system to support them is a recipe for failure.
The alternative proposed in this paper is to look at Toyota’s system as a
philosophy defined by a set of guiding principles. Instead of trying to implement
kanban, heijunka, 5S, and poke-yoke, the idea is to design a comprehensive system
that satisfies the principles. With this perspective the TPS tools may be used as they
are regularly implemented in traditional applications, they may be modified to fit the
needs of the organization, or they may be dropped altogether and replaced by
something completely different. By understanding Toyota’s system at a principles
level we can make the right choices to ensure that the tools implemented fit the
organization and support its people while achieving the objectives they were
designed for.
The principles provide a foundation of understanding and thus should be the
guiding force behind every TPS transformation. However, a true Toyota-style system
cannot be developed or even fully understood based on theory alone. Truly
understanding TPS and how it applies to the particular organization requires getting
involved in the implementation process to try things out. Only by doing this can we
test the hypotheses implicit in our understanding of TPS. Things that work as
 The Toyota Production System and art 3697

expected confirm our beliefs. However, when things go awry, we are forced to revise
our theoretical constructs and our knowledge of the system deepens. In this sense the
principles provide a general theoretical framework while the tools provide the means
for testing it and developing further knowledge. Only through this process of
discovery is it possible to gain sufficient understanding of TPS to develop a Toyota-
style system customized for a particular organization. And, once the system is in
place, it is only the process of discovery that keeps it alive and evolving to meet new
challenges. Without discovery there is no learning and the system stagnates.
It is precisely this evolution through improvement and learning that is at the core
of Toyota’s system. A true Toyota-style system is a learning organization that is
constantly adapting its technical and social systems to improve its performance and
ensure its long-term survival so that it may continue to fulfil its purpose of
generating value for society and for its stakeholders. A true Toyota-like organization
is one that is continuously improving, constantly learning, and relentlessly learning
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to learn.

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