Taiichi Ohno (1912-1990) was born in Dalian, in eastern China. He had joined Toyota Automatic Loom Works between the wars. This was the first business of the Toyoda family until it was sold to a British company, Platt Brothers, and the family decided to invest the money that it had gained from the sale in manufacturing motor cars.
Ohno switched to work as a production engineer for Toyota, a car company, towards the end of the second world war, at a time when its productivity was way below that of America’s mighty Detroit industry. Toyota’s boss declared that it “must catch up with America within three years”.
Ohno decided there was no reason other than inefficiency and wastefulness why Toyota’s productivity should be any lower than that of Detroit. Hence he set out to eradicate inefficiency and eliminate waste in the part of the production process that he was responsible for. This became the core of the so-called Toyota Production System (TPS) that he and others subsequently developed between the mid-1940s and the mid-1970s. Several elements of this system have become familiar in the West: for example, muda (the elimination of waste), jidoka (the injection of quality) and kanban (the tags used as part of a system of just-in-time stock control). Three men were especially prominent in creating the Toyota Production System: Sakichi Toyoda; his son, Kiichiro Toyoda; and Taiichi Ohno.
Sakichi Toyoda was the inventor of automatic looms who founded the Toyota Group. He invented a loom in 1902 that would stop automatically if any of the threads snapped. His invention opened the way for automated loomworks where a single operator could handle dozens of looms. The principle of designing equipment to stop automatically and call attention to problems immediately is crucial to the Toyota Production System. It is evident on every production line at Toyota and at other companies that use the system.
When the Toyota Group set up an automobile-manufacturing operation in the 1930s, Sakichi’s son Kiichiro headed the new venture. Kiichiro traveled to the United States to study Henry Ford’s system in operation. He returned with a strong grasp of Ford’s conveyor system and an even stronger determination to adapt that system to the small production volumes of the Japanese market.
Kiichiro’s solution was to provide the different processes in the assembly sequence with only the kinds and quantities of items that they needed and only when they needed them. In his system, each process produced only the kinds and quantities of items that the next process in the sequence needed and only when it needed them.Production and transport took place simultaneously and synchronously throughout the production sequence — inside and between all the processes. Kiichiro thus laid the groundwork for just-in-time production, and he gets credit for coining the term “just in time.”
The man who did the most to structure the Toyota Production System as an integrated framework was Taiichi Ohno. He experimented with various ways of setting up the equipment to produce needed items in a timely manner. But he got a whole new perspective on just-in-time production when he visited the United States in 1956. Ohno went to the United States to visit automobile plants, but his most important U.S. discovery was the supermarket. Japan did not have many self-service stores yet, and Ohno was impressed. He marveled at the way customers chose exactly what they wanted and in the quantities that they wanted. Ohno admired the way the supermarkets supplied merchandise in a simple, efficient, and timely manner.
In later years, Ohno often described his production system in terms of the American supermarket. Each production line arrayed its diverse output for the following line to choose from, like merchandise on supermarket shelves. Each line became the customer for the preceding line. And each line became a supermarket for the following line. The following line would come and choose the items it needed and only those items. The preceding line would produce only the replacement items for the ones that the following line had selected. This format, then, was a pull system, driven by the needs of the following lines. It contrasted with conventional push systems, which were driven by the output of preceding lines. Ohno developed a number of tools for operating his production format in a systematic framework. The best known of those tools is the kanban system, which provides for conveying information in and between processes on instruction cards.
He is now known for being the father of the Toyota Production System. He was the one who drove development and practical application of the TPS. He believed in teaching leadership by example and empowering employees.
Quote from Ohno: “Costs do not exist to be calculated, they exist to be reduced.”
As we all know TPS has two pillars: Continuous Improvement (often referred to as Kaizen) and Respect for People. The word Kaizen is often referred to as Toyota’s basic approach of doing business. The notion of ‘respect for people’ shows that Toyota truly does care about the individuals that work for them and their contributions they can give to the company. Along with continuous improvement, employees should know that they are not only empowered to be involved, they are expected to continue learning and growing as individuals. This in turn not only helps employees have more satisfying careers, but also will help the company use each employees potential of contributing and making the company more successful and profitable through these continuous efforts. By providing an atmosphere such as this, it helps people embrace change, where as traditionally people are resistant to change.
Where did Toyota get the idea for the TPS?
Soon after WWII had ended and when Taiichi Ohono became the machine shop manager for the Toyoda Group Automotive Operations, they experienced drastic material shortages because of the War. Mr.Ohno gradually developed a more efficient assembly line process and started creating unique ideas which are now known to be key points in the TPS. Ohno credited the TPS to two concepts. One was developed from from Henry Ford’s book ‘Today and Tomorrow’. This helped them understand manufacturing and gave the basis of a production system and what Ford used. Toyota wanted to emulate the Ford assembly and production line. Ford had mastered the conveyor belt system and Toyota knew they could learn a lot that could be used for their production lines. One thing that worried them is Ford was using mass production, but they had the market for it. Toyota could not afford to keep the kind of inventory nor manpower that was necessary for that type of mass production because their market was much smaller. Important to note: Mr. Ohno and his associates took the things they learned from Ford and tailored it to Toyotas needs.
The second concept as we know was driven by the supermarkets in the United States observed during a visit in the late 50’s. The supermarkets helped them with understanding replenishment and how products were constantly being delivered.
Ohno believed that eliminating waste should be a business’ first objective. Muda is a Japanese term that defines something that is wasteful and does not add value. It is extremely important and a key element to separate all of the value added and non value added activities. Once you reach this point you can clearly see what the customer is paying for and start working on how to minimize waste. The seven wastes of TPS are Overproduction, Waiting, Transporting, Too much machining (Over-processing), Inventories, Moving, Making defective parts and products. Mr. Ohno believed that asking ‘Why’ 5 times should help you define what the root cause of the problem is. Of course you can go further and continue to ask why more than 5 times if it is needed. This concept can often be practiced by using a fishbone diagram a.k.a. The Ishikawa diagram. Ohno believed there should not be stagnation during any process of the production line. He would get angry and scold others when products were sitting and not being used. Products evolve and change as technology changes. We must eliminate stagnation and keep a continuous flow of products. An example of takt time: in an assembly line a product is moved to different stages after a certain time (takt time). The time to complete each stage must be less than the takt time in order to complete the product in the given lead time and meet the customer demand. Problems hind behind inventory. Ohno helped in implementing the ‘Just-in-time’ concept which in turn would assist with level loading and making a continuous flow within the production line.
What if we are running faster than Takt Time?
- Inventory increases
- Lead times increase
- Demand on suppliers increase
- Cost increase
What if we are running slower than Takt Time?
- Overtime needed to meet demand
- Product increases in cost
- Shipping costs will increase
- Customer dissatisfaction
- Missed shipments
Kanban was one more tool which was prevalent in Toyota. Kanban is a simple and clear way to communicate that something is needed. It is often referred to as a signal. Kanban may help in the long run with continuous improvement and help product flow and production processes. Kanban was developed by Taiichi Ohno, at Toyota, to find a system to improve and maintain a high level of production. Kanban is one method through which JIT is achieved.
Taiichi Ohno stated that to be effective, kanban must follow strict rules of use. Toyota, for example, has six simple rules, and close monitoring of these rules is a never-ending task, thereby ensuring that the kanban does what is required.
Toyota’s Six Rules
- Do not send defective products to the subsequent process.
- The subsequent process comes to withdraw only what is needed.
- Produce only the exact quantity that was withdrawn by the subsequent process.
- Level the production.
- Kanban is a means of fine tuning.
- Stabilize and rationalize the process.
Ohno’s principles influenced areas outside of manufacturing, and have been extended into the service arena. For example, the field of sales process engineering has shown how the concept of Just In Time (JIT) can improve sales, marketing, and customer service processes.
Source: Book on Toyota Production System, Economist, Online article written by Ronald M. Becker, www.toyotageorgetown.com