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Toyota Production System: Jim Womack's Insight

While there’s been a glut of articles bemoaning the fall of Detroit, there’s a certain herd mentality guiding them. Who isn’t urging the big three to make more exciting cars, while blaming excessive legacy costs, and taking shots at executive compensation and lack of vision? None of these conventional arguments is untrue, in my opinion. Yet none do enough to explain why, at a time when Detroit is shedding employees by the tens of thousands, employment in this sector remains stable due to the growth of foreign car companies producing vehicles in the state.

For the past year and a half, I’ve been learning about lean manufacturing, or TPS (Toyota Production System.) There are several excellent books on the topic, including Jeff Liker’s The Toyota Way and The Toyota Way Fieldbook. My favorite books in this area are by Jim Womack and Dan Jones (who I’ve done some work for as a consulting editor of late). Earlier this week Jim published an e-letter of his titled A Tale of Two Business Systems (registration required) offering a provocative explanation of how Toyota prevailed. I recommend that you read it.

This prompted me to ask Jim to explain how his books relate to the current crisis. I posed the following questions to him: "Jim, your recent post cast the current crisis in Detroit in an entirely new light. How did your earlier
book The Machine That Changed the World come to identify today's situation? And what are the applicable lessons that automakers, manufacturers, and any other businesses facing harsh market conditions draw from the latest Womack/Jones book Lean Solutions?"

Jim's Answer: It's been amazing to me that in the years since “Machine� came out readers repeatedly have told me that "it's a great book about production". But in fact the book devotes a chapter each to the lean (read Toyota) way to deal with suppliers, with customers, with the development process, with overall company management, and...with production. What's more the chapters are exactly the same length with the same level of detail! So how can anyone think that "Machine" is a book about production rather than what it really is -- a comprehensive description of two starkly different business systems?

I guess its just natural to think about the factory when you think about a manufacturing company (car plants are just so big and so vivid as industrial metaphors) but I'm now hoping that managers are ready to change their focus from that one element of a five part system to the whole system. And if they are willing I think it is largely because the production element of the system has largely been copied by American firms even as Toyota, Honda, and Nissan have rapidly build their own factories in North America. And it's the different Toyota approach to product development, supplier management, policy management (to effectively align the whole organization), and customer touch (in the case of Lexus) that is now killing MoTown, not creaky factories. Ford and GM wouldn't be in serious trouble if automotive competition was just about factories, because their factories are now very nearly comparable to Toyota's.

So, after sixteen years and as GM and Ford threaten to collapse, perhaps American managers are finally ready to look at the big picture rather than the partial picture and to get on with the task of creating complete lean enterprises. "Machine" gives a very clear picture of what these will look like.

The area where I think we've made the least progress in implementing lean enterprise is in the link between the customer and the provider. Part of the problem is that Toyota is only now trying to "lean" its own retail and distribution network in North America. So there has been no example. And part of the problem has been the service businesses -- retailers, distributors, maintenance firms, healthcare providers, and financial organizations -- don't seem to be able to translate easily what a manufacturing company has done to the activities they are involved in.

This perception gap was the motivation for my and Dan Jones's latest book, "Lean Solutions". We work backward from the customer's needs and desires, usually to solve a problem in their lives with no hassle, through the process they must follow to get the desired results. (And by the way, the usually need a combination of goods and services to solve their problem while most providers feel most comfortable offering one or the other on a one-time basis.) Then we look at the process the provider is following to deal with the customer. And...there is a gigantic mismatch in perceptions and expectations that creates an enormous business opportunity for a wide range of businesses. We consider everything from how to run call centers along "lean" principles to how to sell and service cars and to how
to rethink healthcare and airlines.

It's still early days for the early adopters now following this path but Dan and I are convinced that this is the real opportunity for business organizations in the U.S. and Canada in an age where more and more routine manufacturing tasks will be performed in lower-wage areas. The alternative is to use "lean" with zero creativity to try to squeeze ever more waste out of existing manufacturing operations. That's fine as far as it goes, but it doesn't go very far because the real issue for the future is creating a complete lean enterprise including every element of the value creating process. That goes far beyond the factory, if there still is a factory.