© Emiel van Est Did
Toyota Fool the Lean Community for Decades? Emiel van Est & Pascal Pollet March 2014

© Emiel van Est In
the Lean community we admire Taiichi Ohno for his role in the development of the Toyota Production System.

© Emiel van Est Get
ready to admire him even more!

© Emiel van Est Hi
I am Emiel van Est Toyota Kata ambassador The Netherlands I am Pascal Pollet Toyota Kata ambassador Belgium emiel@leanmanagement.nl pascal.pollet@sirris.be

© Emiel van Est Yes
we both speak Dutch!

© Emiel van Est Recently
we read something amazing. Near the end of his life Taiichi Ohno said in an interview:

© Emiel van Est “I’m
proud to be Japanese and I wanted my country to succeed. I believed my system was a way that could help us become a modern industrial nation. That is why I had no problem with sharing it with other Japanese companies, even my biggest competitors.” - Taiichi Ohno - Source: Profitability With No Boundaries P99

© Emiel van Est “But
I was very, very concerned that you Americans and the Europeans would understand what we were doing, copy it, and defeat us in the marketplace.” - Taiichi Ohno - Source: Profitability With No Boundaries P99

© Emiel van Est Hey,
wait a minute, I thought Toyota had been very open to us…

© Emiel van Est “I
did my best to prevent the visitors from fully grasping our overall approach.” - Taiichi Ohno - Source: Profitability With No Boundaries P99

© Emiel van Est
Okay…

© Emiel van Est “I
explained it by talking about … reduction of the seven wastes (muda)” - Taiichi Ohno - Source: Profitability With No Boundaries P99

© Emiel van Est
WHAT?

© Emiel van Est Talking
about the 7 Wastes was a way to confuse his visitors?

© Emiel van Est Even
today for many people Lean = Eliminating Waste

© Emiel van Est His
strategy to confuse us is still effective almost 25 years after his death! RIP Taiichi Ohno February 29, 1912 – May 28, 1990

© Emiel van Est Just
an empty slide for you to fully grasp this… Take your time….

© Emiel van Est As
said, we are Toyota Kata ambassadors

© Emiel van Est With
the improvement kata it can be explained why the 7 wastes was a way to confuse.

© Emiel van Est The
improvement kata is a pattern of thinking and acting we can practice to meet challenges.

© Emiel van Est Just
like in martial arts

© Emiel van Est As
you can see, the improvement kata starts with understanding the direction.

© Emiel van Est Eliminating
waste lacks direction 1 2 3 45 6 7 Overproduction Inventory Waiting MotionTransport Rework Overprocessing

© Emiel van Est What
to do? Logistics Manager Production Manager We need smaller bins to reduce travel distance for our assembly people We need bigger bins to reduce travel distance for our logistics people Example from Toyota Kata P40

© Emiel van Est What
is the right direction?

© Emiel van Est “All
we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.” - Taiichi Ohno -

© Emiel van Est That’s
where kanban comes in right?

© Emiel van Est “I
explained it by talking about techniques … with Japanese names like kanban…” - Taiichi Ohno - Source: Profitability With No Boundaries P99

© Emiel van Est Kanban
was another way to confuse us?

© Emiel van Est
YES!

© Emiel van Est By
focussing our attention on the tools Ohno could hide the most important: his way of thinking and acting. Lean solutions (tools, techniques and principles) to improve quality, cost, delivery • A systematic, scientific routine of thinking & acting • Managers as the teachers of that routine Visible Less Visible Image by Mike Rother

© Emiel van Est We
just copied the solution without understanding the thinking that created the solution.

© Emiel van Est We
misunderstood the purpose of kanban.

© Emiel van Est The
purpose of kanban is to eliminate kanban!

© Emiel van Est The
best number of kanban cards is 0

© Emiel van Est Ah
I understand. We do not want material to stop; we want it to flow continuously so we get the shortest lead times.

© Emiel van Est Well,
Yes and No… Stay with us, we will explain.

© Emiel van Est First,
lets talk about making money.

© Emiel van Est “Costs
do not exist to be calculated. Costs exist to be reduced.” - Taiichi Ohno -

© Emiel van Est Who
has used these graphs? Traditional Thinking Price = Cost + Profit This worked when supply was lower then demand Lean Thinking Profit = Price – Cost That changed to a situation with more competition and the market dictating the price Cost Profit Price Cost Profit Price Value in Market

© Emiel van Est Don’t
be shy, we did it too!

© Emiel van Est What’s
wrong with these graphs? Cost Profit Price Cost Profit Price Value in Market

© Emiel van Est These
graphs hide some important information!

© Emiel van Est Over
the years the portion of fixed costs has risen. 

© Emiel van Est Leaving
us with less to improve 1920 1960 Fixed Cost Profit Price Variable Cost

© Emiel van Est These
graphs lack a second dimension. 

© Emiel van Est Variable
costs vary by volume Volume $ Fixed Cost Profit Variable Cost

© Emiel van Est Profit
= Price – Cost Profit = Sales – fixed cost – variable cost Volume $ Fixed Cost Profit Variable Cost

© Emiel van Est We
were directed to improve an ever smaller portion of variable costs to improve our margins.

© Emiel van Est The
better way to improve margins is…

© Emiel van Est …to
increase volume with the same fixed costs and less variable costs.

© Emiel van Est So
Ohno directed us in this direction… $ Fixed Cost Profit Current Condition Volume

© Emiel van Est …
while he spurted in this direction! $ Fixed Cost Profit Current Condition Volume

© Emiel van Est Sorry
to bother you with another book but we do not want you to think we make this all up…

© Emiel van Est From
the very beginning Toyota set course to beat GM Source: Inside the Mind of Toyota P58

© Emiel van Est Imagine
the difference at the time!

© Emiel van Est So,
back to continuous flow and kanban. What were we thinking?

© Emiel van Est Were
we thinking this?

© Emiel van Est Or
this? Ohno frequently referred to his river system Source: Profitability With No Boundaries

© Emiel van Est Ever
used this image? No worries, this is one of our own… Waiting Inventory Transport Over- production Rework Over- processing Waiting Inventory Transport Over- production Rework Over- processing

© Emiel van Est It
is not about the boat, it is about the water! Waiting Inventory Transport Over- production Rework Over- processing

© Emiel van Est It
is not a lake, it is a river. Waiting Inventory Transport Over- production Rework Over- processing

© Emiel van Est It
is not about less water. It is about more water flowing faster.

© Emiel van Est That
is why the rocks have to move!

© Emiel van Est Is
there more we misunderstood? What about quality?

© Emiel van Est Is
quality “Job One” at Toyota?

© Emiel van Est “There
are two reasons we try to improve quality.” - Taiichi Ohno - Source: Profitability With No Boundaries P101

© Emiel van Est “If
our product is better more people will buy it.” - Taiichi Ohno - Source: Profitability With No Boundaries P101 

© Emiel van Est “Also,
bad quality causes big disruptions in my river system.” - Taiichi Ohno - Source: Profitability With No Boundaries P101 

© Emiel van Est “When
the experts from your country visited, they noticed that our machines were very dependable, our quality was high... I understand that many went back … and suggested you implement preventative maintenance programs, quality circles, and other programs in order to copy our results.” - Taiichi Ohno - Source: Profitability With No Boundaries P101

© Emiel van Est “I
do not think that they understood why we did these things, which might explain why these changes often weren’t very helpful. I tried to prevent them from understanding why we wanted a river system, and I think I was successful.” - Taiichi Ohno - Source: Profitability With No Boundaries P101

© Emiel van Est Oh
yes!

© Emiel van Est While
Ohno pointed us to the rocks in the water

© Emiel van Est He
hid his river system plans…

© Emiel van Est Now
we understand this we can create more value for everyone on this planet.

© Emiel van Est So,
lets make a deep bow for Ohno

© Emiel van Est He
was truly brilliant!

© Emiel van Est Want
another quote? Here is one more for you to chew on…

© Emiel van Est “Where
there is no Standard there can be no Kaizen” - Taiichi Ohno -

© Emiel van Est Thank
you for staying with us!