Toyota's approach is viewed by many western multinationals as the benchmark product development system, writes Clifford Coonanin Beijing
Western managers at major industrial concerns are speaking a lot of Japanese right now. Senior strategists are taking the respectful mantle of sensei, or teacher, and peppering their discussions with words such as obeya, bucho and shusa when talking about how to introduce lean production and to better integrate ideas.
There is broad recognition that companies these days need to be flexible and quick to innovate, and the focus is increasingly on building a system that sidesteps the constraints of conventional R&D and constantly reinvests in improving the process. This is why so many companies are turning Japanese. Obeya is a big room, bucho is a department manager and shusa is a chief engineer and all of the above are key concepts in understanding the template for lean production everywhere - Toyota's product development engine.
Speed in product development at Toyota, which is about to become the world's number one carmaker, is the envy of companies in all sectors and the company's new product engineers are 400 per cent more productive than their equivalents in other plants. This is a fact that has other car companies, especially those struggling in Detroit, and leaders in other sectors, such as Harley Davidson and Dell pricking up their ears, wondering how they can boost productivity and increase the scope for creativity that the Toyota product development system allows.
"Since it is a total system, it takes years to develop. I do not think it will take a company 60 years to get better, but it will not happen in one or two years either. It takes Toyota about five to six years to develop a single junior engineer who can function pretty autonomously on a product development programme, so why should another company transform their entire product development system in less than that?" said Jeffrey K Liker, professor of industrial and operations engineering, University of Michigan at Ann Arbor and co-author with James M Morgan of The Toyota Product Development System.
Toyota is avowedly evangelist about this system, which is fuelling debate on Powertrain car-making lines, in the clean rooms of pharmaceutical companies and in boardrooms in the West, as leaders try to bottle the system's magic without spending 60 years to develop it.
It's not a perfect system, and there have been issues on the consumer side. Last year, Toyota's president, Katsuaki Watanabe, was forced to bow down and promise to introduce a "customer first" programme following some embarrassing recalls. This programme could redirect engineering resources and possibly even lead to delays in the product development process. And there are still issues in consumer surveys, for example the problems with the Tundra full-size pick-up.
But the core principles are there to be emulated. Boeing has implemented major aspects of the Toyota system in its efforts to continue as an aerospace leader and to find ways to make its products cost-competitive in sectors such as commercial airplanes, for example, or in its ongoing competition with Airbus. The focus is on lean production and efficiency.
"The marketplace is demanding lower prices for our products," Ross Bogue, commercial airplanes vice president of manufacturing, writes on Boeing's website, "and costs need to be below price to run a healthy business". Lean production has paid off for the aerospace giant. The 737 programme, for example, has shaved its flow time by 30 per cent, reduced its crane moves by 39 per cent, lowered its inventory levels by 42 per cent, and reduced its needed floor space by 216,000sq ft.
Japanese consultants like Chihiro Nakao, founder of Shingijutsu, have been hired by Boeing and are called sensei.
"To make planes is to make and develop people," said Nakao. "We use the word kaizen [ continuous improvement], but all it's really about is training the people who make it happen." The approach seems esoteric, but the Toyota system is a mindset, and central to its success is an understanding of lean product development of turning problems into opportunities.
One example is their determined efforts to synchronise processes. The system tries to co-ordinate the activities of a large number of people to enable work to progress simultaneously instead of serially. That's how they can be the fastest in the world in product development.
For Liker, a crucial insight into the process comes from the chief engineer on the Prius hybrid vehicle project, Takeshi Uchiyamada.
"It is rooted deep in the culture in things like 'plan, do, check, act', the chief engineer system, standardisation, etc. It is the totality of it working together in the culture established across many years that make it all work. What is actually happening in your workplace? It is not necessarily a great business or finance system that will make a company good. It is what is actually happening in our workplace every day such as kaizen that makes us strong," said Uchiyamada. See what I mean about evangelism?
Swedish heavy truck and bus maker Scania based its production system on the Toyota system, and describes the results as "astounding". "In the development of the new truck range launched in 2004, thousands of possible faults that may have caused problems for the customers were discovered and amended before the first truck was delivered. That means we were able to spare our customers most of the teething troubles," said Thomas Karlsson, senior vice president at Scania.
Before the introduction of that production system, quality control was focused on events and results, but the focus changed to working methods.
"Improving them is the only way to ensure continuous improvement," said Karlsson. The group also made individuals responsible for quality control.
"Every deviation from the norm is an opportunity for improvement," explains Karlsson. "Employees who discover deviations and faults are rewarded, even if they are the source of the fault. Finding a fault is a chance to correct it before the product reaches the customer. The more deviations we find, the better our products become."
Western companies have experimented with Japanese production theories before, not always generating the right cultural fit - the sight of British car workers doing their morning exercises in the Nissan plant in northern England during the 1980s sticks in the mind. But Toyota's product development engine is different.
"Because of the performance this has generated, almost all automotive companies are looking at this system. Toyota is viewed as the benchmark - fastest to market, higher productivity, quality advantages, durability, unit cost advantages," said Kevin Dehoff, an analyst at Booz Allen Hamilton who authored the study Innovation Agilitywith John Loehr this year.
"The Toyota product development system can have a pretty significant application outside the car industry. The aerospace and defence industries are interested. In the aerospace industry, they start off interested in the production process, then turn to product development," said Dehoff. "While each industry is unique, I believe a lot of our clients still look at Toyota as being one of the benchmarks and there is a lot of attractiveness in terms of systems and applicability. There's no silver bullet, but some of the best practices are applicable."
It's about more than spending money or simply replicating the system in a superficial way - simply giving your chief of production the title of shusa is not going to turn around your business.
"It's more about commitment and resolve," said Dehoff. "Some companies do visible things but they don't put commitment and the underlying things in place. You can't just flick the switch, this is not an overnight transformation."
