Emulate Toyota Production System Small Business

Emulating The Toyota Production System in Small Businesses

When last did you change or improve something in your business?

Most business owners are so busy that they rarely take the time to look at their business from an outside perspective and see where things aren’t working, or where things could work better.

Small changes done regularly, can have a massive impact on your business.

 

 

Toyota, for example, became a big multinational corporation due in part to their unique and innovative improvement system which was based on continuous improvement. Prior to developing the “Toyota Production System”, Toyota was an insignificant small business.

Nowadays, Toyota is a household name and is known worldwide.

Related: What is Business Systemisation?

Toyota is an excellent case study illustrating how small, continuous improvements drive productivity and increase the quality of operations. We can all draw lessons from their success.

Brief History of Toyota

Toyota has quite a history, so this is merely a summary. The Toyota story sets off in 1926, when the founder, Sakichi Toyoda, started Toyoda Automatic Loom Works; a manufacturer of automatic looms.

The Japanese government encouraged the company to produce automobiles, because they needed domestic vehicle production, during the war with China.

The automobile branch-off is known today known as Toyota Motor Corporation.

 

 

Image Source: By Chris 73 / Wikimedia Commons, CC BY-SA 3.0
Replica of the first production model of Toyota in 1936

 

During World War II, the company was dedicated to truck production for the Imperial Japanese Army, and due to severe shortages in Japan, military trucks were kept as minimalas possible, doing away with anything that was not essential. The war ended shortly before ascheduled Allied bombing run on the Toyota factories in Aichi.

After World War II, it was natural that Japan would experience extreme economic difficulty,Toyota decided to start commercial passenger car production in 1947. However, by the end of 1949, the company was on the brink of bankruptcy but managed to obtain bank loans.

In June 1950, the company produced a mere 300 trucks and was on the verge of going out of business, but the Korean War resulted in an order of over 5,000 vehicles from the US military, and the company was revived and began to expand in the 1960s with a new research and development facility. (Source: Toyota and Wikipedia)

Related: 3 Key Ingredients to a Successful Working System

What is The Toyota Production System?

The Toyota Production System (TPS) was developed between 1948 and 1975. It is an approach to complex organisational work design that recognises the interaction between people and technology.

The foundational principle of TPS is that the right process will produce the right results.

 

 

There are 7 principles of the Toyota Production System, 5 of which can be used in small businesses:

  1. Create continual process improvements to bring problems to the fore.
  2. Build a culture of stopping to fix problems, so that things are done right the first time.
  3. Standardise processes.
  4. Use visual control so no problems are hidden.
  5. Utilize the right technology to serve people and processes.

 

In review, the benefits of the Toyota Production System are to produce:

  • Quality
  • Minimal costs
  • On-time delivery
  • High employee engagement

 

2017 Lexus Motomachi lc500 Manufacturing Plant
Image credit to CarAdvice.com.au

Toyota Production System Principles for Service Businesses

PRINCIPLE 1: Set up continual service improvement processes. Make someone responsible for managing each process, to be aware of problems as they arise.

Put business systems in place that flag issues. For example, create operational service feedback systems to collect customer reviews which drive continual improvements throughout operations.

PRINCIPLE 2: Build a culture that takes the time to fix problems at their root cause instead of attempting to constantly fight fires on the go. Incorporate modern methods for quality assurance and encourage any negative feedback from clients and staff alike to drive continual changes and improvements.

Develop business systems to notify you when things go wrong. Aim to get things done right the first time.

Related: How to Turn Problems into Better Systems

PRINCIPLE 3: Standardise processes, and then, once that’s achieved, keep improving to get better results. Work on methods to ensure employees comply to standardised processes, including Key Performance Indicators.

Make sure definitions are clear so that there is no confusion. For instance, the interpretation of “acceptable quality” depends on the subjective opinion of “acceptable”, so defining “acceptable” is essential.

PRINCIPLE 4: Use visual control, so no problems are hidden. It’s vital to document process flows and business systems so that all employees know what’s expected and can be empowered with information that helps them achieve the overall business goals.

Make the documents readily available to all relevant staff. Documenting business systems and process flows aids Key Performance Indicators, and helps set employees up for success.

PRINCIPLE 5: Use technology to enhance, not as the be-all and end-all. Technology should not be viewed as the answer to all business woes, but it should instead be seen as a method to improve processes. It should support people, not replace people.

 

 

Stick to reliable technology, research well and try different options to make the transition as smooth as possible.

Related: How your Business can Work Smarter with New Technology

Lesson to Take Away

The Toyota Production System is one of the more well-known production systems in the world. I’ve heard reports from people who have had the opportunity to visit one of the many Toyota factories that it’s operations resemble that of a precision rocket factory.

One of the biggest takeaways from the system is, in essence, “Lean” means a relentless culture for committing to quality and continuous improvement.

 

 

What this translates to for the small business is a daily management system that is well structured and systematic. Results should be visible in real-time with a problem to solution process working in fast cycles producing efficiency of operations.

Another lesson we can learn from the factory floor is that everyone knows exactly what they should be doing and when. At Toyota, you will find work instructions that are visible, up to date and followed precisely. Job rotation is encouraged between teams; this is something not well practised in most small businesses; therefore issues appear when a key team member is missing. Teamwork is pivotal, by choosing motivated team members, there is a higher chance of achieving major improvements.

 

Emulating The Toyota Production System in Service Businesses

 

One more key point that is often the most overlooked it that Business Owners and Managers should lead, coach and support but not try to fix all the problems. Most business process improvement activities are conducted by management rather than the people who do the work. Creating a culture of process improvement at the team level is the best way to ensure the entire team buy-in.

Related: 5 Ways to Get Buy-in from your Team when Systemising your Business

If having a business that is systematic, predictable and efficient is something that you strive for, book a time to chat and let’s see how we can incorporate the Toyota Production System principles into your business.