In the field of management, when mentioning Peter Drucker, known for his theoretical insights, one cannot help but think of Taiichi Ohno, who similarly achieved great success in management practice. Taiichi Ohno, the former vice president of Toyota Motor Corporation, earned the honorary titles of “Father of the Japanese Revival” and “Godfather of Production Management.” During his more than sixty years at Toyota, Ohno experienced hardships and setbacks and ultimately developed a unique and revolutionary production philosophy—the Toyota Production System.
“The Toyota Production System,” as Ohno’s masterpiece, is widely respected in the global manufacturing industry and is considered an authoritative textbook in the field of production management. The book deeply analyzes the secrets behind Toyota’s industry-leading position and details core management concepts including just-in-time, automation, the kanban system, standard work, and lean production.
The book not only focuses on theoretical frameworks but also reveals how Toyota, in the face of a severe economic slowdown, has maintained its core competitiveness of low cost and high profits through in-depth exploration and effort in human capital.
1. “0.1 person is also 1 person”
In the process of business operation, an eternal theme is how to use as few human resources as possible to achieve the highest possible production efficiency. Toyota Motor has proposed a unique concept: “Labor-saving.” Unlike the general concept of “labor-saving,” which is often associated with construction machinery such as cranes or bulldozers that bring direct savings in effort, in the automotive industry, “labor-saving” refers more to partial automation or localized automation measures.
In some factories, we find that only in the final stage of the production process are labor-saving automated devices introduced, while all the steps before that still rely on manual operation. This approach of seeking temporary ease is inadvisable because it may lead to an increase in costs. How can we increase output by reducing human resource input? The approach of starting from simply reducing working hours is inappropriate. For example, even if the work hours are reduced by 0.9 person, it doesn’t help to achieve real “Labor-saving.” It is only through improving work processes and optimizing procedures, and further promoting equipment improvements and automation that we can approach this.
I want to emphasize here that improving work processes and improving equipment should not be confused with one another. If we start with improvements in equipment, the result will not only fail to reduce costs but may even lead to an increase in costs. Toyota has adopted a new term, “Fewer people,” to more accurately describe this ideal production state. We have removed the character “目” (indicating “saving” or “sparing”) from the word “省人化” (Labor-saving), thus creating the new term “少人化” (Fewer people). This new concept originally appeared by chance in a typo, when an internal newspaper reported my speech and mistakenly wrote “省人化” as “少人化.” This seemingly accidental error brought me profound reflections and was eventually adopted by us, as it more genuinely reflects the core philosophy of pursuing efficiency and leanness in our production process.
At Toyota, we have adopted a management strategy aimed at reducing the number of employees. We believe that reducing staff by increasing efficiency will help achieve more efficient operations, rather than simply cutting staff numbers.
The so-called strategy of a smaller workforce is different from the traditional method of reducing staff numbers. Reducing staff typically implies layoffs after extensive hiring, due to a decrease in work demand. On the other hand, the strategy of a smaller workforce plans from the start to complete tasks with fewer personnel, aiming for high efficiency and flexible staffing.
In 1950, Toyota experienced a layoff that led to serious labor disputes. However, with the outbreak of the Korean War, the U.S. military’s special orders required us to increase production on a large scale. It was at that time that we achieved a production leap with the fewest number of people, and from this experience, we managed to complete the same volume of work as other companies with 20% to 30% fewer employees.
The key to achieving the Toyota spirit lies in the innovativeness, effort, and execution of the practitioners of the Toyota Production System, the “Toyota people.” What we advocate in the Toyota Production System is to avoid creating silos artificially and to achieve collaborative work through the promotion of cooperation among employees, rather than working in isolation.
In thoroughly analyzing waste, we believe that improving efficiency and cutting costs must go hand in hand. While ensuring the minimum number of personnel to produce the required quantity of products, it is necessary to start from the overall efficiency of each worker to the production line and then to the entire factory, considering the benefits of each link.
After the special demand boom, we actively explored how to increase production without adding more personnel. Suppose on a production line, 10 workers can produce 100 products per day. After a detailed analysis, we noticed problems of overproduction and uneven efficiency. Then, as an improvement measure, we managed to cut two workers, and the remaining eight could still maintain a daily output of 100 products, fully reflecting the importance of efficiency.
If we do not cut the excess two workers, it seems that a 10-person team can produce 125 products within a day, as if achieving a growth of 25 units. However, in reality, these 10 workers could have completed the production of 125 products in a day under the existing conditions. The waste of the potential productivity of these 25 units is mainly due to unnecessary operations and output exceeding demand. By synthesizing these viewpoints, we can conclude an important production relationship: existing capacity equals work plus waste. In other words, work equals labor plus waste. Therefore, to truly improve efficiency, it is necessary to increase the proportion of work to an almost complete level and eliminate waste.
However, according to the principles of the Toyota Production System, we cannot produce more than what is demanded. This means that we must eliminate excess personnel and capabilities. For the Toyota Production System, identifying and eliminating all forms of waste is a key prerequisite, including:
- Waste caused by overproduction;
- Waste due to idling or downtime;
- Waste generated during transportation;
- Waste in the processing stages;
- Waste occurring in the inventory phase;
- Waste from movements;
- Waste generated from producing defective products.
By thoroughly eliminating these wasteful elements, it becomes possible to greatly improve production efficiency. Producing products according to actual demand naturally reveals the issue of surplus personnel. Therefore, the Toyota Production System is also a management system for detecting surplus personnel.
It is worth mentioning that some union organizations may question this, worrying whether this method will be used as an excuse for layoffs. Here, I want to emphasize that this is not the original intention of the Toyota Production System. Operators should be responsible for accurately identifying surplus personnel and transferring them to more appropriate positions. Whether the economic situation is good or bad, hiring or firing employees should not be seen as a temporary solution.
In addition, eliminating each worker’s ineffective labor is also extremely helpful in boosting their work enthusiasm.
Finally, when problems arise, can we persist in asking “why” five times? When a problem occurs, repeatedly getting to the root of it will eventually reveal the essence of the problem. Take for example a machine that stops working:
“Why did the machine stop working?” Because of an overload, the fuse blew.
“Why did an overload occur?” The bearing was not lubricated sufficiently.
“What caused insufficient lubrication?” The lubrication pump could not extract enough oil.
“Why couldn’t the lubrication pump extract the oil?” The shaft of the lubrication pump was worn and there was a gap.
“Why was the shaft worn?” No filter was installed, allowing iron filings to get in.
By this method, we not only solve the problem, but also prevent its recurrence through preventative measures. The success of the Toyota Production System is based on this scientific attitude and practical method of asking “five whys”.
By asking “why” five times in-depth, we can thoroughly understand the causal relationships between things and reveal the essence beneath the surface. Taking Toyota Motor Corporation as an example, the phenomenon of a worker managing just one machine may reflect the absence of an automatic shutdown function in machining. This discovery prompts us to consider the role of automation in the entire production process.
When we face issues in achieving just-in-time production, digging into the reasons might reveal that it is due to the unbalanced speed of different production stages, overproduction, and a lack of awareness of the time needed to produce each product. In such cases, the concept of balanced production becomes particularly important.
The exploration of problems caused by excess output leading to waste, might make us realize the absence of a mechanism to control output, which may lead us to consider implementing “visual management” or “Kanban” and other methods to reduce waste and optimize the production process.
The Toyota Production System emphasizes the elimination of all forms of waste. In order to identify and remove the sources of waste, it is essential to articulate the reasons for the problems. It is related to the company’s cost control and profit and loss balance, and even prompts us to deeply reflect on the essence of the value of human labor.
Traditionally, I might value data, but I think “facts” are more important. When facing problems, if there’s a lack of thorough investigation into the root cause, our response strategy might be off target. Therefore, repeatedly asking “why” five times, is the foundation of building a Toyota-style scientific attitude, which helps us accurately identify the crux of the problem, thereby formulating practical solutions.
