I’ve only just read Toyota Production System, written by its inventor Taiichi Ohno, despite admiring Toyota’s world-class operational rigor for many years. The Toyota Production System (TPS) is the company’s comprehensive manufacturing philosophy and methodology, which aims at improving efficiency, eliminating waste, and producing high quality output. While I found the entire book to be enlightening, I found Ohno’s thoughts on waste to be particularly instructive. Ohno goes as far as to say that the entire aim of the TPS is to eliminate all waste. While I naturally seek out more efficient ways of doing things, reading about Ohno’s obsession with waste elimination shows me that I need to take it much more seriously in my own work and life. Below I share my thoughts inspired by Ohno and my notes on waste from the book. (Note, above link to the book is my Amazon Affiliate link)
Toyota started as an auto-loom manufacturer, but later invested its profits to become an upstart automaker. It started making cars when Japan had just been destroyed by its involvement in World War 2. Over many decades, Toyota grew to become the world’s largest automaker producing the highest quality cars in large part as a result of TPS.
Ohno defines waste as the “all elements of production that only increase cost without adding value” to the end product or service. He goes on to say that these “must be eliminated immediately.” Examples of waste include mundane things like additional steps and movements in a workstation, to certain parts of the assembly line overproducing parts, to keeping an inventory of production parts in a warehouse and transporting them to the assembly line. These examples of waste eat away at Toyota’s work time and money, squandering it off for unproductive purposes. To eliminate these sources of waste, Toyota’s managers and assembly workers relentlessly innovated to reduce production steps; eliminate production bottlenecks by, for instance, reducing the time it takes to change huge metal stamping dies from hours to minutes; eliminate the warehouse and store parts alongside the assembly line; and develop just-in-time inventory management.
To help myself better understand Ohno’s urgency for waste elimination, I conducted a thought experiment: what would waste mean for me if I were a medieval subsistence farmer living in an age of scarcity? In an age of scarcity, I would be living constantly under the threat of starvation. I wouldn’t have access to any of the technologies that help modern farmers, or any social safety nets if I had a bad harvest. Instead, I would rely on my body to toil away in my fields, along with some beasts of burden if I’m lucky. Both my body and my animals’ bodies are powered by calories taken in from past harvests. I would need to be efficient in my work to simply maintain my caloric balance. Each calorie I waste on ineffective movements would tip my caloric balance ever so slightly toward starvation. Thinking about waste from this perspective really brought to life the urgency of waste elimination for me.
For a more mundane modern example of what waste actually wastes, we can look at how some diners at fast food restaurants waste bunches of paper napkins. (I discussed this in a prior essay contemplating hand dryers vs. paper towels, which my friend Morgan unironically considers the best thing I’ve ever written!) Between picking up their trays-full of food and filling up their sodas, these diners thoughtlessly grab huge stacks of napkins. They then proceed to use only one or two while eating, throwing the remaining unused stack in the trash. While seemingly innocuous, these diners create a situation where trees were chopped down, transported to a paper mill, processed into paper using chemicals and machines, then transported to the restaurant, only to be thrown directly into the trash unused. All of those resources and labor were ultimately spent in an unused end product being wasted because someone didn’t want to spend the split second thinking about how many napkins they might actually need and taking that amount out of the napkin dispenser! Now imagine this on an industrial scale, with innumerable work-in-progress parts on an assembly line being scrapped due to damage, obsolescence, or other reasons.
Reflecting on my time working at an assembly plant in the U.S. auto industry in the early 2000s, I remember people commenting that my company ineffectively attempted to copy TPS. One example of how we strayed from TPS is with “rework.” Rework is the fixing of non-conforming or defective parts of the final product. My company, like Toyota, aimed to eliminate rework. We focused on improving our first time through (FTT) rate, the percent of final products that rolled off of the assembly line with no defects. Like Toyota, we would temporarily stop the assembly line to diagnose problems with defective parts at the source (e.g. the assembly line workstation where the defect originated) to improve our FTT rate.
We stopped short of Toyota’s intense discipline, however. When a big enough production problem arose, the plant manager would instruct the plant to keep producing vehicles, and they would just pay the repair workers weekend overtime to repair the problems on the finished vehicles. The plant managers knew that their bosses measured them on units that rolled off of the assembly line, defective or not. This decision to keep the assembly line rolling creates a huge amount of rework and waste. Overtime is costly. Defective parts are harder to repair in finished vehicles because you may need to disassemble other parts to get at the defect. And the finished products parking lot gets filled up with cars that can’t be shipped. Toyota, in contrast, would keep the line stopped for as long as they needed to diagnose and fix the problem at its source. I don’t know how my former employer’s practices have changed in the past 20 years, and I hope they have improved, but that’s the state of what I observed.
Below, I’ll share some ideas and quotes from the book which illustrate Ohno’s thoughts on waste:
Complete Analysis of Waste:
When thinking about the absolute elimination of waste, keep the following two points in mind:
1. Improving efficiency makes sense only when it is tied to cost reduction. To achieve this, we have to start producing only the things we need using minimum manpower.
2. Look at the efficiency of each operator and of each line. Then look at the operators as a group, and then at the efficiency of the entire plant (all the lines). Efficiency must be improved at each step and, at the same time, for the plant as a whole.”
Present Production Capacity = Work + Waste
- Waste = all elements of production that only increase cost without adding value. The needless, repetitious movements that do not contribute to the end product or service, which must be eliminated immediately.
- Work = movements that contribute to the end product or service. There are two types of work:
- Non-value-added work – work that is necessary to perform under the present conditions, but does not add value to the end product or service.
- Value-added work – work that directly adds value to the end product or service.
The basis of the Toyota production system is the absolute elimination of waste.
7 types of waste:
- Overproduction → the worst type of waste
- Time on hand (waiting)
- Transportation
- Processing itself
- Stock on hand (inventory)
- Movement
- Making defective products
Ohno’s illustration of why overproduction is the worst type of waste:
In production, “waste” refers to all elements of production that only increase cost without adding value – for example, excess people, inventory, and equipment … [These] cause secondary waste. For example, with too many workers, unnecessary work is invented which, in turn, increases power and materials usage … The greatest waste of all is excess inventory. If there is too much inventory for the plant to store, we must build a warehouse, hire workers to carry the goods to this warehouse, and probably buy a carrying cart for each worker … [Then workers will need to be hired to do rust prevention and inventory control. Parts will rust and need to be scrapped. An inventory computer system will need to be purchased, and someone to run it. And when part shortages occur, producing even more spare inventory will be demanded. Hence, Toyota’s implementation of just-in-time manufacturing to minimize or eliminate the need to carry inventory.]
The vicious cycle of waste generating waste hides everywhere in production.
The waste caused by a single mistake will eat up the profit that ordinarily amounts to only a few percent of sales and thereby endanger the business itself.