When people think of Lean Manufacturing, Toyota often comes to mind. And rightfully so. They came up with this way of thinking, tools, and techniques that put the automotive company ahead of the rest in both customer and shareholder satisfaction. But even decades into their success, Toyota thought it could do better. A member of the Board of Directors suggested to the head of North American Operations that he should reduce warranty costs by 60 percent over the next six or seven years. Already being number one in the industry and faced with the need to lower warranty costs by 10 percent over the next year, the head of North American Operations went back to the fundamentals and employed Lean techniques. In this post, we’ll discuss the four essential elements to a highly effective Lean manufacturing culture and show how Toyota was able to meet their warranty cost reduction goals.
Element One: Discover Better Ways of Working through Lean Behaviors
Often, we accept problems in the manufacturing process as routine or trivial. They simply aren’t important enough to warrant creating a team to solve. But highly effective Lean manufacturers are in a constant state of zeroing in on all problems and then engaging the people most affected by them to develop a better way of working. To find better ways of working, Toyota had to start by visualizing the problem. Let’s take a look at what that entailed.
| What Toyota Did | What Toyota Discovered | Lean Thinking/Tools/Techniques |
| Clarified the problem’s ideal state and current state | While Toyota is best-in-class, ideally, auto owners won’t have problems during the warranty period vs. the current state where auto owners are inconvenienced by needing warranty work. | Zero defects Plan phase of PDCA cycle |
| Visualized gaps between states | Gaps happen in both manufacturing and design, but quickest results can be achieved by improving manufacturing, not design. Bound the efforts to improve manufacturing. | Bound the problem Plan phase of PDCA cycle |
Element Two: Deliver value efficiently to the customer
The Lean concept of delivering value efficiently means meeting the customer’s needs exactly. This is not the easiest of Lean manufacturing principles because no one can predict what may upset the equilibrium. That’s why the highly effective lean manufacturers focus on mapping the value stream and eliminating waste where it makes sense.
Mapping the value stream is the best way to categorize activities into value-added tasks that transform the product in some measurable way and eliminating non-value-added tasks that impact the customer. To visualize the problem areas and eliminate non-value-added tasks, Toyota created a Value Stream Map and performed a root cause analysis.
| What Toyota Did | What Toyota Discovered | Lean Thinking/Tools/Techniques |
| Broke down the problem and set target goals | Target goal is 10 percent each year. In mapping, dealer feedback proved vague. It was clear what was happening, but not why. | Value Stream Mapping Plan phase of PDCA cycle |
| Analyzed underlying causes | Too many diverse defects were getting past each station and past inspection, so Engineering was inundated with issues that it didn’t know how to prioritize. | 5 Whys Root Cause Analysis |
Element Three: Enable people to lead and contribute to their fullest potential
Lean manufacturing won’t be successful if only management is on board. By empowering the entire team to contribute, effective Lean manufacturers provide employees with motivation and increase their capacity to add value for the customer, thereby increasing their own sense of self-confidence. It’s a win-win. In the case with Toyota, a lot of employees also were customers, so they had employees bring in their cars to Toyota Motor Sales, so they could do warranty work on their cars while the employees were working.
| What Toyota Did | What Toyota Discovered | Lean Thinking/Tools/Techniques |
| Developed and deployed countermeasures | Through a customer satisfaction center that they created, the Toyota team diagnosed the actual root cause of each warranty problem. | PDCA cycle Root Cause Analysis |
Element Four: Connecting strategy, goals, and meaningful purpose
Highly effective Lean manufacturers recognize that people perform best when they have a meaningful purpose. To connect employees to your goals and strategy, make sure they understand them, and support your team with ways that they can contribute. With commitment to continuous improvement, Toyota achieved 60 percent improvement in 7 years despite the head of North American Operations’ early departure because everyone understood the goals and strategy and believed they were meaningful.
| What Toyota Did | What Toyota Discovered | Lean Thinking/Tools/Techniques |
| Standardized results | They filtered the request for changes and prioritized them. Requests for changes were regularly root-caused and prioritized on an ongoing basis. | Standardized work Kaizen |
While Toyota is undoubtedly large with a lot of resources, you don’t have to be a large manufacturer to benefit from Lean. Following these four principles, you can make a change for the better in your manufacturing operations. For even more help making your team effective and efficient, consider our platform solution that works with your other technology and gives you real-time actionable insights into your lines. Find out more on our platform page and get a free trial to see how it works.