@ Supply Chain Management

In Toyota, Toyota… Part 1, I looked into a recent challenge outlined by Toyota’s CEO, Katsuaki Watanabe, to his firm about competition in the auto business.
In this post, I want to look at older article from HBS Working Knowledge titled How Toyota Turns Workers Into Problem Solvers. The article is an interview by with Steven Spear from HBS. The other author in the background that is referred to is Professor H. Kent Bowen who teaches at HBS.
The rationale for studying Toyota’s Production System (TPS) long after a deluge of similar such efforts by various researchers and journalists in various quarters is articulated by Steven Spear as follows:

However, despite Toyota’s openness and the genuinely honest efforts by other companies over many years to emulate Toyota, no one had yet matched Toyota in terms of having simultaneously high-quality, low-cost, short lead-time, flexible production over time and broadly based across the system.
It was from observations such as these that Kent and I started to form the impression that despite all the attention that had already been paid to Toyota, something critical was being missed. Therefore, we approached people at Toyota to ask what they did that others might have missed.

And furthermore,

To paraphrase one of our contacts, he said, “It’s not that we don’t want to tell you what TPS is, it’s that we can’t. We don’t have adequate words for it. But, we can show you what TPS is.”
Over about a four-year period, they showed us how work was actually done in practice in dozens of plants. Kent and I went to Toyota plants and those of suppliers here in the U.S. and in Japan and directly watched literally hundreds of people in a wide variety of roles, functional specialties, and hierarchical levels. I personally was in the field for at least 180 working days during that time and even spent one week at a non-Toyota plant doing assembly work and spent another five months as part of a Toyota team that was trying to teach TPS at a first-tier supplier in Kentucky.

Empiricism is defined as a reliance on observations of phenomenon as perceived in experience of the observer. But for empiricism to be a profitable (and this word is used loosely), you need observers who bounce of ideas against each other, fine tuning their perceptiveness as they advance along the road of interpreting their experiences and observations of phenomenon. It is this collective work built on their shared individual observations, responses and ensuing discussion that in the most general sense creates a framework, specialized langugage and the basis of integrating future observations. In short, this is a body of knowledge that is not only true in the light of observations but also serves as a basis for the future.
What I think that the employees at Toyota were doing in their response is illustrating this problem of articulating this collective body of knowledge (of which culture is but a representation) pithily or in some easily transferrable form – or in other words, it is not in the saying, it is in the doing, the shared doing, structuring and integrating the learned lessons back into the doing on a continual basis. In this framework, there is an insistence on work, understanding it, refining it but in the back on one’s mind is a reflective process of adjusting work to reality.

So what did these researchers find? Here is a rough summary:

• We concluded that Toyota has come up with a powerful, broadly applicable answer to a fundamental managerial problem.
• The products and services characteristic of our modern economy are far too complex for any one person to understand how they work. It is cognitively overwhelming. Therefore, organizations must have some mechanism for decomposing the whole system into sub-system and component parts, each “cognitively” small or simple enough for individual people to do meaningful work. However, decomposing the complex whole into simpler parts is only part of the challenge. The decomposition must occur in concert with complimentary mechanisms that reintegrate the parts into a meaningful, harmonious whole.
• It is our conclusion that Toyota has developed a set of principles, Rules-in-Use we’ve called them, that allow organizations to engage in this (self-reflective) design, testing, and improvement so that (nearly) everyone can contribute at or near his or her potential, and when the parts come together the whole is much, much greater than the sum of the parts.

Steven Spear goes on to elaborate what they call Rules-in-Use:

…specified-in-their-design, tested-with-their-every-use, and improved close in time, place, and person to the occurrence of every problem.

Steven Spear also says that the scope of these rules are taken in the totality of the firm:

We’ve seen that consistently—across functional roles, products, processes (assembly, equipment maintenance and repair, materials logistics, training, system redesign, administration, etc.), and hierarchical levels (from shop floor to plant manager and above) that in TPS managed organizations the design of nearly all work activities, connections among people, and pathways of connected activities over which products, services, and information

The net effect of this totality is:

They are saying before you (or you all) do work, make clear what you expect to happen (by specifying the design), each time you do work, see that what you expected has actually occurred (by testing with each use), and when there is a difference between what had actually happened and what was predicted, solve problems while the information is still fresh.

Allow me to interject the two distint control models that are available today – open loop and closed loop control models. The above “net effect” is an example of a closed loop system in action i.e. a closed loop theoretic control model applied in a real business operations model. The reason why closed loop systems are inherently superior to open loop systems is because of feedback. Furthermore, the following words from Steven Spear smacks of what a control theorist would call a transition to steady state:

This is a system designed for broad based, frequent, rapid, low-cost learning. The “Rules” imply a belief that we may not get the right solution (to work system design) on the first try, but that if we design everything we do as a bona fide experiment, we can more rapidly converge, iteratively, and at lower cost, on the right answer, and, in the process, learn a heck of lot more about the system we are operating.

Now, there is only one element missing in the control model analogy – the controller and the various gains to be positioned in the model. And guess what that controller is – People!
It’s all swell to structure the operations of a firm like a closed loop control model but the success of any control model rests on the controller and the kind of response it issues based on the objective and feedback signals. This is what Toyota does well in the approach it takes with its people:

They do this by teaching people to solve problems by solving problems. For instance, in our paper we describe a team at a Toyota supplier, Aisin. The team members, when they were first hired, were inexperienced with at best an average high school education. In the first phase of their employment, the hurdle was merely learning how to do the routine work for which they were responsible. Soon thereafter though, they learned how to immediately identify problems that occurred as they did their work. Then they learned how to do sophisticated root-cause analysis to find the underlying conditions that created the symptoms that they had experienced. Then they regularly practiced developing counter-measures—changes in work, tool, product, or process design—that would remove the underlying root causes.

The above describes the process – a step by step approach, that Toyota employs to bring their people up to speed in their work areas. Their total aim is to get their workforce to engage in using the previous described rules in a systematic way to solve problems and that closes out the closed loop controller analogy. There is no off-the-shelf solution that you can plug in to solve a problem. Instead, Toyota relies on training problem solvers to solve problems using a specific toolkit.
Furthermore, this is a concept that scales throughout the organization i.e. across different departments as well as through the management hierarchy:

…the role of the manager gets right to the heart of the difficulty of managing this way. For many people, it requires a profound shift in mind-set in terms of how the manager envisions his or her role. For the team at Aisin to become so skilled as problem solvers, they had to be led through their training by a capable team leader and group leader. The team leader and group leader were capable of teaching these skills in a directed, learn-by-doing fashion, because they too were consistently trained in a similar fashion by their immediate senior. We found that in the best TPS-managed plants, there was a pathway of learning and teaching that cascaded from the most senior levels to the most junior. In effect, the needs of people directly touching the work determined the assistance, problem solving, and training activities of those more senior. This is a sharp contrast, in fact a near inversion, in terms of who works for whom when compared with the more traditional, centralized command and control system characterized by a downward diffusion of work orders and an upward reporting of work status.

This is the heart of how TPS works – its a working closed loop control system and perhaps those who are unfamiliar with control theory as an engineering discipline will find it hard to understand what I’m saying as well. I harken back to the notion of specialized language that a body of knowledge entails and words such as control, controller, transition and feedback have notions quite different from ordinary usage. For example, in the above paragraph, “when compared with the more traditional, centralized command and control system” is quite different from my usage of “Control System” which is an term taken from control engineering.
So the natural question arises – what then is Lean?
In the context of TPS, then Lean is a governing philosophy of how one must operate in order to be successful. You can be a problem solver even while inventory grows without bounds in all parts of the supply chain. That cannot be, in principle, called a Lean Supply Chain. A governing philosophy is what one uses to identify such inventory as waste and then embark on ways to find ways to eliminate waste.

Tags: HBS Working Knowledge, Steven Spear, Professor H. Kent Bowen, Sarah Jane Johnston, TPS, Toyota Production System, Empiricism, Turning Workers into Problem Solvers, Control Methodology, Controller, Control analogy