14 Principles of Lean Toyota Production System (TPS)

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Editor’s Note: Charles Intrieri is a consultant with over 25 years of experience in Operational Excellence, Supply Chain & Logistics, and Metrics-driven Management.  He has made available a number of reports and tools related to these areas on Flevy, which can be viewed here.

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Lean Management (also known as Lean Manufacturing and Lean Thinking) is a management philosophy based on Toyota Production System (TPS). TPS is a management system that organizes Manufacturing and Logistics for the Manufacturer, including interaction with suppliers and customers within its ecosystem. TPS was developed by Taiichi Ohno and Eiji Toyoda between 1948 and 1975.

Per Toyota’s website, Toyota Production System is a production system based on the philosophy of achieving the complete elimination of all waste in pursuit of the most efficient methods. TPS Lean and its approach to Cost Reduction are the “wellsprings of competitive strength and unique advantages for Toyota.”

The objective of Lean Manufacturing principles and general Lean principles is to eliminate everything that does not add value from the customer’s eyes. Through this, our organization will able to increase productivity and create greater customer value while utilizing fewer resources.

This article introduces 14 important Toyota Production System principles. Follow these Lean Toyota Way principles to cultivate a culture of Continuous Improvement and Learning.

Principle 1: Base your management decisions on a long term philosophy, even at the expense of short-term financial goals.

• Have a philosophical sense of purpose that supersedes any short-term decision making. Work, grow and align the whole organization toward a common purpose that is bigger than making money. Understand your place in the history of the company and work to bring the company to next level.  Your philosophical mission is the foundation for the other principles.
• Generate value of the customer, society and the economy – it is your starting point.  Evaluate every function in the company in terms of ability to achieve this.
• Be responsible. Strive to decide your own fate.  Act with self-reliance and trust in your own abilities. Accept responsibility for your own conduct and maintain improve the skills that enable you to produce added value.

 Principle 2: Create continuous process flow to bring problems to the surface.

• Redesign work process to achieve high value-added, continuous flow. Strive to cut back to zero the amount of the time that any work project is sitting idle or waiting for someone to work on it.
• Create flow to move material and information fast as well as to link processes and people together so that problems surface right way.
• Make flow evident throughout your organizational culture. It is the key to a true continuous improvement process and to developing people.
• Provide your downline customers in production process with what they want, when they want it and in the amount they want it. Material replenishment initiated by consumption in the basic principle of just-in-time.
• Minimize your work in process and warehousing of inventory by stocking small amounts of each product and frequently restocking based on what the customer actually takes away.
• Be responsive to the day-by-day shifts in customer demand rather than relying on computer schedules and systems to track wasteful inventory.

Principle 3: Use “Pull” system to avoid overproduction.

• Provide your downline customers in production process with what they want, when they want it and in the amount they want it. Material replenishment initiated by consumption in the basic principle of just-in-time.
• Minimize your work in process and warehousing of inventory by stocking small amounts of each product and frequently restocking based on what the customer actually takes away.
• Be responsive to the day-by-day shifts in customer demand rather than relying on computer schedules and systems to track wasteful inventory.

Principle 4: Level out the workload (heijunka). (“Work like a tortoise, not the hare”).

• Eliminating waste is just one-third of the equation for making lean successful. Eliminating overburden to people, equipment and eliminating unevenness in the production schedule is just as important – yet generally not understood at companies attempting to implement lean principles.
• Work to level out the workload of all manufacturing and service processes as an alternative to the start/stop approach of working on projects in batches that is typical at most companies.

Principle 5: Build a culture of stopping to fix problems, to get quality right at the first time.

• Quality of the customer drives your value proposition
• Use all the modern quality assurance methods available
• Build into your equipment the capability of detecting problems and stopping itself. Develop a visual system to alert team or project leaders that a machine or process needs assistance. Jidoka (machines with human intelligence) is the foundation for “building in” quality.
• Build into your organization support systems to quickly solve the problems and put in place countermeasures.
• Build into your culture the philosophy of stopping or slowing down to get quality right the first time to enhance productivity in the long run.

Principle 6: Standardized tasks are the foundation for continuous improvements and employee empowerment.

• Use stable, repeatable methods everywhere to maintain the predictability, regular timing and regular output of your processes. It is the foundation for the flow and pull.
• Capture the accumulated learning about a process up to a point in time by standardizing today’s best practices. Allow creative and individual expression to improve upon the standard; then incorporate it into the new standard so that when a person moves on you can hand off the learning to the next person.

Principle 7: Use Visual Control so no problems are hidden.

• Use simple visual indicators to help people determine immediately whether they are in standard condition or deviating from it.
• Avoid using a computer screen when it moves the worker’s focus away from the workplace.
• Design simple visual system at the workplace where the work is done, to support flow and pull.
• Reduce your reports to one piece of paper whenever possible, even for your most important financial decisions.

Principle 8: Use only reliable, thoroughly tested technology that servers your people and process.

• Use technology to support people not to replace people. Often it is best to work out process manually before adding technology to support the people.
• New technology is often unreliable and difficult to standardize and therefore endangers “flow”. A proven process that works generally takes precedence over new and untested technology.
• Conduct actual tests before adopting new technology in business processes, manufacturing systems or products.
• Reject or modify technologies that conflict with your culture or that might disrupt stability, reliability and predictability.
• Nevertheless encourage your people to consider new technologies when looking into new approaches to work. Quickly implement a thoroughly considered technology if it has been proven in trials and it can improve flow in your processes.

Principle 9: Grow leaders who thoroughly understands the work, live philosophy and teach it to others.

• Grow leaders within, rather than buying them from outside the organization.
• Do not view the leader’s job as simply accomplishing tasks and having good people skills.  Leaders must be role models for the company’s philosophy and the way of doing business.
• A leader must understand the daily work in great detail so that he or she can be a best teacher of your company’s philosophy.

Principle 10: Develop exceptional people and teams who follow your company’s philosophy.

• Create a strange, stable culture in which company values and beliefs are widely shared and lived out over a period of many years.
• Train exceptional individuals and teams to work within the corporate philosophy to achieve exceptional results. Work hard to reinforce the culture continually.
• Use Cross functional teams to improve quality and productivity and enhance flow by solving difficult technical problems. Empowerment occurs only when people use the company’s tools to improve company.
• Make an ongoing effort to teach individuals how to work together as teams together toward common goals. Team work is something that has to be learned.

Principle 11: Respect your extended network of partners and suppliers by challenging them and helping them improve.

• Have respect for your partners and suppliers and treat them as an extension of your business.
• Challenge your outside business partners to grow and develop. It shows that you value them. Set challenging targets and assists your partners in achieving them.

Principle 12: Go to gemba and see for yourself to thoroughly understand the situation (Genchi Genbutsu).

• Solve problems and improve processes by going to the source and personally observing and verifying data rather than theorizing on the basis of what other people or the computer screen tell you.
• Think and speak based on personally verified data.

Even high-level managers and executives should go and see things for themselves, so they will have more than a superficial understanding of the situation.

Principle 13: Make decision slowly by consensus (use cross functional teams), thoroughly considering all options; implement decisions rapidly.

• Do not pick a single direction and go down that one path until you have thoroughly considered alternatives.
• Nemawashi is the process of discussing problems and potential solutions with all of those affected, to collect their ideas and get agreement on a path forward. This consensus process, though time – consuming, helps broaden the search for solutions, and once a decision is made, the stage is set for rapid implementation.
• Once you have established a stable process, use continuous improvement tools to determine the root cause of inefficiencies and apply effective countermeasures.
• Design processes that requires almost no inventory. This will make wasted time and resources visible for all to see. Once waste is exposed, have employees use a continuous improvement process (kaizen) to eliminate it.
• Protect the organizational knowledge base by developing stable personnel, slow promotion and very careful succession systems.

Principle 14: Become a learning organization through relentless reflection (hansei) and continuous improvements (Kaizen).

Lean and TPS are never ending total organization journeys.

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Process Improvement involves analyzing and improving existing business processes in the pursuit of optimized performance. The goals are typically to continuously reduce costs, minimize errors, eliminate waste, improve productivity, and streamline activities.

As we continue to deal with COVID-19 and its economic aftermath, most organizations will prioritize Business Process Improvement initiatives. This is true for a few reasons. First, Process Improvement is one of the most common and effective ways of reducing costs. As the global economy slows down, Cost Management will jump to the forefront of most corporate agendas.

Secondly, a downturn typically unveils ineffective and broken business processes. Organizations that once seemed agile and focused during periods of growth may become sluggish and inefficient when demand drops off.

Lastly, COVID-19 has expedited Digital Transformation for most organizations. One of the quickest and most impactful forms of Digital Transformation is Robotic Process Automation (RPA). Thus, we have included numerous RPA frameworks within this Stream.

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