The Hindu Business Line : Gas gauges for all businesses

ANY TALK about fewer man-hours, less inventory, highest quality with the least defects can easily be dismissed as impractical. No, it is possible to get your business processes run at double or triple the current speed; you can turn every employee into a quality control inspector; and you can eliminate costs of hidden waste. How? Simply follow the "14 management principles" outlined by Jeffrey K.Liker in The Toyota Way, published by Tata McGraw-Hill (www.tatamcgrawhill.com).

The foreword reminds that each organisation must develop its own way of doing business. "Toyota can provide inspiration, demonstrate the importance of stability in leadership and values that go beyond short-term profit, and suggest how the right combination of philosophy, process, people, and problem solving can create a learning enterprise," writes Liker in his preface.

`Lean' and Toyota go together, though most companies who think they are lean aren't. So, what's this `lean' business? "To be a lean manufacturer requires a way of thinking that focuses on making the product flow through value-adding processes without interruption (one-piece flow), a `pull' system that cascades back from customer demand by replenishing only what the next operation takes away at short intervals."

The founder of Toyota Production System (TPS) Taiichi Ohno would put it this way: "All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes." From this perspective, when a company collects money in advance, with no penalty clause to pay interest when delivery becomes overdue, there can be no incentive for it to perform.

From where did Toyota pull the `pull' idea? American supermarkets. "In any well-run supermarket, individual items are replenished as each item begins to run low on the shelf. That is, material replenishment is initiated by consumption," notes the book. Nothing new, because you fill your fuel tank that way. "It would be foolish to fill your gas tank when you're not low on gas, but the equivalent of this — overproduction — happens all the time in mass production." So, first fix gas gauges for every process!

Overproduction is only one of the seven non-value-added wastes that Toyota has identified. The rest are: waiting, unnecessary transport, over-processing/incorrect processing, excess inventory, unnecessary movement, and defects. To this, Liker would add: "Unused employee creativity." I would add a ninth: `Not reading all this!'

In the list of 14 management principles, pull comes as number three. The very first is about basing decisions on a long-term philosophy, even at the expense of short-term financial goals. (That's something very critical for accountants.)

Next, `create continuous process flow to bring problems to the surface.' Continuous means cutting back to zero "the amount of time that any work project is sitting idle or waiting for someone to work on it."

Work like the tortoise, not the hare, is a wise story for principle 4. Means, level out the workload. Does that explain why companies where a few people work while many are idle can't lay claims to being lean? Five, "build a culture of stopping to fix problems, to get quality right the first time." Without quality, customer leaves you, don't forget. Jidoka (machines with human intelligence) can help in quality assurance. Six, the foundation lies in standardised tasks. "Use stable, repeatable methods everywhere to maintain the predictability, regular timing, and regular output of your processes." Seven, use visual control effectively. "Reduce your reports to one piece of paper whenever possible, even for your most important financial decisions." Else, you would be manufacturing reports and not your core products.

A book that is not about a company but about a state of mind. So, don't delay implementing these and seven more principles that Liker would expose you to.

ManageMentor@TheHindu.co.in

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