LMJ editorial board member Wendy Wilson, from Warwick Manufacturing Group, reflects on the article on the Toyota Sales Logistics system appeared in the last issue of the journal.
As a former employee of Toyota and now tutor of Warwick Manufacturing Group’s Lean Principles MSc module, I found Modig et al.’s article on “Services: lessons from Toyota” to be fascinating on two counts. Firstly, the way in which the principles of lean can be seen to be in evidence and secondly, the extent to which the principles of TPS are just as applicable to a service context. Let’s start with the lean principles.
From my own experience of working with lean practitioners, I have come to believe that there are two fundamentally different approaches to applying Womack and Jones’ five lean principles. The first, and perhaps most common approach, is what might be called Left to Right. This approach typically starts with the mapping of the current value stream and then takes a leaning out approach to the removal of waste, thus typically resulting in better quality (in terms of conformance to specification), better on time delivery, shorter lead times and reduced cost. The expectation is that delivery of customer value will be improved, although rarely is there either a fundamental and rich dialogue with the customer to understand value-inuse or a critical assessment made of the appropriateness of the existing value stream construct. It is questionable whether this approach, which can be deeply satisfying to those involved in the exercise, actually makes any significant difference to either the top or bottom lines.
Right to Left, in contrast, starts with the marketplace to truly understand customer value and subsequently to define highly attractive, innovative value propositions to be offered back to the market. Attention then turns to designing an organisation whereby endto- end value streams are constructed which are absolutely aligned to the delivery of each value proposition with the minimum investment in systemic waste. In this way, not only is customer value enabled, but this is achieved with remarkable efficiency. The offerings of such lean enterprises are extremely difficult to compete with. This is partly because the offerings not only delight the customers, but also, because the cost base is reduced, prices can be significantly lower. Perhaps more importantly, the lean capability developed within the enterprise can enable new market spaces to be identified and captured far more quickly than non-lean enterprises would be capable of doing.
So, back to the article, did the creation of TSL go Right to Left or Left to Right? I would suggest that there is strong evidence of the former. Firstly, the purpose of redesigning the car dealership operation is clear – to increase both sales and service revenue. Lean was the enabler to achieving this, not the objective. As such, the starting point was to understand exactly what customers value and not the existing value streams, such as they were. Although the article discusses shorter and fixed delivery lead times, dependability and improved quality, it is the more subtle aspects of customer value which, to me, shine through. For example, the idea of being able to see the car being serviced and cancel the service at short notice. This understanding of value is needed in order to move forward with designing the value streams.
The design process in itself is intriguing. It is not detailed whether Toyota had a clear idea of the seven system boundaries from the outset, but what is apparent is that there was a clarity of purpose and vision which drove the design of each system in turn. This is not dissimilar to the evolution of TPS. Moreover, it can be inferred that, by starting with the most severe problems, the sequence with which the systems were designed was driven essentially by the question, “What is the main constraint to delivering our vision?” It would also appear that the earlier systems were critical to the delivery of customer value whereas the later systems were more around creating efficient ways of working (like reducing costs).
As the article explains, the actual operating systems were underpinned by the fundamentals of TPS applied in a way that was appropriate to meeting the purpose and objectives for each system. In particular, the two pillars of TPS – JIT and jidoka – which are essential to the elimination of muda (waste), muri (overburden) and mura (unevenness) – are seen to be as relevant to Toyota’s service context as they are to its production facilities. It is this evidence which brings me onto the second point.
For many years, there has been a school of thought which, although accepting that Toyota is the pinnacle of lean enterprise, would advocate that the way to become a lean enterprise is through the appropriate application of the five principles of lean, particularly in terms of the tools and techniques used to create flow and pull, and NOT to try and copy Toyota. However, here we have a case study where Toyota has taken the deep knowledge acquired over half a century through the evolution of TPS, and applied it, in terms of the principles encapsulated in the TPS house, to a service environment. This must surely challenge us, as lean practitioners, to reevaluate the applicability of TPS beyond the context in which it was created. After all, how many businesses would be comfortable with adding cost which is not going to result in value (muda), stressing resources (muri) or creating unnecessary volatility (mura)? To what extent might the oft-quoted “we’re not Toyota and we don’t make cars” mindset have closed our thinking to the transferability of TPS, certainly in terms of the underlying principles?
When I worked at Toyota, I vividly remember going through a patch where standards were perceived to be slipping. Standardised work was not always being followed, visual controls were not being updated in a timely way and root causes of problems were not being identified. The response was a “Back to Basics” campaign to re-instate the fundamentals of the system. I cannot help but wonder, with all the models and frameworks which have been developed in the name of “lean”, and even adaptations of the TPS house itself, if we have lost sight of the basics of this holistic and fully integrated operating system from which we still have so much to learn and gain, no matter what context we work in.
In conclusion, I do believe that the five principles of lean, applied in a Right to Left way, are fundamental to creating a lean enterprise. That said, the application of the first two principles, in terms of what actually constitutes customer value and how to classify value streams, are still problem areas for most lean practitioners. However, I also believe that a rich understanding of the TPS house is fundamental to creating a lean operating system which embraces the principles of flow and pull, and although the way in which those principles are applied must depend on the context, this tailoring can only be done if, at the very least, the basics of TPS are fully understood.