Building Competitive Advantage through Operations

Case SummaryThe Toyota Production System is so famous that anyone interested can look it up. At its core it's about one thing: how to empower ordinary people to do extraordinary things together. Enabling “Ordinary People”(like all of us) to do Extraordinary WorkThe reason any organization exists is to enable this, things that I could not do alone.We come together to accomplish things none of us could do alone — I couldn't do them alone either.

It is easier to get to your destination, if you tell people where you want to go.

Execution mattersAt Harvard Business School or a consulting firm, for example, a good-looking deck really does matter!

Operational Execution

Excellent Execution and Mediocre Strategy

will beat

Mediocre Execution and Excellent Strategy

Empathy and InnovationBuild Customers Empathy?BUILD EMPLOYEE EMPATHY FIRST!

What is really about TPSStandardizationset ruleshow do we do each taskhow do we follow rulesVisibilityCleanlinesMake problem as visible as possibleGuide the team leadersSpecific locationContinuous ImprovementFeedback from al employeesSafe to highlight a problem — Sending a message also : we care about QUALITYAttend to the little thingsIn military training, it's not just about training with firearms — you also polish your boots and keep your uniform neat. All of this is about the broken windows effectMessage to employeesI care about itBehind a transparent system is caring about it very muchIn the TPS there is a cord that people can pull to raise a problemBut does having a cord automatically lead to improvement? — People won't pull the cord lightlyWhy? — It's the overall culture: pulling the cord feels like troubling others — would it be better to have a dedicated person?

Country Culture vs Company Culture

What went wrong with Toyota?Toyota has, for the past few years, been expanding its business rapidly. Quite frankly, I fear the pace at which we have grown may have been too quick.I would like to point out here that Toyota's priority has traditionally been the following: First; Safety, Second; Quality, and Third Volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before, and our basic stance to listen to customers' voices to make better products has weakened somewhat.We pursued growth over the speedat which we were able to develop our people and our organization, and we should sincerely be mindful of that.I regret that this has resulted in the safety issues described in the recalls we face today, and I am deeply sorry for any accidents that Toyota drivers have experienced.Clearly the CEO knew — but he was too confident that nothing would go wrong! Over confident!

Our organization, too, may one day grow too fast without paying enough attention to risk.

TPS needs to be Reinforced ConstantlyInterview with Katsuaki Watanabe, President of Toyota in HBR (July-August 2007)."I realize that our systems may be overstretched....We must make that issue visible.""If a time comes at Toyota when I need to put my foot on the brake pedal rather than on the accelerator, I won't hesitate to do so.""It's my job to pull the Andon cord."

Andon Cord — managers should say thank you to whoever pulls it!!

The “Andon cord” is one of the core tools of the Toyota Production System (TPS) and a key practice of its “Just-in-Time (JIT)” and “Jidoka (autonomation)” principles. Its core purpose is to let anyone on the production line who spots a problem quickly pause production, expose the problem and drive its resolution, thereby preventing defects from moving downstream and improving productivity and product quality.

1. Core definition and originsEssence: a physical pull cord (or button, or electronic trigger), usually laid out along the production line (e.g., beside each machine or above each workstation). Any employee on the line (regardless of rank) has the right to pull it upon finding any of the following: a quality defect in the product (e.g., a part installed incorrectly, a cosmetic flaw); an equipment abnormality (e.g., a breakdown, a precision deviation); a material shortage (e.g., parts not delivered on time); a safety hazard (e.g., an operational risk, an environmental abnormality); a process hold-up (e.g., poor handoffs between steps, disrupted takt time).Origins: Toyota's car plants in the 1950s. Toyota founder Kiichiro Toyoda and engineer Taiichi Ohno designed it to solve the problem of “defects hidden in mass production.” In traditional production, employees often concealed problems for fear that “stopping work would hurt efficiency,” leading defective products to pile up; the Andon cord, by “allowing work to stop and encouraging problems to be exposed,” reduces waste at the root (“defects,” one of the “seven wastes” in TPS).

2. How it works: a closed loop from “pull” to “resolve”

The Andon cord follows a strict process to ensure problems aren't shelved, forming a closed loop of “detect – respond – resolve – review”: Pull: when an employee spots a problem, they pull the Andon cord at their workstation (or press the button); Alert: once the cord is pulled, the line's “Andon Board” (usually an electronic screen or signal lights) lights up the indicator for that workstation (e.g., red = emergency stop, yellow = assistance needed), possibly accompanied by a buzzer; Respond: the team leader, technician or support staff (e.g., maintenance, materials handlers) must arrive at the workstation within a set time (e.g., within 30 seconds); if the problem can't be solved quickly (e.g., within 2 minutes), the team leader escalates the response and may even stop the entire line; Resolve: the team analyzes the root cause on the spot (e.g., using the “5 Whys”) and fixes it quickly (e.g., replacing parts, adjusting equipment, replenishing materials); Reset & Review: once the problem is solved, authorized personnel reset the Andon system and production resumes; afterward, the cause and solution are recorded and fed into training or process improvement so the same problem doesn't recur.6. Core value: more than a “stop-work tool”

The significance of the Andon cord goes far beyond “pausing production”; its core value reflects the underlying logic of the Toyota Production System: Empowering employees and breaking down hierarchical barriersNew or veteran, every employee has the right to “stop” production, embodying a management philosophy of “respect for people” — employees are closest to the shop floor and most likely to spot problems, and empowering them sparks initiative and a sense of responsibility.Exposing problems immediately to avoid “hidden waste”In traditional production, “producing with defects” leads to rework in later steps, wasted materials and customer complaints; the Andon cord, through “immediate stoppage,” nips problems in the bud and lowers downstream costs.Driving “continuous improvement (Kaizen)”Every pull is a “problem signal,” and data from many pulls can be aggregated and analyzed (e.g., a workstation that frequently triggers due to equipment failure), becoming the basis for process optimization, equipment upgrades and employee training, driving continuous iteration of the production system.Safeguarding quality and safetyIt stops defects from flowing downstream at the source while quickly eliminating safety hazards, in line with the production principle of “quality first, safety foremost.”7. Applications: from manufacturing to other industriesCore applicationsAutomotive manufacturing (e.g., final assembly and stamping lines at Toyota, BMW, Volkswagen and other carmakers), electronics manufacturing (e.g., phone and home-appliance production lines), machining and other discrete manufacturing — these industries have many process steps and densely packed workstations where problems easily travel downstream, so the Andon cord's “immediate response” value is significant.Extended applicationsServices: some restaurant chains (e.g., for kitchen order hold-ups) and logistics warehouses (e.g., for picking errors) have introduced similar mechanisms, using “call buttons” to respond quickly to problems; Healthcare: some hospital operating rooms and wards use “emergency call cords” (though focused on emergency care, the logic is similar: “immediate trigger – rapid response”).

On company training

If you send people out for training, when they come back the environment for it isn't there;

If you invite trainers in, the whole company moves forward in step;