LAST SUMMER, the International Journal of Production Research devoted an entire issue to the Toyota Production System. The TPS is probably the most influential manufacturing model since Henry Ford's moving assembly line of the early 1900s. It figures among the 'giant steps in management' described in a new book of the same name, and is also part of strategy guru Gary Hamel's 'management of the future'. The TPS has generated a model of 'lean production' not only for the rest of manufacturing but also, increasingly, for the service sector; it has been applied to jurisprudence, house repairs, benefits processing and even the NHS. Its inventor, Toyota, is perhaps the most successful large manufacturing firm in the world.
Why is the TPS so important? Because it's the nearest thing there is to a learning organisation. It is not strategic brilliance (Toyota makes mistakes just like anyone else) but manufacturing prowess that has turned the company from a joke in the 1950s into the equal largest, by far the most profitable, and the most advanced car maker in the world.
It has managed this through 50 years of problem-solving that has abolished conventional production trade-offs and recast manufacturing economics. Textbooks used to teach that manufacturers had to chose between quality or low price, volume or flexibility. The TPS was among the first to show that built-in quality ('right first time') was cheaper, not more expensive. Today, the same lines handle different models and specifications without missing a beat. Tomorrow, Toyota aims to demolish the final trade-off - by building a car that doesn't despoil the environment.
Unsurprisingly, Toyota's capability to solve ever larger problems evokes deep envy. Yet the TPS's success is matched only by its elusiveness. Despite the best (or worst) efforts of consultants and academics, no other large organisation has managed to replicate it. While the component principles are understood, how they work together remains, in the phrase of the article in IJPR , 'a continuing puzzle'. 'We don't really understand what the TPS is,' admits author Steve New, 'and it is possible we never will.'
Why not? Because the TPS is a complex self-organising system, the irreproducible product of the interplay of a few simple principles that derived from the particular circumstances of its origins.
At Toyota, the fixed cost is in effect the labour force, whose ingenuity is used to minimise the variables. Thus from the Toyoda Automatic Loom Works, where the firm originated, came the notion of jidoka , or 'automation with a human touch'. By inventing a machine that automatically stopped when a fault was detected, founder Kiichiro Toyoda prevented the waste of faulty production, allowed the workforce to concentrate on solving problems rather than supervising the looms, and hugely boosted productivity.
With a premium on space, raw materials and capital, Toyota devised frugal production methods that, by 'pulling' supplies only when they were needed, minimised inventory, space, capital investment and all kinds of management overhead. The principles were turbocharged by what has come to be called kaizen , 'continuous improvement', but in fact could equally well be termed 'obsessive tinkering': trial-and-error shopfloor experimentation whose lessons are incorporated into highly standardised work routines. That turns the TPS into a learning system. Given that Toyota's Japanese workers alone make upwards of 600,000 improvement suggestions a year, most of which are adopted, it's hardly surprising that the production system in front is Toyota's.
But while it has evolved into a formidable organism, the TPS is not the product of a grand design. Rather, notes industry observer Takahiro Fujimoto in a new book, the Japanese car makers' systems emerged through improvisation - 'piecemeal, ad hoc measures for addressing needs and issues that arose'. Toyota, he believes, would remain formidable even if it abandoned the hallmark practices of the TPS, since its strength resides not in any particular method but in an extraordinary ability to develop new ones.
The TPS, then, is not a blueprint it is organic and emergent, a living thing. Hence the impossibility of replication: other companies can only reinterpret it in the light of their own contexts. This is also why would-be copiers often fail. The commonest mistake is to assume that the essence of the TPS is the tools rather than the purpose for which they have been devised. As many organisations have discovered, in the hands of command-and-control managers, TPS-inspired ideas can do as much harm as good.
Now the TPS faces its biggest challenge: accommodating the results of its own success. Can it maintain its integrity while the company is expanding globally faster than any other firm in the motor industry's history? It is not just Toyota's future that is riding on the result.
The Observer, 2 December 2007