© Emiel van Est So, Did Toyota fool the lean community for decades?

© Emiel van Est
Did Toyota Fool the
Lean Community for
Decades?
Emiel van Est & Pascal Pollet
March 2014

© Emiel van Est
In the Lean
community we
admire
Taiichi Ohno
for his role in the
development of the
Toyota Production
Syst...

© Emiel van Est
Get ready to admire
him even more!

© Emiel van Est
Hi
I am Emiel van Est
Toyota Kata ambassador
The Netherlands
I am Pascal Pollet
Toyota Kata ambassador
Bel...

© Emiel van Est
Yes we both speak Dutch!

© Emiel van Est
Recently we
read something
amazing.
Near the end of
his life Taiichi
Ohno said in an
interview:

© Emiel van Est
“I’m proud to be Japanese and I
wanted my country to succeed. I
believed my system was a way that
could he...

© Emiel van Est
“But I was very, very
concerned that you
Americans and the Europeans
would understand what we
were doing, ...

© Emiel van Est
Hey, wait a minute, I thought Toyota
had been very open to us…

© Emiel van Est
“I did my best to
prevent the visitors
from fully grasping our
overall approach.”
- Taiichi Ohno -
Source:...

© Emiel van Est
“I explained it by talking
about … reduction of the
seven wastes (muda)”
- Taiichi Ohno -
Source: Profitab...

© Emiel van Est
Talking about the
7 Wastes was a way
to confuse his
visitors?

© Emiel van Est
Even today for
many people
Lean
=
Eliminating Waste

© Emiel van Est
His strategy to
confuse us is still
effective almost
25 years after
his death!
RIP
Taiichi Ohno
February 2...

© Emiel van Est
Just an empty slide for you to fully grasp this…
Take your time….

© Emiel van Est
As said, we are
Toyota Kata
ambassadors

© Emiel van Est
With the improvement kata
it can be explained why the 7
wastes was a way to confuse.

© Emiel van Est
The improvement kata is a pattern
of thinking and acting we can
practice to meet challenges.

© Emiel van Est
Just like in martial arts

© Emiel van Est
As you can see, the
improvement kata starts with
understanding the direction.

© Emiel van Est
Eliminating waste lacks
direction
1
2
3
45
6
7
Overproduction
Inventory
Waiting
MotionTransport
Rework
Ove...

© Emiel van Est
What to do?
Logistics
Manager
Production
Manager
We need
smaller bins to
reduce travel
distance for our
as...

© Emiel van Est
What is the right direction?

© Emiel van Est
“All we are doing is looking at the
time line, from the moment the
customer gives us an order to the
point...

© Emiel van Est
That’s where
kanban
comes in right?

© Emiel van Est
“I explained it by talking
about techniques … with
Japanese names like
kanban…”
- Taiichi Ohno -
Source: P...

© Emiel van Est
Kanban was another
way to confuse us?

© Emiel van Est
By focussing our attention on the tools
Ohno could hide the most important: his
way of thinking and acting...

© Emiel van Est
We just
copied the
solution without
understanding
the thinking
that created the
solution.

© Emiel van Est
We misunderstood the
purpose
of kanban.

© Emiel van Est
The purpose of
kanban is to
eliminate
kanban!

© Emiel van Est
The best number of
kanban cards is
0

© Emiel van Est
Ah I understand. We do
not want material to
stop; we want it to
flow continuously so
we get the shortest
l...

© Emiel van Est
Well, Yes and No…
Stay with us,
we will explain.

© Emiel van Est
First, lets talk about
making money.

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“Costs do not exist to be
calculated. Costs exist to
be reduced.”
- Taiichi Ohno -

© Emiel van Est
Who has used these graphs?
Traditional Thinking
Price = Cost + Profit
This worked when supply
was lower th...

© Emiel van Est
Don’t be shy, we did it too!

© Emiel van Est
What’s wrong with these graphs?
Cost
Profit
Price
Cost
Profit
Price
Value in Market

© Emiel van Est
These graphs hide
some important
information!

© Emiel van Est
Over the years the
portion of fixed
costs has risen.


© Emiel van Est
Leaving us with less to improve
1920 1960
Fixed Cost
Profit
Price
Variable Cost

© Emiel van Est
These graphs lack a
second dimension.


© Emiel van Est
Variable costs vary by volume
Volume
$
Fixed Cost
Profit
Variable Cost

© Emiel van Est
Profit = Price – Cost
Profit = Sales – fixed cost – variable cost
Volume
$
Fixed Cost
Profit
Variable Cost

© Emiel van Est
We were directed to
improve an ever
smaller portion of
variable costs to
improve our margins.

© Emiel van Est
The better way to
improve margins is…

© Emiel van Est
…to increase
volume with the
same fixed costs and
less variable costs.

© Emiel van Est
So Ohno directed us in this
direction…
$
Fixed Cost
Profit
Current
Condition
Volume

© Emiel van Est
… while he spurted in this direction!
$
Fixed Cost
Profit
Current
Condition
Volume

© Emiel van Est
Sorry to
bother you
with another
book but we
do not want
you to think
we make this
all up…

© Emiel van Est
From the very
beginning Toyota set
course to beat GM
Source: Inside the Mind of Toyota P58

© Emiel van Est
Ever used this image?
No worries, this is one of our own…
Waiting
Inventory
Transport
Over-
production
Rew...

© Emiel van Est
It is not about
the boat, it is
about the
water!
Waiting
Inventory
Transport
Over-
production
Rework
Over-...

© Emiel van Est
“There are two
reasons we try to
improve quality.”
- Taiichi Ohno -
Source: Profitability With No Boundari...

© Emiel van Est
“If our product is
better more people
will buy it.”
- Taiichi Ohno -
Source: Profitability With No Boundar...

© Emiel van Est
“Also, bad quality
causes big disruptions
in my river system.”
- Taiichi Ohno -
Source: Profitability With...

© Emiel van Est
“When the experts from
your country visited, they
noticed that our machines
were very dependable, our
qual...

© Emiel van Est
“I do not think that they understood
why we did these things, which
might explain why these changes
often ...

© Emiel van Est So, Did Toyota fool the lean community for decades?

EmielVanEst

© Emiel van Est So,