Thanks to Pablo Alvarez Flores, who posted this video on LinkedIn with an invitation for me to share my comments and reactions. There's a lot to dig into, but this post will focus on the theme of misunderstandings.

I'm writing this post as I watch the video, which was shared on Vimeo by Goldratt Consulting Ltd. (yes, Goldratt as in The Goal). It's a talk given by Nampachi Hayashi at the “Building on Success 2018 Conference.”

About Mr. Hayashi:

“He served as a senior technical executive of Toyota, and from

2009, has sat on the company's board of directors. Mr. Hayashi is a member of the “Productivity Improvement Citizens Advancement Council” advanced by Japan's Prime Minister Shinzo Abe. Mr. Hayashi is well-known around the world for his humor and liveliness to explain the essence of the Toyota Production System (TPS) as it applies to various industries.”

As Mr. Hayashi shares in the video, he joined Toyota in 1966 and was “engaged in expanding TPS serving in the frontline for 52 years” and was “one of the last direct proteges of Taiichi Ohno.”

Mr. Hayashi was a sensei to Michael Ballé‘s father, as he wrote about here.

Even before introducing himself, Mr. Hayashi talks about the importance of developing human capital in the organization:

This is a Toyota theme (Human Resource Development) that I learned a lot about on my last trip to Japan (see a post and a podcast about this).

Mr. Hayashi says that current CEO Akio Toyoda “studied the Toyota Production System on-hand under my direction.” He points out that none of the current board members (nor the CEO) had the opportunity to be directly mentored by Mr. Ohno, but “his legacy has been passed on.”

Mr. Hayashi showed a photo with Eli Goldratt and said Goldratt honored Ohno as “my hero” — an interesting intersection of TPS and TOC (the Theory of Constraints).

Is Toyota Production System Misunderstood?

He seems to answer his question on the bottom of the slide by asking “how” these misunderstandings happen. I'll add notes below… and some of the subtitle translation language is more clear than the wording of the slides, in some cases:

“Why reduce inventory in an age of low interest rates?”

“Do we neglect safety and quality when we have worker savings?”

“TPS is only applicable for a production environment. It's not relatable to my environment.”

“The misunderstanding that TPS is an improvement method born in a production plant.”

He introduced those misunderstandings, but I wish he would have elaborated more. Of course, Toyota places a high priority on safety and quality. He didn't address the idea of TPS being used in healthcare or other industries… but he did have a lot of interesting things to say.

Mr. Hayahsi says that TPS was first called various names like “Ohno System,” “Kanban System,” or “Later-process Pull System,” but was unified under the name Toyota Production System “with Mr. Ohno's approval.”

“This was the beginning of the misunderstanding!!”

Mr. Hayashi says the name “should have been TPS = Toyota Process Development System.”

“It is not an improvement method born from gemba. Solely a mechanism for Genka Teigen and Human Capital Development.”

He says Genka Teigen literally translates to “cost reduction.”

Jidoka and Just in Time

Mr. Hayashi talks about the “two pillars that support the TPS:”

This is not new if you have studied TPS. Here is Toyota's corporate web page about TPS.

“By applying these rigorously, [cost reduction] will be made possible.”

This is in line with what I was taught about built-in quality and improved flow leading to lower cost… as a result. Cost reduction isn't the primary lever that's pulled (as we see attempted in so many Western companies, including hospitals)… it's a result. Simple cost-cutting might not lead to better quality and flow (it's often quite the opposite that happens). But better flow and better quality always leads to lower cost, in my experience.

“And going through this process itself will develop human capital.”

Mr. Hayashi says it's difficult to explain the essence of jidoka so they keep the Japanese word and attempt to explain it.

He says there are two goals of jidoka:

“to build good quality into each process”

“not make the operator an assistant to the machine”

Back to the lower cost that results… in an interesting twist, after saying “Genka Teigen” literally translates to mean “cost reduction,” he says, “Toyota's Genka Teigen is NOT Cost Reduction.” It doesn't mean “to buy things cheaper.” It's defined as “to make things cheaper.”

He adds:

“There is no magic method. Rather, a total management system is needed that develops human ability to its fullest capacity to best enhance creativity and fruitfulness, to utilize facilities and machines well, and to eliminate all waste.”

Mr. Hayashi mentioned Mr. Ohno and the idea that Toyota works with suppliers to help them produce at a lower cost so the supplier can make more money. Compare that to the traditional “Big 3” approach of just demanding lower prices from suppliers.

He says:

“Quality is the basis of the Toyota Production System.”

He elaborates to say it means “good product at low cost in timely manner.” Compare that to the common misunderstanding that thinks TPS is only about cost (or only about efficiency or speed). “Quality must be built in during each process” and that's accomplished when work “automatically stops when problems occur.” And, because production stops “when the work is done” (when demand is met), then “less workers are required.”

I also like his phrasing about Just in Time… shorter distances and smaller batches mean less lead time. He adds:

“Large Lot is the Villain that Lengthens Lead Time”

Hence the need to reduce setup times instead of just trying to forecast sales more accurately at longer lead times. Better flow, of course, helps support better quality.

Making me Think About Healthcare

Mr. Hayashi adds two points that make me think about healthcare.

Customer first: “customer will not come unless we provide quality products” My comment: patients too often come to hospitals with the assumption that quality is good (or equally good) when that's not always the case. Better quality might not be rewarded in healthcare the same way the market rewards quality in the auto industry.

“Tight financial situation does not allow any defects” My comment: in healthcare, the defects are too often hidden or get reimbursed anyway, meaning there's often less of a financial incentive to reduce defects (but there should be a moral reason to do so, since healthcare says they are different).



Is your organization willing to be motivated by a rallying cry of “zero defects” (or perhaps “zero harm” for healthcare), as Mr. Hayashi talks about?

In the video, which I will probably continue blogging about, Mr. Hayashi does not seem to directly answer his question about where misunderstandings come from. What are your thoughts on this?

Does your organization have misunderstandings or incomplete understandings about TPS or Lean? What can we do about this?

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