Note: Links to all of four Japan factory tour posts and the various lessons from those tours can be found here.

I thought I understood lean pretty well. I was wrong. There is still so very much to learn.

On Monday I visited Toyota's Kyushu operations as part of Gemba's Japan Kaikaku Experience. The complex has the capacity to manufacture over 40,000 vehicles per month, did 430,000 vehicles in 2007, and is currently running at a 1,150 vehicle per day clip across two shifts. There are over 6,000 employees, which is down from a few months ago thanks to the global slowdown in vehicle sales, but up from only 2,000 less than a decade ago.

The first thing you notice as you drive up are the bright yellow "smoke" stacks. Why yellow? So they can easily see if the stacks are dirty in order to clean them. The last thing you experience as you leave the facility is the tour guide saying "I'm sure I could do a better job and I will endeavor to be better" and then watching her repeatedly bow to our bus as it drives off, punctuated by a final full bow as we round the corner out of the parking lot… a quarter mile away. The desire to improve and the respect for people is pervasive.

The experience between can be difficult to describe, but here goes with some free-flowing thoughts and observations.

This is Toyota's most profitable plant by a dollar/vehicle standpoint. It is not the best in terms of labor productivity. That simple fact should immediately throw some cold water on the "hours per unit" type metrics commonly used in multiple industries. More time not applied to work can lead to improvements in plant productivity that increase profitability. They understand that labor is a value, not a cost.

Toyota produces only what is ordered. Dealers have to make a unit commitment 30 days in advance of the production month, then lock in their specific orders 5 days in advance. At that time specific requirements are transmitted to Toyota's suppliers, and they then have a 3 day lead time to sequence the parts required for each vehicle, which are then delivered in hourly increments straight to the production floor.

Sounds complex? It is. Add to it that the takt time, or how often a vehicle needs to come off the assembly line to meet demand, can range from 90 seconds down to less than 50 seconds. Seconds. That takt time is constantly changing to accommodate demand. Think about how the changes in demand blow back to supply chain requirements and supply chain flexibility.

Now… think about this: the same assembly operation doesn't just make a vehicle with different colors, or even a vehicle with different options, or even a vehicle with radically different technology (like conventional versus hybrid models), it makes completely different vehicles. Continually, constantly changing, units of one. Hundreds of permutations, many as radical as completely different vehicle chassis. Every sixty seconds. A car to an SUV to a hybrid version of that SUV back to a car… think about the material flows, line balancing, standard work required to keep such a line humming along. That should give pause to anyone believing that Toyota doesn't do mixed model production, or that quick changeover is a pipe dream.

And finally… thing about this: there was not a computer visible on the floor. Anywhere. A large electronic sign that showed the status of each line, but everything else was manual. Individual parts bins were manual kanbans (but with bar codes so the paper cards themselves didn't transfer). When empty they were replenished by guys driving trains of carts up and down the aisles between the lines. As a bin of parts was emptied, another was put in its place. For thousands of bins, parts ranging in size from washers all the way up to engines and doors, across acres of factory floor.

Toyota automates only what is dangerous (welding) or too heavy for humans. Everything else is done by humans… because humans can create ideas for improvement. And that ongoing improvement is one of the truly impressive aspects of this operation.

Contrary to many other automakers, Toyota let's their plants improve on an individual basis instead of forcing detailed standard work across different factories. Changes and innovations are evident everywhere, at every work station. The employees use PVC pipe to create their own ways of presenting parts in the exact location needed for efficiency. These Rube Goldberg carts follow them as they move with the car to do their operation.

Every movement is choreographed and improved. You have to stand and watch each person for several cycles to see just how choreographed. Each movement has a purpose and is designed to minimize movement for the current and next operation. As he is exiting the front seat after installing four bolts a slight twist of the left hand will open the rear door so as he swings out of the front seat he swings right into the rear. As he exits the rear he leaves a tool that is required by the next operator. This is very hard to describe, but it is truly a manufacturing ballet.

If the operator has a problem, he pulls a cord that sounds a chime. Another person in white gloves comes running. The problem escalation method is something many of us struggle with, and the Toyota solution is to create very simple decisions and multiple decision points. The operator begins with "is there a problem, yes/no". If "yes" he pulls the cord. The guy in white gloves comes running and has another simple decision "is it really a problem, yes/no". The two of them have literally under a minute, one takt, to make that call. If "yes" then the line stops and the supervisor comes running. He has a simple decision of "can the problem be fixed within two takts (about two minutes), yes/no". If "no" then the decision goes one more level to "shut the factory down". Within three minutes a problem has been identified, attacked, almost always resolved, but potentially a decision has been made to shut down an entire factory.

How often does the chime sound? About once a minute throughout the factory. There is no problem reporting a problem. The intent is to find it and get it fixed, fast. As in within a minute. How long does it take you to identify, report, and fix a problem? I know what you're thinking, I'm embarassed too.

There are about seven parallel assembly lines, running head-to-toe, to make each vehicle. Each are synchronized but independent to allow for a three to seven vehicle buffer, which thereby allows for each individual line to be shut down for two takts two or three times per shift without shutting down the entire factory. "Buffer" is probably a misnomer… remember that it represents about five minutes. The factory is scheduled to 100% uptime, but the goal is 97%.

Takt time adjusts continually based on demand. Slower takts are seen

as opportunities to create improvement. I know the current crisis has

already led to slowdowns for most of you, but what would happen if you

went to your boss and said you want to reduce the amount of time

employees spend directly producing something so they can improve?

They'd probably check the authenticity of your MBA.

But this is why this facility is so profitable… without being the best in terms of labor utilization. The human-created improvements more than offset. A "kaizen" at this facility, and throughout Toyota for that matter, is any improvement. Some may be no more than "instead of my left arm reaching across my right to get a part, I'll move the parts bin to the left", but it is still an improvement. And every person is expected to do one such improvement per month. Each one is documented on a single sheet. Hundreds of thousands per year. Small improvements add up to massive change.

We often struggle with whether to compensate or reward employees for improvements, and where those dollars should come from. At Toyota, instead of trying to calculate the ROI for each improvement a five or ten dollar reward is paid from the plant's training budget. If the idea results in a lower workload, the employee gets to experience that reduced workload for a month before the line is rebalanced.

Training is obviously a key concern. New employees take three months to learn their first job, much of which is in a training center that looks almost like the factory itself. After they learn that first job, they then learn the job that occurs before their operation, then the one after, each taking about a month.

Labor balancing is also a concern. Unplanned absenteeism can be a killer. The factory is staffed at 5% extra to accommodate planned vacations and absences. After that… the boss is expected to replace a missing employee. If the employee needs to go to the bathroom outside of the two breaks and lunch, the boss must fill the position. If the employee is absent unexpectedly, the boss must step in. And this philosophy goes all the way to the top, to the executive levels.

Bathrooms and breakrooms are placed within 50 meters of each operation. Surprisingly, employees are allowed to smoke on their breaks… on the production floor. The breaks are all taken at the same time, and the line is stopped… and the lights above the line go out to conserve energy. Ten minutes later, Edelweiss is played, and everyone goes back to work.

The current downturn has hurt. Hundreds of contract employees, a traditional and accepted form of employment in Japan, have left. But the full-time people have jobs for life, as they have for decades. The loyalty in both directions helps both sides. But also remember that Toyota is a bit unique in that they have, and operate to, formal 50 year plans. Not five year plans like the rest of us. Fifty. This crisis was expected, cash reserves created, strategies created to implement training in order to come out the other side ahead.

Who can tell me the CEO of Toyota? Sure, a few can. But not as many as can name Welch or Nardelli. Leadership at Toyota is humble. Fujio Cho has said "lead as if you have no power." After seeing this facility, you truly understand that concept. Toyota is a principle, a system, that just happens to have a leader. It is a principle that supports people, and leverages the improvements those people create.

Do you think you understand lean? Then you might want to visit Toyota Kyushu on the Japan Kaikaku Experience.