Lessons on the Toyota Production System applied to suppliers
Roberto Priolo: Stefano, you were a senior executive at Toyota's material handling plant in Italy when Sadao Nomura was asked to help the group's sites improve their quality. Can you tell us what exactly his objective was?
Stefano Cortiglioni: The president of Toyota Material Handling gave Nomura-san the responsibility of radically improving quality at the group's production sites around the world. The trend was positive overall, but it fluctuated and did not match what was expected of the Toyota brand.
Another problem was that, outside Japan, there were only two Toyota Material Handling greenfields. The rest, including our plant, were acquisitions – with the resulting difficulty of having to bring change into a culture different from Toyota's. Nomura's Dantotsu project aimed to make Toyota Material Handling the “undisputed number one” in terms of quality – a much bigger goal than a simple quality improvement, in fact.
RP: What was that first meeting like?
SC: From the start, Nomura was clear about his way of doing things. His approach was certainly not “soft”: as you would expect, becoming the “undisputed number one” meant setting very challenging targets. Nomura told us he expected our plant to achieve a 50% reduction in warranty payments, a 90% reduction in the number of nonconformities, and a 90% reduction in the number of in-process defects within 3 years.
I must admit that, at first, we were quite skeptical: Nomura's approach to quality seemed very different from ours. He certainly ended up changing many of our practices.
RP: What were the main changes Nomura-san introduced with his Dantotsu approach?
SC: We started by measuring only three KPIs: what we paid in warranties, the number of nonconformities reaching the customer, and our first-time-right rate. Nomura immediately put a lot of emphasis on daily management (“speed is key” was his motto): you cannot wait until the end of the month to track your quality performance; you have to be on top of every problem that comes up as soon as it comes up.
The Asaichi morning meeting was one of the first changes we introduced. It was a completely different approach, based on the idea that the quality results you see at the end of the month are built day after day. So we began collecting data and tracking problems daily. The meeting took place on the shop floor, with the CEO present (a very important point). It lasted exactly 15 minutes, with everyone standing. That way, there was no time left for blaming or finger-pointing, and it forced everyone to focus solely on discussing problems.
My role as director became to smooth things over whenever conflicts arose, to steer people toward problem solving, and never to interpret the list of detected problems as a way of knowing who is good and who is bad at their job.
Nomura-san guided us through the eight steps of his approach to quality improvement. From the outset, he encouraged us to embrace standards (without them, there can be no kaizen). When we began investigating the 4Ms, it was normal for us to start with the man aspect. However, it took only a few visits to the operators at their workstations with Nomura-san for us to realize that we were neglecting the other three (method, for example, when it became clear that we did not always have standards in place).
With Nomura, we also restructured the way we did PDCA, breaking the cycle down into deadlines and explicitly assigning each improvement job to a person – to ensure that the intervention happened in a timely manner and that people felt fully involved.
Finally, the leader of the Asaichi meeting was the department head. The person traditionally seen as the “victim of the system” became the internal customer for whom the company had to solve problems.
Categorizing defects was another major contribution from Nomura (A, B, C, and D defects). This made us more aware of the defects that reached our customers and improved our ability to filter defects at our quality assurance stations and to control our processes. Once people understood this model, the single Asaichi board we used to track defects grew considerably. Nomura always stressed the importance of visual management (he used to tell me: “I need to understand the business without you having to explain it to me”).
RP: How did you get suppliers involved?
SC: Before asking anyone else to change, we wanted to have our own processes under control and become familiar with Nomura's method. Once we had done that, we approached our suppliers, offering them the same training we had received. When, after a few months, the first dramatic drops in the number of defects were recorded, even the most doubtful came on board. Today, they would never go back to their previous way of working!
RP: Many of the ideas and practices Nomura-san introduced seem quite simple, which is not to say they were easy to introduce. This seems to happen quite often with Toyota, don't you think?
SC: Toyota is simple! It is so simple that sometimes we struggle to understand it. What makes Toyota's principles and ideas hard to apply is the discipline they require. Many companies (including our own, before the Toyota acquisition) still have a “who is wrong?” culture, while Toyota has a “what is wrong?” culture. Thinking about raising problems is impossible if the prevailing culture is one of blame.
Not involving people in defining and improving the work is the worst thing you can do. They need to know that they can always make things better, that they are valued by the company, and that their contribution goes beyond their own job. With my Japanese colleagues, the difference used to be this: it is easier to complain about others than to clean up your own mess, but the success of a company – and certainly Toyota's – comes from many small, simple improvements that combine to create a superior organization.
RP: What was it like working with Nomura-san on a personal level?
SC: Nomura-san is a person of extraordinary knowledge and experience. He remembered everything and everyone, and he had a very clear understanding of how our business works.
Despite his vast experience, however, we never felt judged by him. Our plant was a Toyota acquisition, and some expected an authoritarian figure like Nomura to come in and simply tell us what to do. He never did that (although he knew how). Instead, he walked alongside us while we figured things out for ourselves. He also never undermined my role as director. In fact, he wanted me to introduce the changes, because he knew it was the only way they would stick.
One of my favorite memories of the time I spent with Nomura is the two weeks I spent with him at Toyota in Japan. He had me stand on the line eight hours a day, asking me to identify any potential kaizen I saw. Those two weeks on the shop floor with a hard hat, safety shoes, a pen, a notepad, and a stopwatch were some of the best professional learning I have ever had. No slides, presentations, or explanations can give you the same understanding of how a system works.
RP: What lessons did you learn from Nomura?
SC: Before Nomura's visits, we used to prepare everything so that the site looked nice, but he soon realized the decoration was only cosmetic. Two or three visits later, we realized there was no point in sweeping the dust under the rug, because he already knew it was there. Whenever a problem occurred, Nomura taught us to trace it back through the process to understand where it originated and why it was not detected. We chased it until we got to the bottom of the problem. For him, it was not about the error, but about the resilience and robustness of the system.
Another important lesson I learned from Nomura was that, when it comes to quality, it is never too early. Nomura believes in integrating the work of production with that of engineering. He wanted people to learn from their mistakes and found it absurd that a technical team's experience with defects was not made available to everyone (in fact, his favorite work is the simultaneous engineering manual). The time we spent on product development, design reviews, and so on was meant to help us surface problems from the very beginning, instead of only discovering them after production was completed. For Nomura, it was essential to collaborate with research and development and to find time to improve the product from the start.
Another fundamental lesson he taught us concerned the relationship with suppliers, who should be seen as partners, with the company committed to them in the medium and long term. Everyone wants cost savings, but switching suppliers as soon as the price goes up is counterproductive. Nomura taught us that a relationship based on trust is preferable and that it is much better to work with a supplier to help it regain or maintain its competitiveness than to simply abandon ship when things get tough. He asked us to invest a lot of time and energy (in the form of training, for example) in our suppliers, which paid off handsomely: we taught them our way of doing things, which in turn led them to go after every defect to understand its root cause. For Nomura, losing a supplier meant more than just losing a product; it meant losing a culture, a relationship, a way of working.
RP: What were the results of the Dantotsu project for your company, TMH Italy?
SC: Nomura helped us find ways to do more with less, leveraging our kaizen resources and without any additional investment. His contribution proved fundamental for us, and not only because of the extraordinary results detailed in the book he wrote. After his intervention, we could truly live up to the Toyota name. Within a few years after that, our volumes tripled!
RP: The approach Nomura describes in his book is, at least in theory, replicable. What are your recommendations for those thinking about introducing the Dantotsu method into their own operations?
SC: A common problem organizations face is a lack of leadership commitment. CEOs who attend the launch event and then disappear will not help much. Instead, they need to attend the morning meetings, talk to the operators, and listen to them. Without this, the Dantotsu method (or any other improvement activity) has no chance of success.
I would also recommend three concepts that Nomura always valued highly when it comes to solving problems and improving the system: speed, consistency, and perseverance.
Finally, there is another dynamic typical of Western organizations that we must overcome if we want to benefit from Nomura's method: focusing on the macro dimension of problems without thinking about the details. In Japanese culture, and certainly at Toyota, it is the individual's contribution that makes the system successful.
Stefano Cortiglioni early in his career, ran the Italian plant of Toyota Material Handling at the time when Sadao Nomura brought his Dantotsu method to TMH sites around the world.
