A3 Report: a tool for process improvement

Portuguese translation by Diogo Kosaka

The A3 report is a tool that Toyota Motor Corporation uses to propose solutions to problems, provide status reports on ongoing projects and report on information-gathering activity.

At the Lean Summits, a number of companies always present and explain their A3s, offering a practical view of this method, which is one of the foundations of the lean system.

1. Introduction

Few companies in the world stand out for continuous improvement like Toyota Motor Corporation. The company is best known for its efficient production system, called “lean manufacturing”. But the most efficient production method in history was not born of the inspiration of a single genius (although Toyota has had several of them over the years). On the contrary, it evolved into its present state through decades of sustained, high-level improvement activity. Toyota's efficiency is not limited to the shop floor; it also involves product development, prototyping, testing and all other business operations. Manufacturers around the world have sought to implement Toyota's practices and have even had some success. However, unlike at Toyota, most of that success is confined to the shop floor, with little in the rest of the company.

Many of Toyota's tools have been studied, written about and copied, but one tool has received little attention. In previous research on Toyota's product development system, the first author found that this tool was used freely and with incredible power and effectiveness. Toyota uses the tool as a systematized guide to problem solving through a rigorous process, documenting the key problems of that process and proposed improvements. The tool is used so freely that it is a key piece of Toyota's famous continuous improvement program. Toyota calls this tool the A3 report.

2. The A3 Problem-Solving Report

The A3 report is so called because it is written on a sheet of A3-size paper. Toyota has developed several types of A3 report for different applications. The report is written from top to bottom and from left to right. Three holes on the left side combined with a double fold allow the reports to be stored in standard three-ring binders. Although the names of the boxes may change, the organization of the report remains the same, as explained below.

2.1. Theme & Background

 Every report begins with a “theme” or title. The theme indicates the problem to be addressed and is quite descriptive. The theme should be focused on the problem and not advocate a particular solution.

Next, the author of the A3 report describes any background information that is essential for understanding the extent and importance of the problem. Items that should be included in this section are how the problem was discovered, why the problem is important to the company's objectives, the parties involved, the symptom of the problem, previous experiences, company structure, and so on.

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2.2. Current condition

 This section is perhaps the most important in an A3 report. The author draws a diagram showing how the system that produced the problem currently works. The problems are clearly highlighted in the diagram. The author should also quantify the extent of the problem (e.g., percentage of defects, hours of “downtime”, etc.) and show this information graphically or numerically somewhere in the current condition. The diagrams should be drawn neatly and be easy to understand for anyone with some knowledge. It is useful to have a few standard icons for different activities.

The information for developing the current condition diagram is gathered through direct observation. Digging in and understanding in detail the actual process and the way it is carried out, rather than thinking about how it should be done or how someone says it is done, is absolutely critical. Workers and supervisors can often tell how the process generally works, or how it should work, but general deviations like this or hypothetical concepts almost always undermine the definition of the problem. So direct observation is necessary. The information describing the extent of the problem must also be real information, perhaps collected in a logbook if necessary, and not estimates or “guesses”.

There are several purposes for putting the problems into a diagram and quantifying them. First, the act of drawing the diagram provides a deeper understanding, helping to organize knowledge and learn through observation. Second, the diagram communicates needs to others quickly and effectively. The graphic can contain a great deal of information, and readers can understand it quickly thanks to the visual representation. Third, by diagramming the system, problem-solving efforts are focused on the system rather than on people. This results in greater objectivity and a less defensive, less blame-seeking stance toward the causes of problems. Our experience is that problem-solving efforts in implementation have failed because the A3 authors did not sufficiently understand the current conditions. Failures due to incompetence or lack of creativity are rare.

2.3. Root cause analysis

 As the author understands the current condition and its meaning in depth, it is clear that he or she begins to understand the root cause of the problem symptoms, shown by means of “specific icons (clouds)” in the initial condition diagram. Failing to identify the root cause of problems means they will come back. A common technique for analyzing the root cause of problems is the “5 whys” method. Simply ask why five times in a row about a problem. Experience shows that stopping at the second or third why usually means the questioning did not go deep enough. One possible guide is whether the questioning has touched at least one of the three principles of organizational system design. 1) Has the work been specified as to content, sequence, timing and outcome? 2) Are the connections between areas clear, direct and immediately understood? 3) Are the pathways followed by products/services simple, direct and uninterrupted, and do all the steps add value? Spear and Bowen, in their extensive studies, identified these principles as the DNA of the Toyota Production System. We have not yet found a failing system that does not violate at least one of these principles. So, to guide the “5 whys” questioning, the problem solver should consider whether activities, connections or pathways are at the root of the problem.

2.4. Target condition

 Now that the problem solver understands how the work is done and has a good understanding of the root cause of the system's problems, he or she is ready to consider how the system should be improved. Toyota calls improvements countermeasures (rather than the ambiguous “solution”) because this implies that: a) we are dealing with a specific problem and b) it is what we will use now until we find an even better countermeasure. Countermeasures go to the root cause and fit the three principles. The idea is to move the organization toward an ideal state that does exactly what the customer needs, safely, when needed, in the quantity needed and without waste.

With the countermeasures in mind, the author draws a target condition diagram, the diagram of how the system will work with the countermeasures in place. The countermeasures can be noted on the diagram with “clouds” (to highlight them) or separately. Just like the current state, the target or future condition diagram must be very clear to everyone who reads the A3.

2.5. Implementation plan

 The implementation plan outlines the steps that must be completed to reach the future state. The author lists the steps, when they should be done and who will be responsible. Since implementation is an activity, it must comply with the activity principle (i.e., specify content, sequence, timing and outcome).

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2.6. Metrics

 How will the organization know that the new system is better than the previous one? The metrics show how and when the author will measure the system's improvements or the results of a specific test. They should include a realistic, quantified forecast of how the new system will perform (e.g., X% decrease in defects, turnaround time reduced by Y minutes). The forecast should be as accurate as possible, based on the author's deep understanding of the work and the planned countermeasures. It cannot be a shot in the dark or an unrealistic ideal case. For example, while ideally we would like to see zero defects, will the countermeasures really achieve zero defects? If not, how many defects can be expected with the new system?

2.7. Results report

 This section is an adaptation of Toyota's A3 report. Toyota's problem solvers have outlined a special A3 for following up on results. It is somewhat lengthy, including a list of defects and plans to identify them. We decided to incorporate the results report into the original A3 to simplify the A3 Report system and improve its acceptability. So we left space at the end of the A3 to put the actual results compared with the forecasts. If the new system still has problems, a new A3 report can then be generated.

The step of demonstrating the results is absolutely critical to maximizing learning across the organization. Toyota indoctrinates its people in its own version of the method – each improvement is designed as an experiment. The A3 problem-solving process is the framework for implementing the scientific method. The initial condition and root cause constitute the necessary prior knowledge, the target condition and implementation plan are the experimental design, and the implementation plan the hypotheses. Finally, the results report section is critically important for evaluating the support given to the hypotheses. If they are supported, we confirm our understanding and move on to the next problem. If not, we know that our current understanding of the work is incorrect or insufficient and additional experience with the work is needed. If we fail to establish the hypotheses, or if we fail to measure the results, we will not have truly tested our understanding; as Lord Kevin said, our knowledge will be meager and of an unsatisfactory kind.

3. Benefits/ Why it works

 We have successfully applied the A3 tool to thousands of problems. We have been able to solve problems that had not been solved with other problem-solving methods. We believe that the success that comes from using the A3 report is due to several factors. First, unlike other approaches, the A3 method demands documentation of how the work actually happens. The best (and probably most credible) way to document the current work is to observe it firsthand. Recreating the process from memory in a meeting room far from where the work happens will result in incorrect information and excessive generalizations. Almost always, it is the aberrations and small overlooked details in the workplace that cause inefficiencies or quality issues.

Second, the A3 report allows people in the workplace to contribute to solving problems instead of just working around them. The A3 report does not require hours of specialized training. Reports can be sketched with pencil and paper, so problem solvers do not need access to a computer. This allows the problem solver to stay as close as possible to the workplace so that the fix is immediate. Toyota makes no distinction between the people who do the work and the people who solve problems. Everyone's job is to solve problems and improve.

Third, the visual nature of the icons and diagrams creates a representation closer to real systems than other representations such as flowcharts. In this way, authors are able to see their problems more clearly and readers see the system more easily. In addition, these diagrams serve as an objective boundary object between individuals and the company's units. Having a physical artifact that both sides can literally point to and discuss facilitates communication and knowledge sharing.

Finally, the A3 report represents a form of problem solving, from analysis to the generation of solutions, all the way to implementation planning and follow-up. And it is still succinct – two A4-size sheets. The combination is powerful. Moreover, documenting process improvement and following up on results enable company learning at the same time that improvement objectives are achieved. In other words, documentation is a necessary part of the process, not an additional responsibility to be completed hastily after the fact (usually long after!).

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4. Conclusions

 The A3 problem-solving report, adapted from Toyota, is a tool with great potential usefulness for organizations. It simultaneously documents the key results of problem-solving efforts concisely and incorporates a complete problem-solving methodology that begins with a deep understanding of how the work is actually done. When properly implemented, this approach pushes the organization toward a systemic view rather than point optimization, as the author/problem solver seeks information and, ultimately, the consensus of all parties affected by the proposed change. Considering the various types of possible systems, the problem solver tries to propose countermeasures that help the company move ever closer to its ideal.

While the A3 report can be an important tool for promoting rapid and effective process improvement, it is not a magic wand. Implementing the tool requires conscious effort, and numerous obstacles need to be overcome. Perhaps the most common issue we have encountered is finding time to do problem solving. One possible countermeasure for this problem is to provide temporary extra support to carry out the A3 process. As problems are found and solved and processes are organized, the time previously spent on unnecessary activities (waste) is freed up for problem solving. Afterward, the extra support can be redirected to other units of the organization.