1. The Systems Thinking in the Toyota Production System (TPS) “The important thing in science is not so much to obtain new facts as to discover new ways of thinking about them.” William Bragg

2. l Systems Thinking is composed of the following cognitive processes: X Synthetic Thinking – Studying the role and purpose of a system and its parts to understand why they behave as they do. X Dynamic Thinking – Framing an issue as a pattern of behavior over time. X Closed Loop Thinking – Seeing causality as the result of interdependent variables rather than independent variables. A Working Definition of Systems Thinking

3. Two Key Questions: l How does Japan’s leading automaker keep getting better? l Why can’t competitors emulate that performance?

4. “While U.S. Manufacturers in many sectors have used practices from the Toyota Production System (TPS) to boost performance substantially since the Mid- 80s, they have used it improperly, experts say, instead of embracing TPS as an overarching philosophy, they have used it as a piecemeal toolbox. These companies’ leaders must revive their strategies to mimic Toyota’s in order to compete, which means reversing the popular notion that lean and other TPS-derived concepts are tools to be used selectively to achieve departmental milestones.” John Teresko – Industry Week, February 2006, p.34

5. Shingo Prize Scoring Criteria

6. “While U.S. Manufacturers in many sectors have used practices from the Toyota Production System (TPS) to boost performance substantially since the Mid- 80s, they have used it improperly, experts say, instead of embracing TPS as an overarching philosophy, they have used it as a piecemeal toolbox. These companies’ leaders must revive their strategies to mimic Toyota’s in order to compete, which means reversing the popular notion that lean and other TPS-derived concepts are tools to be used selectively to achieve departmental milestones.” John Teresko – Industry Week, February 2006, p.34

7. Implication of the Accepted Wisdom of “Experts” l Manufacturers must perfectly mimic the Toyota Production System to be competitive. l Key Questions: X Is it reasonable to assume that competitors can achieve Toyota’s success simply by mimicking their system? X Are the tools and techniques used in the TPS the secret of its success or merely a by-product? X If replicating the tools & techniques of the TPS is not what managers should do, what should they do? “Any fool can criticize, condemn, and complain, and most fools do.” Dale Carnegie

8. What is the Toyota Production System? l “The TPS is a philosophy of changing the production and management flows.” In NPS New Production System: JIT Crossing Industry Boundaries, Shinohara, I., English translation copyright 1988, Productivity Press Inc. p. 149 l Lean Production – A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with customers. Lean producers employ teams of multiskilled workers at all levels of the organization and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety. It contains a set of principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes. APICS Dictionary, 11 th edition

9. DNA of the Toyota Production System l Rules of the TPS X System Rule – Specify what products & services the system will deliver, and to whom. X Pathway Rule – Specify who will do what tasks to supply what items (material, services, information) to whom over simple pathways. X Connection Rule – Specify how people will request material, services, information from the proper supplier. X Work Activity Rule – Specify the work element content, sequence, timing, location, and outcome for each element in a pathway. X Improvement Rule – Specify that problems be solved close to their occurrence in time, place, and process by those affected by the problem with the help of a teacher using a hypothesis testing experiment process. Spear, S.J., 2004, Harvard Business School Teaching Note 5-604- 086

10. Understanding the TPS “At the biological level open (living) systems achieve durability through genetic coding (DNA), a blueprint for self-reproduction. As open (living) systems, social groups such as organizations exhibit the same tendency, a movement toward a predefined order. Therefore the cultural code becomes the social equivalent of biological DNA… Left to be self-organized, these internal codes, by default, act as organizing principles that invariably reproduce the existing order” Jamshid Gharajedaghi, 2006, Systems Thinking: Managing Chaos and Complexity, 2 nd Ed., Butterworth-Heinemann

11. Oscillation Time Exponential Growth Time Goal Seeking Time S-shaped Growth Time Overshoot and Collapse Time Growth with Oscillation Time Common Modes of Behavior in Dynamic Systems

12. TPS Related to Systems Thinking l The Systems Rule relates to Synthesis & the motivation behind intended behavior. l Pathway & Connection Rules relate to Closed-Loop Thinking & policy resistance. l Work & Improvement Rules relate Dynamic Thinking and monitoring behavior over time

13. TPS Related to Systems Thinking (continued) l These are the aspects of the TPS that managers need to try and replicate! X Make the purpose of the system visible to all parties involved. X Ensure all feedback loops are visible and all sources are informed and involved. X Monitor behavior over time of key variables and minimize delays between changes and reactions.

14. A Multi-Methodological Approach Combining Systems Tools, TOC, & Lean l Identify customers and determine how they define value. l Develop a process net of the operation. l Identify specific personnel involved at each stage. l Identify information flows necessary to the process. l Develop appropriate pathway and connection rules. X Use CLDs to gather insight into the mental models and sources of feedback within the system. l Identify the processes’ primary constraining resource and initially pace the process accordingly. l Identify the process takt time and focus improvement efforts to eliminate differences between it and constraint processing capability. X Use BOT graphs and Stock & Flow maps to monitor the relationships between decisions, resource performance, and desired process outcomes.