Management

Principle #8 of Toyota Way

As stated by Eiji Toyoda:

“Society has reached an era in which by pressing a button you can reach plenty of technical and management information. This can be very useful but you need not loose the skill of thinking as eventually, it is the human being who has to solve the problems.”

It is not about robots replacing human being workforce, but more about robots that are able to optimise processes allowing employees to dedicate their efforts in other areas. Let us give the robot the hard operations so that we can use that time to supervise and think on a long term basis. Robots can’t think (although AI is nowadays progressing rapidly) or make decisions on their own as they thoroughly depend on people to make sure they stay functional and improved.

So even with technology advancing, there will still be a need for human skills and abilities. Without robots, human beings could still do the work. Without human beings, however, robots would be severely limited in their capabilities.

Having said the previous, Principle #8 from The Toyota Way states the following:

“Use only reliable, thoroughly-tested technology that serves your people and process.”

Below, is shown a very easy example to undersatnd the importance of this principle:

Imagine a manufacturing company machinery-intensive, which owns 200 machines to cope with the yearly demand. This company forecast that the following year there will be a rise of a 20 % of the demand, therefore CAPEX department will have to work hard to increase the machinery park. The price for the new machinery will cost (depending on the supplier) from 120,000 € to 160,000 € per unit.

Taking into account that the increase is of a 20 %, apparently, the company will need 40 new machines (as the saturation of them is almost 100 %). Therefore, forty machines will cost from 4,8 M€ to 6,4 M€.

The turnover for this company in the current year is 45 M€, so it will suppose an investment from 11 % to 14 % of the turnover. Having this figures, one will notice that the decision to be made is crucial, as we need to assure:

  • Reliability for the new machinery.
  • Standard Operating Maintenance Procedures similar to the current machinery park.
  • Standard Operating Production Procedures similar to the current machinery park.

(The previous two will avoid downtime, quality problems and reduce the training period).

  • Return of investment lower than 10 years (for example). We need to know if the increase of the demand will be maintained over the years or even increased.
  • Amortization.
  • Human Resources consumption (extra maintenance and production teams which will be needed to run the new machinery).
  • Automation level.
  • Energy consumption.

With all the previous features and using powerful decision making tools, the company needs to select from two different suppliers.

a) The first supplier is the same that they currently have. The new machinery has some new features (more automated, less consumption, slightly increased productivity).

b) The second supplier, which is the most expensive, offers machinery fully automated, with less energy consumption and doubling the productivity. These type of machinery is differently operated and maintained and obliges the client to include a maintenance contract as spare parts are only sold by this supplier.

Having all the information above and after weeks of analyzing the pros and cons, the company decided to go for the first supplier, the one they already have.

That is why they want to assure:

  • Standard Operating Procedures (both for production and maintenance) will be the same or slightly modified.
  • Although this machinery is less automated, there is an increase in productivity (not as much as in the second option) but, as the company is leader in price within this field, they do not need this huge productivity increment.
  • As for the Toyota Principle mentioned, “Use only reliable, thoroughly-tested technology that serves your people and process.”. Do not try to make huge changes within the technology area in a small period of time but try to make slight incremental changes which are sustainable throughout the time.

A different example could be shown using the cell phone service.  We have lots of service provider options, device options and service types that must be considered.

There is plenty of information that must be analyzed in order to make the right decision for implementing this technology into your life. Think about all the factors  when deciding what phone, carrier, and services to hire. How much time did you take to decide?

Think about the cost of doing it incorrectly. You hired a service plan that has poor signal in locations where you spend most of your time and the phone you purchased was not as powerful as you wished. Is it expensive to change? Yes, you will need to pay a termination fee with the current provider, spend more time looking fr a new one and paying the new service you hire.

As a conclusion, the cost of implementing the wrong technology can be very important. It is much better to do it right at the beginning and get the options and services that you know will properly serve your processes (any type of them) and your employees.

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