Toyota Production System Gives Company Influence Far Beyond Its Plants

Toyota’s influence on U.S. manufacturing extends way beyond its own operations—because of the Toyota Production System. Here's why it's so powerful.Toyota recently reminded Americans about its huge manufacturing footprint in this country with an announcement about how the Japanese automaker plans to expand its presence by investing nearly $13 billion over five years, throttling up its original $10-billion commitment and adding nearly 600 jobs at manufacturing plants in five states.

But Toyota’s influence on U.S. manufacturing extends way beyond its own operations—because of the Toyota Production System. Over the decades, American companies ranging from arch-rival General Motors to Herman Miller have learned about the Toyota way of making things, improving their own factories and processes as a result.

And as a not-for-profit arm of Toyota North America, the purveyor of TPS, the Toyota Production System Support Center, has shared its know-how with more than 350 government entities and other non-profits as well as small to mid-sized manufacturers over the last 25 years.

TPS teams “work in our plants quite frequently,” Andi Owen, CEO of Zeeland, Michigan-based Herman Miller, the giant office-furniture manufacturer, tells Chief Executive. She’s relying in part on leveraging TPS as she gets a handle on her new industry after joining Herman Miller in 2018 from the fashion world, where she honchoed supply chains for The Gap and other companies.

Jim Lentz, CEO of Toyota North America, explains TPS’s long relationship with Herman Miller this way. “We ended up buying furniture from them, but at one point they were looking at moving an unproductive manufacturing line overseas, and we assisted them with TPS,” he tells Chief Executive. “Now they’re true advocates, and it has helped them.”

Toyota describes TPS as an “organizational culture that engages people to continuously make improvements” and is sustained by three integrated elements: Toyota’s philosophy, which includes continuous improvement, engaging employees, and putting the customer first; TPS tools and practices such as just-in-time and “built-in quality”; and the role of managers to inspire and develop people “to surface and solve problems to improve performance.”

But TPS practitioners and beneficiaries also will say that the system is far more than the sum of these parts, that it involves a holistic approach to improving practices, processes and even attitudes that can enlighten managers and workers not only on a factory floor but also in a soup kitchen, a disaster-relief center or a health-care operation.

Lentz notes, for instance, that TPS was instrumental in helping the St. Bernard Project rebuild more homes in the wake of Hurricane Katrina in New Orleans than any other not-for-profit organization did. After applying TPS, the organization was able to cut the time it took to rebuild a house to 62 days, half of what it had been, and at half the cost private contractors would charge.

In the 1980s, GM was so impressed by TPS after working with Toyota on a joint venture in California to build small cars that GM executives including Mark Hogan overhauled the company’s approach to building small cars based largely on TPS. Hogan eventually went on to become a director of Toyota and remains a global advisor.

Toyota also harnesses TPS on behalf of clients in other countries, such as a small ethanol-processing plant in the Brazilian sugar-cane fields where Hogan and others from Toyota were assisting last year.

What’s in it for Toyota? The company says, “Sharing our ideas in this way makes it possible for our partners to stay competitive and preserve jobs or support more people in need – and that benefits all of us.” The regard that has been achieved by TPS worldwide clearly also boosts the overall Toyota brand in myriad ways.

For Owen, watching TPS in action as she learns about it is impressive. “There’s a problem every day that they’re working to solve,” she says. “It’s a test-and-learn, fail-fast mentality that everyone thinks is associated with the tech world but really is a craft of TPS. It’s solving small problems every day and working with human beings efficiently at the center. It’s pretty remarkable.”

For example, she observed how applying TPS solved an ergonomic challenge at a Herman Miller chair-making plant. A woman on the line was continually bruising her hand, and the whole team of workers around her used the principles of TPS to break down her job bit by bit “to see exactly what motion, and at what point in the process, caused the bruise,” Owen says. “They identified that one of the trays she had to use to move one part to another was slightly warped. So engineering got involved to fix it.

“TPS takes you down to that level of detail. You don’t find that kind of attention to detail in every company, and certainly not in every supply chain.”

Read more: States Feel Toyota’s Growing U.S. Success Via New Plant Investments