The Toyota Economic System

The Toyota Economic System: Book 3, The Managerial Element: Reconciling Industrial Work with Human Nature With a thorough grasp of the philosophy and a proper technical understanding of TPS, one can lead people effectively to grow and sustain a TPS-like culture. Respect for people means not making machines the most important asset. Instead, we must develop common purpose, human expertise, teamwork, and a scientific approach to problem-solving. When combined with key business and operational measures grounded in TPS thinking, these principles ensure lasting prosperity.

This book analyzes the purpose and relationship between the different elements of the Toyota Production System (TPS) and how they add up to an economic system rather than just a production system that brings engineering and managerial solutions to businesses. It argues how TPS can be viewed as a science as opposed to a tool-based technique and an add-on to the current production system. Our society faces unprecedented economic, social, and environmental challenges. Thankfully, TPS offers solutions. These solutions are born out of Toyota's dissatisfaction with simple cost-benefit analyses and trade-offs. It challenges the antiquated model of economies of scale and radical individual asset efficiency. The Toyota Production System offers technical and managerial innovations that eliminate pre-existing financial, socio-economic, and environmental contradictions. The result is congruency between several factors and agents of our society that have conflicted in the past. Specifically, TPS does the following: Financially, TPS creates congruency between the Income Statement and the Statement of Cash Flow by pursuing total instead of individual efficiency. Socio-managerially, TPS reconciles the creative nature of people with the mundane requirements of modern industrial work by re-introducing craftsmanship into industrial operation. Economically, TPS lessens the conflicts between economic growth and environmental stewardship by eliminating unevenness, overburden, and waste instead of only chasing economies of scale through over production These innovations bring financial benefits to the corporation, social benefits to the workers, and economic and environmental benefits to society at large. Each benefit supports the others as opposed to itself individually. The result is true instead of apparent efficiency. This is measurable, repeatable, and worth making into a scientific discipline, which can be taught and applied more widely not just to business haphazardly, but systematically to the broader aspects of our economies.

This book analyzes the purpose and relationship between the different elements of the Toyota Production System (TPS) and how they add up to an economic system rather than just a production system that brings engineering and managerial solutions to businesses. It argues how TPS can be viewed as a science as opposed to a tool-based technique and an add-on to the current production system. Our society faces unprecedented economic, social, and environmental challenges. Thankfully, TPS offers solutions. These solutions are born out of Toyota's dissatisfaction with simple cost-benefit analyses and trade-offs. It challenges the antiquated model of economies of scale and radical individual asset efficiency. The Toyota Production System offers technical and managerial innovations that eliminate pre-existing financial, socio-economic, and environmental contradictions. The result is congruency between several factors and agents of our society that have conflicted in the past. Specifically, TPS does the following: Financially, TPS creates congruency between the Income Statement and the Statement of Cash Flow by pursuing total instead of individual efficiency. Socio-managerially, TPS reconciles the creative nature of people with the mundane requirements of modern industrial work by re-introducing craftsmanship into industrial operation. Economically, TPS lessens the conflicts between economic growth and environmental stewardship by eliminating unevenness, overburden, and waste instead of only chasing economies of scale through over production These innovations bring financial benefits to the corporation, social benefits to the workers, and economic and environmental benefits to society at large. Each benefit supports the others as opposed to itself individually. The result is true instead of apparent efficiency. This is measurable, repeatable, and worth making into a scientific discipline, which can be taught and applied more widely not just to business haphazardly, but systematically to the broader aspects of our economies.

Book 2 is structured as a step-by-step guide through the principles and techniques of TPS. It focuses on the principles (the why) and the techniques (the how) for each of the elements of just-in-time (system efficiency), jidoka (process efficiency), heijunka (level production) and standardized work. The goal is to set up a system that cohesively works towards the systematic elimination of waste, not as a prescribed recipe to be clear, but as a series of actions and corresponding effects working as a system toward an ideal. Every organization is unique and requires a tailored approach that fits its particular needs. What to do and where to start varies based on the circumstances. However, there are constant core principles that need to apply to the specifics of any situation. For example, we need to eliminate changeover time to leave batch production, and the rate of supply needs to match the rate of pull to eliminate inventory. TPS requires a level of technical expertise, from the pace of work to equipment layout, that cannot be left to chance. Companies often begin change-management initiatives without addressing these kinds of questions around work design and organization. The effort and the intentions are commendable but often fail to successfully implement TPS. We must set up the environment to drive the right behavior long term. At Toyota there is a saying: "We must act ourselves into changing." Imagine how hard it would be to find problems quickly in a large pile of inventory, or create a steady flow of production with machines that stop frequently.

The Toyota Economic System: Book 3, The Managerial Element: Reconciling Industrial Work with Human Nature With a thorough grasp of the philosophy and a proper technical understanding of TPS, one can lead people effectively to grow and sustain a TPS-like culture. Respect for people means not making machines the most important asset. Instead, we must develop common purpose, human expertise, teamwork, and a scientific approach to problem-solving. When combined with key business and operational measures grounded in TPS thinking, these principles ensure lasting prosperity.

Book 2 is structured as a step-by-step guide through the principles and techniques of TPS. It focuses on the principles (the why) and the techniques (the how) for each of the elements of just-in-time (system efficiency), jidoka (process efficiency), heijunka (level production) and standardized work. The goal is to set up a system that cohesively works towards the systematic elimination of waste, not as a prescribed recipe to be clear, but as a series of actions and corresponding effects working as a system toward an ideal. Every organization is unique and requires a tailored approach that fits its particular needs. What to do and where to start varies based on the circumstances. However, there are constant core principles that need to apply to the specifics of any situation. For example, we need to eliminate changeover time to leave batch production, and the rate of supply needs to match the rate of pull to eliminate inventory. TPS requires a level of technical expertise, from the pace of work to equipment layout, that cannot be left to chance. Companies often begin change-management initiatives without addressing these kinds of questions around work design and organization. The effort and the intentions are commendable but often fail to successfully implement TPS. We must set up the environment to drive the right behavior long term. At Toyota there is a saying: "We must act ourselves into changing." Imagine how hard it would be to find problems quickly in a large pile of inventory, or create a steady flow of production with machines that stop frequently.