The Seven Deadly Wastes of Logistics: Applying Toyota Production System Principles to Create Logistics Value

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Introduction
Henry Ford said that “Quality means doing it right when no one is looking.” If Henry Ford knew the value of doing it right the first time, then why does this basic practice seem to be missing from so many companies today? The answer is...because it’s hard. It requires a rigorous approach to problem solving, a relentless effort to identify and eliminate all forms of inefficiency, and a commitment to change the corporate culture that few firms are willing to embrace. In fact, a recent study by the management consulting firm Bain & Company found that only 19% of companies that have attempted to implement lean are happy with the results. Early in the twentieth century, Henry Ford took all the elements of a manufacturing system and arranged them in a continuous system for manufacturing the Model T automobile. After World War II, Taiichi Ohno at Toyota Motor Company recognized the benefits of this system and began to incorporate the Ford production system into an approach called the Toyota Production System (TPS), a system even better than Ford’s at doing it right the first time by applying continuous problem solving by every employee to make the system ever stronger. In the decades that have followed, Toyota has diligently applied these principles and, in the first quarter of 2007, passed General Motors to become the world’s No. 1 auto seller (www.msnbc.msn.com/id/18286221). Fundamentals of TPS: Muda, Process Focus, Genchi Genbutsu, Kaizen, Mutual Respect 

While TPS has been discussed and written about for decades, a precise process has never been documented. An effective manual or a “how to” book has never been created that provides a step-by-step approach for understanding and implementing TPS—nor can such a complex process be adequately documented. Instead, newcomers to TPS are provided a daily lesson by Japanese mentors in the art of identifying and eliminating waste. Much like a child learns and forms habits from every action his or her parents take, newcomers to TPS learn from their Japanese “parents”. For example, within TPS there are many Toyota Way principles that need to be clearly understood and successfully applied before the benefits of TPS can be fully realized. But there are five in particular that are fundamental to TPS process. Once you grasp these you’ll be able to take the first steps on your Lean journey. TPS strives for total elimination of muda (anything that is wasteful and doesn’t add value), through a process focus (where managers work cross- organizationally to develop and sustain robust business processes), using genchi genbutsu (collecting facts and data at the actual site of the work or problem), and kaizen (continuous and incremental process improvement), with a value of mutual respect (between management and employees and business partners).  Muda adds unnecessary cost, quality problems, and lead-time to business processes. Process focus creates a capable and stable value stream. Applying genchi genbutsu provides the necessary understanding of how work is actually done so standardized processes can be developed, and lets us see problem causes for kaizen problem solving to eliminate muda. This may be the most difficult principle for traditional companies and managers to embrace, since it requires an attention to detail that seems to fly in the face of making Wall Street quarterly numbers and speedy decision making. The purpose of kaizen is to involve every employee in the identification and elimination of all forms of muda, thereby creating value. This is commonly referred to as the kaizen process, which uses the scientific method of problem solving at the Lehigh University Center for Value Chain Research www.lehigh.edu/~inchain 2

lowest possible level in the organization. Mutual respect between management and employees reflects a true respect and sense of responsibility from management. This mutual respect is exemplified by employee safety, lifelong learning, and nurturing and...
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