The 3rd Installment
“A World-Class Japanese Achievement”

　A worldwide economic crisis marches on, and Japan’s manufacturing industry is taking a big hit. As the auto industry in particular is seeing a serious decline with absolute amount of work declining sharply, I worry that a great many people must be feeling its effects. However, while this can be considered a state of crisis in the short term, I am writing this column out of consideration for what this means in the slightly longer-term.

　In the United States, GM is on the brink of collapse. Toyota, too, has revised its earnings forecasts downwards a number of times, and while this has been preceded by news of the economic crisis, it appears that the mantle of top automobile manufacturer in the world has passed from GM to Toyota. Japan has become home to the world’s leading automaker. This is a feat of which Japan can be proud.

　The direct contributing factor in its becoming number one in the world was good quality. The Japanese possess the skills to make products of extremely high quality. Building quality into products is not something that can be achieved overnight. It is the crown of long years of effort, and the result of setting in place a culture that eliminates those factors which degrade quality.

　The culture that Toyota has been able to cultivate is clearly different from the U.S.-style culture that puts the economy above all else. Toyota has never set the goal of aspiring to be number one in the world. It is not that it wanted to become number one in the world; rather, the times have propelled Toyota into the number one position. Japan’s efforts and culture have drawn the place of number one in the world to it.

　Figure 1 depicts a dynamic stability model of which I am particularly fond. The model is split into four quadrants, and depending on the quadrant upon which basis a company conducts its business, their corporate structure, business processes and information systems shall differ accordingly. I assert that companies follow the sequence of (1) - (2) - (3) - (4) as they develop. This model perfectly describes the stages of development in the auto industry.

Figure 1. A dynamic stability model Companies change in the direction of the arrows

　(1) is Invention, and this indicates when the first car was invented at a time in which cars did not exist. Since automobiles were produced completely by hand, one at a time, they were extremely expensive products. It was in (2), Mass Production, when it became possible to produce these automobiles in large quantities. Ford came up with the method to mass produce automobiles, and prices became much more affordable.

　In the American way of thinking, everything is fine provided a blue-collar worker is able to work according to instructions. The border between those who give work orders and those who follow them is clearly defined. Blue-collar workers are treated as robots, in the sense that there is absolutely no expectation that they will improve work methods or come up with ideas. Behind this there is a culture where even if a work error occurs, it is the person who gave the work order that produced the error who is at fault rather than the worker. As a result, in the 1980s, American cars stopped being able to compete with Japanese cars in terms of quality.

　After (2) Mass Production, comes (3) Continuous Improvement. This is the concept of kaizen (Japanese for “improvement”) epitomized by Toyota. Anyone, including factory workers, are encouraged to come up with ideas for improvements. The good ideas are adopted. In Japan, the QC cycle and TQC activities of making continuous improvements are deeply entrenched in manufacturing sites. High quality has been achieved by building in quality at the manufacturing site so as to avoid producing inferior products.

　The Toyota Production System, or TPS, has seen the most success in the area of (3) Continuous Improvement. TPS is a system of lean pull production. Only when a downstream process indicates that it needs something is that item alone produced. A kanban, or “signboard” signaling system is used to signal the need for an item.

　Produce what is needed, when it is needed, and only in the quantity needed — This is not a process of creating production plans and then carrying out production according to those plans. While production plans are used for the purpose of pilot production, items must not be made until being “Pulled” using the signboard system. Things are not made in bulk. Only the quantity pulled is made. Items may not be produced by referring to plans. Under TPS, planning and execution systems are separate, and cut off from one another.

　The idea that production must not be carried out by referencing plans rejects the notion that making things in bulk is a simpler alternative. This has served as a warning to the mentality that tends to flow towards easiness. The essence of TPS requires human power.

　Just-in-time (JIT) production requires cooperation between parts manufacturers and production lines. Parts manufacturers need to deliver parts to production lines when they are needed. As a result, a line production that does not maintain a parts inventory has been achieved. In doing so, confidence in parts manufacturers, and their ability to take action by carrying out work as agreed is essential. What is achieved through JIT is not only a system; it is the human capacity for trusting one another and working together.

　Under TPS, a culture has been cultivated in which everyone, including parts manufacturers, cooperate with each other, and all involved share ideas for even the slightest improvements. The foundation of this is human power. This is an area which other countries have had a hard time emulating.

　Under the current economic crisis, the demand to replace cars that are still serviceable with new ones may have decreased significantly. However, this is not to say that the demand for automobiles in the likes of India and China has evaporated. From a global perspective, there are persistent areas of demand for automobiles in developing nations. If we exercise patience in the meantime, in the near future the auto industry will most certainly regain its vitality. At that time, Japan will likely be in a dominant position.