That’s an iron computer!

In 1963, Toyota opened a new transmission shop at the Honsha plant, and they needed to find a way to transmit signals to indicate where to send parts on conveyors to the assembly line. Figuring out how to transmit the signals was a challenge. Today, you just program a PLC or type stuff into a computer, but they didn’t have PLCs or computers back then. They had to do something…

What Toyota did was to install limit switches at the places where the conveyor was headed. Actuating a combination of switches at process No. 6, for example, might signal conveyor No. 2 to send a part. They did it by putting wooden rings on certain flag poles and used ring combinations to provide more-complex switching and signaling. The system did work.

Taiichi Ohno was showing the system to a vice president from Ford, who visited the plant after the system had been up and running for quite a while. The Ford executive froze at one place and wouldn’t budge for about 30 minutes. He was staring at the signaling system. When he finally spoke, he said, That’s an iron computer!” That was an electrical signaling system with toggle switches, the first and only “computerised” process Toyota had back then. What a technologically humbling experience for a globally admired company known for the development of a superior total management system: the Toyota Production System (TPS).

In the following sections we’ll identify the constituent methodologies of the system, focusing on the role technology has played to stabilize production and procurement by mitigating internal variability and market signal errors.


The Toyota Production System Methodologies in a Historical Context

  • First stage: Flow production, 1946 to 1955

    Toyota began deploying production equipment in the sequence of successive processes rather than in groups of similar machines; this type of layout is a prerequisite for the development of a pull-system methodology. One objective Toyota was steadfast to achieve was to optimize the material flow rather than maximize the worker’s productivity (i.e., prioritize flow to reduce lead time). To accomplish this objective, Toyota began to experiment with multi-process handling, where one worker operates several machines. This first gigantic step engendered a natural evolution towards cellular manufacturing, small-lot production, Total Quality Control, and other TPS techniques (please see Figure below).

  • Second stage: Development of an internal pull-system, 1956 to 1965

    Toyota developed a pull-system methodology for integrating production lines. That effort focused initially on linking lines that produced units, such as engines, transmissions and suspensions, with the lines that fabricated parts for those units.

    The objective was to achieve the Just in Time production of parts by the various processes in the necessary amounts at necessary timing for assembling a vehicle as a final product. If such is the case, it can be said that only the final assembly line that performs vehicle assembly is the process that can accurately know the necessary timing and quantity of the parts. Therefore, the final assembly line goes to the preceding process to obtain the necessary parts at the necessary time for vehicle assembly. The preceding process then produces on the parts withdrawn by the following process.

    In the late 1950s, the pull-system produced higher synchronization and body inventories were reduced (inventories were reduced by synchronization, not by waste elimination practices). It should be noted that Toyota is not a “zero inventory” company, although it is sometimes referred to as such.

    It’s important to emphasise that to achieve the synchronization of a JIT pull-system is easier said than done; and then, to consistently execute this multi-echelon process is an enormous challenge. Most companies have not mastered this challenge, condition that subjugates them to perpetually execute Kaizen in the flow production stage (i.e., companies are stuck in the first stage limbo).

  • Third stage: Development of end-to-end pull-systems, 1966 to 1975

    In this stage, Toyota established pull-system linkages between the vehicle assembly lines and the processes, including outside parts manufacturers, that supply components to those lines. It synchronized the fabrication of parts on in-house production lines and at outside suppliers with the production sequence on the vehicle assembly lines.

    Toyota introduced production leveling (heijunka) to help them react to demand changes and utilise their capacity in the best possible way.

    Two other key achievements of this stage were Product Development Routines and the Black Box Supplier System. Due to space restrictions, we’ll only discuss the latter. The Black Box Supplier System refers to a certain pattern of transactions in which a parts supplier conducts detailed engineering of a component for an automobile maker on the basis of the latter’s specifications and preliminary designs. This practice is known to be prevalent in the Japanese industry and one of the sources of its competitive advantage.

    In brief, given the fact that in the automotive industry 70 to 80% of the cost of the automobile is controlled by the suppliers, it’s essential that the parts or units are manufactured with the best designs, and delivered by means of a synchronized end-to-end supply system.

  • Fourth stage: Development and Adoption of Digital Solutions, 1976 to date

    Toyota employed electronic communications equipment to link activity alongside the vehicle production lines with activity in the previous processes. That helped them fine-tune the timing of production instructions and of sequential delivery.

    However, a new round of innovation became necessary in the fourth stage. The increasing diversity in vehicle models and model variations necessitated innovations in replenishing line-side stocks of parts and assemblies. Toyota needed to create sophisticated in-house logistics systems, and it needed to tap the potential of newly emerging electronic and communication technologies. Advanced technology became part of the tale of the TPS.

    By the late 1970s, Toyota had found itself achieving world-class flexibility and efficiency at the same time.
    As for production processes and techniques, the 1980s continued with system expansion. The basic elements of Toyota’s production system were in place, but Toyota continued to refine its system. Micro electronics, computers, and new process technologies arrived on the shop floors, but they did not change the basic pattern of the Toyota-style manufacturing system.


What is Toyota Doing Now?

To capture what Toyota is doing today, we’ll refer to declarations made by Akio Toyoda and presentations given by key executives in charge of its digital transformation.

In a nutshell, Toyota’s digital transformation can be summarised in the following initiatives:

  • Faster time to PDCA/problem solving.
  • Real time, faster data driven decision making.
  • Real-time visualisation to improve team member control and empowered decision making.
  • Connected data to enable predictive and prescriptive insights.
  • High factory flexibility, chiefly to realign internal and external materials flows, and improvements during periods of volatility.

A key theme expressed by Toyota is that all the digital initiatives will not alter the ethos of the TPS, but they will enhance it to migrate from Mass Production to Mass Customisation, by preparing themselves for whatever the future of mobility will be.


Why Lean implementations don’t typically lead to a sustained Continuous Improvement culture

​Over the past 30 years my colleagues and I have come across many hundreds of initiatives and implementations branded as TPS, WCM, Lean and/or BPR in all manner of enterprises and sectors. Whether led and resourced internally or driven by consultants, what we have seen invariably falls into one of 3 categories: the great, the mediocre and the downright ugly; with the mediocre being the norm.

The ugly category is usually characterised by short term cost-cutting through application of simplistic headcount reduction targets, without any real process redesign or performance improvement to release resources. This naturally results in fewer, more highly stressed staff remaining to operate processes which are now even more dysfunctional than before, so it is no surprise that such approaches can rapidly destroy overall business performance. But leaving such extreme short-sightedness aside, what is it that distinguishes the bulk of the mediocre outcomes from the few truly great examples?

We would argue that a relatively successful transformation of certain key business processes to higher levels of performance should be seen as a mediocre outcome whenever it is followed by a flatline (or even a decline). A truly great initiative should achieve such transformation, but at the same time also create a sustained culture of continuous improvement and innovation. This is the ideal outcome which positions the enterprise to not only improve current performance further but also to innovate with the agility required to suit constant and rapid changes in their business environment and in the needs of their customers. The disruptive events of the last 2 years have brought this ideal into even sharper focus.

So why do so many initiatives only achieve mediocre outcomes and fail to create a sustained culture of continuous improvement and innovation? There are two classic problems / errors which we have seen most often repeated (and if we’re honest we’ve all committed these errors at some point in our own careers as improvement professionals!)

Problem 1: Improvement cycles are not practised or coached

  • A focus on implementations of Lean tools only–valid as they may be – without the regular habit of practicing scientific improvement cycles (improvement kata) will not create an improvement culture.
  • The focus on tools alone leads to Lean being seen as the terrain of experts and only ‘something that happens in operations’.
  • When experts teach Lean tools in a classroom instead of providing coaching in the practice of improvement cycles, all learning is quickly forgotten. Indeed training staff ‘in Lean’ without coaching and without practice of improvement cycles is virtually worthless.
  • Experts focused on tools alone naturally go after ‘low hanging fruit’ and quick step changes / transformations but then no further improvement or innovation follows – especially if they then leave the site – since no broad improvement skill base has been created to leave behind.

Experts should rather be employed as a resource pulled in as needed to support and coach the wider employee teams in the practice of scientific improvement cycles. They need to get out and practice the techniques repeatedly until they become second nature.  Likewise, the habit of scientific improvement thinking is acquired through practical repetition of improvement cycles, guided by an experienced coach to create a sustained improvement culture.

Fortunately, KaizApp has revolutionised the practicality of widespread improvement coaching, with all relevant information instantly available at the coaches’ fingertips; allowing for far more efficient and effective coaching sessions, whether on-site or remote. In addition, all improvements are always instantly presentation-ready, allowing a whole new level of team collaboration across shifts, sites and countries to deliver more ambitious, innovative and impactful improvements more quickly.

Problem 2: Senior leaders are not engaged in improvements

  • Too often, Lean implementations start out in the wrong place – on the shopfloor, with lots of training of front level employees in improvement tools and techniques.
  • This is typically much too slow to demonstrate any real tangible benefits in quality or service (let alone ROI!) so the C-suite soon lose interest and may even cut the ‘Lean training’ / CI budget.
  • Without the engagement of senior leaders, initiatives lack strategic direction. Too often, the Lean experts are perceived to be working on ‘nice to haves’; improving non-bottleneck areas with no overall benefit to the business.
  • The larger the business, the more remote the leaders are from front-line improvement initiatives, which remain largely invisible to them.
  • Improvement leaders spend far too much of their time on data gathering and admin to try to report progress upwards, but even then C-suite cynicism remains.


The practice of improvement cycles needs to be led and modelled from top down and not bottom up, beginning at the leader level. Once leaders have practical experience of the value they themselves can deliver in this manner, then modelling and coaching this with their direct reports becomes the obvious next step. In this manner, the regular habit of scientific improvement thinking can be cascaded gradually down through the organisation to create a sustained culture of Continuous Improvement.

Of course, this works even better if senior leaders have full visibility and control of improvement activities from top to bottom, helping to set strategic priorities. With KaizApp, all improvements are fully visible globally and ROI is tracked at every level. Comprehensive search with multi-language capability ensures best practices are widely shared and replicated across entire enterprises; multiplying the value of every good innovation.