Placing a Popular Taiichi Ohno Quote in Context

call to cash retail.JPG
There is a popular quote by Taiichi Ohno which has always bothered me. Unless you are completely new to Lean, you’ve seen it.

“All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line…”

…by attacking waste within the processes across this time line. Too often this is taken as the marching order or purpose of the Toyota Production System, a.k.a. Lean. The problem with this quote is that it is almost never introduced in context. Taken alone today, one could think that Toyota is to this day working on reducing its lead times in a single-minded fashion. Certainly the minimization of waste and the speeding of the call-to-cash cycle remain important, but they are in no way “all we are doing”.
The quote is popular because of its simplicity. Often we find it treated as a credo, that according to St. Ohno all we need to do is to look at the time line, cut out waste and shorten the call to cash cycle, and good things will follow. While following this approach is almost never a bad idea, to avoid missteps on the Lean journey by taking ill-advised shortcuts, this quote needs to be understood in context.
It was in the mid-1980s, after he had retired from Toyota and was serving at Toyoda Gosei where he was serving as chairman, that Taiichi Ohno answered a question:
“What is Toyota doing now?”
This question came more than three decades after Taiichi Ohno began experimenting on the gemba with production control and industrial engineering methods that became the Toyota Production System. This question was posed roughly three decades ago. Taiicho Ohno answered this question somewhere halfway between the beginning of Toyota’s lean journey and today.
So what are we to make of his words that in the mid-1980s “all we are doing” was “reducing the time line” by reducing waste? Perhaps we can answer this question by asking also “What was Toyota doing in 2001?” There was a supply chain-wide cost reduction effort aimed at taking cost out at the product design level. This seemed to be working well until around 2007 when due to falling quality, cost was added back into the system in the form of 1,000 additional engineers. This was a correction in a rare misstep by Toyota, having focused too much on the short-term at the cost of the long-term. Today Toyota is redoubling its efforts to strengthen its core.
We can look further back and ask, “What was Toyota doing between 1950 and 1980?” Far from working on kaizen activities focused on lead-time reduction, in the early days there was an intense focus on productivity to meet increasing demands without hiring or capital investment. This is well-documented, as “The goal was ten-fold higher productivity” in Taiichi Ohno’s writings. Then as now, cost reduction was forefront.
The context of Taiichi Ohno’s exploration of a more rational system was Toyota’s emergence from bankruptcy, lack of access to capital to meet growing demand, and a need to raise output using their minds instead of money. These were the factors guiding the development of the Toyota Production System. After the oil shock of 1973 the challenge became to reduce costs even with limited volumes, as well as to begin expanding the Toyota Production System across their supply chain in earnest. As Japan emerged from a slow-growth period into another growth period, variety became more important to the consumer, requiring further kaizen. Perhaps the production control, logistics and inventory management systems had been near-perfected by the 1980s when the question was posed to Ohno, and Toyota had shifted the focus of kaizen to various other business processes and wastes adding to the time line and trapping cash.
Over the years there was also a fierce focus on quality improvement, in order to overcome Toyota’s early struggles in delivering a quality product to the U.S. market Their fervent adoption of Dr. Deming’s teachings is well-known. Although tremendous work was done to stabilize and improve quality using TWI, standardized work, QC circles, statistical quality control, the invention in 1961 of the andon system for workers to stop the line, and the quality engineering tools that are only just reentering the Western consciousness via design for Six Sigma, there is no equivalent quote from Taiichi Ohno stating that “all we are doing is looking at the process and reducing variation…” Perhaps this is because Toyota was the student rather than the teacher in the quality field, in contrast to the field of modern production control, supply chain and logistics management, which hey largely reinvented.
We could do this decade by decade and gain important insights, but there is no need. It is enough to understand that the application of kaizen changes during the course of our journey. The far destination may not change, but the changes to the climate and landscape beneath our feet requires that we adapt. Still it is a pity that there was no follow up question to Ohno’s reply about “All we are doing…” A simple, “Why?” would have enlightened us about the context and purpose of what Toyota was doing in the 1980s, and what it means for each of us today.
We need to question easy answers, ask “why?” and take a broad, deep and honest look at our own operation. We need to ask the right questions. The answer to “What is Toyota doing now?” may not be the answer you need to follow to begin or advance your Lean journey. The answer to what they were doing in the 1980s needs to be understood in context. We must understand our own situation and needs so that we can test the foundations and build up our management system.