Gemba Keiei Chapter 19: Toyota Made the Kanban System Possible

In this chapter Taiichi Ohno explains the origin and the conditions that resulted in the development of the kanban system at Toyota. In the beginning the machining process upstream would replenish what the assembly process downstream used. The kanban card was used as a production instruction ticket. It was still upstream push, based on a kanban order card.

The machining processes faced challenges of large lot sizes and long lead-times in order to respond to the downstream pull. Machine changeover times kept the process from being responsive. In order to deliver just in time – the quantity of what the customer wants when they want it – single minute changeovers became necessary.

Back in those days single minute changeovers were not a reality. Nobody was doing it. The workers did not believe it was possible. It seemed even illogical and risky, not something that responsible management would permit a factory manager to experiment with.

Today we have many success stories of Lean manufacturing and SMED is a standard part of the curriculum of many industrial engineering or operations management programs. Even today people fear change and think single minutes is impossible. Imagine what Ohno must have felt like 50 years ago trying to do something that had never been done.

Taiichi Ohno says that he was scared, and that many people thought that his efforts could lead the company to bankruptcy, but that he was convinced that this was what was needed for Japanese automobile manufacturing to turn a corner.

Until 1961 or 1962, the Toyota Production System was not named as such. It was the Ohno System. This is because it was a risky experiment, and Ohno’s name was on it, not Toyota’s. At the same time Taiichi Ohno fully credits the Toyota executives for having the courage to support his efforts.

Before the oil shock in 1973 productivity improvement was relatively easy because the industry was living in the world of mass production. Toyota only had to increase output with the same people in order to improve productivity. Several chapters of Gemba Keiei are dedicated to the discussion of “reduced volume production” and its challenges. This is because that is the world in which the Toyota Production System was born.

The thinking behind Just in Time led to the development of the kanban system. In those days (and still at many companies today) the “common sense” was for the producer process to deliver the parts downstream. By reversing this so that the downstream process had to go get the parts they wanted, Just in Time was achieved. “There was nothing difficult or challenging about this” says Ohno. It was just turning common sense around.

In those days people thought Just in Time was an ideal, and not something that could be achieved in practice. This was common sense. Ohno says that he turned this common sense around because it was part of his personality to look at things from different perspectives. He was often scolded as a child for this, but it helped him go beyond common sense and see things differently.

Taiichi Ohno says that being the final assembly manager was good education for him because it allowed him to see the folly of the push production system from the final point downstream. Various departments would proudly say they achieved their monthly targets for engines, frames, etc. but without enough steering wheels Ohno’s assembly lines couldn’t build cars. The upstream push into the warehouse was not helping Ohno run the assembly lines, so he went beyond common sense and took a backwards look at the situation, arriving at downstream pull.

Ohno started working on the Kanban system in mid 1950s. Back then he was in charge of final assembly, machining, and stamping factories. Another manager was responsible for forging, casting and heat treating. This limited the kanban system to operate between assembly and machining and also assembly and stamping. Only in 1962 when all departments were placed under Ohno was the Motomachi factory able to run a complete kanban system.

It was not easy to ask another manager to manage their production according to a kanban system, so the kanban system developed one section at a time. The suppliers were included in the kanban system at the very end “to minimize confusion to our suppliers”. Ohno gives an example of another Toyota manager who caused problems for a supplier who was forced onto a kanban system even before the Motomachi factory at Toyota had succeeded with kanban. Ohno makes a strong statement that you should not implement a kanban system with your suppliers before you have successfully implemented the kanban system in-house. This is advice that is seldom heeded today.

This somewhat explains why my Japanese teachers, themselves students of Ohno, insisted to American companies that they should not rush to implement kanban. “You are not ready” they would say. Years before kaizen and Lean manufacturing was properly understood (are we there yet?) kanban was a buzzword in U.S. manufacturing, and misunderstanding of kanban systems persist today.

It seems not a week goes by when a press release touts one or another software vendor as the market leader in digital kanban for advancing Lean manufacturing implementations. I fear that few of these are much more than a way of coercing suppliers to submit to a supply chain scheme that burdens them with inventory management. Almost none of these firms sell software that enables production kanban and withdrawal kanban in-house. Too few of these software companies could show you an implementation site where production kanban triggered production upstream and withdrawal kanban were used for downstream pull. Even fewer could show you sites where kanban is used as a tool of continuous improvement, instead of a supply chain hammer with dubious long-term benefits.

Technology is a wonderful thing, but it’s important to understand the thinking behind the process that is being automated or digitized. The same can be said for the kanban system.