Human Kanban

Kanban is a material and information flow management tool. They are typically cards attached to containers of parts. The cards contain information about the parts and these cards are reused, traveling with parts. Kanban are used to control the minimal amount of inventory in the system. It is based on a formula that takes into account usage, lead-time to replenish, and a safety factory based on known or probable breakdowns in the system.
Quantities of cards are added or removed based on seasonal changes in demand. Quantities of cards are also removed to make it harder to meet deliveries if there are problems, in effect exposing weaknesses. Kanban is used as an improvement tool with the aim of removing all slack from the system by eliminating the need for a safety factory through root cause countermeasures of the breakdowns in the system.
The paper ”Human Kanban” and its Countermeasures in the Toyota Production System” by Hiroaki Satake, Professor of Economics at the Fukui Prefecture University addresses the problem of the rapid increase in temporary labor in the Japanese manufacturing industry. The Japanese title is “ningen kanban to Toyota seisan houshiki no taiousaku” in The March 2005 issue of the Ohara Social Problem Resarch Center Magazine No. 556 (Ohara Shakai Mondai Kenkyuujo Zasshi No. 556 2005.3)
Satake cites a 1995 Nikkeiren report that credits the increase in part time and temporary labor to the rising cost of labor in Japan and the challenge for Japanese industries to remain competitive. In Japan there is a 30% difference in labor cost between a regular employee and a non-regular or temporary employee due to taxes and social insurance.
Satake also cites the magazine Economist May 11, 2004 issue that there are 4,500,000 Japanese workers between the ages of 15 and 34 who work in contract or temporary labor. The gap in lifetime earnings (to age 60) between this type of worker and a regular employee is estimated as approximately $1,400,000 (160,000,000 yen).
Doing a bit of my own research, I was found that over 25% of the Japanese workforce was engaged in part-time employment in 2004 according to the OECD (Organization for Economic Cooperation and Development) statistics. Only the Netherlands and Australia have a higher percentages though the absolute number is less and neither of these are the industrial powerhouse that Japan is. This number is 13.2% for the United States.
Multi-process handling and moving workers from not only production line to production line based on demand fluctuations is a feature of the Toyota Production System and Lean manufacturing. In the 1970s due to Toyota’s product strategy and swings in demand, this system required the movement of workers from one factory to another based on demand. Satake says this was criticized as “human kanban” in those days due to the disruption this caused to people’s lives.
The human kanban system at Toyota was to move people from low demand production lines to high demand production lines. In Toyota’s words, quoted from Satake’s paper, it was to move people “when needed, where needed, as many as needed”. This is a direct application of the production control principle of just in time manufacturing to manpower allocation.
According to Satake the criticism of the human kanban system was limited to the movement of people between factories, not between production lines in a factory. This included both regular and term labor. Toyota recognized this as a problem and made efforts to level their labor requirements through heijunka in order to stabilize the lives of their employees’ families.
He says that today the Japanese area no longer as critical of the “human kanban system” as they were in the 1970s. Yet Satake concludes that in Japan today the manufacturing work force is comprised of more term and contract labor. “To put it bluntly, they are seen as disposable” says Satake.
Satake asks what is the value of reducing inventory to become just in time if this only eliminates the cushioning effect inventory has on demand variation, resulting in job instability. He calls on people in production control positions to make further efforts at heijunka in order to minimize the impact of swings in customer demand on demand for labor.
Investigative journalist Satoshi Kamata provides a more personal view of the dark side of Lean and how labor is viewed as disposable. Kamata worked for six months in 1973 as a “term laborer” assembling transmissions at Toyota and wrote and wrote about it in a book called Jidosha zetsubo kojo–Aru kisetsuko no nikki (Auto Factory of Despair: The Diary of a Seasonal Worker). This book was translated in English as Japan in the Passing Lane
Toyota has been improving quality, cost, delivery, safety and working conditions steadily for 50 years. What would today’s investigative journalist learn from term laborers? Kamata returned to Toyota City and wrote an article titled November 1, 2004 Shukan Kinyobi magazine Toyota: Suicide and Worker Depression at the World’s Most Profitable Manufacturer. Kamata is critical of how Toyota’s drive to profitability through reduced labor cost was then and still is dehumanizing.
Kamata makes some comparisons between 1973 and 2004:
1973: Toyota had 41,000 employees and 3,000 term laborers.
2004: Toyota had 65,000 employees, and 10,000 term laborers
1973: Monthly wage including overtime and night shift allowance was 79,000 yen (approx. $720) a month.
2004: Monthly wage was 254,430 yen (approx. $2,300) according to a newspaper ads Toyota runs for “term employees”.
2004: Toyota’s profits had increased more than 30-fold since 1973.
Kamata is critical of the union and Toyota, claiming that a typical response to wage complains to the union local is “Find me a company that will hire you for the wages you’re being paid now” and that Toyota constantly uses the language of crisis and competition as reasons they do not raise wages. Results of wage 2006 negotiations between Toyota and the workers’ union is consistent with this.
Quoting Kamata:
“The conversation among my friends turned to an accident one early morning in May, where a 33-year old worker was crushed to death in a metal press, followed by talk of suicides, some from overwork, among elite technicians in the development division and among leaders of the labor union. Over the last decade, they said, they’ve seen a dramatic increase in depression among their coworkers.”
In the United States labor unions are still strong enough to prevent abusive of contract workers who are de facto full-time employees. The Wash Tech union’s victory over Microsoft is a recent example. In Japan the company unions largely have no teeth, an unlike the United States it is not easy for a workers to switch from one full-time job to another several times in their career.
The human kanban system in Japan supports the profitability of Toyota. As more industries emulate Toyota and adopt TPS in Japan, this style of non-regular, part-time and term employment will become more common. In Japan today the reduced job security and economic stability of families due to just in time labor and the human kanban system are social ills resulting from the dark side of Lean.
Tomorrow: Lean Production Does Not Respect People