Page 229 - The Toyota Way Fieldbook

Chapter 9. Make Technology Fit 205

This is a different story of technology adoption than we see in most compa-
nies. It is a story of a group working tirelessly to develop a solution that fits its
process and principles. This is a Toyota logistics group, not an IT group. They
did not place all their faith in the outside vendor. They used the vendor’s algo-
rithm and worked with the vendor over several years to tailor it to fit TPS
before finally bringing it live, including a display that meets Toyota’s tough
visual management standards. While the planning horizon was long, one can
safely predict that the implementation will be smooth and, if successful, will
migrate as a new Toyota standard globally—to be continually improved.

Contrasting Models of Technology Adoption
In reflecting on how Toyota approaches technology, we have identified contrasting
models of traditional companies versus Toyota’s lean approach. Broadly speak-
ing, there are two different animals here—the case of hard automation and the case
of IT systems for planning, scheduling, and decision making. We will consider
each in turn.
Automation has been around for centuries. It is not a new story. Any engi-
neer who has made a case for automation knows the drill. Do a cost benefit
analysis where the cost is the amortized capital cost and the benefit is typically
labor savings. If labor savings exceeds the amortized capital cost, the automa-
tion wins. In reality there is often a hidden bias in favor of the technology since
automation does not talk back like people or threaten to unionize. Give a robot an
order by programming it and it executes the order without further explanation.
Many engineers make a living going through factories area by area and making
cases for automation. The automation is typically purchased from the outside,
and the engineer acts as a technical liaison for the outside vendor.
Look at the diagram of the traditional automation process in Figure 9-1.
Clearly, the underlying philosophy is to lower labor cost by automating peo-
ple out of the process. The strategy is to look at a cost-benefit analysis job by
job and automate in those cases where it is cost justified. In this way variable
labor costs are replaced by fixed capital costs. Some negative effects of this
focus on taking out labor through automation are job insecurity, labor-man-
agement conflict, and a lot of complex and fixed equipment that has to be main-
tained. Skilled labor costs often go up, and equipment downtime becomes a
problem. Moreover, if sales go down, management is stuck with the fixed tech-
nology costs.
From a lean viewpoint the technology is often unreliable, inflexible, and
overproduces. It overproduces because it is not completely reliable and the
company needs to justify the cost of the technology by keeping it busy. In an
environment where large banks of inventory are the norm, this waste is usually
ignored as long as the equipment is busily producing parts.