Page 38 - Toyota Under Fire

THE MOST ADMIRED COMP ANY IN THE WORLD

leader was the pursuit of economies of scale. This approach fo-
cused on driving down the cost of production by increasing the
amount that was produced at every step of the process. Inevita-
bly this caused a buildup of inventory, but that was perceived as
a good thing. Quality problems could be tolerated because there
were always more parts to pull from inventory. The belief was
that reducing defects was far more expensive than maximizing ef-
ficiency and throwing away the flawed parts.
Toyota proved that the opposite was true. If you elimi-
nated waste and quality problems, you could operate far more
cheaply—and keep customers much happier. The process
for eliminating waste and errors that Toyota has developed is
founded on the insights of Taiichi Ohno. Ohno saw that if the
company was to maintain Sakichi’s commitment to catching
and fixing problems and Kiichiro’s commitment to just-in-time
operation, it had to have a systematic way of solving problems
throughout the company. His focus was on drilling down to the
root cause of the problem by asking why five times.
The problem-solving process that Ohno started was later en-
hanced by ideas from an American who was dispatched to Ja-
pan by the U.S. government to assist in the rebuilding of Japan
after World War II, Dr. W. Edwards Deming. Deming’s ideas
are the foundation of the modern quality movement. He taught
Japanese managers about the importance of quality and a way of
thinking about how to achieve it. Central to Deming’s approach
was a radical expansion of the definition of the word customer.
Historically, customers were considered to be the end users of a
product. Deming taught that “the customer” is also the next stage
of a process. Thus, serving the customer in a manufacturing envi-
ronment meant providing the next step in the assembly line with
exactly what it needed, in terms of both quality and volume, at

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