Kaizen in the Automotive Industry

Level: Beginner

What you will learn:

• About the Toyota Production Center
• How Ford uses Kaizen to encourage problem-solving
• How Volvo communicates leadership’s commitment to continuous improvement
• Nissan’s push toward a radical form of Kaizen
• How Kaizen is helping Toyota embrace a digital transformation
• The need to commit to Kaizen

Kaizen developed as a core pillar of The Toyota Production System (TPS), so it’s no surprise that the automotive industry continues to apply it to innovations large and small. While many of the companies seek to redefine Toyota’s system in terms that best apply to their organization, there are many shared examples of continuous improvement that puts people first. The result is a value-creating competition where the customer always wins.

About the Toyota Production System

TPS is a philosophy developed by Toyota leaders from 1948 through 1975. The goal is to reduce costs and save time, thereby delivering greater value to the customer. TPS achieves this goal by targeting the elimination of three areas:

• overburden (muri)
• inconsistency (mura)
• waste (muda)

Eliminating muri, mura and muda improves production processes. TPS is further grounded in two pillars: just in time delivery and jidoka, translated as “automation with a human touch.” One of the central principles of TPS is Kaizen, the idea of striving for daily, continuous improvement.

Today, Kaizen has been widely adapted as the basis of Lean manufacturing.

Ford encourages problem solving

Former Ford Motor Co. president and CEO Alan Mulally became a legend when his Working Together Management System helped transform the struggling automaker by putting people first. One of Mulally’s first changes upon coming to automotive industry in the late 2000s was to sell off many of Ford’s brands. This helped return a single, central vision around Ford’s value. The next step was to bring employees from around the world together around this central vision, and a plan for achieving it.

One of the key components of Mulally’s “One Ford” plan was mandatory Business Plan Reviews. During these reviews, leaders discussed how their departments were meeting key metrics, spoke openly about problems, and worked together to find solutions. At first, however, it wasn’t easy to get leaders to speak up. In fact, during the first review, virtually everyone in attendance at the meeting indicated that everything was going well, despite clear financial evidence otherwise.

Finally, one person spoke up and presented a problem. This gave Mulally an opportunity to show that the meeting was a safe place to discuss problems. Through teamwork, the group identified the best solution. It took weeks of committing to this format before all leaders felt safe in raising real concerns. As Mulally said, it took time to get everyone to trust the process “and deal with reality.” Yet over time this approach broke down silos. Ultimately, it helped transform the company’s value to customers.

Volvo communicates leadership commitment

Volvo dedicated the Feb. 2017 cover of Volvo Group Magazine to telling employees “Your ideas matter.” The magazine issue was but one way that the organization focuses on celebrating the improvement process and the Volvo Production System’s successes throughout the organization.

In an editorial, Volvo president and CEO Martin Lundstedt described the key to the Volvo Production System: “[T]he actual key is leadership, discussing why we do things in a particular way and involving everyone in the process. At workplaces where we have been focusing on continuous improvement for a long time and have done so successfully, our employee engagement level is also high.”

The organization relies on daily meetings, regular Gemba visits and Kaizen events to identify opportunities for improvement. Yet the organization makes it clear that it’s leadership’s support of improvement that drives the initiative’s success.

Nissan pushes radical Kaizen

Nisaan set out to distance itself from competitor Toyota in 2017 by dedicating itself to a drastic contrast from the Toyota Production System. The company set out to foster a corporate culture that encourages  manufacturing innovations in leaps and bounds over daily incremental improvement.

“The old-style kaizen gives you a 5 percent, maybe a 10 percent, improvement. But our team’s goal is what we call ‘Kakushin,’ to deliver change that’s a multiple of the previous,” commented Atsuhiko Hayakawa, corporate vice president who heads powertrain production for Nissan, in an AP article.

However, practitioners of Kaizen often find reason to apply Kakushin, one of the four types of Kaizen, to project development. For example, this approach can develop new value if a set process isn’t working or when a company wants to take a competitive leap forward.

In many cases, the practice of Kaizen can help smooth workflow following a Kakushin project. Daily continual improvement can further magnify major innovations.

Toyota drives digital transformation

As mentioned above, there are four types of Kaizen. Kaikaku describes a process where an organization undertakes a radical process transformation. For many automotive industry companies, that switch may be part of a broad digital transformation.

At Toyota, the next transformation includes using mixed-reality technology on the factory floor. The company has adopted Microsoft’s HoloLens goggles, which superimpose graphic or textual data over the real world. The AR technology is expected to change the pace and speed of processes, such as checking the thickness of a car’s coat of paint. A process that once took two days can now be completed in two hours.

Kaizen takes commitment

Kaizen has the power to transform companies, but it takes a commitment to change and leadership support. General Motors’ joint venture with Toyota is an example of how a lack of commitment can derail a Kaizen program. NUMMI was, in part, an experiment for GM to better understand TPS. It also served as a way for Toyota to bring manufacturing to the U.S. The immediate results included reductions in annual worker turnaround from upwards of 20% to 2% and significant improvements in product quality. Yet corporate leaders never pushed the lessons learned at NUMMI across the organization. Those involved at NUMMI speculate the company might have avoided bankruptcy in 2009 if it had pushed those improvements company-wide.

Next Steps

For More Information

The 4 Types of Kaizen

Kaizen versus Innovation: Key Differences Between the Two

Role of Kaizen in Digital Transformation

The Origins of the Toyota Production System

NUMMI 2015 on This American Life