TPS from Yamazaki #3: Kaizen and Cost Reduction

This article is the third part of the “TPS Perspective” series compiled from the TPS seminar notes of Tetsuya Yamazaki. In this part, we examine the relationship between kaizen, productivity and cost reduction from the Toyota Production System perspective. For the previous part: TPS Perspective from Yamazaki #2 – Strong Shop Floor Management.

The Real Logic of Kaizen, Productivity and Cost Reduction

One of the common mistakes in operational excellence efforts is thinking that we eliminate problems by investing money in them. Yamazaki’s approach says the exact opposite: “Use your brain, not your money.”

In an environment of unlimited resources, it is easy to close problems with investments. However, this approach may not develop the organization’s real problem-solving ability. The power of kaizen comes from trying to find a better method with existing resources.

First Ask Why the Problem Exists

If a part is getting damaged, our first reflex should not be to use more expensive packaging. First we should ask: why is the part getting damaged? If burrs form on the part, instead of only improving the deburring operation we should ask why the burr forms. If a machine keeps breaking down, instead of building more safety stock we should ask why the machine breaks down.

Although these questions seem small, they reveal the fundamental difference of lean manufacturing and kaizen culture: instead of making it easier to live with the problem, we try to eliminate the cause of the problem. To develop problem-solving skills, see our problem-solving coaching program.

Productivity Is Not Working More

From the TPS perspective, productivity is not people moving faster or making more effort. The aim is to achieve the same result with less loss, less motion, less waiting, less inventory and simpler processes. One of the thoughts Yamazaki conveys is therefore especially important: do not think of ways to work hard, think of methods that allow working with less strain. This approach explains the relationship between productivity and kaizen very well.

Cost Reduction Is Not a Finance Project

From the TPS perspective, cost reduction is not so much a periodic savings program as a continuous task of the production system. When excess inventory, waiting, defects, rework, breakdowns, unnecessary transport and unnecessary processes are eliminated, costs naturally decrease. Therefore lasting cost reduction is possible not just by cutting budgets but by eliminating muda (waste).

In the Ohno approach conveyed by Yamazaki, managers are advised to keep returning to the shop floor, get to the root causes of excess inventory, defects and breakdowns, and use the 5 Whys approach.

Goals: Quality, Delivery and Cost

In lean management, goals should not consist only of financial results. The company’s goals should reflect customer expectations. The customer wants a quality product, at the time they want it and at a competitive cost. Therefore the management system should track quality, delivery and cost performance together. For these to be improved sustainably, the dimensions of people, motivation and occupational safety must also be part of the management system.

The Starting Point of Operational Excellence: Not Saying “We Already Know”

One of the strongest messages in Yamazaki’s seminar notes comes at the end. In TPS, kaizen or lean manufacturing, an attitude of “we already do it, we know this” is one of the significant obstacles to development. Because the moment you think you fully know a continuously improving system, the learning process slows down.

Therefore the starting point of operational excellence is not learning a new tool but being able to accept that the current state is not enough. TPS, lean manufacturing or your company’s own production system… What it is called matters less than the entire organization taking part in continuous improvement under management’s leadership.

Conclusion

Lasting productivity and cost reduction are born not from investment but from a culture that questions causes on the shop floor. For support on your operational excellence journey, see our lean manufacturing consulting service or get in touch with us.