Lean manufacturing's five guiding principles were developed by Toyota after World War II. Seeing itself as the underdog in the auto industry dominated by Detroit’s big three -- General Motors, Ford and Chrysler -- the Japanese auto manufacturer developed the Toyota Production System to reengineer the entire production process from the suppliers to its customers. These principles can streamline processes and improve a company's competitive edge by cutting waste, speeding production and producing satisfied customers.
Value in the Customers' Eyes
Rather than attempt to tell customers what features they wanted, Toyota sought to meet customer expectations at a price they were willing to pay. Toyota perceived that other auto manufacturers were attempting to create value with add-on features that customers neither needed nor wanted. Instead, Toyota focused on what customers wanted, and eliminated wasteful and unnecessary features. This principle can be applied to any business seeking to make itself more competitive, whether its market is local or global.
Steps in the Supply Chain
Toyota reevaluated its production process and reengineered every stage. The firm examined the steps that created value, steps that added no value but were required by the nature of the manufacturing process, and finally steps that added no value that were avoidable. By eliminating as many valueless steps as it could, Toyota identified ways to produce more efficiently without compromising the value that consumers wanted. Examining the process flow for your business is a worthwhile activity that can help cut cost and decrease production time.
Production Flow Improvement
Building on the analysis of the previous principles, Toyota tackled the task of eliminating waste on an enterprise-wide basis. While most companies are built on a department-based organizational chart, Toyota broke down organizational walls to focus on the product and its needs. By doing so, it dismantled a fragmented corporate structure where each department focused on its own objectives, and instead concentrated all corporate resources towards the production flow based on creating the value that the customers wanted. Any firm, regardless of size, can replicate this process, cutting costs while improving products and customer service at the same time.
Demand Pull From Customers
By eliminating waste in the production process and focusing on customer needs, Toyota found that customer demand stabilized, thus making the supply chain more predictable. The firm also found that time from concept to product delivery was cut. Applying this step to your business means you will not have to push your products on customers. Instead, you will provide them with products they want, whose value matches or exceeds the price they pay.
Striving for Perfection
As Toyota applied the principles, it found itself in a drive for continuous improvement. With each advance, opportunities appeared for even more advances. Employees who suggested improvements were rewarded, and Toyota involved everyone in the production flow -- suppliers, contractors, employees, distributors and customers. Any business can benefit by following these principles as first enumerated by Toyota.
Thomas Metcalf has worked as an economist, stockbroker and technology salesman. A writer since 1997, he has written a monthly column for "Life Association News," authored several books and contributed to national publications such as the History Channel's "HISTORY Magazine." Metcalf holds a master's degree in economics from Tufts University.