Episode 151 - Quality Circles

Hi, I’m David Veech and this is Elevate your performance.

Let’s talk about Quality Circles; also known as Quality Control Circles or QC Circles.

Quality circles are small groups of employees with cross-functional skills who work together on a problem in the workplace to learn how to solve problems.

This is my definition based on my understanding of the INTENT of quality circles programs at Toyota and Honda.

The key outcome for quality circles is not the solution to the problem, but on having people learn, understand, and use the key problem solving process.  They of course learn by doing, so the solution is the gravy to the meat and potatoes of LEARNING.

I heard a story a long time ago about the birth of Quality Circles.  Let me remind you that Deming initiated the quality movement in Japan in the 1950s through his lecturing with the Japanese Union of Scientists and Engineers.  

Sometime in the mid to late 50s, after Deming had taught another group of managers and engineers the basics of Statistical Quality Control, someone is said to have asked him repeatedly about ways to get more employees involved in solving problems.  

The story says that Deming made a short, off the cuff remark about pulling a group of employees together after they’ve experienced a problem and have them stand in a circle to discuss and solve their own problems instead of calling someone else.

This informal, off-the-cuff comment sparked another movement in Japan that included a series of local, regional, and national QC-Circle conferences where workers who solved a problem through a QC circle would present their findings to an audience of peers, who would then select certain ones for awards and celebrations.

Joseph Juran, a contemporary of Deming’s, wrote several articles on Quality Circles in the mid-1960s, published in Quality Digest and other similar publications in the United States.  All of these were completely ignored, of course, until the 80’s when everything Japanese was duplicated, or at least we tried to duplicate.

I was in Grad School at Clemson in 1991 researching production systems when I first learned about Quality Circles.  I was studying self-directed work teams, but quality circles kept coming up in my research and my discussions with managers.  

A lot of companies tried to install Quality Circles programs in the 80s and 90s.  But as we are wont to do here, we usually mandated that every employee be assigned to a Quality Circle, and they would meet once a week and solve problems to save the company money.

This attitude had to come from Juran’s articles that said Japanese companies who participated in all these Quality Circles conferences reported saving about $10 Million annually through the programs.  

US companies wanted that $10 million bucks and missed the whole point about people volunteering, once a problem had occurred, and that other people would be recruited to join the circle with the full support of the company.  

Needless to say, most efforts in the US failed.  

I started studying quality circles at Toyota after I joined the University of Kentucky faculty in 2001.  Toyota maintained about 150 to 170 active quality circles at any given time.  They reported saving about $10 million from these efforts - a surprisingly consistent number.  

I discovered similar findings at Honda’s facility in Marysville, Ohio when I served on the board of IdeasAmerica.

I found this so cool that I wrote about creating circles in my book Leadersights.  Here, though, I called them Learning Circles in an effort to get the focus on developing people.  

I hope you’ll pick it up, read it and give it a try.  When you do, call me.  I’d love to help make your system more successful.

I hope you’re finding these videos helpful.  

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Episode 149 - The Quality Movement

I’m David Veech and this is Elevate Your Performance.

I’ve been making my way through the history of events and people who have shaped Toyota, enabling them to become the great company they are.

It started with Sakichi Toyoda, who’s known in Japan as the King of Inventors.  His Automatic Loom changed the game for the textile industry and provided seed money to start the Toyota Motor Company.

Sakichi’s son, Kiichiro and nephew, Risaburo focused on the passenger car business, first with an Automotive Division within the Toyoda Automatic Loom Works and later as the Toyota Motor Company.  They struggled to reengineer cars and engines from Ford, General Motors, and Chrysler.

Japan’s government asked them to design and build a truck for the military, which they did throughout World War II.  After the war, Kiichiro wanted to get back into the passenger car business as soon as possible, but the restrictions of the occupation government prevented them from achieving his goal of catching the Americans in 3 years.

Before I get too far away from the Automatic Loom Works, I want to point out that in 1949, an engineer from Toyoda Boshuku, named Taiichi Ono was promoted to General Manager of the Koromo Plant Machining Plant.  This facility integrated the engine and Powertrain plants.  Ono noticed that operators worked at a single machine, often just watching the machine as it ran.  The way that the automatic loom changed the game in textiles was instead of having one or more operators working each loom, now one operator could run a room full of looms, often up to 20.  Ono wanted to bring that practice to Koromo and initiated programs to add simple automation to machine tools so they could start and finish without human action, allowing one operator to work several machines.

1950 would turn out to be a significant year with labor disputes and turmoil, a tie-up agreement with Ford that allowed Eiji Toyoda to study their processes and facilities as well as those of dozens of other suppliers, and the Korean War, which actually hampered the Ford agreement and passenger car production.

Toyota did receive orders for 4,679 Model BM trucks to support the war and those orders stabilized the company financially.

In the late 1940’s, the United States sent representatives from the US Census Bureau to help prepare Japan for a 1950 census.  One of these representatives was W. Edwards Deming who had joined the Bureau in 1939 and applied statistical process control to their processes, significantly improving their productivity.

The Japanese Union of Scientists and Engineers invited Deming to speak at one of their conferences, and as a result, he lectured in Japan for ten years teaching statistical process control and total quality management to as many as 20,000.  JUSE named their top national quality prize after Deming in 1951.  The quality movement had officially begun.

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Episode 148 - Post-War Labor disputes in Japan

I'm David Veech and this is Elevate Your Performance

I've been focusing these past couple of months on the historical activities that got manufacturing and business to where we are today.

I've been focused on Toyota lately because of the impact they have had on bringing improved methods to our attention.  After all, they are the Poster Child for Lean Organizations.

When I first started teaching TPS and lean, I read everything I could get my hands on about Toyota and lean manufacturing.  I learned a ton, but I wasn't always diligent about keeping track of what source said what thing.

The delays I'm experiencing this month are all related to research.  I've been re-reading those older works primarily in an effort to validate the truth of what I've been teaching.  Sadly, I've also validated that some points I make in courses I teach are wrong, historically.  

These would be details like lifetime employment contracts in Japan.  I was taught (again, I was remiss in keeping track of the source) that Japanese companies were ordered to provide lifetime employment contracts to their employees as a result of labor disputes and protests in 1950.  

This week, after re-reading Eiji Toyoda's Fifty Years in Motion, Taiichi Ohno's Toyota Production System, and a scholarly research article on Japan's Lifetime Employment, here's what seems to have really happened.

In December 1948, the occupation government, known as SCAP for Supreme Command, Allied Powers in Japan, imposed austerity measures to bring inflation under control in Japan.  The biggest piece was known as the Dodge Line, named after Joseph Dodge, chairman of the Detroit bank and special ambassador and financial advisor to SCAP.  

These measures fixed prices on certain products like trucks and passenger cars, but not on others, like raw materials.  Many Japanese customers suffered as they lost jobs, or their profits vaporized.  

Their inability to collect installment payments for vehicles they sold drove Toyota Motor Company and many others to the brink of bankruptcy, requiring them to secure significant loans that came with strict conditions on the operations of the company.

As the economy grew more volatile, the union movement in Japan flourished.  Initially, this was encouraged by SCAP until they learned that the largest union was backed by the Communist Party.

To meet the regulatory requirements and to survive, Toyota was ordered to reduce its labor force, already relatively small compared to their pre-war staffing, by 1,600 staff.   Toyota offered early retirement buyouts, but also were forced to reduce wages across the board by 10%.  As a result, Toyota President Kiichiro Toyota resigned from the company, accepting responsibility for the turmoil.

The same was happening to other companies as well and the labor unions exploded with strikes, protests, and often violence. 

The most violent labor disputes in Japanese history took place between 1949 and 1954, involving major companies, such as Toshiba, Hitachi, Toyota, and Nissan.  The working days lost in 1952 alone reached unprecedented 15 million days involving 1.6 million workers.

Lifetime employment was never mandated by the state, but as a long-time philosophy of Japanese employers, this was a goal that most large companies held very dear.  Japanese workers, accustomed to this, were particularly devastated when the staff cuts were required by the economics of the Japanese Market, pushing them into the streets in protest.

According to Ohno, a key goal Kiichiro shared with Toyota leadership was that Toyota needed to catch up with the productive capability (if not the volume) of US passenger car manufacturers within 3 years of the end of the war.  

In 1950, Eiji went to the US to study the automobile industry.  When he returned, he said he was asked "how long until we catch up with Ford?" 

 He answered that Ford was not doing anything that Toyota didn't already know about, 

but it is very difficult to say how long when you consider that Toyota's passenger car output at the time was a mere 40 vehicles per month, while Ford was making over 8,000.

Next up we'll touch on the birth of the quality movement and how Toyota was able to respond to the 1973 oil crisis, which is the event that actually made people start studying how Toyota was doing things.

Have a great day and I'll see you soon.  Don't forget to subscribe!

Episode 147 - Kiichiro Toyoda's challenge to his team

I’m David Veech and this is Elevate your Performance.

Post WWII, Japan was under the control of the US Military.  Our objectives were to remove war-making capability from Japan, and to restore it’s economy so it can rejoin the world in open trade.

Dozens of measures were put in place that would freeze prices on most commodities, and remove subsidies the government had been paying for critical raw materials and resources like coal and iron.

These economic controls, along with breaking up of Holding Companies in an Anti-monopoly measure, had a devastating impact on Japanese manufacturers, and Toyota was no exception.  This move effectively stripped Toyota from its sales organization.  To keep people working, including the returning soldiers, Kiichiro launched several other businesses, from a chinaware franchise to fish paste, to clothing and dry cleaning. 

To relaunch the automobile business, Kiichiro first had to study what was happening elsewhere.  They had time, since Japan was not allowed to produce cars immediately after the war, and the volume of trucks and busses it was allowed to produce was too low to fuel any growth.  He sent people to the US and to Europe to study the post war automobile business and learned that they would need to improve productivity significantly to stay in that business.  His 4-point plan for recovery included:

1. In order to repair and renew machinery that has undergone heavy use or deteriorated, establish a Temporary Reconstruction Office to comprehensively promote the restoration of the plant's equipment.

2. Change the company's parts manufacturing policies to establish and develop a specialized parts plant equipped with independent capacity.

3. Implement improvement and remodeling of the company's vehicles (which was stagnant during the war), plans for design changes, and establishment of a system for the steady supply of previous model parts for repairs.

4. Change from a company that supplied and maintained automobiles under a controlled economy to establish a sales system that will better and more fully reflect users' wishes, requests and opinions.

The overwhelming concern Kiichiro expressed was toward the livelihood of his people.  His efforts to create work for people and to focus on food, clothing, and shelter, produced some moderate effect and some businesses that still linger - including a business that makes prefabricated components for concrete houses.

All this effort still nearly failed completely when the Dodge Line came into effect in Japan.  This strict austerity initiative to control spiraling inflation, sparked a deflationary trend that resulted in some devastating decisions Kiichiro would have to make.  

More on that when I see you tomorrow.

Episode 146 - Training Within Industry

I’m David Veech and this is elevate your performance.

Sorry about the long break.  I had knee replacement surgery for my left knee and the recovery isn’t going as smoothly as I’d like.  It’s going well, but I’m in a hurry and some things you just can’t rush along.

Before the break, I’d been talking about Toyota.  I shared a little about their founding and growth and I want to complete that picture now with a few additional stories.

During World War II in the United States, the War Department created the Defense Production Board to monitor the production of military equipment and supplies.  With so many men volunteering for military service early on, and the draft a little later on, a consistent problem was quality because new workers lacked the skill necessary.

To counter this problem, they created the Training Within Industry program.  This program had 3 key components:  Job Relations, Job Instruction, and Job Methods.  Job relations taught leaders how to interact with employees.  Job instruction taught supervisors how to teach the work techniques to employees.  Job methods taught supervisors how to engage the employees in improving the way they did the work.

These were built on sound principles of educational psychology and were scripted so the teaching was consistent.  It was very effective.

After the war, we provided all the TWI documentation to Japanese industries as part of our reconstruction effort.  At home, companies were rehiring their former employees as they returned from the war.  Since they all knew the work before the war, the figured there wasn’t a real need to keep the program and so it faded into oblivion.

Japan, however, made good use of those materials and continues to use the methodology.  In the late 80’s, as manufacturers in the US were scrambling to learn all they could about Japanese Management Techniques, we rediscovered TWI and it has since become a movement of it’s own.  

I’ll talk about some details of the program in a couple of future episodes.  This week we’ll cover Kiichiro’s challenge to his manufacturing team, a period of labor unrest in the early 50s, some lessons from Deming and Juran, how Toyota weathered the oil crisis in 1973, and the growth of their business in the United States.

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Episode 142 - Timelines for Toyota - Part 2

I'm David Veech and this is Elevate your performance.

With Sakichi Toyoda's death in 1930, his Son Kiichiro and nephew Risaburo were left to run his businesses.  As a result of a great earthquake in 1923, which destroyed significant pieces of Japan's railways, demand for automobiles soared.

Ford built a plant in Yokohama in December 1924, beginning production in March of 1925.  In 1927, General Motors began assembly operations in their plant in Osaka.  The surge of vehicles produced by these two plants effectively destroyed Japan's domestic automobile makers at the time.

It wasn't until 1933 that Kiichiro established an Automotive Production Division within the Toyoda Automatic Loom Works.  It began prototyping parts and designs which were reverse-engineered from a 1934 Chrysler DeSoto and a Chevrolet Engine.  Kiichiro had to establish his own steelmaking department as well, because their expected demand from existing steel mills was too low.

They purchased some machines, and converted others from the Loom works to begin making parts.  Kiichiro also sent an engineer to the US from January to July of 1934 to learn more.  That engineer visited 130 plants, 7 research facilities, and 5 universities to study the automotive and machine tool industries.

The Japanese government asked Toyoda to develop a truck as well, so Kiichiro bought a 1934 Ford Truck to use as the model, similar to how he used the DeSoto as the model for their first car.  That first car, the Model A1, was finally finished in May 1935.  The first truck prototype, the G-1 was finished in November that year.  Both were prone to serious defects.

With promising developments in the domestic manufacturing capability, the Japanese government changed the licensing rules, restricting licenses to manufacturers owned by a majority of Japanese citizens, effectively restricting Ford and GM from continuing operations there.  This, despite low output of the 2 domestic manufacturers, Toyoda and Nissan.  By September 1936, Toyota's volume had grown to just 100 vehicles per month.

In 1936, Toyoda hosted a contest to design a new Logo for the company, and changed the name from Toyoda with a D to Toyota with a T, as Industry leaders recommended.  People submitted 27,000 entries with the winner announced in the October 10, 1936 issue of the Toyota News.

They established the Toyota Motor Company in August 1937 and saw their dealer network grow to 22 outlets.  These dealers became significant investors in the new company.

We'll pick up here tomorrow and talk about Japan's entry into World War II.

Give me some feedback.  Let me know what you'd like to know more about.  Post a comment or send me an email.

Have a great day and I'll see you tomorrow.

https://www.toyota-global.com/company/history_of_toyota/75years/text/index.html

Episode 140 - A little on Toyota

I’m David Veech and this is Elevate Your Performance.

I have been a lean teacher, coach, and consultant for over 20 years.  Lean is coupled closely with the Toyota Production System, often simply TPS.  Why?

That goes back to the mid-1980s when the US Auto Industry was struggling to retain market share in the face of a tsunami of imports from Europe, to some extent, and Japan in particular.  MIT launched a project called the International Motor Vehicle Program - IMVP - in 1985.  

The IMVP charter directed it to study not only the automobile industry, but also “…to go beyond conventional research to explore creative mechanisms for industry-government-university interaction on an international basis in order to understand the fundamental forces of industrial change and improve the policy-making process in dealing with change.”  

This quote is from “The Machine that Changed the World - The story of lean production:  How Japan’s secret weapon in the global auto wars will revolutionize western industry.”  The book was the report of the research from the IMVP.

Keep in mind that the IMVP was sponsored and funded by 136 separate companies, universities, and governments.  None was able to individually influence the research.  The researchers went in to study the systems in different companies with as few preconceived notions as possible for regular human beings.

Their analysis, reported in the book I just mentioned, highlighted the radically different approach employed by Toyota in producing automobiles, but also explained it in terms of principles that are universally applicable.  Any business can benefit by understanding the principles of lean production whether you're treating patients, selling insurance, running a supermarket, or even making coffee.

I will spend the next few videos sharing a little about the history of Toyota and how they got to be where they are, and how you can too.

If you need a boost to your lean transformation efforts, or if you recognize that your culture isn't delivering the results you need, maybe I can help.  Send me an email or give me a call.  The contact information is in my profile.

Make today the day you began a transformation to excellence and greatness.

Have a great day and I'll see you tomorrow.

Episode 141 - A brief timeline for Toyota - Part 1

The story of Toyota begins with Sakichi Toyoda who was born in 1867 and began his working life as a carpenter like his father.  

I heard a story once, though, about Sakichi's curiousity.  The story was that he once spent an entire day watching his neighbor's grandmother make a quilt.  In his search for meaningful work, he let the textile industry lead the way.  

What set Sakichi apart is that he wasn't content to be a regular worker.  He keenly observed the functioning of various machines, then set out to make them better.  He got his first patent in 1891 for the Toyoda Hand Loom.  

Through a variety of companies he started, he continued to research and create better and better spinning and weaving equipment.  In 1918, he established Toyoda Boshuku, or Toyoda Spinning and Weaving Company, Ltd. He built a huge plant in Shanghai in 1919 to manufacturer the automatic looms he invented.

In 1924, he completed the Type G Toyoda Automatic Loom that featured an automatic shuttle-changing mechanism, weft-break auto-stop and warp-break auto stop mechanisms and other devices to provide automation, protection, health, and safety.  In 1926, Sakichi incorporated the Toyoda Automatic Loom works to manufacture the Type G.

This loom caught the eye of the world and was licensed to Platt Brothers & Co. Ltd of England in 1929.  The money from this Patent Rights Transfer Agreement was used to launch the Toyota Motor Company.

Sakichi died in October 1930, leaving behind 8 Toyoda companies employing more than 13,000 workers.  Toyota's first set of guiding principles were derived from Sakichi Toyoda's working philosophy and consisted of these 5 points.

1. Always be faithful  to your duties, thereby contributing to the Company and to the overall good.

2. Always be studious and creative, striving to stay ahead of the times.

3. Always be practical and avoid frivolousness.

4. Always strive to build a homelike atmosphere at work that is warm and friendly.

5. Always have respect for God and remember to be grateful at all times.

Simple guidelines are always best.  What about you and your company?  What are your guiding principles?

We'll continue on Toyota timeline over the next few days.  Let me know your questions and I'll do my best to answer them.

Have a great day and I'll see you tomorrow.