Do it like Toyota
Is it their tools and techniques?
How do Toyota manage to develop a new car from scratch in under 20 months?
The product development conundrum
Simulation is a key tool: it enables you to develop products that fulfil their function better and cost less to make. But to get the full benefit, the activities that precede and follow simulation need to be as well run as the simulations themselves. Unfortunately they rarely are.
For example in 2005, McKinsey surveyed 43 US car makers’ and suppliers’ development programmes. On average the companies wasted $600 a vehicle from changes to product specification during development, unnecessary product complexity and overly optimistic estimates of production capacity. All stemmed from absent or poor front-end product development activities.
Most product developers experience similar challenges - it’s a world-wide problem. Typically, projects are late, over-run budgets and don’t achieve their target sales or margins. And this despite a well-documented, audited process. The major cause is that most companies have inadequate front-end activites.
Toyota is the world benchmark on how to run product development. Despite their size, no 2 in the world, they are the most profitable vehicle manufacturer. They have learned how to develop a completely new complex vehicle in less than 20 months. At the same time they achieve peerless class-leading quality and low manufacture cost.
So how do they manage to do what most other companies can’t?
Most of the US auto companies surveyed above, like thousands of others world-wide, use many of the same tools as Toyota. So if you had a good process and applied these tools and techniques, would you replicate Toyota’s performance? Unfortunately you wouldn’t. If Toyota’s success was the result only of replicable techniques and methods, many more companies would be as successful. But they’re not. So why aren’t they?
How you achieve a performance as good as Toyota
If you want to improve your manufacturing, you apply the Toyota production system (TPS). You map your operation, redesign your processes to make them smarter, alter your process map and organisation, and make continuous improvements. It takes a sea culture change and tenacity to do it successfully.
But you can’t apply the TPS to product development (Toyota don’t). First, you don’t have the equivalent of fixed manufacturing plant. And second, companies rarely question their process route; compared to Toyota, most have an incomplete process. Much is published but little is helpful; very little is able to be applied. Often it’s no more than consultancy or software “sales speak”, academic, too general, or arms length analysis of only parts of the process. You often find that you know more about developing products than the article’s author (who often has never actually been responsible for doing it).
How your own process operates in practice depends on your accumulated management, technical and intellectual knowledge. And on your company’s culture. Just doing a value stream map does not identify where and what to improve.
Process
Process is about the start to finish business activity, from product strategy to handover to production and beyond. You define who is involved at each stage whether in-company or suppliers, what they do, and why. It runs from generating ideas, testing them against your strategy and what customers want, to how you plan your manufacture. It’s about running the entire business process from start to finish in the least risky manner, at least cost, in least time.
The first trick is to assess the risk-reward profile of each project and include only the best in your programme - as few as possible. This speeds the programme.
Then, in each project, you delay setting the product specification in concrete until as late as possible. This requires a logical activity sequence that few companies do: you have to do things in the order that reduces risk as much as possible while committing as little cost as possible. The majority don’t do this; they omit tasks or do things in the wrong order. And the product development area usually has far more projects than it can handle. The result is slow and costly. Good tools help but is not the fundamental answer.
Culture
This governs how your process works in practice rather than how your process manual says it should. In the West, it is almost unknown to replicate exactly how Toyota does it because we can’t replicate their organisation or culture.
But there are ways you can achieve Toyota-level performance that Western culture will sustain. Work environments of trust, openness and continual learning are built over time. The process is not random but relies on subtlety. Most managers have not been trained to see it. It has to be grown and nurtured; it can’t be manufactured; it needs patience and commitment. And you need to understand how to guide it.
Culture operates at superficial and deeper levels: from visible artefacts such as a tools and methods to unquestioned assumptions - what staff do when no one’s looking. It’s learned through doing, not through study or exhortation. We all tend to act from our own mental models and preconceptions rather than from observing what is really happening. To change this takes constant practice and relies on personal relationships and continuous mentoring.
Doing it
Amending your process may seem straightforward but most companies think that learning how to change their culture appears harder. In practice the two are closely interlinked. If it were easy, every company would do it. But the few that do, manage to achieve untold competitive advantage over the majority that don’t.
You do it by building on your sound current foundation, applying detail changes that make the difference. It is led from the top, to develop a culture of mentoring and continuous learning rather than just delegation. It does not have to be radical or disruptive. The cost (internal and external) is chicken feed compared to your long-term benefits. And in this age of manufacture migrating to the East, any action that makes your future more secure is worthwhile. If you learn and apply the “how-to”, you diminish the threat from the East.
To help you, with the benefit of a sabbatical from our industrial careers, we have analysed in depth how more than 80 leading Western and Japanese companies achieve their results, including Toyota and Nissan. (We have decades of industrial management experience; we are not academics.) We have helped a handful of UK companies apply this to their operation, with great success.
It starts at the top of your organisation and deals both with process and culture. Above all it’s about how you eliminate failure and errors. It’s not rocket science but nor is it easy or immediate. It can be 3 to 4 years before results appear on your bottom line. But appear they do. And it makes your future more secure.
| Some product development tools and techniques - how can you tell which the useful ones are? |
| Belbin team selection |
| Cross function resource planning |
| Design process concurrency |
| Design structure matrix analysis |
| Design for manufacture and assembly |
| Engineering computing tools such as FEA, CFD |
| Five whys |
| FMEA, both for design and process |
| Functional cost analysis |
| ICAD |
| Idea generation methods |
| Incremental innovation |
| Ishikawa |
| Lencioni operating pyramid |
| Low cost tooling and modelling |
| OTLA |
| PLM software |
| Poka Yoke |
| Problem solving techniques |
| Process capability studies |
| Product architecture analysis and planning |
| Project management software |
| Project risk assessment |
| Project prioritising by risk-reward analysis |
| Pugh concept selection |
| Quality function deployment |
| Rapid prototyping |
| Shainin |
| Six field waste analysis |
| Statistical process control |
| Stage gate methodology |
| Taguchi robust design methodology |
| The product pyramid (strategy development) |
| Triz |
| Value stream mapping |
| Voice of the customer analysis |
| Weibull failure analysis |