The Toyota Product Development System's implementation challenges

Automotive Design & Production, May, 2006 by John Cleveland

For conducting business in the U.S. market, Toyota has historically had several separate business entities: a sales and distribution company headquartered in California (Toyota Motor Sales, USA); manufacturing operations (Toyota Motor Manufacturing North America); a racing subsidiary (Toyota Racing Development, USA); the Toyota Technical Center for R & D in Ann Arbor; and a design facility in California (Calty Design Research, Inc.). On April 1, 2006, Toyota merged its R & D operations and its manufacturing operations into a single company. While this might be perceived as an efficiency move primarily designed to reduce administrative overhead, the reality, however, is that it was motivated by Toyota's intention to do more vehicle development in the U.S. Under the Toyota Product Development System (TPDS), extremely close collaboration between R & D and manufacturing is the norm. Toyota's move is designed to assure that the two functions are under common leadership as Toyota moves to implement an integrated version of its product development system in the North American market.

In the January, 2006, issue, we took a quick look at the Toyota Product Development System (TPDS) and the extraordinary levels of efficiency it achieves in the development process--approximately four times that of the typical North American auto company. Let's dig a bit deeper into this system and look at the challenges that implementation presents to automotive suppliers.

Suppliers that are more advanced in their implementation of the Toyota Production System (aka "lean manufacturing") will generally have an easier time implementing the TPDS than other suppliers. In advanced lean facilities you will typically find some of the key cultural infrastructure in place that is critical to the "learning organization" orientation that is the underpinning of the TPDS. Nevertheless, there are still substantial challenges most suppliers, even those with more advanced lean systems, will face when they move to implement the Toyota Product Development System. Some of these key challenges involve:

* A new approach to engineering leadership -- A rethinking of engineering management roles and skill sets.

* A new approach to knowledge management -- New systems for storing, accessing and using engineering data.

* A new approach to design variations -- Implementation of set-based concurrent engineering.

* A new approach to the development process -- Less focus on process standards and more focus on product standards and design results.

* A new organizational design -- Creation of the "Big Room" and use of visual management for the development process.

ALIGNING AUTHORITY WITH KNOWLEDGE, AND MANAGEMENT WITH "TEACHING." In the Toyota system, authority derives from knowledge, especially technical knowledge. The product development managers are those who are the most technically competent in engineering. Their function as managers is to "teach"--to educate by asking the "Five Whys." This set of expectations conflicts with the culture in many North American supplier organizations, where authority often derives from organizational politics and is perceived as the power to "tell people what to do." It is rare in the American engineering culture to find a combination of technical competence, humility and operational discipline in the same individual. It takes time to cultivate this kind of talent, and requires a reworking of human resources, organizational development and compensation systems.

GETTING SERIOUS ABOUT KNOWLEDGE MANAGEMENT. TPDS utilizes a highly disciplined knowledge management system that: (1) standardizes the way engineering data on design options is stored; (2) makes the data available to everyone working on development; and (3) sets the expectation that each engineer is familiar with the data on related development work done by others in the organization. Key technical data is stored in the form of "tradeoff curves" that show the relationship between paired performance variables for a particular design option. This level of discipline on engineering knowledge management is absent in most North American suppliers. There are enormous levels of waste incurred because engineers "reinvent" a product each time they reengineer it. Simply finding data on previous versions is often an impossible task. (This is made more difficult by the often rapid turnover of engineers on the development team.)

[ILLUSTRATION OMITTED]

Implementation of a knowledge management system requires:

* Development of standardized formats for data collection.

* Creation of an electronic system for storing and organizing the data in a way that is easily accessible by other engineers and development team members. (1)

* Setting the disciplined expectation that engineers use the database in their development work.

* Rewarding the "reuse" of prior engineering work. This means eliminating the "culture of reinvention" where a "Not Invented Here" mentality drives engineers to want to do everything de novo.