| Researchers have established that Toyota enjoys advantages in cost, quality, lead-time, and flexibility when compared to its competitors in automobile assembly. Differences in generating value have been attributed to differences between the Toyota Production System ("TPS") and alternative management systems. Distinctive tools and practices have been associated with TPS. However, evidence suggests that merely copying these does not generate the performance advantages enjoyed by Toyota. This has prompted several questions: how is TPS used in actual practice; under what circumstances and why does it lead to performance advantages; how is TPS propagated and why is it difficult to imitate?;I have three primary conclusions. The first is that the tools and practices that have received attention are not fundamental to TPS. Rather, they are responses to site-specific challenges in production and delivery of goods and service. The unstated, implicit but nevertheless pervasive guidelines that govern the design, operation, and improvement of individual activities, connections between activities, and flow-paths for production and delivery are fundamental. I have codified these as five "Rules-in-Use.";Second, the five Rules-in-Use promote distinctive organizational features. These are nested, modular structure; frequent, finely-grained self-diagnostics; and frequent, structured, directed problem solving that is the primary mechanism for training and process improvement. These are advantageous when people both design and perform value-adding activities; information relevant to the design, coordination, and improvement of activities is inextricably linked to doing the activity; and the system's performance as a whole is affected by the form, timing, and quantity with which goods, services, and information are passed between activities. Bureaucracies, M-form corporations, light-weight and heavy-weight project management, and other approaches have been used to manage organizations with these characteristics. Toyota has invented---through decades of experimentation---a novel approach that contrasts with these others both in methods and in the fundamental, underpinning assumptions.;My third finding follows from these two. The Rules are fundamental to TPS. They are learned through frequent, structured, directed problem-solving. Therefore, people who know the Rules-in-Use and mechanisms to teach the Rules through frequent, structured, directed problem-solving are both necessary if an organization is going to learn TPS. Both are barriers to imitation.;These Rules were developed from field data, collected during 176 days working or directly observing others work at 33 sites in Japan and North America, over a 3 1/2 year period. Data was gathered across a variety of products, processes, functional specialties, and stages in the supply chain. |
