Making large lots of a single part — that is, punching out a large quantity of parts without a die change — is a commonsense production rule even today. This is the key to Ford’s mass production system. The American automobile business has continuously shown that planned mass production has the greatest effect on cost reduction.

The Toyota system takes the reverse course. Our production slogan is “small lot sizes and quick setups.” Why are we so different from — in fact, the opposite of — the Ford system?

For example, the Ford system promotes large lot sizes, handles vast quantities, and produces lots of inventory. In contrast, the Toyota system works on the premise of totally eliminating the overproduction generated by inventory and costs related to workers, land, and facilities needed for managing inventory. To achieve this, we practice the kanban system in which a later process goes to an earlier process to withdraw parts needed just in time.

To make certain the earlier process produces only as many parts as are picked up by the later process, the workers and equipment in each production process must be able to produce the number of parts required when they are needed. If the later process varies its pick-up in terms of time and amount, however, the earlier process must be prepared to have available the maximum amount possibly needed in the fluctuating situation. This is an obvious waste that boosts costs.

Complete elimination of waste is the basis of the Toyota production system. Therefore, production leveling is strictly practiced and fluctuation is flattened or smoothed. Lot sizes are made smaller and the continuous flow of one item in large quantity is avoided.

For example, we do not consolidate all Corona production in the morning and Carina production in the afternoon. Coronas and Carinas are always produced in an alternating sequence.

In short, where the Ford system sticks to the idea of making a quantity of the same item at one time, the Toyota system synchronizes production of each unit. The idea behind this approach is that in the marketplace, each customer buys a different car, so in manufacturing, cars should be made one at a time. Even at the stage of making parts, production is carried out one piece at a time.

To be able to average production and reduce lot sizes, quick die changes are necessary. In the 1940s, in Toyota’s production department, setups in large processes took two to three hours. So, for efficiency and economy, die changes were avoided as much as possible. At first, the idea of quick setup met strong resistance in the production area.

Setup was regarded as an element that reduces efficiency and increases cost — and there seemed no reason for workers to want to change dies cheerfully. On this point, however, we had to ask them to change their attitude. Rapid changeovers are an absolute requirement for the Toyota production system. Teaching workers to reduce lot sizes and setup times took repeated on-the-job training.

In the 1950s, when production leveling was being pushed at Toyota, setup time was reduced to under an hour, sometimes dropping to 15 minutes. This is an example of training workers to meet needs by changing what is considered to be common sense.

General Motors, Ford, and the European automobile makers have been improving and refining production processes in their own way. They have not attempted, however, the production leveling Toyota has been working to achieve.

Using a large die press as an example, European and American manufacturers still take a long time for setup — perhaps because there is no need to hurry. Nevertheless, lot sizes remain large and they continue to pursue mass production under a planned production system.

Which is in the superior position, the Ford system or the Toyota system? Because each is undergoing daily improvement and innovation, a quick conclusion cannot be drawn. I firmly believe, however, that as a production method the Toyota system is better suited to periods of low growth.

Sorensen writes that Henry Ford was not the father — but a sponsor of the mass-production system. Not everyone would agree on this point. I, for one, am in awe of Ford’s greatness. I think that if the American king of cars were still alive, he would be headed in the same direction as Toyota.

I believe Ford was a born rationalist — and I feel more so every time I read his writings. He had a deliberate and scientific way of thinking about industry in America. For example, on the issues of standardization and the nature of waste in business, Ford’s perception of things was orthodox and universal.

The following excerpt from Ford’s book, Today and Tomorrow,² reveals his philosophy of industry. It is from a chapter entitled “Learning from Waste”:

Conserving our natural resources by withdrawing them from use is not a service to the community. That is holding to the old theory that a thing is more important than a man. Our natural resources are ample for all our present needs. We do not have to bother about them as resources. What we do have to bother about is the waste of human labour.

Take a vein of coal in a mine. As long as it remains in the mine, it is of no importance, but when a chunk of that coal has been mined and set down in Detroit, it becomes a thing of importance, because then it represents a certain amount of the labour of men used in its mining and transportation. If we waste that bit of coal — which is another way of saying if we do not put it to its full value — then we waste the time and energy of men. A man cannot be paid much for producing something which is to be wasted.

My theory of waste goes back of the thing itself into the labour of producing it. We want to get full value out of labour so that we may be able to pay it full value. It is use — not conservation — that interests us. We want to use material to its utmost in order that the time of men may not be lost. Material costs mean nothing. It is of no account until it comes into the hands of management.

Saving material because it is material, and saving material because it represents labour might seem to amount to the same thing. But the approach makes a deal of difference. We will use material more carefully if we think of it as labour. For instance, we will not so lightly waste material simply because we can reclaim it — for salvage involves labour. The ideal is to have nothing to salvage.

We have a large salvage department, which apparently earns for us twenty or more million dollars a year. Something of it will be told later in this chapter. But as that department grew and became more important and more strikingly valuable, we began to ask ourselves:

Why should we have so much to salvage? Are we not giving more attention to reclaiming than to not wasting?

And with that thought in mind, we set out to examine all our processes. A little of what we do in the way of saving manpower by extending machinery has already been told, and what we are doing with coal, wood, power and transportation will be told in later chapters. This has to do only with what was waste. Our studies and investigations up to date have resulted in the saving of 80,000,000 pounds of steel a year that formerly went into scrap and had to be reworked with the expenditure of labour. This amounts to about three million dollars a year, or, to put it in a better way, to the unnecessary labour on our scale of wages of upward of two thousand men. And all of that saving was accomplished so simply that our present wonder is why we did not do it before.³

In 1937 or 1938, while still working at Toyoda Spinning and Weaving, I was once told by my boss to prepare a standard work sheet for weaving. As I mentioned earlier, I found it very difficult. Since then, I have continued to think about what is meant by the word “standard” in standard work.

The elements to consider in standard work are worker, machine, and materials. If not combined effectively, the workers will feel alienated and find it impossible to produce efficiently.

Standards should not be forced down from above but rather set by production workers themselves. Only when the plant system is considered as a whole can standards for each production department become defect-free and flexible.

In this sense, standards should be thought of not only as the production department’s standards but also as top management’s. Let us hear Ford’s opinion in his chapter on standards in Today and Tomorrow:

One has to go rather slowly on fixing standards, for it is considerably easier to fix a wrong standard than a right one. There is the standardizing which marks inertia, and the standardizing which marks progress. Therein lies the danger in loosely talking about standardization.

There are two points of view — the producer’s and the consumer’s. Suppose, for instance, a committee or a department of the government examined each section of industry to discover how many styles and varieties of the same thing were being produced, and then eliminated what they believed to be useless duplication and set up what might be called standards. Would the public benefit? Not in the least — excepting in war time, when the whole nation has to be considered as a production unit. In the first place, no body of men could possibly have the knowledge to set up standards, for that knowledge must come from the inside of each manufacturing unit and not at all from the outside. In the second place, presuming that they did have the knowledge, then these standards, although perhaps effecting a transient economy, would in the end bar progress, because manufacturers would be satisfied to make the standards instead of making to the public, and human ingenuity would be dulled instead of sharpened.⁴

We see in Ford’s thinking his strong belief that a standard is something not to be directed from above. Whether it be the federal government, top management, or a plant manager, the person who establishes the standard should be someone who works in production. Otherwise, Ford emphasizes, the standard would not lead to progress. And I agree.

In pursuing the definition of standards, Ford’s thinking extends into the future of private businesses and industry:

The eventuality of industry is not a standardized, automatic world in which people will not need brains. The eventuality is a world in which people will have a chance to use their brains, for they will not be occupied from early morning until late at night with the business of gaining a livelihood. The true end of industry is not the bringing of people into one mould; it is not the elevating of the working man to a false position of supremacy — industry exists to serve the public of which the working man is a part. The true end of industry is to liberate mind and body from the drudgery of existence by filling the world with well-made, lowpriced products. How far these products may be standardized is a question, not for the state, but for the individual manufacturer.⁵

Here, the foresight of Ford is revealed clearly. We see that automation and the work-flow system invented and developed by Ford and his collaborators were never intended to cause workers to work harder and harder, to feel driven by their machines and alienated from their work. As in everything else, however, regardless of good intentions, an idea does not always evolve in the direction hoped for by its creator.

Tracing the conception and evolution of work flow by Ford and his associates, I think their true intention was to extend a work flow from the final assembly line to all other processes; that is, from machine processing to the die press that corresponds to the earlier processes in our Toyota system.

By setting up a flow connecting not only the final assembly line but all the processes, one reduces production lead time. Perhaps Ford envisioned such a situation when he used the word “synchronization.”

Ford’s successors, however, did not make production flow as Ford intended. They ended up with the concept “the larger the lot size, the better.” This builds a dam, so to speak, and stops the flow at the machining and stamping processes.

As I already mentioned, American-style labor unions may also have hindered the work flexibility in the production area, but I do not think this was the only cause. A major reason is that Ford’s successors misinterpreted the work flow system. The final process is indeed a work flow, but in other production lines, I think they were forcing the work to flow.

In the course of developing the Toyota production system — changing from a forced to a real work flow — human intelligence was transferred to countless machines. In this way, the two pillars, just-in-time and autonomation, were both the means of realizing the system as well as the end.

To prepare for future natural disasters, people are accustomed to stockpiling goods, for example, the Japanese farming tribes. Although not necessarily a bad social custom, I deny its value in industry. I am talking about the way today’s managers store raw materials and finished products to meet unexpected demands.

Business is connected to the outside world. Why, then, should it store things for its own safety? As I have often said, this tendency to store things is the start of waste in business.

“If a new machine is purchased, keep it operating fulltime … As long as it is running smoothly, let the machine produce to capacity … In case of future trouble with the machine, let it produce while it can.” This way of thinking is still deeply rooted among manufacturing people.

In an era of low growth, such ideas no longer apply, but the tendency to make and store is still strong. If Toyota’s just-in-time principle works, certainly there is no need for storing extra raw materials and finished products.

But what should we do if the machine stops and production requirements cannot be met? Under the kanban system, what would happen if the later process went to the earlier process to pick up needed goods and found the machine down and the goods not produced? Certainly, it would be a difficult situation.

For this reason, the Toyota production system stresses in all production processes the need for prevention. If we think to keep inventory in anticipation of machine problems, why not consider preventing trouble before it occurs?

As the Toyota production system gradually spread within and outside the Toyota Motor Company, I asked everyone concerned to study how machine problems and process difficulties could be prevented. Thus, preventive “medicine” or maintenance became an integral part of the Toyota production system.

Ford had similar ideas on this subject. To fulfill his business’s social responsibility, he established hospitals, schools, and the well-known Ford Foundation. When a hospital was built, Ford published his opinions on health, disease, treatment, and prevention.

In a chapter entitled “Curing or Preventing,” Ford argues that if we can find good food and prepare it perfectly, health can be maintained and disease prevented:

The best doctors seem to agree that the cure for most indispositions is to be found in diet and not in medicine. Why not prevent that illness in the first place? It all leads up to this — if bad food causes illness, then the perfect food will cause health. And that being the case, we ought to search for that perfect food — and find it. When we have found it, the world will have taken its greatest single step forward.⁶

Ford pointed out that the possibility of succeeding in this crucial goal would be greater if its scientific study was organized not by a research institution but by business as a socio-business need. While he did not say prevention itself was indispensable to the work flow that forms the basis of the Ford system, it is interesting to discover that the man who invented automation also pondered such problems.

A strong production line means a strong business. In describing the complementary relationship between just-intime and autonomation, Toyota’s two supporting pillars, I emphasize their part in building a production line with a strong constitution. Toyota’s strength does not come from its healing processes — it comes from preventive maintenance.

I have been talking about the origins of the Ford system, the mass-production system presently dominating the United States.

With respect to work flow, Toyota has learned a lot from the Ford system. The Ford system was born in America, however, and ushered in the automobile age with its introduction of the mass-produced Model T. I have similarly sought a Japanese-style production system equally suited to the environment of Japan.

As to the evolution of the Ford automation system in American automobile manufacturing, the Ford Company included, I think Ford’s true intention has not been accurately understood. As I have already said, the reason I think this is that, compared to the smooth flow in an automobile plant’s final assembly line, the flow of other processes has not been established and a system based on large lots that seem to stop the flow has been incorporated.

Why is this? Before Ford’s ultimate goal was understood clearly, competition in the U.S. automobile marketplace intensified. The Ford Company itself was under pressure from its rival, General Motors. I think this situation halted study of the appropriate development of the Ford system.

The fact that the American automobile industry faced a major turning point in the 1920s is well described in the book My Years with General Motors, written by Alfred P. Sloan, Jr., the former Chairman of the Board of General Motors.

According to Sloan, an incident occurred between 1924 and 1926 that changed America’s automobile industry dramatically. The smaller but higher-class market that had existed since 1908 was transformed into a larger market demanding better-class cars for the general public.

In other words, where Ford’s goal was providing a cheap mode of transportation, the new market demanded a constantly improving automobile — for everyone.

With the development of the automobile industry in the 1920s, the U.S. economy entered a period of new growth. With it, new elements appeared, further changing the market. These new elements can be divided into four categories:

If we consider the automobile environment as well, I would add to this list:

These elements are deeply rooted in today’s automobile industry and it is almost impossible to think about the industry without them. Prior to 1920, however, and for a little while after, car buyers were limited to those purchasing a car for the first time; typically they paid in cash or acquired a special loan. Many cars were of the “touring” or “roadster” type, styles that did not change from year to year.

This situation continued for a while. Even if the model changed, the change was not conspicuous until the entire changeover reached completion. New elements developed at different rates and were added separately until, finally, all the changes came together as a completely new model.

Sloan grabbed hold of this important modification in the marketplace and began to offer more and more different models. This “full-line” policy was General Motor’s unique strategy to answer public demands. How did the automobile industry as a whole respond to this diversification?⁷

In the transition from mass-produced Model T’s to the full-line policy of General Motors, production processes became complicated. To reduce costs while making various types of cars, standard parts had to be developed for use in different models. The Ford system, however, was not modified to any great extent.

At about this time, pricing policies were actively studied and employed in response to the wide variations resulting from diversification in the marketplace. I think that in production, however, the unfinished Ford system changed little and became deeply rooted.

While building up the Toyota production system, I always kept in mind the Japanese market and its demands for many types of cars in small quantities — different from American demands for a few types in large quantities.

The Toyota production system helps production meet market demands. We now know that producing many types of cars in large quantities is economically desirable, even though the Toyota system was built on the premise of many types in small quantities for the Japanese environment. Thus, the system is proving its effectiveness in the mature Japanese market. At the same time, I think the Toyota production system can be applied in America where the market for many types in large quantities has existed since Sloan’s time.

Today and Tomorrow was published in America in 1926 at the peak of Henry Ford’s career. In fact, this period of time also marked a turning point for the U.S. automobile industry. Later we shall discuss the details of the changes that occurred, but in brief, while the high point in Ford’s career, this period ironically marked the beginning of the Ford Company’s downward slide and the rise of General Motors.

The year 1926 corresponds to Taisho 15 in Japan and, coincidentally, was the time when Toyoda Sakichi’s autoactivated loom was perfected.

It was Ford who perfected the automobile industry. He knew in detail every material used in his vehicles and his knowledge was not superficial. With his own hands, he created separate business operations for the various metals, including steel and nonferrous metals, and textiles.

Ford thought flexibly about things without getting caught in existing concepts. One ofhis experiences concerns textiles:

Spinning and weaving have come down to us through the ages and they have gathered about them traditions which have become almost sacred rules of conduct. The textile industry was one of the first to make use of power, but also it was one of the first to use the labour of children. Many textile manufacturers thoroughly believed that low-cost production is impossible without low-priced labour. The technical achievements of the industry have been remarkable, but whether it has been possible for anyone to approach the industry with an absolutely open mind, free from tradition, is another matter.⁸

Ford must have written this before the development of Sakichi’s auto-activated loom, an invention that changed the textile industry shackled by centuries of tradition. Nonetheless, Ford’s ideas and developing business designs open our eyes:

We use more than 100,000 yards of cotton cloth and more than 25,000 yards of woollen cloth during every day of production …

At first, we took for granted that we had to have cotton cloth — we had never used anything but cotton cloth as a foundation material for tops and for artificial leather. We put in a unit of cotton machinery and began to experiment, but, not being bound by tradition, we had not gone far with these experiments before we began to ask ourselves:

Is cotton the best material we can use here?

And we discovered that we had been using cotton cloth, not because it was the best cloth, but because it was the easiest to get. A linen cloth would undoubtedly be stronger, because the strength of cloth depends upon the length of the fibre, and the flax fibre is one of the longest and strongest known. Cotton had to be grown thousands of miles from Detroit. We should have to pay transportation on the raw cotton, if we decided to go into cotton textiles, and we should also have to pay transportation on this cotton converted into motor-car use — very often back again to where it had been grown. Flax can be grown in Michigan and Wisconsin, and we could have a supply at hand practically ready for use. But linen making had even more traditions than cotton, and no one had been able to do much in linen making in this country because of the vast amount of hand labour considered essential.

We began to experiment at Dearborn, and these experiments have demonstrated that flax can be mechanically handled. The work has passed the experimental stage. It has proved its commercial feasibility.⁹

I was intrigued by Ford’s question “Is cotton the best material we can use here?”

As Ford pointed out, people follow tradition. This might be acceptable in private life, but in industry, outdated customs must be eliminated. In this process of asking why, we see vividly one facet of Ford’s business spirit.

Progress cannot be generated when we are satisfied with existing situations. This also applies to improving production methods. If we just walk around aimlessly, we will never be able to ask good questions.

I have always tried to view things upside down. Reading Ford, I was encouraged by the way he repeatedly came up with brilliant inverse conceptions.

Do not forget that Today and Tomorrow was written in the 1920s, over a half century ago when Ford’s career was at its peak. Shortly, he would face his first failure and discouragement even though the Ford Motor Company ultimately survived.

As I said earlier, I have long doubted that the mass-production system practiced in America and around the world today, even in Japan, was Ford’s true intention. For this reason, I have constantly sought the origin of his ideas. For example, take a look at the American social environment of the 1920s when Ford was prospering:

But are we moving too fast — not merely in the making of automobiles, but in life generally? One hears a [great] deal about the worker being ground down by hard labour, of what is called progress being made at the expense of something or other, and that efficiency is wrecking all the finer things of life.

It is quite true that life is out of balance — and always has been. Until lately, most people have had no leisure to use and, of course, they do not know how to use it. One of our large problems is to find some balance between work and play, between sleep and food, and eventually to discover why men grow old and die. Of this more later.

Certainly we are moving faster than before. Or, more correctly, we are being moved faster. But is 20 minutes in a motor car easier or harder than four hours’ solid trudging down a dirt road? Which mode of travel leaves the pilgrim fresher at the end? Which leaves him more time and more mental energy? And soon we shall be making an hour by air what were days’ journeys by motor. Shall we all then be nervous wrecks?

But does this state of nervous wreckage to which we are all said to be coming exist in life — or in books? One hears of the workers’ nervous exhaustion in books, but does one hear of it from the workers?…

The very word “efficiency” is hated because so much that is not efficiency has masqueraded as such. Efficiency is merely the doing of work in the best way you know rather than in the worst way. It is the taking of a trunk up a hill on a truck rather than on one’s back. It is the training of the worker and the giving to him of power so that he may earn more and have more and live more comfortably. The Chinese coolie working through long hours for a few cents a day is not happier than the American worker with his own home and automobile. The one is a slave, the other is a free man.¹⁰

There have been many changes in the last half century. Circumstances in China have changed drastically, for instance. Recently, between September 1977 and September 1978, I visited many Chinese industries trying hard to promote modern industrialization.

From Ford’s time to the present, through our postwar period when we began work on the Toyota production system, and within the industrialization that China is trying to achieve, there is one universal element — and Ford called it “true efficiency.” Ford said efficiency is simply a matter of doing work using the best methods known, not the worst.

The Toyota production system works with the same idea. Efficiency is never a function of quantity and speed. Ford raised the question: “Are we moving too fast?” In connection with the automobile industry, it is undeniable that we have been pursuing efficiency and regarding quantity and speed as its two major factors. The Toyota production system, on the other hand, has always suppressed overproduction, producing in response to the needs of the marketplace.

In the high-growth period, market needs were great and losses caused by overproduction did not appear on the surface. During slow growth, however, excess inventory shows up whether we like it or not. This kind of waste is definitely the result of pursuing quantity and speed.

When describing the characteristics of the Toyota production system, we explained the concept of small lot sizes and quick setup. Actually, at the heart of this is our intention to reform the existing and deeply rooted concept of “faster and more” by generating a continuous work flow.

To be truthful, even at Toyota, it is very difficult to get the die pressing, resin modeling, casting, and forging processes into a total production flow as streamlined as the flows in assembly or machine processing.

For example, with training, setup of a large press can be accomplished in three to five minutes. This is shorter than that of other companies by a surprisingly large margin. In the future, as work flow is perfected, we could slow down and still keep it under 10 minutes.

This explains why the Toyota production system is the opposite of America’s system of mass production and quantity sales — the latter system generates unnecessary losses in pursuit of quantity and speed.