The implementation of the Toyota Production System at NAPO means terms such as ‘lean’, heijunka and kaizen are applied to every aspect of logistics, warehousing, order and corporate strategy

That the Toyota Production System (TPS) is adhered to at the OEM’s own North American Parts Operations may not be a surprising revelation, but the fact that its principles go beyond manufacturing and handling operations, towards its customers, employees and suppliers, arguably marks something of a distinctive approach compared to other OEMs.

Across the global automotive industry, of course, TPS and its many derivatives are de rigueur, and executives pepper their vocabulary with Japanese words like heijunka (the ‘smoothing’ of production schedules), muda, muri, mura (eliminating waste and strain) and, most ubiquitous, kaizen, for continuous improvement.

However, many managers leave their Japanese at the factory gate. While highly complex and diverse inbound supply chains are controlled down to a finite point in plants, the fragmentation of product flows across thousands of smaller customer locations makes stability and continuous flow more difficult. Perhaps even more fundamentally, many manufacturers are interested in using TPS to harness economies of scale rather than to improve customer service.   

At Toyota, ‘lean’ and kaizen principles are meant to be more than a toolbox for cost control. TPS encompasses values at nearly every point of business, including employee engagement, problem solving and training, as well as customer service. It is meant to put the customer first, not least with its demand-pull operations and meticulous attention to quality at every stage (jidoka).
This ‘customer first’ approach has become the driving force behind the strategy for NAPO vice-president Neil Swartz and his corporate team. Swartz makes it clear, for example, that Toyota is willing to pay more – whether in extended hours and extra shifts at warehouses, same-day delivery services, or even open part return policies – to make sure that the right part gets to the customer as quickly as possible. If continuous flow is the principle for material moving through a warehouse or to the assembly line, then it should also determine how products move to dealers.

“The major revolution [for NAPO] has been the customer focus,” says Mike Schober, NAPO corporate manager. “Our core competency is TPS, which we use to help meet customer expectations in the most cost efficient manner.”

Spreading TPS across the supply chain

TPS processes are easiest to spot in NAPO-run warehouses, including methods for just-in-time delivery and pull-system replenishment. The two-tier supply chain itself also allows for heijunka smoothing of volume through warehouses and distribution. Meanwhile, handling operations follow standard jidoka methods, including a high concern for ergonomics, safety and the separation of human work and automation.

Also in line with TPS, the approach to automation is a very careful one – Toyota has been cautious in applying technology such as automatic retrievals or pick-by-voice systems for its warehouses, concerned that such systems will not necessarily help or be well received by warehouse employees.

Following yokoten principles, best practice and improvements are standardised and distributed evenly across the network. ‘Rejuvenation’ projects at parts distribution centres, for example, have seen the racking and retrieval methods from the California and Kentucky part centres applied to the regional warehouses as well.  

But TPS is just as important at NAPO for its ‘softer’ applications. One example at the company is a strong concern for the safety and development of employees (called ‘associates’ by Toyota Motor Sales). It is an area of particular importance since the NAPO division employs more than 1,800 across its warehouses, field operations and headquarters. According to Swartz, this focus is one of the reasons that Toyota prefers to keep its larger warehouses in-house, as there are opportunities for workers to advance from warehouses to management positions.

“Many of our managers in field operations started as warehouse associates, so it is not unusual to move up through the organisation,” Swartz says. “We don’t have a ceiling for these workers.”

National inventory manager Gordon Fogg adds that the warehouses are great places to promote people for functions like inventory control. “People that have been on the warehouse floor understand the sense of urgency and complexity of the business,” he says. “If you bring someone from that background into an office setting doing procurement work, they use their understanding of the warehouse to make decisions around things like daily orders and supplier management.”

According to corporate manager Ed Huante, NAPO’s application and training in TPS and continuous improvement have also been critical to its ability to react to supply chain disruptions that Toyota and other companies in North America have faced, including supplier capacity and financial constraints, logistics provider bankruptcies, or cost pressures that followed the financial crisis.

“We as senior management don’t always have the answers, but we do have the people that we ask to go into gear and do what they do best,” he says. “We train all of our associates with a TPS and kaizen mindset. They have put that training and incredible talent to good use for us many times in recent years.”       

Show what you believe in

Another aspect of TPS is visuals, which are used frequently to guide processes, measure data and communicate improvements. For NAPO operations these are again evident in the warehouse: at the Ontario parts centre, there is an LCD board showing planned and actual dispatch times at the shipping docks in the style of an airport flight screen; pickers in the bin parts area have also invented a system of numbered ‘foosballs’ (table footballs) that work as a kanban for picking parts.

Swartz has used visuals to represent TPS business culture and goals. His team designed a department-specific graphic called the ‘NAPO Priority Wheel’ (pictured). It features layers of a car wheel, with the rubber tyre spinning between ‘continuous improvement’ on one side, and ‘respect for people’ on the other; the next inner layer contains action points, including prompts for innovations, human emphathy, visualisation and fast action. Deeper within are the factors that interconnect in the supply chain, including quality, safety, performance and employees. Finally, the customer is at the core, upon which everything turns.

The wheel can be found across NAPO’s literature, on desks, and team message boards in parts centres and PDCs. It is a symbol as obvious to managers in the operations as the sunny skies, mountains and beaches that symbolise California. The choice of the wheel also represents a journey for NAPO, whether the wide distances covered across its supply chain, the road to frequent delivery and order fulfilment, or even shortening those journeys thanks to reduced miles and emissions in the supply chain. Either way, with ambitious plans to extend the reach and frequency of the network further, Swartz makes it clear there is still more ground to cover.

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Warehouse photos by Jon Didier