Tuesday, May 13, 2008

Success Secrets: The Toyota Production System Part 1

A wonderful post at Next Big Future led me to a fascinating article by Harvard Business School guru Clayton M. Christenson and associates, “The New Economics of Semiconductor Manufacturing. The article tells of their experiments applying the Toyota Production System (TPS) to a semiconductor fab. The results were astounding. Christensen's team writes:

"In just seven months, the organization was able to reduce the manufacturing cost per wafer by 12 percent and the cycle time—the time it takes to turn a blank silicon wafer into a finished wafer, full of logic chips—by 67 percent. It did all this without investing in new equipment or changing the product design or technical specifications. And this short experiment has exposed only the tip of the iceberg."

My first thought (after removing my jaw from the floor) was: “Heavens! This is a major plant run by a major manufacturer (Christensen won’t say who). I thought this kind of plant was already ruthlessly efficient. You mean they don’t even know how many wafers they have in the fab (yes, that is one of the questions the team suggests asking!!) ??? Apparently, that is only one of a litany of seemingly obvious data points that are not routinely tracked in such environments. But the miracle is that such amazing improvements can be wring out of such granular, simple, straightforward and relatively easy-to-obtain data. This is not he first time this blog has explored the astounding results that flow from some fairly simple "specifying" procedures.

Elsewhere in this blog I have mentioned a magnificent article on checklists , and how such lists have drastically cut infection rates in hospitals, where it was assumed that the highly trained staff already knew the processes well. But it was discovered that , to use a quote from Christensen, “memory fades quickly”. The more detailed and concrete the specifications in the hospital, the more patients were saved. It’s that simple. Christensen’s article mines a similar vein. If you don't know exactly what you're doing, you won;t be able to measure it properly, and you will have absolutely no chance of improving it. In short, highly specified procedures are the key to vast improvements in output, no matter what the area of inquiry.

In upcoming posts I will discuss the four key Toyota Production System (TPS) principles outlined in Christensen’s article, and I’ll attempt to broaden their application to personal and business success . The principles are:

1. Highly Specified Activities
2. Clearly define the transfer of material and information
3. Keep the pathway for every product and service simple and direct
4. Detect and solve problems when and where they happen using the scientific method.

As I continue this blog, I am always fascinated at how much one can “cross-pollinate” best practices, even from such seemingly disparate worlds as a semiconductor fab, to a hospital room, to our own lives as individuals, single practitioners, or just running a Saturday errand. Stay tuned.

- - - Visit the Success Books Store - - -

No comments: