On March 26th, Toyota announced a new program, “TNGA,” short for Toyota New Global Architecture. This event was newsworthy because Toyota’s announcements are rare and have a habit of revolutionizing the auto industry.
It was entertaining to read how various news agencies made sense of Toyota’s announcement without really understanding either what Toyota is doing or how Toyota functions as a company at all. Some characterized it as a way to catch up to the manufacturing flexibility and efficiency of Volkswagen. Seriously? As if multiple models built on the same line was something new for Toyota. Others presented it as a response to Toyota’s recall issues. Come on. Toyota quality and reliability remain cross-industry benchmarks. Frankly many of the articles told us more about the level of understanding of the writers than TNGA. But we digress…
In our view, the announcement of TNGA, and related breakthrough innovations is Toyota at it’s best. It represents the true meaning of the Toyota Way—deliberate innovation to deliver ever-greater customer value through detailed and rigorous collaboration between product development engineering, suppliers, and manufacturing. This system is the very foundation of lean product-process development: a relentless focus on delivering ever-greater customer value at lower cost through targeted innovation and enterprise collaboration.
The impetus for TNGA is not the recall crisis, but rather Toyota’s history, with a push added by the Great Recession. Toyota’s history has been fundamental innovation to get closer to the ideal of one-piece-flow—lean, agile systems producing what customers want when they want it. Toyota is constantly working on the next generation of fundamental product and process innovations and occasionally we get a snapshot of what they have achieved to date. This latest round was driven by three simple words: simple, slim, and flexible. This has been the philosophy of product-process development for over a decade and reflects a return to the basics of the Toyota Production System.
Toyota’s reflection on losing money in the first year of the Great Recession revealed excessive product proliferation (over 100 base models and 800 engine types) that could barely be handled by existing engineering resources and a threshold of running their plants at nearly 80% of capacity to break even. This had to change so that Toyota could use less resources for product development, changeover between models faster and cheaper, and adjust to different levels of customer demand more quickly and profitably. According to the announcement further standardizing the parts and architecture of the vehicle, and introducing breakthrough production technologies, which will lead to:
- 20% reduction in resources for new model development
- 25% improvement in fuel economy with 15% more power
- 40% reduction in cost of a new plant
- 50% reduction in launching a new model, with almost zero downtime
- Eventual target of 75% reduction in part numbers
- Improved quality, safety, energy efficiency, and flexibility
There are many changes, each of which no doubt were the result of a rigorous collaborative process of continuous improvement. The daily kanban reported seeing over 26 new processes that have been implemented at various places within the Toyota system for production trials.
For example, they fundamentally changed the design of a steel body stamping line reducing its length from 20 meters to 2 meters. They reengineered welding to reduce weld cycles from 2 seconds to .3 of a second. The platforms will have a lower center of gravity which will allow for more aggressive and exciting styling that will fit Akio Toyoda’s image of vehicles that bring a smile to our face. The factories will be smaller, with lower volume, but able to make 8 or more different vehicles. Paint lines which are typically 10 meters high and the size of two football fields will shrink to 6.5 meters high and about half the footprint. We could go on listing innovations, but this should give you a sense of the potential of lean product and process development.
Jonathon Ramsey got it right in his autoblog:
“The platform is important, but it is just one flowering bud sprouting from the real action, which is the production processes that will create it. It is crucial to understand that TNGA is fundamentally about a revolution in how Toyota designs and builds its cars – it even includes an overhaul of management and human resources.“
Some are calling this TPS 2.0. We think it demonstrates the incredible potential of Enterprise wide focus on product-process development operating within a robust lean system. It undoubtedly highlights the difference between authentic lean and “check the box lean” that is still all too common.
The former requires a level of teamwork, continuous improvement, and unyielding focus that few companies have achieved. It is real, hands-on engineering: roll up your sleeves, go to the source, stretch the organization, develop breakthrough targets, and keep on trying until you achieve them. It is what separates innovation for sustainable competitive advantage from manipulating the business to get another quarter of positive earnings. It is why Toyota continues to be a model for others desiring greatness.