Industrial Engineering

Managing the IE (Industrial Engineering) Mindset: An investigation of Toyota’s practical thinking shared among employees

Abstract:

Purpose: The goal of this work was to investigate the managerial practices of today to understand if Toyota is sheltering themselves from these newer practices or embracing them like most believe.

Design/methodology/approach: This work utilizes a new form of data mining named Latent Semantic Analysis (LSA) to analyze an organizations ideal management practices.

Findings: This work shows quantitatively that TPS favors earlier versions of industrial engineering compared to the optimization techniques available today.

Originality/value: The use of data mining to analyze organizational management practices.

Introduction

     What is unique about Toyota's system is not particularly any single piece of TPS, but how the pieces are combined to bring out something new, different and very difficult to imitate. It is argued in this work that Toyota's management system is a richly interconnected set of parts and relationships that are more important than the nature of the parts themselves. This means that even if the parts themselves can be identified, their relations are often lost, which loses meaning of the system. It is believed that research in TPS must follow the same type of systems thinking to discover how TPS emerges from the way the parts are organized in the system. Holism, rather than reductionism can provide a more entire solution than a partial one. Historically, practitioners have been concerned about what Toyota is doing now rather than what was Toyota doing when TPS did not exist. Pioneers like Taiichi Ohno, the father of TPS and one of his close friends, Sheigo Shingo, an industrial engineering consultant to Toyota during the time, are less received and noted for developing TPS. 

          In Ohno's book (Ohno, 1988), named the Toyota Production System, Ohno firmly believed that TPS is simply a form of industrial engineering (IE) aimed at reducing cost through systematic study. By treating everything as a process, Ohno and Shingo built the interconnections of TPS one by one, but more importantly passed on this industrial engineering way of thinking to future generations. The purpose of this work is to evaluate and quantify some of Toyota's thinking styles as it relates to Ohno's traditional view of TPS. It is speculated that one of the ways Toyota is able to develop such a holistic approach to TPS is by passing down from generation to generation a type of thinking similar to industrial engineering. The secondary goal of this work is apply a new form of management science, named dimensional reduction analysis to highlight and quantify managerial preferences. The secondary goal of this work is apply a new form of management science, named dimensional reduction analysis to highlight and quantify managerial preferences. In this work the link will between TPS and IE will be established and analyzed to determine which trend of IE practices are utilized to maintain the TPS structure.

Literature review

   Ohno believed that the quickest way to catch up with America was to import American production management techniques and business management practices. Toyota studied industrial engineering (IE) which by Ohno's accounts can best be compared to the Toyota Production System. That is, a company-wide system tied directly to management to systematically lower cost and raise productivity. Shingo also viewed TPS as a way of thinking to addresses plant improvement. He believed that management should possess a set of fundamentals closely related to industrial engineering as a way to spread and teach the Toyota Production System.

1     Industrial engineering

An industrial engineer is one who is concerned with the design, installation and improvement of integrated systems of people, material, information and equipment which utilizes specialized knowledge and skills in mathematical, physical and social sciences together with the principles and methods of engineering analysis (Salvendy, 2001). Over the years industrial engineering has drawn upon mechanical engineering, economics, labor psychology, philosophy, and accountancy in an effort to bring together people, machines, materials and information (Saunders, 1982). If industrial engineers had to focus on one aspect of their field it would be productivity or productivity improvement. That is, the total elimination of waste by increasing efficiency through cost reduction (Going, 1911).

Industrial engineering not only covers the technical aspects of systems, but also systems relating to management. Anderson proposes that industrial engineering is one the primary drivers for linking the needs of the employers to the needs of the employees. Employers want industrial peace, reduction of cost, higher efficiency and improvement in quality. Employees want steady work, higher wages, better personal relations with their supervisor and good working conditions. By utilizing industrial engineering techniques, management can develop, evaluate and improve the wants of both groups (Anderson, 1928).

2     Scientific management

Scientific management was never a manner of how much a person can do under a short burst of speed but instead a safe and comfortable working speed that can be done day after day (Mogensen, 1935). The long term prosperity of the employer cannot exist unless it is accompanied by the prosperity of the employee (Gilbreth, 1973). Scientific management included employees to some degree in decision making.

3     Skill sets of industrial engineers in the era of scientific management

IEs were mostly concerned with defining processes, identifying problems and establishing standard operations (Harrington, 1911). Some of the most practical techniques employed by IEs was the use of direct observation and work sampling (Staley & Delloff, 1963). The industrial engineer also was proficient with the use of charting. By breaking down processes into smaller units, the IE could analyze work flow by examining process steps visually. Lastly, the IE was concerned with running trials to test new productivity ideas. By testing factors one at a time and by sequentially changing those parameters based on previous trials, the IE could speed up decision making while focusing on improvement.

4     Industrial engineering today

Today, industrial engineering has become a more integral part of the organization. With the invention of the high speed computer in the 1960s industrial engineering has evolved into a hard discipline where data can be recalled at any time and decision making can be improved through the use of models and simulations (Saunders, 1982). Computers have given industrial engineers the ability to analyze and optimize complex systems throughout the organization (Katzell et al., 1977). Industrial engineering offers several sub specialties such as human factors, job design, labor psychology and systems engineering. Now it is not uncommon for IEs to work on planning systems, supply chains, accounting systems and organizational polices.

5     Skill sets of industrial engineers in the 21st century

The skill sets of the modern industrial engineer are much different compared to the days of scientific management. Most modern IE skill sets emphasize rapid organizational change instead of spending time stabilizing and documenting current operations. Techniques such as Process Design and Re-engineering can result in radical change by focusing on end to end processes. PDR assumes a clean state change and suggests skipping documenting existing processes because it limits the vision of the design team with nothing to be gained (Taylor et al., 2001). A popular tool to aid in the study of complex organizational factors in PDR is Experimental Designs (ED) and Design of Experiments (DOE) concepts. These techniques allow industrial engineers to understand the complexities of the business and interacting factors acting on and within the organization before leaping towards a new state (Czitrom, 1999). Six Sigma is a systematic method for strategic process improvement that relies on statistical methods to make dramatic reduction in customer defect rates (Tanco et al., 2009). Initially established by Motorola in 1987, Six Sigma has been extremely popularized as new form of business management strategy (Jugulum & Samuel, 2008). Lean Sigma is another improvement methodology that is being employed by industrial engineers. Proponents suggest that by integrating statistical methods with the ideas of work simplification a common language can be developed to help organizations be responsive to changing markets while eliminating defects (Wedgwood, 2007). Six Sigma provides the detailed statistical study to optimize projects while lean is usually implemented through a series of short focused kaizen blitz. (Jugulum & Samuel, 2008).

6     Has lean followed the trends of industrial engineering?

The lean community has followed many of the same trends and skill sets as applied by the industrial engineering profession. Bicheno suggests that a kaizen specialist should be capable of performing value engineering in product design and development (Bicheno, 2000).  There is work that suggest the kaizen specialist should be able to perform cellular manufacturing, production flow analysis and supply chain infrastructure design (Askin & Goldberg, 2002; Srinivasan, 2004). In these contexts, the kaizen specialist is illustrated as person that exists within an organization to advance lean concepts in highly specialized areas single handedly. In other ways the kaizen specialist is also expected to work with employees utilizing team-based worker participation activities often referred to as kaizen events. Compared to extreme Taylorism, where the IE function is responsible for telling workers what to do, kaizen specialist appear to be much nicer and softer. For example, the work of Martin and Osterling state that these specialists should be armed with PowerPoint kick-off material, masking tape, whiteboards, post-it notes and kaizen team t-shirts (Martin & Osterling, 2007).

7     Is Toyota sheltered from modern industrial engineering?

IE handbooks today are emphasizing system optimization, advance computational mathematics and rapid overhaul within organizations. Interestingly, Toyota’s approach to TPS appears to be highly shielded from modern trends in the industrial engineering profession and mainstream business improvement methodologies. In 1935 Sakichi Toyoda the founder of Toyota developed five basic teachings based on the Toyoda family work ethic. His teachings emphasized the importance of practicality, good study habits and healthy homelike work environment. In the 1950s Taiichi Ohno initiated a new type of production system (i.e. TPS) with an emphasis on standardization, just-in-time, jidoka and kaizen (Ohno, 1988). Ohno’s shop floor focus and the idea of testing practical ideas immediately encouraged learning by getting employees to confirm failure with their own eyes (Ohno, 1988b). Ohno viewed that management should join with subordinates in experimentation and each supervisor must have the ability to teach. In 2001 Toyota continued this practical view of TPS when Fuijo Cho then President of Toyota Motor Corporation released the Toyota Way, a set of managerial values to strengthen the organizational thinking as it relates to work (Cho, 2001). In 2005 Cho re-issued the company’s 8-step problem solving process named Toyota Business Practice (TBP) as an effort to share a common way of thinking about problems in the workplace (Cho, 2005).

Research approach

The overall approach in this analysis is to analyze Toyota’s organizational documents by applying statistical data mining. This work will use Latent Semantic Analysis (LSA) to study Toyota’s industrial engineering techniques, systems and managerial practices. LSA is a theory and method for extracting and representing the contextual-usage and meaning of words and phrases by statistical computation applied to text (Landauer, 2004). LSA is based on Singular Value Decomposition (SVD) which is a mathematical matrix decomposition technique using factor analysis. In LSA repetition does not imply relevance because LSA looks at both the local weights and global weights and normalizes them.LSA is particularly not suited for distinguishing similar terms that vary in context. The study of IE practices can be more quantitative and precise using LSA compared to traditional techniques. Existing techniques are largely subjective and qualitative. Current methods rely on interviews that assume that participants’ accounts are a fair reflection of what has actually occurred. Subjects also tend to inflate the results due to attribution theory (Gerhart, et al., 1999). Attribution theory is the tendency to make causal explanation about the world based on individual internal beliefs.

Questionnaires and surveys are also well accepted techniques for conducting research. Unfortunately, research shows that subjects are influenced in their responses by how questionnaires are formatted. Another popular technique is the use of informants (Gardner & Wright, 2009). An informant is a knowledgeable subject or employee inside the company that is used to measure the content and quality of the company’s system. Informants pose many problems in the study and are often a source of unreliable data. For observation techniques to be accurate, analyst need to make observations over a wide variety of persons and range of context. There are also many limitations due to participant observation. Human behaviors are often emitted at a rapid pace that exceeds our ability to note by informal means. Research has shown that behaviors are bundles of complex information (symbols, logic emphasis, warmth, aggressiveness, syntax, humor) and the personal process of filtration suffers from biased conclusions, which means that it is difficult to lead to objective evidence (Biddle, 1979). LSA may prove an acceptable substitute for traditional research techniques; however, there are noted concerns in this new area of study. First, it is assumed that employees within the organization are aware of IE expectations and can perform them if asked. Second, that these expectations produce a conforming behavior. Third, it is assumed that these expectations have been communicated by management throughout the organization. It is also unknown how management sanctions these expectations, which is the positive or negative reinforcement for engaging in the desired behavior. These unknown areas provide many interesting and future opportunities for research. Bedsides these short falls of studying IE corporate documents, inscriptions do represent a continuing existence and a more permanent intention of how IE is being used.

Research methodology

A document-term(s) matrix was created from numerous Toyota documents; such as the Toyota Way, The Toyota Business Practices, the team member basic training manual, the team member handbook, role of the supervisor, standardized work training manuals, process and system kaizen manual and problem solving for managers. Also tables for text corpus properties of the documents are used in the matrix and the themes selected in the study. Next, the Singular Value Decomposition (SVD) algorithm is used to reduce the document-term(s) matrix.

Interpretation of results in latent semantic analysis

The overall goal in LSA is to map the dominate semantic themes in a reduced dimensional space. The reduced dimensional space represents all word and document vectors in the semantic space or text corpus. This work will map the strength (i.e. magnitude) of each word vector and its ranks to illustrate the level of dominance throughout the document collection. Rank 1 (lower order) is the most dominant rank followed by rank 2 and so on. The singular value matrix indicates through a scree plot (not shown) the optimal rank. Ranks beyond the “k” value are less dominant.

Results

Figures attempt to describe how a manager from Toyota is expected to apply some of the same industrial engineering logic or thinking styles in the workplace. (For Detail analysis of figures go to http://www.jiem.org/index.php/jiem/article/view/293/252 )

Discussion

The figures attempt to evaluate how managers at Toyota are trained in assessing the workplace. More specifically, when a manger begins to question or speculate organizational activities or functions, there are two general approaches managers are trained to assess the current situation. A rank 1 data point in quadrant four would indicate that a manager's starting point in the investigation is to gather information by searching through a variety of different sources such as reports, shift logs, e-mails and databases. Data points in quadrant two would mean that a manager's first instinct into inquiring and assessing a workplace issue or problem is to see the problem first hand, meaning that it is more important to judge the situation personally without trying to make assumptions or inferences about actual situation.

Results suggest that Toyota strongly favors the scientific management approach in assessing workplace problems. Figure 4 substantiates quantitatively that Toyota trains it managers in genchi genbutsu which in Japanese means go and see. Managers are expected to go to the source to find facts to make correct decisions. This data also implies that management should not rely on other employees’ interpretation of the problem. It could also be argued that Toyota's scientific management approach for information gathering is out of date, unpractical and too slow for modern business. . Not all andons are problem solving or genchi genbutsu visits by a manager. Most andons are answered by a team leader to adjust or correct the process. Yet, when problems do reach a point of escalation or severity, managers at Toyota are expected to see the problem first hand. If the problem solving team did not actually see or witness the problem first hand, the countermeasure trial would not be approved. This is important because data does not replace facts gathered through genchi genbutsu. Again, like the Gilbreth's pointed out some 50 years ago, many charlatans got into time and motion study without understanding the purpose of scientific management. Like lean, most practitioners place value in obtaining speedy results rather than achieving consistency, predictability and stability. Toyota views that stability (i.e. standardization) is the prerequisite for kaizen. Toyota's preference on standardization compared to BPR demonstrates quantitatively that managers follow an older view of the IE profession.

Conclusion

This work uses a new method for analyzing managerial practices. LSA was used to mathematically describe Toyota's approach towards industrial engineering. The other goal in this work was to understand the similarities or differences of industrial engineering towards Toyota’s management style. Early work indicates that Ohno and Shingo modeled much of their thinking towards the earlier versions of industrial engineering, namely scientific management. Up to this point, most work describes Toyota or lean methods as modern IE techniques. This research shows quantitatively that Toyota’s managerial practices of today very much resemble the IE profession in the early 1900s. It is argued that Toyota has remained successful applying TPS because they have sheltered themselves from modern IE influences that seek to raise the competence of a single employee (i.e. industrial engineer) rather than the basic thinking skills of all employees. Lastly, this work illustrates that Toyota has been successful passing down scientific management practices from generation to generation. Interestingly, Toyota’s drive to “get back to basics” continues and remains a constant force among managers to prepare future generations of Toyota employees.