i

Toyota Methods and

Operating Models
ii

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 iii

Toyota Methods and

Operating Models
Achieve business success
with the Toyota Way

Stefano Cortiglioni, Leonardo Salcerini

and Danilo Verga
iv

Publisher’s note
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accurate at the time of going to press, and the publishers and authors cannot accept respon-
sibility for any errors or omissions, however caused. No responsibility for loss or damage
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publication can be accepted by the publisher or the authors.

First published in Italian in 2017 as Il successo continuo: L’eccellenza Toyota dalla via Emilia
all’Europa by Ulrico Hoepli Editore S.p.A.

First published in Great Britain and the United States in 2020 by Kogan Page Limited

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ISBNs

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 v

Dedicated to my family, in particular to my wife

Roberta and my kids Alberto, Lorenzo and Elisa,
who supported me and gave me the strength to face this
beautiful professional experience.
Stefano Cortiglioni

To Gigliola, Jacopo and Chiara, who give a purpose to my life,

and to all my family and friends for their constant support
and motivation.
Danilo Verga
vi

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 vii

CONTENTS

Introduction by the Italian Toyota Material Handling

organizations  xi
by Danilo Verga 
Preface  xix
by Ambrogio Bollini 
Foreword to the international edition  xxii
by Stefano Cortiglioni
Introduction xxiii
by Stefano Cortiglioni, Leonardo Salcerini and Danilo Verga 

PA R T O N E  From CESAB to Toyota Material

Handling Manufacturing Italy  1
by Stefano Cortiglioni

Introduction 3

01 The Toyota Group 6

02 CESAB’s history 12

03 The product 16

04 From Push to Pull 19

05 Production lines 22
Training of operators and the training dojo 27

06 The planning template 39

07 2S (Seiri and Seiton) 47

08 The system for feeding materials to the lines

(logistics) 52
viii Contents

09 The organization within Toyota 66

10 Standardization 69

11 Quality 74
The Dantotsu Project 75
Case history  84

12 Visual management 90

13 Kaizen and efficiency 105

Kaizen Kobo  108

14 The bottom–up approach to ideas 110

15 The supply chain 115

Examples of implementation of TPS on TMHMI supply chain 120

16 Monozukuri and Hitozukuri (making people) 131

17 Toyota and union relations 138

18 Kaizen and financial results 142

19 TPS and Industry 4.0 148

PA R T T WO  The operational implementation of

the Toyota Way in the commercial and
sales processes: the Toyota Material
Handling Italia Convention 153
by Leonardo Salcerini and Danilo Verga

20 Foreword 155
The Toyota Academy case 155
Preparing the contents for the convention: the Toyota
Academy – scope 155
 Contents ix

21 The point of view of the dealers 158

Speech by Giovanni Speranza at the Toyota Material Handling
Italia Convention 158

22 The evolution of the Italian market for forklifts 164

Analysis of the variation in demand for forklifts in Italy
during the 2007–16 period 164
Performance of the Italian market for counterbalanced
forklifts 165
Performance of the Italian market for forklifts destined for
large-scale retailers and logistics 165
Long-term analysis of the Italian market for forklifts
(2007–16) 165
The second-hand market and the development of the offer
through servitization 166

23 Speech by Leonardo Salcerini 168

Foreword 169
The Toyota Way vision of values and systemic perspective 171
Differential interpretation and the addictive qualification process
of the Toyota Way’s value systems 172
The Toyota Way and Lean organization: differential, additional
and ‘multi-focal’ implementation 172
One channel, three brands 174
GAP: Gestione Armonica Provinciale (provincial harmonized
management) 176
Tangible transformation of commercial policies and business and
sales approaches 177
Conclusions 179

24 The new ACCESS model 181

The interpretation of the Toyota Way and its
contextualization in a medium-sized Italian company 181
x Contents

PA R T T H R E E  Appendices 185

Appendix A: Data 187
Appendix B: Reader’s guide to the universe of
Toyota Material Handling in Italy 194
by Leonardo Salcerini and Danilo Verga
Business transformation and innovation process:
continuous success and the concept of the new cooperative
management 4.0 195
A summary of the main indicators of continuous success of
Toyota Material Handling in Italy 195
Continuous success and the value-generating wave of the
new cooperative management 4.0 203
The continuous success of the Italian Toyota Material
Handling organizations driven by the company’s
commercial sector 207

Glossary 209
Bibliography 215
Acknowledgements 217
Index  219
 xi

INTRODUCTION BY THE
ITALIAN TOYOTA MATERIAL
HANDLING ORGANIZATIONS
by Danilo Verga1

I t was a great pleasure for me to accept the invitation I received from the
management of the Italian Toyota Material Handling organizations
(Toyota Material Handling Manufacturing Italy and Toyota Material
Handling Italy), which asked me to join forces with the same winning, pro-
active management team to create an authoritative, ambitious and chal-
lenging publication.
The strategic goals of this initiative are the analysis of Toyota values and
the application of the principles of the Toyota Way and Toyota Production
System provisions to Italian manufacturing sites and commercial network.
This publication will specifically examine the strategic choices that were
taken and the good business practices enacted by the same management
team, which has been capable of achieving constant success in the transfor-
mation of the entrepreneurial effort formerly known as CESAB S.p.A.
The results of such in-depth studies and successful performances, which
have spawned and qualified new business management excellences along the
via Emilia, constitute a notable business and managerial reference material.
The management of the Italian Toyota Material Handling organizations
have developed this publication with the aim of sharing such assets and re-
paying their territory and community.
Therefore, this publication aims to define and illustrate the application of
Toyota’s principles and transformation processes that were developed by the
Toyota Material Handling organizations operating in Italy, specifically for
the Italian manufacturing and commercial environment. Particular atten-
tion shall be given to the peculiar conditions that had to be faced, to the is-
sues that were resolved, to the challenges that were faced during the process
of transforming a local, family-run enterprise into a modern, innovative and
successful international organization.
xii Introduction by the Italian Toyota Material Handling organizations

The unique content that is shared on these pages constitutes a valuable

in-depth analysis, offering a solid set of guidelines that were successfully
implemented to achieve:

●● organizational change;
●● corporate transformation;
●● alignment of the Italian manufacturing, commercial and service organi­
zations to the new challenges of the current industrial revolution.

Moreover, this data represents a reference model that can be followed to

repeat our effective institution of a new, cooperative form of company man-
agement that focuses on innovation and growth.
Several esteemed researchers and a large number of successful consult-
ants have written abundantly on subjects such as the Toyota Way values, the
principles of Lean Production, Lean Leadership, Total Quality Management,
World Class Manufacturing and the Toyota Production System, commonly
referred to as TPS. This publication is being developed by Toyota managers
wishing to describe the challenges they had to face first-hand, the original
vision they envisaged and the Toyota strategies they implemented for
Toyota’s Italian factories, explaining how they succeeded in the creation of
an ecosystem of suppliers and customers, both direct and indirect, surround-
ing the Italian Toyota Material Handling organizations.
Finally, with this new publication the management team wishes to
­describe and share:

●● the difficulties faced during the corporate transformation process, and

how they were overcome;
●● the operational methods that were designed and implemented;
●● the organizational innovations that were developed for processes and
products;
●● the cultural changes that were pursued and realized;
●● the processes that were implemented to improve operations;
●● the evolution and the outcome: the targets of excellence and continuous
success that were planned and achieved.
 Introduction by the Italian Toyota Material Handling organizations xiii

Understanding ‘The Toyota Way’

and ‘Beyond the Crisis’
This book, created by the Italian Toyota Material Handling organizations,
centres around two themes: The Toyota Way and Beyond the Crisis. These
are two conceptual frameworks that will characterize the publication. Here
I will briefly explore such elements, offering a defined structure of the
­perspective and topics regarding this new and unique publication.

The Toyota Way

First of all, the Toyota Way. The Toyota Way, as it is widely known, is the set
of values that has driven the Italian managers of Toyota Material Handling
while developing and expanding the Toyota excellences located in Italy, spe-
cifically along the via Emilia. The Toyota Way includes all the values that
define the vision and contribute to determine and structure the strategic and
organizational mission of the company. The Toyota Way is built upon the
five pillars that define a system of personal development, itself created upon
the values of teamwork and respect, and a continuous improvement system
that is defined by the principles of accepting new challenges, constant im-
provement (Kaizen) and direct and tangible orientation of the source of real
operative scenarios (Genchi Genbutsu).2

Beyond the Crisis

‘Beyond the Crisis’ is the second critical element of the publication.
It encompasses all the dynamic, evolutionary values and dispositions that
were part of the process that brought constant innovation, growth and
­improvement, identifying the direction, innovation landscape and t­rans­
formative paradigm of the company, founded on the values of respect and
development, on responsible and structured cooperation, on teamwork and
on constant i­nnovation.

Beyond the Crisis: the direction

The idea is to illustrate how the company, in an environment characterized
by constraints and issues caused by the market crisis, implemented dedi-
cated corporate guidance and temporal frameworks to drive the business
towards growth and expansion.
xiv Introduction by the Italian Toyota Material Handling organizations

The framework includes an analysis of the corporate events (all of them

based on the values of the Toyota Way) that occurred during the observation
period: the main, defining moments of transformation of the original local
business, from 2000 until 2016. Starting from the restricted landscape of a
local business environment, the authors of this book, acting as the Italian
managers of Toyota Material Handling, implemented a series of activities
that looked into the future, predicted the evolution process of the fourth
industrial revolution and acknowledged the technological advancement of
artificial intelligence (AI) and its application in various sectors, a process
that will eventually take us into the fifth industrial revolution.3
Beyond the Crisis represents a qualified framework, taking into consid-
eration the transformative managerial actions that were taken over a long
period of time, characterized by an extended crisis that affected economy,
finance and markets. Indeed, the timeframe subject of this analysis begins
in 2000, well before the crisis began and deepened (2008), includes the
peak crisis period and stretches until 2016, with an overview of future
developments.
Beyond the Crisis tracks the period of time during which the original
company, BT CESAB S.p.A., was transformed into today’s organization, the
Italian Toyota Material Handling business. This is the timeframe during
which Toyota’s Italian management implemented, in a peculiar and highly
distinctive way, the values of the Toyota Way and the principles of the Toyota
Production System. These values and principles were the basis upon which
to create a new corporate vision, which in turn drove our strategic thinking
and defined the long-term strategy for corporate innovation, including the
transformation of production and commercial processes.
This strategy has determined how to develop and restructure the factories
and their manufacturing systems, how to set up the whole new commercial
approach, how to introduce new services and develop corporate culture.
In short, these ‘direction guidelines’ focus on a qualified, structured and
well-oriented transformation which, once the values of the Toyota Way are
embedded, can contribute to outline a new, distinctive innovation landscape
for the company.

Beyond the Crisis: the innovation landscape

The new corporate culture adopted by the Italian organizations inside
Toyota Material Handling is focused on a landscape of innovation. The
company develops its paradigms around the predominance of human value
 Introduction by the Italian Toyota Material Handling organizations xv

and on a renewed centrality of the individual. By human values, we include

the company evolution and changes, the interactions with suppliers and
stakeholders, and the relationships with qualified and selected suppliers
­upstream, dealers and direct customers downstream.

Beyond the Crisis: the innovation landscape of the

company and the architecture of the new cooperative
management for ‘strategic and transformative
buildership’4
The new innovation landscape of the company is focused on human values
and on the newfound predominance of the people, actively driving evolu-
tion, alongside the corporate changes required for the transformation pro-
cess, implemented with the application of the principles of the Toyota Way
and the adoption of new digital (and non-digital) technologies in a consid-
ered and well-balanced manner. This new innovation landscape satisfies:

●● the new needs that were expressed by the workforce, wishing to contribute
directly, to be more involved and to add value, which produced a new
strategy that is in fact a new way to manage the company. It is a ‘New
How’, capable of channelling the energy of each worker, integrating and
connecting it with all the others in order to create value through synergy;
●● a growing request by the workers to be more involved and to ‘count
more’. This implies giving more value to each worker, to each person,
creating a new, increasingly evolutional, dynamic and shared leadership.
A new environment with a new constructive and regenerative function,
which we will call with a neologism, ‘buildership’: a new flow, a new
concept of values and behaviour, a fabric woven with motivation and
infused with new constructive energy. Buildership means giving value to
people, it means a shared leadership that is regenerative, motivational,
responsible, open, capable of creating value for the people and for the
single worker, for the organization, for the company and, exponentially,
for the community and the surrounding territory.

Buildership’s conceptual architecture reinterprets and supplies a valid an-

swer not only to the need to put people first, but also to the increasing need
to share corporate knowledge, redefining the involvement of people into
company activities and the common good of the business. Buildership is
therefore the ‘new corporate paradigm’, which reinterprets and enriches the
xvi Introduction by the Italian Toyota Material Handling organizations

common concept of leadership, while underlining the need for a new brand
of adaptive leadership, capable of understanding the surrounding evolution
and changes and to adapt accordingly. Moreover, buildership not only can
adapt, but it can also forecast and prevent changes, reconfiguring the vision
of the company, which is in turn a source of strategic value regeneration. To
this effect, buildership also includes a pre-emptive cognitive side, capable of
forecasting and interpreting new trends to the point of becoming a trend­
setter, bringing changes and innovation to the company’s strategic vision.
Buildership can ensure a systematic, continuous and multimodal align-
ment of the company organization, so that it is always tuned and ready to
face future changes. This is because it can create flexible organizational
plans which, while they maintain the positive aspects of the key elements
that are common in a traditional hierarchical organization. They can also
develop a new organizational approach, evolved and ready to be imple-
mented, typical of a non-hierarchical organization capable of dealing with
the widespread transformation of organizational duties, which are becom-
ing extensive and based on sharing.
It means spreading and sharing responsibilities, where each person is ac-
countable for their involvement and production volume and for helping
productivity of other people, working both within and outside the company
organization.
Such definition and reinterpretation of roles, vision and participation of
the worker to the constant growth of the company can regenerate value by
the workers themselves, who feel more involved in the process of buildership
through motivation and inclusion, making them become an active part of the
company’s organization: they are an integral, proactive, defining element of
the organization itself. Such an environment can deliver and empower; it can
show how synergies are fundamental, and it can underline the importance of
the idea of extended performance, as a group and as an individual.

Beyond the Crisis: a transformative paradigm

The concept of ‘Beyond the Crisis’ includes the new transformative para­
digm (dynamic, positive and evolved) of corporate choices and policies; it is
a paradigm in constant evolution, characterized by the aspects that qualify
and determine the corporate change processes, by anticipation, amplifica-
tion and acceleration of the same change processes, and by other important
elements (such as adaptation, flexibility and autonomation5) that create
connection, contamination, sharing and continuity of operations.
 Introduction by the Italian Toyota Material Handling organizations xvii

Focuses and goals of the publication

by the Italian Toyota Material Handling
organizations
This publication focuses on the description of the corporate strategic and
managerial choices that were taken, of the operative changes that were im-
plemented, of the challenges that were faced and won, illustrated first hand
by the Italian management of Toyota Material Handling.
Specifically, the contents of this book will explain in detail the complex
processes of analysis, planning, execution, control, implementation and diffu-
sion of the company initiatives that were applied by management, targeting:

●● the strategic, operational and innovative activities that were developed

for the transformation of the manufacturing and commercial processes;
●● the educational and consulting initiatives that were planned and devel­
oped by the management and were offered to other businesses, schools,
organizations, universities and business schools during the last few years.

Toyota methods and operating models

The application of Toyota’s principles and values has created manufacturing
and commercial excellences, crucial to the continuous success of the original
Emilia plant in the period ranging from 2000 until 2016. The old business
has evolved into a modern, international manufacturing company and a
successful and complex commercial organization.
Toyota Methods and Operating Models introduces the challenges that
were accepted and faced by the managing team of the Italian Toyota Material
Handling, the good practices that were developed and integrated with spe-
cific processes, organizational guidelines and application developments, re-
sorting to Toyota knowledge, culture, methods, systems, operations and its
advanced labour system.
Such a universally known organization, once integrated with methods,
values and corporate management systems, has brought continuous success
in all business sectors; its unique people-centric approach has determined
the strategies that had to be implemented, while defining how to perform
several activities dedicated to training and expanding workforce skills and
teamwork capabilities.
xviii Introduction by the Italian Toyota Material Handling organizations

Notes
1 Author and coordinator of the Toyota Way series.
2 See the second part of this book.
3 The development and implementation of digital technologies, a tangible
activator of social transformation, requires the company to adapt its corporate
organization, production processes and commercial strategies, regardless
whether the offer is for goods, services or solutions. It creates the need for deep,
urgent and unprecedented organizational transformations, so that the company
can maintain its efficiency levels. An example of this transformation is the
revolution brought by the development of online sales by primary businesses
(such as Amazon), which has worsened the crisis of several companies operating
in the retail sector such as bookshops, supermarkets and shopping centres,
causing closures and job losses.
4 The concept behind a strategic and transformative buildership comes from: the
results of 30 years of research, investigation and consulting interactions
developed with major businesses, organizations, entrepreneurs and managers of
international concerns by the author of this introduction; a specific research
effort by the same author on the development of innovative management of
‘cooperative clusters’, on alliances and business networks and their cooperative
management. Strategic and transformative buildership includes all conceptual
innovations related to the transformation of open organizations, with the right
understanding of the value of putting the person in the core of operations, and
seeing technological transformation as an essential platform for their
organization and a strategic element for development. Strategic and
transformative buildership is what defines the development of the new business
production systems and of market management, and includes the strategic
factors deriving from the evolved applications of the fourth industrial revolution
(Industry 4.0). It also includes the values, the vectors and the evolutional and
transformational advantages brought by the early adoption of technological
advancements and of the game-changing innovations in all the sectors involved
with artificial intelligence, which is in itself at the core of the upcoming fifth
industrial revolution.
Finally, the buildership that goes beyond the current boundaries of adaptive
leadership is the cornerstone of the new management system, described as ‘New
Cooperative, Energetic, Responsible, Innovative, Open, Sustainable,
International and Integral Management’.
5 Autonomation or ‘Jidoka’: detecting and identifying anomalies. A principle
stating that any quality issues must be investigated by stopping the production
process, reducing waste to a minimum. This concept will be detailed at a later
stage.
 xix

PREFACE
by Ambrogio Bollini1

I t was with great pleasure, and with some excitement, that I accepted to
write the preface for this book which, although focusing on technical
matters, does not ignore the human experience that accompanies every pro-
cess of change.
Toyota’s production system, commonly called TPS, was designed and
adopted in several sites, with generally positive results. However, only the
direct involvement of the people, bringing their humanity and willingness to
face the challenges ahead, allowed the results to become excellent, both in
terms of manufacturing system and corporate growth.
The story told in these pages shows how a different way of doing things,
if fully understood and implemented, can affect the long-term outlook of
companies and people.
Technically speaking, the concepts that are typical of Lean Production
have long been absorbed by our industrial culture; TPS, however, is some-
thing different, something that goes further.
Nowadays we are accustomed to rely on diagrams and charts of all sorts
to illustrate techniques that might reach a fairly high level of complexity;
what we struggle with is to explain simple concepts, and TPS has a clear and
extremely effective concept.
Personally, I like to describe it as the ‘structured application of daily com-
mon sense’.
Is it too simple? Perhaps, but its strength lays in a simple, clear method
that sees facts as facts and opinions as opinions, one that puts the factory
and its workers at the core (Monozukuri).
I am convinced that the best way to really understand the meaning of TPS
is to observe it, to see how it became the core of the companies that have
adopted it: the aim should not be to learn its basic techniques faster, but to
understand the shift in paradigm that this system requires at the heart of the
company’s organization. It forces companies to overcome taboos and to
state the centrality of the individuals, each one of them taking part and con-
tributing to corporate success with intelligence, humanity and fallibility.
xx Preface

If one doesn’t believe in this unquestionable truth, the application of the

same method in different contexts will deliver radically different results.
What really matters, for this system to work, is people.
Personally, I had the privilege to be part of this unusual and exciting new
world since 2001. My memory goes back to my first few days at Toyota,
when I had the honour to meet an elderly sensei, and I naively asked him
what were the pillars of Toyota’s production system, expecting to be given
an erudite description of TPS techniques.
The answer I received instead was as simple as bewildering; in a nutshell,
I was told that the secret was ‘being able to do a lot with a little’.
These words have a deeper meaning. They tell the story of a national
community that with very limited resources had the creativity and motiva-
tion needed to re-emerge from the grim aftermath of a devastating war:
doing things the simple way, with method and discipline, without massive
investments, placing at the core of everything the factory and the intelli-
gence of people, respecting individuals, society and environment. A system
called Monozukuri.
Having said that, it is obviously crucial to understand and adopt the
techniques and methods that are the backbone of TPS and these are clearly
illustrated in this book. However, all these changes can only achieve limited
success if they are not implemented in a context where human resources are
firmly at the core of the process, or if there is no real and tangible motiva-
tion to change the way things are done, if the idea of a drastic operational
shift is not appealing enough.
The operational side of an enterprise is unsurprisingly the most receptive
and ready for change. However, the main role is played by management, in
charge of implementing TPS and operating according to its rules, guiding
the whole company transformation process.
Last but not least, it is necessary to take into consideration the concept of
quality, and the kind of culture that is capable of achieving it.
The term ‘quality’ has been the subject of several different interpretations
over time, almost exclusively related to the product.
This is not enough. TPS needs quality to be at the centre of all the com-
pany processes, along the whole supply chain and at every step during the
creation of value. This allows the production of only what is needed, when
it is needed, at a price that the customer is willing to pay, while respecting
people and the environment.
It is something that’s understandably easier said than done; again, people
are what makes the difference, and the most successful enterprises prove this.
 Preface xxi

The question is whether the Monozukuri model will keep on being effec-
tive, or if it will need to be reinterpreted dynamically, in order to adapt it to
an ever-changing economic context. Whatever happens, it will be even more
critical to rely on creativity, on talent and on the added value that every
person can bring; it’s people, with their strengths and weaknesses, who must
always be placed at the core of everything, which is what Hitozukuri actu-
ally means.
Enjoy the read.

Note
1 Senior Vice President Supply, Toyota Material Handling Europe, Former General
Manager and CEO of Toyota Material Handling Manufacturing Italy S.p.A.,
President and CEO of LTE Lifttruck Equipment S.p.A., President of Simai S.p.A.
xxii

FOREWORD TO THE
INTERNATIONAL EDITION
by Stefano Cortiglioni

W hen I was asked to write a brief introduction to the English edition of

the book, highlighting the elements that are relevant in any cultural
context, I immediately thought of the transformation of the Toyota group’s
Swedish and American plants, which I experienced indirectly. However, the
Italian case study described in this book is universally applicable.
The first edition of this book was published in Italian with the title Toyota
Way: il successo continuo. The text describes the transformation of two
Italian businesses after they were bought by the Toyota group.
Firstly, the production plant was transformed into an international man-
ufacturer of counterbalanced forklifts for the Toyota brand, secondly the
Italian sales network merged into a single Toyota sales network.
Common to both of these transformations was the adoption and applica-
tion of the Toyota managerial style, where the skills of the workers are pre-
served and maintained as they are of major importance during a period of
change.
This method has been applied by Toyota around the world, resulting in
many successful business transformations. The model described in this book
is based on solid methodology, successful styles of management and leader-
ship and deep business values which have a universal application.
 xxiii

INTRODUCTION
by Stefano Cortiglioni, Leonardo Salcerini
and Danilo Verga

T he book Toyota Methods and Operating Models is divided into three

parts. The first two focus on the productive and commercial aspects, while
the third part includes the data of the Appendices and further information
regarding TMHIT (Toyota Material Handling Italy). The valued contribution
by Ambrogio Bollini introduces the spirit driving the content of this book:
giving the overview of an integrated system composed of values, entities,
­occurrences, perspectives, solutions and good practices, all together constitut-
ing a unique effort towards innovation. This is the story of the successful
transformation of a business that was originally family-run and focused on
the local market into a modern, international manufacturing company.
This success case, illustrated by the managers of the Italian Toyota
Material Handling organizations themselves, is first and foremost a bench-
mark for comparison, an indispensable resource of methods and operations
for manufacturing companies. This business case represents a new ‘corpo-
rate and managerial template’, a practical system that defines the guidelines
to transform radically the organization of small and medium companies in
the manufacturing sector (but not necessarily from that industry segment),
both in Italy and in Europe, and for their commercial organizations.
Moreover, the contents of the two main parts of the book, together with
the substantial Appendix B, tell a detailed and fascinating story about the
successful transformation of the enterprise into a multinational company.
First of all, such integrated business transformation arises from a sys-
temic and extended vision of the business: an amplified, all-encompassing
vision that goes beyond the traditional boundaries that characterize the
company, involving and affecting all the cooperative processes of the busi-
nesses upstream (the suppliers) and downstream (dealerships and custom-
ers). This augmented, integrated vision of the business, which encompasses
values, priorities and boundaries, becomes a business/community, chosen
and prioritized over the traditional, functional vision, which is nothing but
the independent collection of different business functions.
xxiv Introduction

This book illustrates the transformation of a traditional, medium-sized

Italian family-run manufacturing business into a modern and successful in-
ternational enterprise, structured into the Italian organizations of Toyota
Material Handling.
CESAB S.p.A. is a company founded in Bologna in 1942, operating in the
production and sale of forklifts, which was acquired in April 2000 by BT
Industries AB; a few months later, in July of the same year, Toyota Industries
Corporation (TICO) bought BT Industries. In 2001, Toyota Industries
Corporation became the world leader in the materials handling market; in
2005 the company created a new worldwide organization, Toyota Material
Handling Group (TMHG), structured in Europe under the name of Toyota
Material Handling Europe (TMHE).
In 2006, Toyota celebrated 50 years of activity in material handling,
while Toyota Material Handling Europe began an integration process for
the commercialization of Toyota and BT CESAB branded forklifts.
The success case we are going to study shows the continuum of choices
and corporate activities that drove the gradual transformation of CESAB
S.p.A. into what today is known as the organization of the Italian compa-
nies of Toyota Material Handling. As already mentioned earlier, the first
part of the book describes the evolution stage of the production processes
and corporate operations, including the innovations that were implemented
in the organizational processes of the network of suppliers. The second part
introduces and explains the evolution of its commercial strategies and distri-
bution network. The historic meeting of October 2009, when the two indi-
rect sales networks of the company were merged, is the core of the complex
process of commercial and organizational change, which gave birth to a
new concept of cooperative management.
These two parts of the book constitute a unique managerial and strategic
approach; they focus on the challenges that had to be faced, illustrating the
managerial and organizational developments that characterized the contin-
uous success and the growth of corporate results.
The book illustrates the managerial activities that were carried out and
the operational choices that were made, exploring the various viewpoints
and the processes that range from development to sales.
The strategies and operational choices here explained were planned and
implemented by the Italian managers of the Toyota Material Handling or-
ganizations, who have combined their efforts to successfully transform a
local manufacturing organization into a market leader with international
standing, through the appropriate application of the principles of Lean
 Introduction xxv

Leadership, of Toyota Way’s values and of the related Toyota production

management systems (ie TPS, Toyota Production System), while respecting
the centrality of people and territory.
The parts dedicated to the contributions directly given by the main fig-
ures of this transformation are focused on strategic choices, company reor-
ganization and corporate operational activities. With their decisions and
activities, the Italian managers of Toyota Material Handling contributed to
qualify and adapt, with Italian creativity and wit, the application of pre-
cepts, values, dispositions and principles of the Toyota Way and TPS, creat-
ing unique operational environments, in line with the reference market and
strongly oriented towards the centrality of human values.
The picture that is depicted here shows a company and management that
are strongly innovative and focused, far from the dictates of Fordism and
consistent with the new cooperative management of an open, human and
successful business.
The analysis of the choices implemented by the Italian management of
Toyota Material Handling, and the results that were subsequently achieved,
represent a complete overview of the methods that were implemented, mak-
ing this book a tool that can be a valuable support for those who wish to
achieve the same results.
The managerial choices that are illustrated within these pages are the re-
sult of a unique interpretation of TPS’s principles and the values of the
Toyota Way, contextualized and adapted to fit the context of the Italian
forklift market.
The original aspects of Italian culture intertwined with the Japanese ap-
proach to things; mutual respect and great curiosity created a blend, each
contributing with their best features and characteristics. The companies
achieved total integration because the management decided not to copy, but
to acknowledge and adapt; driven by the curiosity to understand the under-
lying values, it did not stop at superficial and prejudicial assessments. This
decision turned out to be the winning choice.
The exploration of the choices and activities at the core of the methods
and actions that were implemented can be a valuable resource for small and
medium-sized manufacturing and commercial companies wishing to focus
on transformation and growth.
Far-sightedness and a system-wide respect for all those who cooperate
with the company made it possible to maintain continuous market success.
Constant performance and production growth, goals achieved through
communication and the active involvement of people, have established a
xxvi Introduction

strategic and indispensable internal cooperation, expanding from the busi-

ness to the suppliers of the district.
Moreover, management actions have affected the transformation of corpo-
rate culture and of the system of competences inside the company, fostering
human capital and ultimately turning the business into a constantly improving
and growing concern, a true and successful ‘learning organization’.
The growth of the company, helped by teamwork and the professional
development of all the individuals involved, was the obvious result of the
deep transformation of production and factory processes, a transformation
promoted and driven by carefully listening to the market and its customers.
In turn, this has triggered the innovation process in manufacturing and
commercial activities, and a gradual and system-wide attitude of constant
attention and prioritization of the customer, which created differential value
and mutual satisfaction.
This new corporate vision has deeply affected manufacturing and com-
mercial cultures, bringing constant improvement and a renewed positive
tension towards the development of a widespread entrepreneurship which
looks into the future while being firmly rooted in the local territories for
quality, beauty, increasing productivity and far-sighted practicality.

Who is this book for?

The contents of this book are aimed at entrepreneurs, managers, consultants,
researchers and experts in business transformation. It is useful for entrepre-
neurs and managers because it helps to understand what is really indispensa-
ble for the company, indicating the crucial factors for the transformation of
manufacturing and commercial processes.
All the content, including case histories, methods and activities, is focused
on real-life situations, on elements that are tangible and capable of creating
added value. The managers of Toyota Material Handling Italian organiza-
tions, authors and drivers of the change and transformation processes of the
company, wish to help the reader understand what is really useful and indis-
pensable for the correct management of the business, privileging new inside
and outside cooperative harmonies, following synergies that can create
value for growth and the transformation of the production and commercial
processes of a modern business.
 1

Part One
From CESAB to
Toyota Material
Handling
Manufacturing
Italy
by Stefano Cortiglioni
2

THIS PAGE IS INTENTIONALLY LEFT BLANK

 3

Introduction

I often wondered whether it made any sense to write another book about
Toyota, and what I could personally add to the existing bibliography. It is
true that a lot has already been written, but I also believe that my personal
experience can make a difference and add value: working for more than 10
years for the highest performing company in the world allowed me to un-
derstand its systems and learn the details and secrets that are lacking in
other books and publications.
My experience with Lean Production, which from now on I will call by
its proper name, Toyota Production System1 (TPS), began with Ducati
Motor Holding. During that period, I had the chance to discover the main
aspects of TPS, together with the privilege of seeing it live in action. I was a
young engineer back then, and I was immediately drawn and fascinated by
that production model, so I tried to examine each of its aspects in detail.
This caused my first contacts with 5S, Kaizen and Just In Time: the capa-
bility to implement them and to fit them into daily practices made their great
potential increasingly stand out each day.
The years spent with Ducati were filled with projects and implementa-
tions, and were professionally very satisfying. Working in the automotive
sector for a company manufacturing limited volumes (about 200 ­motorcycles
per day) of remarkable products with high seasonality, pushed us towards
the rationalization of the manufacturing system, adopting innovative strate-
gies such as the one piece flow and the Pull, which will be discussed in detail
in the next chapters.
My real breakthrough with the understanding of TPS happened in 2005,
when I accepted the offer to join the Toyota group, fascinated by the oppor-
tunity to learn all the elements that I had studied and applied with Ducati
directly from the source.
This opportunity came from CESAB S.p.A, now Toyota Material Handling
Manufacturing Italy (TMHMI), a company based in Bologna, specialized in
the development and production of counterbalanced forklifts, a company
that had just become part of the Toyota group and was switching from local
ownership to become part of an international conglomerate.
4 From CESAB to TMHMI

A few months after I started working for them, the Japanese parent
c­ ompany created a project for the education of European trainers, which
would promote the diffusion and application of TPS inside the newly ac-
quired production sites. When this opportunity was mentioned to me, I did
not waste a minute and accepted it right away. I was therefore sent away for
training, first to the group’s manufacturing units in the United States, then
directly to the parent company in Japan.
My visit to the Toyota factories allowed me a first glance into that magic
world, where everything seemed planned down to the tiniest detail, and the
idea of something unexpected happening was not contemplated. During my
time spent with the company I had the chance to travel to Japan several
times, visiting most of the group’s production sites, each time enhancing my
knowledge with further information about how they organized and carried
out their work.
I still remember with some excitement an educational event organized by
a Toyota senior advisor, which required for me to spend some time actively
working on a forklift assembly line inside one of the company’s plants in
Japan. Since I was familiar with acquiring knowledge through theory rather
than practice, I must confess that I was quite sceptical about the actual point
of spending 15 days wearing safety shoes, holding a stopwatch and a note-
pad in front of an assembly line, for 8 hours a day, noticing potential Kaizen
(improvements) and recording the sequence of operations while checking
the worker’s motions. In hindsight, this was probably the best possible train-
ing I could receive. Living the assembly line alongside the operator (Toyota
calls it Genchi Genbutsu) turned out to be a fantastic experience: I felt im-
mersed in a huge clock, of which I could spot the mechanisms and each of
their functions, and I could finally understand the complexity and precision
of its structure. The line was assembling forklifts with a takt time (TT) of
about 4 minutes. Next to the worker there were two ropes, a yellow and a
red one. If the operator pulled the yellow rope, the team leader (TL) would
appear; the team leader’s job is to assist the workers along the assembly line.
By pulling the rope, you could hear an audio signal and the Andon showed
the station that needed assistance. Conversely, the red rope would stop the
line, fully in compliance with the concept of Jidoka, which means ‘to bring
anomalies to light’. When the worker realized that they could not respect the
assembly time, they would call the TL, who would intervene immediately.
I  still remember very well how the TL, without communicating with the
worker, was able to understand the issue and start helping with the assembly
so that it could be finished on time. If the issue could not be solved within
 Introduction 5

the TT, the red rope would be pulled to stop production. The Andon would
show the station that suffered the issue, and the TL would rush there to try
and solve the problem.
Next to the station, the parts were placed following a precise layout that
allowed the worker to move as little as possible; most of the parts were
placed into plastic boxes, carried to the station by roller conveyors. A series
of ‘small trains’ and AGVs (automated guided vehicles) were supplying the
parts, carrying them from the main warehouse straight to the lines.
Each part was meant to be used for a specific order, and the worker had
all the elements needed for its assembly right by their station.
The logistics department’s duty was to retrieve the parts required for the
assembly of each and every forklift from the supermarkets; the only task of
the operator was to assemble them correctly, trying to minimize their motions.
Once I returned to Italy, I had the task of transforming a plant, which
until then had worked following traditional production systems, into a
Toyota factory. I had to mediate cultural and organizational differences and
acted to implement a huge shift in corporate culture.

Note
1 The term Lean Production (Womack, 1991) was coined in a study conducted on
the production methods of the main car manufacturers compared with Toyota’s.
The study revealed that Toyota was by far superior. The results of the study
were published in The Machine that Changed the World: The Story of Lean
Production. Toyota’s system was later studied and copied by the industrial
world; many terms were used to emancipate the system from the name
Toyota, but the philosophy and the methods derive from Toyota
Production System.
6

01
The Toyota Group

T oyota was founded in 1918 in Japan, originally named Toyoda Spinning

and Weaving Company. Sakichi Toyoda, its founder, was an inventor
and innovator working in the textiles sector: he refined several technical
aspects of the looms of the factory, bringing increased efficiency and better
quality. His solutions saw the creation of a concept which is still one of the
pillars of TPS: Jidoka, the autonomation. One of the main inventions of
Toyoda is a weaving loom, called Type G, which stopped automatically if
any of the threads of the fabric broke during operations. This principle
caused two substantial revolutions:

●● The machine guarantees its own quality, because it stops when it detects
quality issues.
●● The worker can follow several machines at once, because they must no
longer review the quality of the finished product.

In 1926 Toyota Industries Corporation (TICO) was founded, while in 1936,

thanks to the initiative of the founder’s son, Kiichiro Toyoda (Figure 1.1), it
was the turn of the Toyota Motor Company, heralding the expansion of the
group into the automotive sector. Kiichiro Toyoda is the person responsible
for the development of the second pillar of TPS: the concept of Just In Time.
All the tools that constitute what is called the Toyota Production System
are designed on the basis of these two pillars.
TPS was first introduced in 1953, under Eiji Toyoda’s presidency, father of
today’s TICO chairman, Tetsuro Toyoda; Taiichi Ohno was one of the archi-
tects and promoters of the idea. The need to expand their vehicles market
outside Japan and enter the USA market meant that Toyota had to compete
with the major carmakers at the time, including GM, Ford and Chrysler.
Post-war Japan had very scarce economic resources, way behind those at the
disposal of the huge American companies that dominated the scene; Toyota
was forced to study alternative production approaches, systems that did not
 The Toyota Group 7

Figure 1.1  The pillars of TPS

TPS
Kiichiro Toyoda Sakichi Toyoda

Just-In-Time Jidoka

require massive investments and allowed the production of a wide enough

range to satisfy the needs of several types of customers. While bigger compa-
nies could afford to build factories specifically for a single car platform,
Toyota worked on flexibility and setup time reductions, so that the same
production chain could be used for several models. Worthy of notice is the
implementation of SMED1 (Single Minute Exchange of Die) on bodywork
presses, which allowed for very fast mould switches and substantially ­reduced
the time required to change production from one car model to another.
Later on, Toyoda changed its name to Toyota, officially to end the asso-
ciation between company and founder; however, there is another unofficial
motive, linked to tradition and superstition: the name ‘Toyota’ needs eight
brushes to be written, a lucky number according to Japanese culture.
Today, Toyota Group (Figure 1.2) comprises 17 different companies, linked
together by shareholdings and covering different business sectors.
Toyota Industries Corporation (TICO), aside from being the original com-
pany of the group, is active in four different business sectors, including the
textile industry, where everything started (Figure 1.3).
Toyota Material Handling Group (TMHG) is one of the five units that
are part of Toyota Industrial Corporation (TICO), a company headquar-
tered in Nagoya, Japan, employing over 50,000 people and posting yearly
revenues of over €16 billion. TMHG’s business area is the development,
manufacturing and sales of material handling solutions; the company is the
world leader in terms of market share.
In addition to development, manufacturing and sales of counterbalanced
and warehouse forklifts, the company offers turnkey projects for the crea-
tion of automated warehouses and logistics solutions based on the clients’
specific needs. The group has several production sites, covering the main
8 From CESAB to TMHMI

Figure 1.2  Toyota Group in 2016

Figure 1.3  TICO business results in 2016

Toyota Industries
Corporation Automotive 50%

Materials Handling 45%

Total revenue €18,9 billion

52,600 employees
Textile machinery 3%
4 business areas

Others 2%
* Figures for FY2017 and 1 Eur = 119JPY

global geographic areas. Toyota Material Handling Europe (TMHE) is the

European branch of TMHG (Figure 1.4), with the job of developing, manu-
facturing and selling products in the European markets (Figure 1.5).
The products are mainly destined for the European market and a few
other locations; they are developed and manufactured in four production
 The Toyota Group 9

Figure 1.4  Location of TMHG factories in the world

Toyota Material Handling Group Sweden

Japan

France Italy

USA China

Vietnam

Brazil

Figure 1.5  The data relating to TMHE

EUROPEAN
TMHE’S UNITS SOLD OPERATIONAL
REVENUE EMPLOYEES COUNTRIES
NUMBERS IN 2016 FORKLIFTS
COVERED

85.000 2.0 miliardi 9.500 30 330.000

sites, all of them located in Europe (Figure 1.6). Each site is dedicated to a
product type:

●● TMHMS (Toyota Material Handling Manufacturing Sweden) deals with

the development and manufacturing of the whole range of products
dedicated to indoor material handling.
●● TMHMI (Toyota Material Handling Manufacturing Italy) is focused on
the development and manufacturing of the entire range of electric
counterbalanced forklifts.
●● TMHMF (Toyota Material Handling Manufacturing France) develops
and produces the range of thermal combustion counterbalanced forklifts.
●● LTE (Lift Truck Equipment) is the site in charge of development and
manufacturing of masts for the entire group.
 10
Figure 1.6  TMHE production and R&D European sites
 The Toyota Group 11

Note
1 SMED, Single Minute Exchange of Die (Shigeo Shingo, 1985), is a method
applied by TPS. It was first used by Mazda in 1950 before being
implemented by Toyota. Its aim is to optimize setup times and reduce them to a
minimum. ‘Single minute’ means that the setup must take less than 10 minutes
(single digit). The main procedure is to assess the operations needed for the
setup, splitting them into those that can be carried out while the machines are
working, and those that require them to be stopped. Each operation must be
labelled, splitting those that must be performed when the machine is turned off
from those that can be done when it is in motion. Each operation, in particular
those to be done during downtime, must be reduced and optimized, so that they
can be carried out in the shortest possible time.
12

02
CESAB’s history

B efore we begin illustrating the course of actions that transformed a clas-

sic Italian proprietorial enterprise into a TPS reference company within
the Toyota group, it is useful to describe its history and products. CESAB,
Carrellificio Emiliano Società per Azioni Bologna, was founded in 1942 by
a Bolognese family with the scope of developing and manufacturing coun-
terbalanced forklifts. The company achieved considerable success over the
years, becoming the main Italian producer of (mostly electric powered)
counterbalanced forklifts. The 1990s saw the company expanding into for-
eign markets. At the time, production was limited to a few thousand units a
year, while the assembly organization resembled more a craftsmanship con-
cern, rather than a production line. The long-term outlook that underlined
the need to find an international partner pushed the management to make
further investments in electric forklift technology; Pininfarina was involved
to add value through Italian design. This period, which was very business-
oriented, following what was in fact a pioneering stage, saw important stra-
tegic decisions taking place (Figure 2.1), such as painting the models green,

Figure 2.1  Model Blitz 48 V

Figure 2.2  Main suppliers of TMHMI

13
14 From CESAB to TMHMI

to remind customers of the company’s attention to the environment and to

make the product design stand out.
The owners subsequently decided to sell the company to BTP AB, a
Swedish multinational company, market leader in warehouse material han-
dling machines; a few months after acquiring CESAB, BTP AB was itself
bought by Toyota Automatic Loom Machine. Basically, a chain of events
that unravelled during the year 2000 brought a small, family-run company
that sold 4,000 units a year to become part of one of the world’s biggest
conglomerates.
Another important factor for CESAB’s early success had to do with the
­territory (Figure 2.2): Bologna is located in a highly industrialized area of
northern Italy, with a strong reputation for mechanical engineering excellence.
Thanks to the strategic location, it is possible to create a qualified chain
of suppliers within a limited area, capable of satisfying the most disparate
requirements for mechanical and electronic parts. The company has maxi-
mized the opportunities offered by this network, gradually outsourcing all
the non-core activities and focusing mainly on R&D, reducing the involve-
ment in manufacturing to the point that in early 2000 it only had two
mechanized stations, painting and fixed-position assembly lines for low
­volumes (Figure 2.3).

Figure 2.3  CESAB: Layout of the production area in 2007

Painting Low-volumes
assembly

Low-volumes
Warehouse

warehouse

Line 2

Line 1
Quality Control

Test area
 CESAB’s history 15

Figure 2.4  The entrance of Toyota Material Handling Manufacturing Italy

The integration with Toyota required the separation of CESAB’s commercial

brand from the Bologna factory; the site was therefore renamed Toyota
Material Handling Manufacturing Italy in April 2016 (TMHMI, Figure 2.4).
16

03
The product

T he counterbalanced forklift is an industrial product used for the han-

dling of goods. Models can be classified by general characteristics, such
as the type of power used (electric, diesel or LPG) and the loading capacity,
usually indicated in kilograms or quintals. Customers can then choose
among a wide range of options: different types of cab, varying mast heights
to reach specific handling areas, assorted kinds of worklight, and much
more, so that the trucks can fully satisfy their needs (Figure 3.1). Such a
wide range of settings requires the use of a product configurator which, fol-
lowing precise rules, supports the customer during the creation of the most
suitable ­machine.
The software of the product configurator processes the options selected
by the customer, selecting and planning all the parts needed for the produc-
tion of that model in the required configuration. The range of o ­ ptions is so
wide that there is a very low recurrence of the same configuration; TMHMI
analysed 6,000 orders of a single product family, and discovered that only 3
per cent of them had an identical setup.
The size of the product range that we offer to cover for any customer
requirements, coupled with the extensive list of potential configura-
tions, require a highly complex system of logistics and manufacturing
(Figure 3.2).
In addition to the production of ‘standard’ forklifts, those that are chosen
by the customers by selecting the options from a list, TMHMI also designs
and manufactures ‘special’ forklifts. Those account for approximately 20
per cent of the site’s total production, and are developed by R&D following
Figure 3.1  Current range of electric forklifts

24V
(3W–1.0 to 48V 80V
Tractors
1.5 tons) (3j4W–1.5 to 2.0 tons) (4W–2.5 to 8.5 tons)
TOYOTA

Traigo 24 Traigo 48 3W 15–20 Traigo 48 4W 15–20 Traigo 80v 20–35 Traigo 80v 40–50 Traigo HT 60–85
10–15 New
CESAB

Blitz
100–150 R B 315–320 B 415–420 Centauro 48 Centauro 80 B600 B605 Eco-P 60–85 Trac E–50
BT CARGO

C3E C3E C4E C4E

100–150 R 150–200 150–200 160–200NL C4E 250–300NL C4E 250–350 C4E 400–500
RAYMOND

4450 series 30–40 4700 series 3000–6000

17
18 From CESAB to TMHMI

Figure 3.2  Internal combustion forklifts currently in production

DIESEL/LPG DIESEL/LPG DIESEL

(from 1.5 to 2.5 ton) (from 2.5 to 3.5 ton) (4.0 to 4.9 tons)
CESAB

Drago 150–200 Drago 250–350 E/H Drago 400–500

BT CARGO

C4D/G 150–200 D C4D/G 250–350 E/D C4D 400–500 E

specific indications by the customers. When the existing configurations are

not able to meet unique requirements, a department within the company is
dedicated to the development of customized solutions. These products are
added to the regular units and sent to the assembly lines, consequently ex-
tending the range of models that are manufactured at any given time.
 19

04
From Push to Pull

A s previously mentioned, the complexity of the product range and its

countless configurations make any market forecasts extremely difficult,
despite the considerable tools and resources made available by a global en-
terprise such as Toyota Material Handling. As a matter of fact, the reliability
of forecasts is inversely proportional with the increase of customizable
­options. Moreover, we must also take into account all the orders placed by
major customers, those who have purchased a considerable amount of trucks
with similar or identical configurations, thus affecting the historic data upon
which the demand forecasts are based.
This can only confirm and validate the assumption that the production
and storage of machines, manufactured on the basis of forecasts that rely on
historical data, involve the tangible risk of unsold units.
We previously tried to implement a possible solution as a compromise: a
basic model was manufactured based on forecast and then put into storage.
When the customer sent the order for a machine whose basic characteristics
were matching those of the units in the warehouse, the forklift was retrieved
and placed on the production line, where the assembly was performed ac-
cording to the customer’s specifications. This production model soon showed
some limitations: manufacturing a forklift requires equipping it from the
start with parts and features that are related to its final configuration. For
instance, chassis and counterweight depend on the load capacity, while the
wiring is designed to be adaptable to a limited set of configurations. The
same issue applies to the hydraulic system, whose number of motions relies
on the mast and on possible additional devices that the customer has
­included in the configuration. This method, developed as a compromise
­between a manufacturing system based on mass production1 (where the
setup needed to switch between productions required downtime and m ­ assive
amounts of labour) and a system that could rely on the choices made by the
customer, has shown its limitations. Not only did we have an issue of
compatibility between parts and options, but the final configuration of
­
the  forklifts took much longer than a traditional all-in-one assembly.
20 From CESAB to TMHMI

­ urther­more, continuously moving the trucks between the warehouse and

F
the ­assembly line was a constant time-wasting exercise. Finally, the increase
of the range and of the available options, indispensable for competing in our
reference market, affected the reliability of forecasts and reintroduced the
potential risk of getting stranded with unsold units.
In order to avoid freezing a vast amount of capital in the warehouse, the
most effective solution was to manufacture the machines following ­customer
orders, switching from Make To Stock2 to Make To Order.3
Such a transformation required a deep corporate shift, not only concern-
ing the planning system, but also affecting the organization of assembly
lines, logistics and supply chain.4
This strategic plan started at the beginning of the new century, right after
the company became part of the Toyota group. At the time, the limited num-
ber of models and sales could allow for an organization that manufactured
by single order; although it would have been inadequate for today’s range of
models and options, it represented the first, necessary step to kickstart a
TPS-oriented transformation. Today, Bologna’s production site manufac-
tures 24 different models; six of those are manufactured on a single line and
represent 90 per cent of its yearly output, while the remaining models are
produced on a ‘Big Size’ dedicated line.
The first step was to switch to Make To Order: it was the most important
decision for the transformation of the site and the implementation of the
Pull5 approach, in line with one of the basic principles of TPS: make only
what the customer wants.
With a Make To Order approach, the completed units are stored in the
warehouse only for the time it takes to organize the delivery to the customer,
therefore drastically reducing the need for storage space, improving the
company’s cash flow and virtually removing the risk of unsold units.
When in 2008 the Lehman shock cut in half the European market for
material handling, causing sales to crash from 440,000 to 200,000 units, the
system flexibility proved to be invaluable. In order to adapt the output to a
dwindling demand, the company constantly adjusted its production quan-
tity with the support of the supply chain; this avoided the deadweight risk
of forecasts, which always take longer to align with real market conditions.
If we had decided to manufacture the volumes based on forecasts, with-
out adjusting our capacity to actual demand, we would have manufactured
a considerable amount of trucks that would have had to be stored for a long
time because of a lack of buyers, badly affecting the company’s P&L.
 From Push to Pull 21

Notes
1 As opposed to Lean production, mass production implies the manufacturing of
a single standardized product series in large amounts. The classic example is
Henry Ford’s assembly chain and his famous statement regarding the company’s
Model T: ‘You can have any colour you want, as long as it’s black.’
2 Make To Stock (MTS) is the manufacturing of standard, simple products on the
basis of sales forecasts, destined to be kept in storage. They are usually goods
with limited value per unit, for which there are significant market outlets.
3 Make To Order (MTO) is the system where production is carried out based on
the customer order, while planning and engineering can be done in advance. The
choice of which production method to implement depends on the company’s
positioning in the market; the decision relies on analysis conducted by
operations, marketing and several other company departments.
4 Management of the supply chain, including logistics.
5 The Pull approach states that the processes are ‘pulled by the customer’. It is
opposed to the Push approach, where processes that include production are
based on forecast and/or batches.
22

05
Production lines

T he implementation of Make To Order has surely contributed to elimi-

nate the risk of surplus units; however, it required completely rethinking
the production system, starting from the assembly lines. The orders reach
the site daily, and at times are considerably different from the averages of
past production, both in terms of volumes and models. It is not uncommon
for weekly orders to be more than 50 per cent different from what was
forecast.
For this reason, maximizing the use of assembly lines is a delicate and
complex process, which forced the company to take two crucial decisions:

1 reduce the number of assembly lines;

2 reduce setup times to implement a one-piece flow production model.

Setting up the assembly lines for macro products is a widely adopted layout1
for manufacturing companies, because it allows:

●● good optimization of the lines in terms of assembly efficiency, meaning

high saturation of the time cycles allotted to the stations;
●● simplified logistics, thanks to a reduced quantity of codes to manage
along the production lines;
●● simplified assembly procedure, which allows for simpler training for the
operators;
●● assembly quality.

On the other hand, this system complicates the activity of volume allocation
to the production lines. Let’s assume that we allotted:

●● a daily output of 10 units to the line of product A;

●● a daily output of 15 units to the line of product B.

If the orders coming from the sales department vary from the settings above,
the capacity allotted to the lines must be adjusted to meet customer require-
ments. This implies frequent changes, which means investing resources to
 Production lines 23

i­mplement them. Another downside is the space needed to fit a high number
of production lines, one for each model currently on offer, which also i­mplies
higher levels of investment and the likely duplication of some indirect f­ unctions.
In order to overcome those hurdles, TMHMI decided to manufacture the
best part of its output, around 90 per cent of it, using just one of the assem-
bly lines installed in the site. If we consider the example mentioned above,
the daily production line capacity remains 25, regardless of the kind of
model being assembled.
I often wondered whether saturating the capacity of a single production
line was the way to go, while the other line, which was identical, spent most
of the time on standby. Time has told us that it was the right choice, as the
efficiency level can testify: a line that made 25 forklifts a day now has an
output of 60, with the outlook of reaching 70 in the short term. It is impor-
tant to notice that this result was achieved without substantial capital in-
vestments, optimizing the workstations on a daily basis following the Kaizen
philosophy. With this system the technical capacity of the lines, or the max-
imum theoretical capacity, has improved constantly, regardless of the real
demand coming from the market.
As far as production and process engineering are concerned, our target was
to optimize processes and improve the layout and efficiency of the assembly
stations. Excess technical capacity was highlighted by leaving w ­ orkstations
unattended along the line. This was another key factor for TMHMI’s growth:
for a global business, excess capacity implies the ability to introduce new
models while keeping investments to a minimum.
I still remember when our Japanese parent company had to choose the
European site that would manufacture the new 48V model, designed for the
most important segment of the European market. Top management from
Toyota Material Handling visited the factory several times, to assess the
suitability of the plant for a substantial increase of the production volume,
and to estimate the investments that would be needed to achieve such a
target. Showing them empty stations was one of the most strategic and suc-
cessful choices that we made, because it allowed us to prove that the line
had the potential to perform as required. We had to sell it to them; after all,
a global company has to deal with two kinds of competitors: those outside
and those within the group.
The strategy that we adopted bore fruit: today TMHMI uses line 1 to
assemble large-volume models with smaller labour requirements, saturating
it at above 80 per cent of its total capacity. Line 2 has been dedicated to the
assembly of forklifts of bigger size, which sell in smaller volumes and need
more hours of work (Figure 5.1).
 24
Figure 5.1  Layout and models produced

OHG Painting Line

Welding

Line 2 E-IC 1,2 to 8,5 t

Line 1 E 1,0 to 3,5 t

Warehouse
& Kitting

8 platforms
Specials &
Customization 6 platforms
 Production lines 25

It is fairly understandable if people assume that batch production is a more

efficient system. However, it only works in certain environments. Let’s con-
sider a task such as sending 100 letters: most of us would start folding all
the sheets, then writing all the addresses, placing all the stamps, stuffing the
letters in the envelopes and closing them. If we think of doing each of those
actions one by one for every single letter, we rightly feel like we are being
inefficient.
However, this method is ideal only if all the letters are exactly the same,
and we already have 100 recipients; if that is not the case, for example if the
recipients are just 50, or if their address has changed, you risk filling your
warehouse with useless letters, or disposing of some of them because the
addresses are wrong. Saying that mass production is never efficient is incor-
rect, but there are very few markets that suggest the adoption of such a
production setup.
Let’s make another example, this time with crayons. The analysis carried
out with production and management control suggested that the ideal pro-
duction batch is 10 units per colour. A customer then orders one red crayon;
we produce a batch of 10, 9 of which go to the warehouse, and we deliver
one to the customer. In the meantime, another customer has ordered a green
crayon; we delay production until the batch of red crayons is ready, then we
switch to the production of 10 green crayons, 9 of which will again end up
in storage. This simple example highlights how, in a market that is not will-
ing to wait and expects a wide range of choices, a system based on this ap-
proach is clearly unsuitable to satisfy the customer; the ideal system would
be to manufacture crayons of several colours with a production batch of 1
(Figure 5.2).
Transferring the production of most of the models on a single line is still
not enough, unless it is possible to overcome the constraints of minimum
batch production for each model, organizing the line so that customer or-
ders can be fulfilled by a single-unit batch procedure.

Figure 5.2  Batch manufacturing versus one-piece flow

26 From CESAB to TMHMI

The strategic choice here is to evolve production and logistics in order to

achieve maximum flexibility: manufacturing has to adapt to customer re-
quirements, not the other way around. In order to organize production lines
so that they are suitable for the assembly of such a wide range of products,
with substantial differences in assembly times, it is critical to carry out
­important modifications in the following areas:

a times and methods;

b Heijunka;
c production engineering;
d organization;
e factory logistics.

Let’s begin with times and methods along the assembly stations. One of the
main hurdles to overcome while applying the one-piece flow system is the
need to balance production lines. As far as TMHMI is concerned, various
models and customer options can imply substantial variations of production
times. In order to maintain a steady workflow for the operators along the
line and manufacture all the various models in sequence, we created sub-
groups where some of the parts of the models that require more time are
pre-assembled (Figure 5.3). Those sub-groups are located next to the line:
once the model is pre-assembled, the item travels by roller straight to the
station that will take care of the actual assembly.
Further support to the one-piece flow system comes from the Heijunka
philosophy (Hei, ‘without anomalies’, and Junka, ‘levelling’), aimed at ­levelling
the production of the plant. The goal is to balance workloads throughout the
stations, alternating models with different labour requirements. The sequence
is prepared by manufacturing planning, which drafts an assembly schedule
that complies with the requirements (and takes l­ imitations into consideration)
reported by production. Such a working method also applies to the sub-
groups, so that they are aligned with the maximum capacity of the area. For
example, the sub-group area dedicated to the assembly of the cabs has a daily
capacity that depends on the type of cabs chosen by the customers. Full cabins
with heating and air conditioning require a lot more labour than cabs equipped
with only front and back w ­ indows. Assuming that the amount of people
working on the area remains the same, the maximum daily capacity taken
into consideration at the planning stage depends on the quantity of forklifts
with cabs, and their characteristics. Production engineering has reviewed,
 Production lines 27

Figure 5.3  Pre-assembly area

a­ ssessed and developed all the equipment required for manufacturing, so that
it can be easily adapted to the entire product range; an example of this ap-
proach are the screw guns, whose specifications make them suitable for a wide
range of screws and torques. Other elements, such as the hooks for handling
components, have been developed in-house to allow for maximum flexibility.

Training of operators and the training dojo

Our organization focused on training the operators to manufacture differ-
ent models. For this purpose, a very important function was performed by
the areas called training dojo (Figure 5.4); dojo means place (jo) where you
follow the way (do). These are proper training areas, specifically set up so
that the operators can practise and learn the use of the main equipment they
will use on the line, assembling critical components, simulating quality
­issues and improving manual skills.
28 From CESAB to TMHMI

Figure 5.4 The training dojo

Training dojos are used to train:

●● new hires;
●● operators who are switching tasks;
●● operators whose performance needs to be improved.

For instance, in order to train operators on their manual skills, dedicated

boards have been installed for practising their speed and precision, follow-
ing a specific route with a rope (Figure 5.5) or tightening screws in different
locations (Figure 5.6).
The training dojo is also implemented for training operators on specific,
quality-related elements, in particular those that involve the assembly lines.
One of the most complex issues that we had to solve, for example, is how to
deal with wiring connections; these are performed with connectors that are
pushed one inside the other to ensure the correct flow of electricity. Although
the connection looks properly done and the connectors are properly placed,
at times the internal cable does not link properly. A dedicated board has
been created to solve the issue (Figure 5.7), where operators are trained to
spot immediately this kind of fault during assembly.
 Production lines 29

Figure 5.5  Manual skills simulator

Figure 5.6  Screw tightening simulator

30 From CESAB to TMHMI

Figure 5.7  Wiring connections training board

Operators’ training follows a specific procedure which, for new hires, begins
on their very first day, with a general introduction to the company, a ‘wel-
come on board’ booklet, where they can find all useful information (from
the practical details of the organization to safety instructions, including the
history of the company). The booklet immediately introduces the main con-
cepts of TPS. Training ranges from a minimum of three weeks for the
­simplest workstations, to four to five weeks for the most complex duties.

●● The first week is based on theory, where the future operators learn a
basic set of notions regarding assembly procedures, safety and TPS, aided
by practical sessions at the training dojos. For this purpose, in addition to
the dojo created for work procedures, there is also one that focuses on
safety and environment, illustrating all the safety-related risks with
examples and practical tests. At the end of this stage, the new hires are
tested to assess their knowledge level.
●● Only the second and third weeks focus on training ‘on the job’. The new
operator, supported by a trainer, begins to learn directly at the workstation
where they will be assigned.
●● After the third week, if the operator has received a positive judgement,
they can start working at the station.
 Production lines 31

The training steps described above are displayed on a board placed by the
reference area. A dedicated graph, which splits the skills into four sections,
was implemented to identify the progress stage of the employee’s training
(Figure 5.8).
Finally, the plant’s logistics have been completely overhauled; the topic is
discussed separately in Chapter 8 due to the complexity and relevance of the
operation.
The ‘one-piece flow’ principle was also implemented for processes that
are less flexible by nature, such as those carried out by the welding and
painting lines. In this regard, we opened the carpentry department in 2010
to develop a flexible system for welding the driver protections (Figure 5.9).
The project had the goal of creating a new department that could comply
with one-piece flow and weld over 50 different types of driver protection
units for our range.

Figure 5.8  Training and skill stages of the operators

Theoretical training Trained

Practical training Trainer

Figure 5.9  Rendering of a driver protection unit

32 From CESAB to TMHMI

One of the project imperatives was that any potential solution had to allow
for the shortest setup times2 when switching models; moreover, the station
had to be:

●● tightly set up, to minimize the movement of people and materials;

●● flexible and simple, so that it could be adapted to support future models.

It is worth focusing on the idea of ‘flexible and simple’: these are character-
istics that featured in all my visits to our parent factories. A visitor who
­enters a Toyota factory in Japan, expecting to find a plant where technology
and complexity predominate, is bound to be disappointed. Toyota is noth-
ing like that, not even in the automotive sector, where volumes and ­efficiency
play a fundamental role.
In one of my visits to Japan I had the opportunity to see the site where the
Land Cruiser is made. This production site, considered by the group as one
of the best for cleanliness (5S) and efficiency, manufactures a car every 2.5
minutes. The manager of the plant showed us many of the improvements
they implemented. One of them, which was suggested and carried out by the
workers themselves, involved the creation of a system that could gather
from a container the exact amount of screws needed for the assembly at a
specific workstation. In that case, only three screws were needed for the
operation, but the line speed and the use of gloves made the screws very
hard to pick. The small team of operators solved the issue by attaching three
magnets at the end of three ropes (Figure 5.10).
The ropes are all tied to one end of a balance beam, while on the other
end sits the screw gun used for the operation. When the operator picks the
screw gun, the beam tilts and the magnets reach inside the box of screws

Figure 5.10  Example of innovative equipment by the assembly line

 Production lines 33

placed right below them. As soon as the screw gun is placed back on its seat,
the beam lifts the ropes, carrying the required screws, which can be easily
picked by the operator. I can only imagine what could have happened if the
same issue was faced by a European company: they would have studied a
complex solution that required considerable investments without matching
the same level of reliability.
It is also important to remember that workers are keener to accept a new
solution if it is created by themselves or by their peers; it contributes to their
motivation and makes them feel involved in the company’s process of con-
tinuous improvement.
Inspired by the principle of reaching the ideal balance between technolo-
gies and simple solutions, focusing on Kaizen ideas suggested by the indi-
viduals, we have developed a new welding department dedicated to driver
protection units. To ensure that the plant was simple and functional, the area
was divided into three parts: tacking, welding and finishing (Figure 5.11).
Tacking3 is the operation where the parts of the driver protection are con-
nected with tack welding to form the shape of the unit. It is by far the most
complex process, since it must ensure the quality of the protection shape,
guarantee the correct size, allow flexibility so that the unit can be adapted
on multiple models, and of course it must guarantee complete reliability. We
studied the techniques implemented by other businesses that used similar
products and processes, and we noticed that one of the most common solu-
tions was the use of fixtures, where the parts are assembled and welded by
robots, eliminating the tacking stage altogether. A more detailed analysis of

Figure 5.11  Carpentry department layout

34 From CESAB to TMHMI

this system highlighted some issues, particularly regarding flexibility and

complexity of the equipment. The development of a fixture that could en-
sure quick setup times, together with the need to allow adequate room for
the robot arm, not only required substantial investments from our part, but
it also needed us to make some compromises in our philosophy.
We found a way to adapt different approaches and create our own: we
adopted fixtures with manual holding and positioning systems, and weld
tacking is performed by an operator, who can reach all the critical areas
much more easily than a robot. This method relies on the flexibility of the
human body, avoiding complex software and the equipment that would be
needed by the robot arm, since the operator can easily reach the most re-
mote areas that are more difficult to weld.
Welding, which must ensure speed and constant quality through repeated
motions, is performed by two robots (Figure 5.12). In order to ensure that
the welding torch is always perfectly positioned and that it can reach all the
areas, the unit is moved by a manipulator: since the structure is already tack
welded, handling is easier and guarantees total freedom for the robot mo-
tions. The manipulator retrieves the protection units and places them at the
end of each on a buffer area, where three units can be temporarily stored, so
that the robot can operate continuously.
The finishing stage, where the welding is checked and any imperfections
are addressed, is manually performed by the operators.
The flexibility offered by technological solutions must also be supported
by logistics, which must supply the parts required for the assembly of the
protection unit. We found that the creation of a supermarket area was the
most suitable solution to achieve this goal. The area stocks all the parts for
the assembly of driver protection units; an operator prepares each kit ac-
cording to the daily production schedule, and the kits are then placed next
to the tacking area. The parts are restocked from the external supply chain
with a Kanban system.
Finally, in order to minimize the movements of the driver protection units
when moved around the plant, all handling is carried out with the same trol-
ley, internally developed by process engineering; the trolleys are also pulled
by a towing tractor4 and used to transport three units at a time to the paint-
ing area (Figure 5.13).
These simple solutions suggested by the operators helped to develop the
new carpentry department, which had an initial target of 38 driver protec-
tion units per shift, with the capability of producing two different models.
Now, thanks to the continuous Kaizen improvements and without ­significant
 Production lines 35

Figure 5.12  Carpentry department, robot cell

Figure 5.13  Driver protection unit transport system

investments, the line assembles 58 units per shift, equipping three different
forklift models.
The same one-piece flow approach was brought into the painting facility,
where the robots were programmed and optimized so that they could work
on any part, regardless of colour or shape. Our product range uses four dif-
ferent colours, two shades of grey, a green and an orange; this made the
36 From CESAB to TMHMI

application of one-piece flow very complicated: switching colours requires

waste of paint and the use of solvents to clean the equipment, which means
higher costs and environmental impact. While these limitations suggest that
proceeding with single-colour batch painting is the most suitable approach
for this department, we found a compromise by balancing the number of
colour changes with the number of batch-painted chassis and protections.
Now the system implies four hours of production of batches with the same
colour, but studies are being conducted to reduce the batch to two hours.
Sometimes TPS appears to be in contrast with common sense; however, an
ex post analysis that assesses the efficiency of the whole system, rather than
of a single unit, shows that this approach is unquestionably more efficient.
Gradually reducing the batches or the intermediate production buffers was
a very effective method to introduce the cultural shift in small stages. Years of
mass production logic convinced everyone that the best way to avoid disrup-
tions for customers was to keep high quantities of products in stock. Every
time we recorded a shortage, we thought that the easiest solution was to in-
crease production. When we started to gradually reduce our stock, our de-
partment managers suffered from mild anxiety; however, a gradual reduction
gave time for people to get used to the new situation, while they could see for

Figure 5.14  The seven kinds of waste according to TPS

Surfaces

Transport materiel
Stocks

Overproduction

Waiting time
Operator paths

Repairs/errors
Figure 5.15  TMHMI On Time Delivery graph

On Time Delivery
100%

95%

90%

85%

80%

75%

70%

65%

60%

55%

50%
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10
2014 2015 2016
Late 3% 3% 4% 4% 12% 6% 3% 5% 2% 3% 2% 4% 2% 6% 5% 4% 3% 5% 3% 5% 3% 2% 2% 3% 3% 2% 2% 1% 1% 1% 2% 4% 1% 2%
On time 97% 97% 96% 96% 88% 94% 97% 95% 98% 97% 98% 96% 98% 94% 95% 96% 97% 95% 97% 95% 98% 98% 98% 97% 97% 98% 99% 99% 99% 99% 98% 96% 99% 98%
Target 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97% 97%

37
38 From CESAB to TMHMI

themselves how the level of service was actually improving in the process. TPS
has, not by coincidence, classified seven different cases of Muda5 (waste), and
identified overproduction as the cause of all other waste (Figure 5.14).
Over time, the cultural shift brought by TPS has changed people’s percep-
tion: the stock, once a safety element, has become a Muda. The whole site has
joined forces to reduce the stockpiles of semi-manufactured and finished trucks
it was storing; internal lead time, or the average time from the beginning of the
production phase to delivery of the finished product to the warehouse, and the
WIP (Work In Progress) have become two crucial key performance indicators
(KPIs). Today, with a daily output of 75 units, the WIP (the total of all the
forklifts inside the plant) is 140, which means less than two days’ production.
Notwithstanding the constant effort towards the reduction of WIP, the
level of performance and service offered to TMHMI customers has i­ mproved
constantly, so much so that production hits 98 per cent of the forecasted
delivery dates for all manufactured trucks (On Time Delivery).6

Notes
1 Organization and setting of an area, including the location of equipment.
2 Setup is the time required to perform all the operations during downtime to
switch production from model A to model B (ie mould and equipment change,
removal and replacement of the parts no longer needed, etc).
3 During the tacking stage, little tack welds connect all the different parts. The
process is usually supported by masks that ensure the correct shape of the unit;
once finished, the unit can be moved without altering its structure, ready for the
final welding stage.
4 Towing tractors are small towing vehicles that allow the movement of the
trolleys inside the plant. They are widely used in TPS systems, because they are
very efficient at transporting a considerable volume of parts.
5 Muda, the Japanese term for waste, is one of the three kinds of waste that are
contemplated by the TPS philosophy.
6 On Time Delivery measures the amount of delivered forklifts within the first
delivery date given to the customer. When Toyota Material Handling production
sites receive a customer order, they issue an order confirmation indicating the
delivery date for the order.
 39

06
The planning
template

B efore we focus on some of the unique elements that are part of

TMHMI’s planning template, it is useful to give a broad introduc-
tion of the system. As previously mentioned, the orders are received daily
from the sales network of TMHE (Toyota Material Handling Europe),
mainly composed of commercial branches owned by the group, which
covers the entire European market. The sales network has over 40 units
between companies and importers, sending their orders directly to the
production sites on a daily basis. Each country has its own particular
market, with different volumes and best-selling models; such diversifica-
tion means that the daily orders can vary from a few units to hundreds.
In order to keep the plant’s capacity as stable as possible without having
to resort to frequent takt time1 changes, we maintain an order backlog2
that allows the lines to be supplied with a fairly constant daily volume.
With this method, the backlog fluctuates according to the orders re-
ceived; since the daily output does not vary, the delivery times of a fork-
lift depend on the actual orders received.
The time that elapses from the reception of the order to its delivery is
called Lead Time (LT). Since LT is a sensitive item for sales, it must remain
within a certain range, varying between 6 and 10 weeks depending on the
model to be manufactured. If LT falls within this range, we do not interfere
with production capacity, which is raised or lowered only when LT hits
minimum or maximum levels. Yearly and monthly forecasts are used to as-
sess whether the predefined production capacity is in line with LT targets
and BDG volumes received from TMHE head office. Forecast, LT and pro-
duction capacity are added in a database whose graph (Figure 6.1) displays
the trend of the inserted values.
The width of options and models does not allow for the adoption of a ‘fro-
zen’ base for each finished product. Based on the model and options chosen by
the customer, a product configurator processes the requirements for each
 40
Figure 6.1  LT trend related to production capacity and orders

40
100
35

80 30
70 70 70 70 70 70 70 70 70 70 70 70 73 73 73 73 73 73 73
68 68 88

Lead time Weeks

62 63 25
Daily Units

60
20

40 15
10 9 10 10 10 10 10 10
9 9 10 10 10 10 9
10
20 10 10 9
9 8 8 9 8 8 5
0 0
Apr May June Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec Jan Feb Mar
FY 2016 FY 2017
Average Lead time Average Lead time Planned Capacity LT Min LT Max
(Factory Orders) (STR Included)
 The planning template 41

s­ pecific item, creating a job order. The MRP3 finalizes the delivery plan each
week, which is then sent to the supply chain. The following two weeks of pro-
duction are ‘frozen’ (Figure 6.2): no changes of quantities or component spec-
ifications are allowed. From the third week it is possible to apply modifica-
tions, which increase in number with the passing of time.
Using one-piece flow allowed for complete planning flexibility, since there
are no limitations to the potential numbers of models and options. The only
restriction lays on the daily production capacity of the lines, which is satu-
rated with the daily list of orders. With this system, any modification of the
production mix set by forecasts does not create any particular problem to
the saturation capacity of the lines, while at the same time ensuring that the
customer is given the optimal Lead Time. High flexibility of the two produc-
tion lines also gave us the opportunity to develop different planning systems
for the materials, reducing the stock of raw materials to a minimum and
optimizing production capacity.
The main planning system for TMHMI is always the MRP, which creates
a delivery plan based on the backlog of current orders and on the forecasts
for the incoming months, covering a timespan of about one year. The supply
chain receives a weekly delivery plan which includes a frozen and a fore-
casted period. Some of the typical parameters of MRP have been reviewed
and amended, so that they can be adapted to the new requirements of flex-
ible production systems. For example, if we take into consideration the min-
imum batch4 factor, a normal one-piece flow might define the purchase of

Figure 6.2  MRP applied to TMHMI

Frozen period Forecasted period

70

60

50

40
Unita

30

20

10

0
W1 W2 W3 W4 W5 W6 W7
Week
Traigo 24 Traigo 48 Traigo 80 B200 B300
42 From CESAB to TMHMI

materials following the minimum batch requirements for every single order;
this would mean the need to store a considerable volume of materials.
MRP, which is a system that is normally considered as a Push model, has
been integrated with the typical methods of TPS, a Pull model by nature.
The first action that we implemented to balance the stock of raw materials
and the actual usage by the production lines was the implementation of
Kanban. Kan (看) means ‘visual’, while ban (板) means ‘signal’: it is the most
widely known planning method for materials. There are several techniques
and rules for its use. In TMHMI, each container with the same item contains
a Kanban card (Figure 6.3).
When the operator retrieves the last part from the container, they pick the
Kanban card and place it in a collection box before moving to the next con-
tainer. Logistics periodically gather all the cards and proceed with the purchase
of the materials. Restocking can be performed using the internal warehouse
(internal Kanban) or the suppliers (external Kanban). MRP was integrated
with the Kanban system: MRP gives information and sets future purchases
from the supply chain for the medium to long term, while Kanban deals with
the manufacturing and supply of the materials indicated on the card.
The supply chain, considering its processes and production strategies, can
identify its own decoupling points, which means understanding when to
keep on manufacturing based on the planning received by MRP (a Push
system), and when to activate the typical Pull stage of Kanban. For instance,
a company which follows the logics of mass production will define
its  ­production volumes following MRP requirements; the finished goods

Figure 6.3  A Kanban card

 The planning template 43

­ arehouse shall be the last stage from which to ship the materials required
w
by the orders received via Kanban.
Toyota’s philosophy regarding the supply chain involves an active sup-
port of the suppliers, so that they can develop and implement their own TPS
methods. This derives from the fact that the supply chain is seen as a long-
term business asset; any element that might increase efficiency and offer a
competitive edge can strengthen the relationship and the performance of
both businesses. It is much preferable to making large investments with a
new supplier so that it can meet the group’s quality and method targets,
without considering the risks related to quality.
Another planning method that was developed by TMHMI to optimize
purchases is the reorder point. This system is usually implemented with ma-
terials that are low cost by nature, such as adhesives. Although most of them
are extremely cheap to purchase, their shortage can at times disrupt opera-
tions. When the operator retrieves the first unit of adhesive from its con-
tainer, the item is classified as understocked and must be reordered. The
same principle has been applied to all small hardware parts.
As previously noted, the introduction of Kanban has ensured great results
with stock rotation, balancing the quantity of materials stored inside the
plant at any given time and simplifying management operations, which are
now shared by planning and logistics.
This considerable step forward, however, did not completely solve the
issue: there was still a huge amount of materials stocked, especially heavy
and cumbersome items, which caused several issues for logistics concerning
handling and the need for large storage areas; moreover, it meant that a
substantial amount of capital was kept frozen in the warehouse.
Logistics had to deal, for instance, with ensuring that the oldest materials
were the first to be used, so that quality and obsolescence issues could be
avoided. Several attempts were tried to implement a FIFO5 system (First In,
First Out), but the space and handling requirements of crucial components
such as the frames made the operations very difficult. Moreover, the growth
of volumes and models produced in the plant caused an increase of mistakes
in the retrieval of the parts: logistics issues caused by common errors.
Our visits to the production units in Japan and the USA made us discover
what became a game-changer for our planning system, called Junjo. I must
admit that working for a large, very ‘factory-centric’ group has the advantage
of offering a huge volume of information from the other sites, from which to
find and implement tools and solutions that have previously been applied
with positive results. The Japanese call this process Yokoten,6 and it is widely
44 From CESAB to TMHMI

adopted by the group. Junjo was already used in other plants, and we imme-
diately understood that it could represent the ideal solution for our problems.
Junjo means ‘sequence’; it consists of a planning system that brings consid-
erable simplification and efficiency within and outside the plant. Planning al-
locates the daily production capacity based on each order received, until it
reaches full saturation. Subsequently, MRP plans the purchase of materials and
issues the delivery plan to the supply chain. Close to the start of production
date, each forklift that will enter the line on the same day is given a sequential
number, from 1 to the specific daily capacity. Each day is marked with a differ-
ent colour. With this simple method, each truck planned for production has its
own, unique reference number, making for easier identification (Figure 6.4).
This process is undertaken on a daily basis, planning the production se-
quence of the forklifts that need to be assembled; each day, the sequence for
the following seven production days is frozen. The software processes the
information and defines the materials required for the production of each
number, notifying the supply chain. Suppliers will deliver only the parts
needed for the required daily sequence, following the same sequence of the
line itself. The same approach is applied by all the plant’s internal processes,
starting from carpentry all the way to the assembly line.
Thanks to this system, the plant receives only the parts needed for the
operations planned for the day. The system contributed to reduce the vol-
ume of materials stored in the warehouse, an important advantage when it
comes to items with high value; it has raised the turnover rate of the

Figure 6.4  An example of a Junjo card

Allotted day XX/XX/XXXX

Sequence no. 4

Production order 87717C

Part code 51601T106071

Daily colour code

Monday Tuesday Wednesday Thursday Friday

 The planning template 45

c­ omponents and has consequently reduced the area needed for storage. Any
production issues that prevent the completion of the daily sequence are re-
planned outside the seven-day period, after which all the stock levels
managed by Junjo and the sequence numbers are realigned with the first
forklift that will be assembled, again marked with the number 1.
Although this method drastically reduces the safe stock levels, the quality
of service of the suppliers that have adopted the Junjo delivery plan has im-
proved immensely, hitting almost 100 per cent in terms of delivery dates and
quality of the parts supplied. I personally justify this success with the fact that
now Junjo directly connects the supplier with the production activities of the
plant, as if it were an external production unit. A simple and clear process
makes the supplier aware of the consequences of any disruptions along the
chain. The success of this planning system also meant freeing areas that were
previously destined for storage, creating new spaces and opportunities.
On top of our planning systems, another important contribution was
given by Genchi Genbutsu (‘go to the source’), a system where the personnel
in charge of materials planning is brought directly into the production areas.
Seeing the quantity of parts with one’s own eyes is much more efficient than
any data processing. Often during these visits I would use my index finger to
indicate how much dust had gathered on the parts that had spent a long
time in storage: I picked up the dust, showed it to the visitors and told them
that it was our real ‘turnover index’.
Quoting the words of Taiichi Ohno, one of the founders of TPS, ‘the
higher the quantity of stock in the warehouse, the lower the chance of find-
ing what you need’.

Figure 6.5  Turnover index of TMHMI warehouse

Inventory Turnover
25
12 Months Rolling
20

15

10

0
FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
46 From CESAB to TMHMI

Notes
1 Takt time is the time frame between the start of the manufacturing of a unit and
the next. TMHMI calculates it as the ratio between the total available time for
production, which is 460 minutes per shift (pauses excluded), and the total
volume of trucks that must be produced.
2 Our order book; all the items in the system that still have to be manufactured.
3 Material Requirements Planning is a technique that calculates the requirement
of materials and plans production and purchase orders accordingly, taking into
consideration demand, market, bill of material, production and purchase Lead
Times and available stock. It is seen as a Push model, because it is mainly based
on forecast and minimum batch limitations.
4 Minimum batch identifies the smallest quantity of product that can be
manufactured or ordered while meeting cost targets.
5 The First In First Out logic involves taking the oldest component. This ensures
that the materials do not remain in the warehouses for long periods of time in
order to avoid quality issues due to ageing.
6 This is the abbreviation of the word Yoko-tenkai. Yoko means ‘sideways,
alongside’ and Tenkai means ‘development, sharing’. It represents the concept of
transferring effective solutions from one process to another.
 47

07
2S (Seiri and Seiton)

T his chapter focuses on what are considered to be the foundations of TPS.

Any potential idea for improvement or activity related to the implemen-
tation of TPS cannot exclude in any way the application of 2S.
2S (Figure 7.1), made of Seiri and Seiton, is the first two activities of the
larger 5S concept.
2S is the starting point for Toyota, before moving to the more complex 5S.
Let’s first see what is the meaning of 2S:

●● Seiri (separate) means: ‘separate what is really needed from what is

superfluous and not useful in the workplace’.
●● Seiton (reorganize) means: ‘define an order of tools and equipment so
that they are immediately available when required’. The goal is to reduce
to a minimum the amount of items without causing production delays or
interruptions.

As often is the case with Toyota, the application of TPS requires a substan-
tial cultural shift of those involved; the consolidation of a new concept or
method needs a gradual implementation. The risk is that, as soon as man-
agement eases its control over the application of the new instructions, things
can revert back to their previous stage. This also applies to 5S, which might

Figure 7.1  2S in pictures

48 From CESAB to TMHMI

Figure 7.2  Definition of the 5S

SEIRI - Sort
SEITON - Set in Order
SEISO - Shine
SEIKETSU - Standardize
SEITSUKE - Sustain

look easy to understand, but is extremely hard to apply in a systematic and

integrated way as a part of corporate culture. With Seiri you start separating
what is useful and what is not; what is useful is given a specific collocation
with Seiton; the other 3S are implemented at a later stage, once the first two
are consolidated and fully integrated at corporate level. Figure 7.2 shows
the meaning of each S.
Usually, the first stage is to focus on the workstations along the produc-
tion lines: often there are several tools and utensils placed on a nearby table,
most of which are not needed for the specific operation that has to be per-
formed. I remember the first actions taken by TMHMI on the matter; origi-
nally, each station had a toolbox with a complete set of utensils and tools.
Looking for the right tool took a considerable amount of time, but for the
operators that toolbox affirmed their identity as a mechanic, ready to face
any issue with a wide array of tools.
This toolbox was soon replaced by a rack holding only the equipment
needed for that particular station. This has immediately brought an increase
in efficiency, but most importantly a reduction in mistakes. It took time and
training to accept this modification, but once it became part of the daily
routine, we reached a point of no return, because in the long term even the
operator acknowledges the benefits created. Nevertheless, a crucial factor to
ensure that 2S is fully implemented and followed is the strict control and
supervision by management, which must also ensure that all the areas are
thoroughly cleaned, regardless of the operations performed in them (this
includes the areas that generate more dirt more easily, departments such as
welding and mechanical processing). In addition, TMHMI set up an assess-
ment procedure, periodically carried out by management, which evaluates
several elements based on the requirements of 2S. Each area receives a rating
based on how regularly proper activities are performed; total results are
displayed in a radar chart, which highlights the gaps between previously
stated targets and actual results.
 2S (Seiri and Seiton) 49

Beginning from the stations (Figures 7.3 and 7.4), 2S spread throughout
the whole plant, becoming a vital element in every working area. The imple-
mentation of 2S was carried out following the steps shown in Figure 7.5.

Figure 7.3  Typical early workstation

Figure 7.4  Workstation after the implementation of 2S

 50
Figure 7.5  The steps required for the application of 2S

SEIRI SEITON

Step 1 2 3 4 5
Order based on Decide Decide Decide
Respect the rules
usage frequency its location how to place the quantity

Required • Decide a fixed • Easy to pick • Decide min • All the operators
location and put back and max comply with the
• Visualize to its place volumes rules
• Decide how • Visualize • Check if the rules are
Tools to place being followed

Not used for

Not required = Discard
the last year
or longer
 2S (Seiri and Seiton) 51

One of the most important results achieved with 2S is the collocation of

each item in a dedicated space; the rule that drives this operation is: ‘A place
for everything, and everything in its place’.
For example, when dealing with the components we created a very clear
plan, stating where to place the containers, the areas from which to pick the
parts and those that were interdicted for safety reasons (ie because the fire
extinguishers were stored there, or because the areas are a clear path to-
wards the emergency exits). In time, while we were applying 2S deeper and
deeper in the company, we realized that the more detailed we were while
allocating tools or equipment, the easier it was to notice things that were not
in their proper place. Basically, order draws order: a tidy area makes it ­easier,
almost intuitive, to spot things that are in the wrong place.
52

08
The system for
feeding materials to
the lines (logistics)

O ne-piece flow required a massive development of the logistics system, in

particular for feeding the components to the production lines. Until
2007, with lower volumes and a smaller product line than today’s, the ma-
terials were placed by the side of the line: the operator would collect directly
from the containers the parts required for the assembly of each specific
model (Figure 8.1).
When volumes and model range increased, this line feeding approach
started to show several limitations due to:

1 the space required next to the lines to stock the materials;

2 long pick-up times by the operators (Muda Walking);1
3 potential mistakes when selecting the required components (a product is
made of several parts, some of which are very similar to each other, but
not identical);
4 difficulties faced by logistics when they had to feed the containers by the
lines, in particular those who were closer to the production lines;
5 safety issues caused by the lack of a clear separation between the working
area and equipment handling.

Feeding needed to be revolutionized; for this purpose, we decided to intro-

duce the concept of ‘kit and supermarket’, created by Toyota. This feeding
model was implemented by Taiichi Ohno, one of the main founders of TPS,
who was impressed by American supermarkets during a trip to the US. The
basic principle is that in large-scale retail outlets, the customers can find
everything on the shelves, without the need to order anything or wait for the
product to be retrieved by an assistant (for example, for a can of Coke that
 The system for feeding materials to the lines 53

Figure 8.1  Components layout by the production lines in 2007

they want to buy). One can pick up anything just moving around with a
shopping cart. The application of the same principle in a factory means set-
ting up a similar system of shelves, where all the required parts are displayed
and can be easily found and retrieved for the production of the item ordered
by the customer.
Such a simple, linear system, while it is taken for granted in the retail
­sector, has caused a drastic transformation in manufacturing. In our case,
once we realized that it was imperative to change the feeding system of the
production lines, we moved over a single weekend all the parts stored next
to the lines and placed them on shelves built at operator height, divided by
aisles and gathered in a dedicated area, which is called the supermarket
(Figures 8.2, 8.3 and 8.4).
We also assembled small trolleys for the transport of the parts, and a
pick list for each order that the logistics operators must follow to retrieve
the parts and create the kit. At the end of the route, the logistics operator
54 From CESAB to TMHMI

Figure 8.2  Production lines in 2007

Figure 8.3  Production lines today

would consign the trolley, which we called the kart, containing all the re-
quired parts to complete one or more stations along the line. The kart
would follow various stations of the line, moving in sync with the forklift
being assembled. At the last station of the line, the kart was placed in a
dedicated area, where it was picked up again by the logistics operator to
Figure 8.4  Production lines layout in 2012

P02
P05

P04

P03

P01
Kart Kart
Kart Kart Kart Kart Kart
exit entrance

Pounder
and priority
Galvani Odette
Odette shelf
Kart

fasteners
shelf

Kart
Kart

Kart

55
56 From CESAB to TMHMI

create a new kit. This system was called ‘petal’, because the route of the
kart looked like a flower petal. The whole assembly process could be per-
formed using three separate karts, each one containing the parts required
for a single section.
The introduction of the supermarket and kits was crucial to increase the
production capacity of the line, improve quality and allow for maximum
assembly flexibility. The following steps included the replacement of the
pick sheet with a barcode scanner which, based on the bill of materials, ac-
cording to the model to be assembled, displays the part to be picked up and
the quantity required, further reducing the risk of errors. Thus, the line op-
erator must focus exclusively on the assembly of the parts that are supplied,
reducing movements to a minimum. If at the end of the cycle there are parts
left over on the trolley, it is a clear signal that something has not been prop-
erly assembled.
The kit feeding system that we adopted offers several other advantages:

●● high flexibility with the assembly of several different models on the same
line, in compliance with the one-piece flow principle;
●● elimination of setup times for product feeding by logistics;
●● clearly visible production lines, clear from all the clutter caused by the
materials stored nearby, which contributes to order and tidiness,
fundamental dictates of 5S;2
●● improvements in safety, because the operators have more space available;
●● more freedom to install additional equipment along the line.

Once we assessed the benefits that this new system implied, we decided to
apply the same principle to the pre-assembly areas, where we started supply-
ing the parts to the operators with plastic boxes; this allowed us to free a
considerable amount of space near the assembly lines (Figure 8.5).
The application of Junjo has hugely contributed to the improvement of
line feeding and to logistics in general: as explained in Chapter 6, the
­production sequence is finalized seven days in advance, and every forklift is
identified by its sequence number and the colour that indicates the day of
the week. Using this information, logistics now can identify the material
just by using the sequence number, unique for each item that must be
­manufactured.
At the same time we required the supply chain, which has adopted the
Junjo supply system, to send and identify each single part with its sequence
Figure 8.5  Assembly area subgroup, before and after

Before After

B B B B B B

B B B B B B SC Free space
35 sq m
Distributor pre-assembly
80 sq m

B B B B PL PL

B B B B PL PL
Busy space
45 sq m

PM PM PM SC SC PM SC SC
SC SC SC SC

57
58 From CESAB to TMHMI

Figure 8.6  Procedure implemented in the Junjo area

Junjo Delivery

N - WED N +1 - THU N +2 - FRI

1
Daily sequence

Warehouse

Warehouse

Pick up Stock Arrival

number (Figure 8.6). The use of a card not only drastically simplifies the
identification of the materials, but also allows any missing parts to be identi-
fied in the sequences that have been planned. The ID card contains the whole
code and its barcode, so that inventory is carried out automatically.
The frame was the first part that underwent the Junjo treatment. Several
models with differing load capacities require specific frames for each range,
which means having to manage several codes. Nowadays, the frames are
delivered daily by the supplier, unpainted; they are loaded in the truck, each
with its own Junjo card identifying sequence, code and other information.
The operator who is in charge of unloading picks the parts and places them
in sequence on a grid showing the line production order. The grid is num-
bered from 1 to the maximum daily capacity, and divided by days of pro-
duction. Basically, each frame is identified by a sequential number, written
on a card that is placed on the frame itself, also indicating its position on the
grid. Due to the fact that the frames are painted in-house, we decided to
hold to a maximum stock of three days, during which the painting depart-
ment retrieves the frames to be painted, always and rigorously following the
established sequence.
 The system for feeding materials to the lines 59

Once the frames are placed on the numbered grid, their picking order is
simplified (Figure 8.7) because it is no longer necessary to identify the part
code: the sequence number is perfectly adequate for the scope. This method
allowed us to:

●● simplify logistics activities (saving time and improving quality);

●● limit the maximum stock of an expensive and cumbersome item such as
the frame to three days of production (Figure 8.8);
●● achieve FIFO;
●● immediately spot any missing part.

The application of Junjo to the supply chain was extended, including parts
that met the following requirements:

●● high number of codes due to a large amount of configurations;

Figure 8.7  Junjo area where the frames are stocked

Figure 8.8  Days covered with the existing stock after the introduction of Junjo

10.0
GG cop.
8.0
6.0 Target
4.0
2.0
0.0
16/04/09 30/04/09 31/05/09 30/06/09 31/07/09 31/08/09
60 From CESAB to TMHMI

●● high cost/volume of the part;

●● locally supplied.

As far as the mast is concerned, meaning the part that lifts the weight in a coun-
terbalanced forklift, it is manufactured in a plant belonging to the group where
the same methods are applied, which allows us to have a maximum coverage of
0.5 days of production; moreover, the mast needed for about four hours of se-
quential production are left in the trailer, positioned in the outdoor square/
warehouse of the plant, saving us the time we needed to unload and store the
cargo. The operator picks the mast needed for the sequence that has to be car-
ried out by the production line directly from the trailer (Figure 8.9).
The last factor related to Junjo has to do with transport. Daily deliveries
are arguably the best suited system for the criteria set by Junjo. We assessed
our suppliers’ capability to perform daily deliveries; for those who couldn’t
because of volume or quantity issues, we set up a milk run3 system, a daily,
optimized route to collect items from several suppliers.
The introduction of Junjo and its configuration as the logistics pacemaker
allowed us to apply other key principles of Toyota’s philosophy, among which
is the Jundate, an area for setting up the components, which we will discuss later.
One of the fundamental principles of Toyota’s approach is that the pro-
duction line has to be ‘fed’, letting the operators focus mainly on their direct
production activities.
There is an anecdote on the subject about the various sensei 4 who have sup-
ported us in the development of TPS. Often, during their visits, they spent time
silently observing the production lines. They would place themselves at the be-
ginning of the line and observe it for several minutes, without uttering a single
word. At the beginning I could not understand their behaviour; I thought that it
amounted to a massive waste of time. However, my increasing experience with

Figure 8.9  Junjo carriages

 The system for feeding materials to the lines 61

TPS and several visits to Japan eventually made me understand the great impor-
tance of this activity. Watching the lines and the operators at work means assess-
ing the effectiveness and organization of the whole company. One of the aspects
that impressed me in the Toyota plants, particularly in Japan, is the pace at
which the operators move. Observing their motions clearly shows the sequence
of activities they carry out, the harmony of their implementation and the preci-
sion of each step. There are no indecisions or pauses: everything is organized so
that the flow is constant and uninterrupted. Achieving such a result implies that
each movement of every operator has been studied so that they can find the
tools and the components in the best possible location: everything is in its right
place. This means total quality of the components and the ability of logistics to
supply the lines while complying with required volumes and timelines. I discov-
ered this world during one of my first training experiences in Japan, which I
spent exclusively on the production lines.
I felt like I was in the middle of an orchestra, where each instrument
played the right tune at the right time, contributing to the general harmony
of the whole structure. In order to achieve such a remarkable result, every
single detail had been studied, improved over time and clearly defined.
‘There is no genius in Toyota; we just do what we think is right, trying to
improve something every day, step by step. Fact is, if small improvements add
up for seventy years, they become a revolution.’ This philosophy is what made
it possible, over time, to implement a system capable of creating such har-
mony, by paying the utmost attention to every single detail, from the assembly
­sequence by the workstations to the feeding system of the production lines.
The karts that carried the kits prepared at the supermarket were even-
tually replaced by roller conveyors installed by the production line
(Figure 8.10). The components, prepared in the supermarket to fulfil the
needs of each station, are put into containers that are then placed on the

Figure 8.10  Roller conveyors used to feed components in Junjo

62 From CESAB to TMHMI

conveyors. This system further reduced operator movements, since it is

no longer necessary to move the kart from one station to the next.
Besides the supermarket, other areas have been set up to split more volu-
minous components. These areas, called Jundate, are where the parts are
picked based on the programmed production sequence and placed on spe-
cific carts that are subsequently towed. On every trip of this small train
(Figure 8.11), the materials required for the assembly of three trucks are
brought to the lines; basically, the ‘train’ supplies the lines every three Takts.
With the introduction of Junjo, each forklift fed into the production
process is identified with a number and colour. In order to simplify its iden-
tification, an A3 summary sheet was developed and is attached to each
truck during the first production stage. This sheet, called the infomatrix
(Figure 8.12), reports all the main information that allows the production
process to proceed.
The upper area of the sheet shows information such as production order,
model, customer and stated delivery date: all the main data that the opera-
tor will use to check if the components prepared by logistics match the
production number.
In the lower area of the infomatrix we can find individual sections that
show the options and configurations required by the customer, namely:

●● cab;
●● seat;

Figure 8.11  Feeding ‘train’ in Junjo

 The system for feeding materials to the lines 63

Figure 8.12  Infomatrix

●● mast;
●● distributor and reverser;
●● wheels;
●● forks;
●● batteries;
●● battery charger;
●● backrest.

The goal is to simplify the understanding of the configuration required by

the customer, and to verify if there are any discrepancies with the compo-
nents that have been prepared.
The evolution of these systems meant that logistics now play a fundamen-
tal role, upon which is based a good share of the company performance: its
reliability and precision are indispensable to reach productivity targets, qual-
ity and OTD. Today’s frequencies imply 12,000 to 13,000 movements per
day: 1 per cent of wrong parts or quantities can cause more than 120 mis-
takes, which would have a serious impact on the plant performance. Moreover,
such a complex system required total standardization of the activities carried
 64
Figure 8.13  Logistics flows and warehouses within TMHMI

Kanban

Kanban & MRP

Supplier

TMHMI PC Store Supermarket

1
2
3
4

Production Line
5

Junjo parts
Junjo .
.
Supplier .
23
24

Stockyards - Junjo Parts

3 Takt
Kanban
Supplier

Main Jundate
Sequence Area
 The system for feeding materials to the lines 65

out by the operator, which in turn required a procedure where everything is

organized to the finest detail: there are working cycles with strict timelines to
comply with; picking routes have been studied and optimized; electronic de-
vices have been adopted so that the operator not only can identify the correct
part, but can also record the relevant warehouse i­nventory variation through
the WMS5 (warehouse management system).
The different procurement and feeding system of the production lines
had a considerable impact on the internal layouts and on the supply struc-
ture that was being used. We began to rely on towing tractors, to transport
the materials from the storage areas to the production line. Figure 8.13
shows the current logistics flow of TMHMI and the main handling ­processes
of the materials.

Notes
1 TPS sees any motions by the operators during the production stage as waste.
2 5S, representing order and cleanliness, is the basis of TPS and is described in
Chapter 7.
3 Logistics model that sets a collection route from several suppliers. With a single
journey, we can retrieve small quantities of materials from each site, optimizing
the truck load and the volumes reaching our warehouse.
4 Person born before another; usually it means ‘master’ or ‘expert’.
5 WMS is a software that is usually integrated with the managerial IT side of the
company; it oversees the movements of materials in the warehouse and
processes transitions, including shipping, receiving, reorganization and
collection. It is used to map the materials and allows for the optimization of the
operators’ picking routes and the management of the locations based on
rotation (ie lower shelves near the exit for high-rotation materials, upper shelves
far from the exit for parts with lower turnover).
66

09
The organization
within Toyota

I n order to support the cultural shift required to apply TPS and spread it
through the company successfully, we needed to make changes to the or-
ganization, to roles and activities managed by its members; we had to give a
strategic role to the group leaders (GLs).
Toyota faced heavy confrontations with Japanese labour unions from the
end of the ’60s to the beginning of the ’70s. The clashes between manage-
ment and unions caused strikes and production freezes. Such mutual lack of
trust highlighted the communication difficulties and caused several modifi-
cations, from the creation of open-space offices (including top management
desks) to the reassessment of the duties of internal figures such as the GL.
This role is so relevant for the company (Figure 9.1) that the education of
GL trainers, basically the training of those who will in turn train the GLs, is
made directly by the parent company in Japan, so that the whole group
maintains a common imprint.
A specific, 15-day course held by HR illustrates the activities and charac-
teristics of the employees assigned to this role.
Some of the GL main duties involve:

●● Daily management: establishing and managing the KPIs of their department.

●● Operators management: sharing and referring to HR training plans,
bonuses and concerns about employees.
●● Hoshin Kanri: working to achieve the corporate goals defined by man­
agement.
●● Organization and development: contributing to the development of the
company and of its human resources, creating an environment where
people collaborate and can express their full potential.

A GL manages a department or a production line; they usually coordinate no

more than 70–80 people and are supported by the team leaders (TLs) for their
 The organization within Toyota 67

Figure 9.1  GL functions in Toyota

MD

Management

GL GL GL

Team Leader Team Leader Team Leader

Team Associates Team Associates Team Associates

operational duties. Aside from the activities listed above, GLs have a double
role in the company: they are a link between management and operators,
­enabling communication, information and company strategies. They also per-
form the same job the other way around, reporting to management the situa-
tion of the department and any possible tension that might need to be dealt
with. Often the GL role is assigned to employees who have a qualified experi-
ence in the production area; this choice affirms and strength­ens their leader-
ship over the operators.
Team leaders manage up to 10 people and assist the operators in their
production duties. Support is given directly, helping the operators in the
execution of their work when required. The TL is called to the station in
need of help through the Andon board, which is installed in all the plants of
the group. This board was originally developed to display the advancement
stage of production and to show any anomalies, so that they could be solved
immediately, complying with one of the fundamental elements of Jidoka.
The board has evolved considerably over time, gradually becoming more
technological and advanced, extremely flexible and capable of recording
and displaying several kinds of information. Evolution notwithstanding, the
basic information has remained unchanged. Therefore, every Andon board
(Figure 9.2) in every Toyota plant displays:

●● workstations;
●● daily production target;
●● the target for that specific moment in time;
●● the volumes produced so far;
●● downtimes occurred during the day.
68 From CESAB to TMHMI

Figure 9.2  Andon display in TMHMI

In Japanese production lines, the Andon also shows the overtime that is
planned for the day: there is an agreement with the unions that allows the
company to require up to two hours of overtime every day, if this decision
is notified by 3pm the same day.
If the operator encounters issues during the production stage, they call
the TL with a button that is located by each station. The Andon immediately
displays the call, the workstation on the board is highlighted in yellow, while
an audio signal calls for attention and reduces response time. The team
leader assesses the issue with the operator, trying to solve it within the takt
time. If this cannot be done and the truck goes out of phase, the TL can
­decide whether to stop the production line, in which case the workstation
number on the Andon turns red and a downtime counter starts, or to let the
truck proceed to the next stage, indicating the problems that will eventually
be rectified in the dedicated service area.
In addition to the support given to the operators, team leaders manage
other activities in collaboration with them; one of the most important is
focused on improvement: the operators refer to team leaders to discuss
­potential issues and suggest possible solutions.
 69

10
Standardization

O ne of the main factors of TPS is standardization, a term that has many

connotations but that in Toyota can be summarized with a quote by
the president, Mr Toyoda: ‘Our competitors have excellent people in medio-
cre processes, while we have normal people in excellent processes: victory
can be only ours.’ Standardization leads to excellence, and such excellence
becomes an asset of the company, available to everyone.
Standardization is therefore the application of what people successfully
managed to improve through their personal experience into processes and
information for the entire group. There are other companies that rely on the
skills and capabilities of a limited number of people; when these people are
not working, the system cannot ensure the same quality and performance
standards.
Many enterprises can boast highly capable and experienced operators in
their workforce, while it is much more difficult to find places where such
capabilities and experience are applied to methods and processes. I remem-
ber well what happened when we began a deep improvement effort of the
product quality by adopting the 4M approach1 (Man, Machine, Method,
Material) to the production lines. With this system, each quality issue is as-
sessed and classified based on the four areas above. The issue is then ana-
lysed in depth until the real source of the problem is identified. Every time
we applied this method, the cause turned out to be Man: it looked like the
operator was always the culprit in each occasion. The results looked suspi-
cious; I doubted that we had such a large number of ‘useless’ employees, so
I personally verified the situation on the lines and found the real truth: the
instruments and the information we made available were totally inadequate
for them to assemble the trucks the way we expected. I realized as such that
those working conditions were not excellent as they should have been, and
that they required excellent people to be carried out successfully.
This approach is one of the cultural differences that I’ve noticed between
Japan and Italy (but not limited to these countries). In Italy the attitude
is  often to find who is responsible, rather than assessing the system as a
whole. During a training course I attended at Hazu Academy, the Toyota
70 From CESAB to TMHMI

t­ raining centre in Japan, I had the chance to spend two weeks with the com-
pany’s top management. The HR vice-president of the group commented on
the different approaches of our countries when it came to problem-solving:
in Europe we have the tendency to work on who is wrong, while Toyota
prefers to work on what is wrong. In our case, the company had to assess
whether its employees were given all the instruments they needed to perform
at the best of their abilities. We are not only referring to ‘technology’ tools:
the concept also applies to the working environment and to the interper-
sonal relationships among people performing different functions at different
levels. This factor is part of teamwork, one of the Toyota values, which we
will discuss in the following chapters.
Standardization requires the implementation of critical elements, among
which:

●● takt time;
●● operating sequences;
●● stock levelling among processes.

Takt time is a key concept within Toyota: it represents the frequency at

which the customer requires the product, and it is the ratio between net
daily working hours and the quantity of required products. Takt time must
rule over all the processes in a department/business; ideally it should be the
same for everyone, because in a well-balanced factory, each process manu-
factures the same volume of products in the same period. This principle
­requires an unequivocal vision of the factory, which adds one unit per takt.
In TMHMI, takt time is allocated to the assembly lines on the basis of cus-
tomer requests; as a consequence, all the processes are balanced with the
same takt. The only exception concerns the painting department, which
works over two shifts rather than one to fulfil the orders. The allocation of
a frequency, or a number of products delivered in a time slot, implies the
organization of a work sequence and the analysis of the time required for
each and every operation, so that the operator has a working cycle that is
compatible with the allocated takt time. Although in the Japanese factories
of the group one can see an amazing speed of execution by the operators,
the cycle given to each station must not cause excessive fatigue on the work-
ers, in order to avoid issues of quality and safety. Oversaturation of the
­operators is one of three kinds of waste that are defined by the TPS philoso-
phy, which identifies it as Muri (the others are Muda and Mura).2 With
standardization, each activity is singled out and analysed, so that those risks
can be avoided. The first step towards the standardization process in
 Standardization 71

TMHMI was the creation of the working sequence, composed of all the
documents meant to the operators, indicating all the procedural details for
each workstation.
We developed two main documents applying the standards set by Toyota:
the WES (Work Element Sheet) and the WSS (Work Sequence Sheet). The
WES is used to describe the assembly sequences for each station, the model
they are related to, if they are STD operations or specific for a particular
model, and the reference documents that can be consulted. The WSS in-
cludes further details, showing the procedure of each task with pictures and
drawings (Figure 10.1).
Quality and standardization had great success in Japan thanks to W.
Edwards Deming; the wheel that illustrates its main points is still used by
Toyota in many activities.3 Deming’s wheel is split into four parts (Figure 10.2):

1 Plan: identify the problem and plan the corrective actions to solve it.
2 Do: carry out the plan.
3 Check: check whether the results are in line with the expectations
established in the Plan stage.
4 Act: implement a correcting action if the results are not in line with the
target; otherwise, standardize and consolidate.

One of the main differences that I noticed between Japanese and Italian
culture is that the Japanese consider the Plan stage as crucial, where they
focus most of their attention, while Italians tend to see Do as the main ele-
ment; this approach, as illustrated in Figure 10.3, poses a high risk of delays
and could not bring the desired results.

Figure 10.1  WES and WSS examples

72 From CESAB to TMHMI

Figure 10.2  PDCA

Figure 10.3  Accuracy of planning versus time

Man-hours
Inadequate
Plan Large number of
man-hours
P D C A
Adequate Small number of
Plan man-hours

Let’s imagine that we want to take a bicycle journey, and we cannot bring
the satellite navigator with us. A good Plan approach requires that before
leaving we identify all the turns that we need to take at each junction
we cross along the way, so that when we reach the Do stage, basically when
we start our journey, we can optimize our riding time. If, instead, we neglect
the Plan and leave right away, we would be forced to stop at every intersec-
tion and look at the map to find the right turn. I am positive that by using
the first approach we can reach our destination much faster. It is also very
important not to overlook the Check and Act stages: checking the results
­allows KPIs and targets to be identified during the Plan stage, so that we can
evaluate whether the project and the activities are p ­ roducing the results we
want. It is a useful tool for implementing the right corrections and, more­
over, for setting a standard available to the entire company (Act stage).
Buffers, areas where a set number of units is placed between processes,
are part of the standardization process (Figure 10.4). Each unit is clearly
visible, in order to spot immediately any anomalies or bottlenecks. TMHMI
set up several buffers in their operations; for example, there is a buffer
 Standardization 73

Figure 10.4  Example of a balancing buffer

Service
Assembly line 1
Check Point

Inspection buffer
Inspection buffer

Standard 2+4 trucks

Functional testing

­ etween assembly lines and the first inspection stage. Since both processes
b
have the same takt time, an increase or decrease of the trucks in the buffer
shows that the processes are not balanced. For example, too many imperfec-
tions detected at the checkpoint at the end of the line can cause the inspec-
tion downstream to be delayed, a situation that is clearly shown by the lack
of units in the buffer.
Standardization is part of the Jidoka pillar of TPS, because it is strictly
related to the improvement of quality processes, and it can also identify
potential anomalies.

Notes
1 4M, also called Ishikawa diagram or fishbone diagram; developed in Japan in
1943, it displays graphically the analysis of an issue, splitting all potential
causes into four categories (Man, Machine, Method, Materials). Each one is
then divided by sub-causes, which are studied to identify the main elements that
need to be addressed to solve the issue.
2 TPS classifies waste into three different categories. In addition to Muda, which
is an activity without added value, there is Muri (overload, in particular
concerning people) and Mura (unreasonable, overdoing, which usually causes
Muri).
3 Liker (2000).
74

11
Quality

O ne of the elements that has always been associated with the Toyota
brand is quality.
Such quality is not only achieved through excellent inspection and con-
trol systems, which are capable of intercepting any quality issues, but it is
also the result of procedures and verification systems that are carried out at
each step during the development of a new product, and are implemented
right until the last inspection along the production lines. It would take an
entire book to explain in detail the development model for new products
that is used by the group: the procedure is composed of various steps, called
design reviews, management meetings where the progress of the project is
assessed and eventually approved.
Quality is a must for the group in all corporate functions; paying atten-
tion to the smallest detail, inside a framework that manages every stage of
the process, can improve the process automatically, making it more efficient
and precise. In addition, complying with the philosophy of standardization,
we strive for continuous evolution and look for the Kaizens that ensure a
constant development of the system and guarantee its development. Mistakes
are examined and solved immediately, becoming themselves an asset for the
company: they are part of the information about company standards, so
that they will not be repeated in the future.
Quoting Taiichi Ohno, the founder of TPS, ‘the biggest problem of a com-
pany is having no problems’.
One of the factors that defines excellence in quality is the method of
analysis, a crucial part of problem-solving;1 this approach is integrated in
the model that Toyota calls quality control, defining the methods and the
main approaches that must be applied when looking for the solution to a
problem. Quality control includes the seven tools used for data analysis:

1 Pareto;
2 cause and effect diagram;
 Quality 75

3 check sheets;
4 graphs;
5 scatter diagrams;
6 histogram;
7 control charts.

The Dantotsu Project

One of the most significant examples that can illustrate how quality is per-
ceived within the group is related to a project launched in 2007 by Toyota’s
Quality Department: Dantotsu, which means ‘to be indisputably the num-
ber one on quality’. Three main indicators were chosen for this project, each
representing a macro-category:

●● Complete Vehicle Inspection (CVI): this KPI aims to measure the quality
of internal processes.
●● Non-Conformity Report (NCR): this KPI aims to evaluate the quality of
the supply chain.
●● Warranty Claim Paid (WCP): this KPI measures the costs of servicing the
products under warranty, therefore assessing the level of customer
satisfaction.

The project involved all the plants worldwide; its goal was to reduce quality
costs in three years and achieve the following results:

●● CVI: –95 per cent (defects found at the end of the production line);
●● NCR: –95 per cent (non-compliance by the suppliers);
●● WCP: –75 per cent (cost of warranties).

Each plant was assessed on a monthly basis to check its KPI trends; each
year a meeting would analyse the results that were achieved. Toyota’s senior
advisor, who was in charge of the project, would visit each site four times a
year for a week, checking with management which were the activities that
needed to be improved and which were correctly performed. Each KPI
­involved specific activities.
76 From CESAB to TMHMI

Reduction of CVI (complete vehicle inspection)

CVIs, measured as the ratio between trucks manufactured and faults
­reported, are assessed at three different checkpoints2 inside the plant. The
first is located at the end of the production line, the second is performed
after the first functional tests, while the last one is carried out during the
final inspection stage, prior to the declaration of conformity that authorizes
the delivery of the truck to the customer (Figure 11.1).
The faults that are detected by the checkpoints are related mainly to parts
supplied externally or to assembly issues (mistakes by the operator); rarely
they involve the engineering process that defined the development of the
product.
A daily meeting called Asaichi (Japanese for ‘morning market’) (Figure 11.2)
was organized to manage and improve the performance of CVI; during the
Asaichi, all the GLs illustrate the problems that were encountered during the
previous day of production, using pictures or bringing the faulty component to

Figure 11.1  Layout of the checkpoints on the lines

CP 3 CP 2 CP 1

Line on
Final Functional First
inspection test check

Figure 11.2  Asaichi meeting

 Quality 77

the meeting. Each problem is studied and a department is given the task to
solve it (usually the department that caused the problem in the first place).
These meetings are run by the production GL and see the attendance of all of
the company’s corporate functions; all the graphs and countermeasures are
updated daily by the person responsible.
Countermeasures are developed by following the PDCA wheel method;
most importantly, for each countermeasure there is a person who is respon-
sible for its implementation and for the solution of that particular problem.3
True to the principle of involving the operators, quality management and
its KPIs are transferred directly into the plant where the problem has oc-
curred, applying one of Toyota Way’s principles, Genchi Genbutsu (‘go and
see with your own eyes’). It wasn’t easy to involve all the people not strictly
related to production and take them every day to the production areas. The
first meetings saw the attendance of the top management of the company, in
order to prove that we were committed to this new approach; however,
often the meetings did not see the attendance of departments that were not
involved with operations. It took perseverance and tenacity to embed this
meeting into the company DNA, but the results it managed to achieve gave
it credibility over time. Today, years later, all corporate departments attend
the Asaichi; GLs can manage the meeting perfectly, updating all the indica-
tors, respecting the 15 minutes’ allocation and, most importantly, involving
all departments to find the countermeasures needed to solve the problems
that have been detected.
Such great exposure of all the difficulties that the company must face on
a daily basis has contributed to focus the attention of all the departments in
order to find the correct countermeasures: each department verifies the list
of problems involving them, checking for new reports.
Over time, the meeting has become effective and functional; CVI values
have improved noticeably, with two-digit reductions. In order to perform
increasingly detailed analysis and spot the real causes with more precision,
we introduced the concept of problem-solving and its eight steps, shown in
Figure 11.3.
In order to verify whether the analysis of the problem was successful and
succeeded in spotting the real causes, and to validate the effectiveness of the
countermeasure that was implemented, a graph for each of the main prob-
lems shows if the same defect has occurred after the implementation of the
countermeasure (Figure 11.4). If this is the case, the process is restarted,
­reapplying the steps of problem-solving to spot the real issue, find a different
countermeasure and monitor its results.
78 From CESAB to TMHMI

Figure 11.3  Eight steps of quality

Problem solving – 8 steps

1. Problem definition

P 2. Collect data about current situation

3. Define target

4. Cause analysis
D
5. Define countermeasure

C 6. Apply countermeasure

7. Verify countermeasure effectiveness

A
8. Standardize & Prevention

Figure 11.4  An example of problem-solving

7. No defects after a month. 1. During the connection of the

8. Quality gate added (visual check) on work cables of the power enigne,
sequence sheet it is possible to invert the
cables
2. Two defects detected each
month
3. Target = 0 defects

4 1 labels
2008/07/30 2008/03/21

2008/07/08 3 2 2008/03/21

6. Added a quality gate during the assembly 4. The labels identifying the stages, which are
stage. similar among them (US, VS, WS, UM, VM,
WM), can cause erroneous connections
5. Suggested to add a quality gate during the
assembly stage of the labels, asking for a
visual check

We also made improvements by classifying the defects by area, including the

anomalies reported by customers at ‘zero operating hours’. Such classifica-
tion is crucial to improve the checklists used during the final inspection
stage: if a customer reports a defect at zero operating hours, the verification
of that particular element is added to the lists.
 Quality 79

Defects have been classified as follows, according to the suggestions of

Toyota’s senior advisor:

●● type D defects: reported by customers;

●● type C defects: reports filed during the final inspection;
●● type B defects: reports filed by the final inspections for each single process
(ie painting, carpentry, assembly, etc).

Quality gates have been introduced for critical defects, whose responsibility
is assigned to the line (Figure 11.5); an illustration of the defect, be it a pic-
ture or a drawing, is placed by the station responsible for the issue and re-
minds the operator to pay particular attention to that particular step.
Just as with any change involving human resources, in the early days we
had to show great determination and commitment, so that the tools that we
adopted were actually used by the employees. In my experience, I have no-
ticed how each cultural shift goes through a first stage, which I call ‘elastic

Figure 11.5  Example of a quality gate

80 From CESAB to TMHMI

Figure 11.6  CVI performance

0,6

0,5

0,4

–98%
0,3

0,2

0,1

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

deformation’, during which management pressure on the subject must be

constant; otherwise, things tend to revert to the old, established procedures.
To achieve what I call a ‘plastic deformation’, where the change succeeds
by consolidating within the culture of resources, management must make a
great effort and act systematically towards change. A point of no return is
generally achieved when the people involved begin to understand that the
tool, be it a process or any other modification, can properly support daily
operations: it is performed not because it is required by management, but
because those who implement it have fully understood its actual usefulness.
Thanks to the adoption of the activities illustrated above, soon our –95
per cent target, which looked unrealistic at first, was reached and improved.
Moreover, as shown by the graph in Figure 11.6, this method allowed us,
after some early adjustments and modifications, to maintain our perfor-
mance levels, even with the introduction of new products and of takt time,
events that usually cause a temporary decrease in quality.

Reduction of NCRs (non-conformity report)

On a production site like ours, where the supply chain guarantees a sizeable
share of the product value, each performance (be it in terms of quality or
customer service level) relies on the involvement of the supply chain itself.
Suppliers are carefully selected; R&D and acceptance perform several
checks on the parts before approving a new product or a change of supplier.
Most importantly, selection and development of the supply chain involve
 Quality 81

several audits, performed by TMHMI personnel, to verify and assess the

consistency of processes, procedures and activities, so that they ensure the
quality of the products.
During the Asaichi meeting, any quality issues regarding the parts re-
ceived by the external supply chain are reported and discussed. In such
cases, the quality department of TMHMI takes responsibility for the report,
informing the supplier with a non-conformity report (NCR). Each NCR
triggers a series of actions, such as the inspection of the parts already on site
and the exclusion of those that do not meet requirements, so that the line is
fed only with compliant parts. The supplier must reply to the NCR in writ-
ing, outlining a careful analysis of the issue and countermeasures. Most of
the supply chain has been trained on the methods used by Toyota to analyse
defects, such as those related to quality control outlined at the beginning of
this chapter. Moreover, key suppliers have been trained by TMHMI on
Toyota’s approach to quality, and they too implemented Asaichi meetings in
their production sites.
Basically, the same approach and methods developed by TMHMI for the
reduction of CVIs have been transferred to the supply chain, with the aim of
increasing the conformity of the parts produced. A team of TPS experts sup-
ported the people responsible for the quality of supplies, transferring the
acquired know-how based on the audits performed on their processes and
quality requirements. Our experience as precursors of this method, and the
fact that we could demonstrate with data and facts the positive results we
achieved, made its diffusion much easier.
The implementation of Asaichi in the production sites of the supply chain
has simplified and standardized the management of NCRs. Each report, in-
cluding those received by the customers, activates procedures that involve
the sales network, TMHMI as manufacturer of the good and the companies
that supply the parts (Figure 11.7).
The adoption of this approach means that every time an NCR is reported
by the lines or received from a customer, the referent of the quality team im-
mediately relays the issue to the supplier with a written report, describing in
detail the defect that was detected. The supplier will discuss the same issue at
its own Asaichi, so that adequate countermeasures can be implemented and
transmitted to TMHMI. With this system, the person responsible for the
quality of TMHMI supplies can reply during the Asaichi, ­illustrating the
causes that generated the defect and the countermeasures implemented to
avoid the recurrence of the same issue. The supplier itself is often invited to
the Asaichi, so that it can show personally to the team which countermeas-
ures were applied to decrease NCRs.
 82
Figure 11.7  Flow of quality reports from the customer to the supplier

1. kind of NCM
Supplier Assembler Dealer Customer
In-process
material Not In-plant
A B Out flow NCM C Out flow NCM to assembler D Outflow NCM to customer
Conform

Store Store
Final Pre-delivery
Inspection Inspection Inspection

Painting Assembly Customer

NC NC
In-coming
inspection NC NC NC NC
NC Trouble

NC NC
Technical
NC Q report
Very strong
complain
Supplier In-house
NC Scrap,
ASA-ICHI QA NCM report Not conform ASA-ICHI damage,
Warranty
Srcap or claim
Conformità Material repair...
repair
answer Photo
100%?

Non-compliant material Non-compliant material Defects

A PRODUCTION B INTERNAL
C FINAL INSPECTION
D WARRANTIES

Current Current Current

90% 90% 50%
? TARGET TARGET
TARGET

Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar Apr Mar
2007 2008 2009 2007 2008 2009 2007 2008 2009

2. ACTIVITIES THAT MUST BE STRENGTHENED

 Quality 83

Figure 11.8  NCR performance

250

200
Unconfirmed numbers

150
–89%
100

50

2007 2008 2009 2010 2011 2012 2013 2014 2015

The introduction of Asaichi in the main production sites of the suppliers, after
appropriate training and implementation processes, allowed them to achieve
notable results, not dissimilar to those recorded by TMHMI (Figure 11.8).

Reduction of WCPs (warranty claim paid)

The third area of intervention that was acted upon for the Dantotsu ­concerns
the cost of warranties.
This is the area which, aside from involving substantial costs, has a sig-
nificant impact on the brand image; these are issues that are by nature hard
to spot during the inspection and testing stages during production, and they
are often related to engineering or supply.
Despite the utmost attention given to development and testing of new
products, some quality issues can still arise when the product reaches the
market, and are reported as warranty costs. In such cases, it is crucial for the
company to be able to identify and act on them immediately with the proper
countermeasure, not only to supply the customer with an adequate answer,
but also to minimize potential growing costs and to avoid damages to the
product image. The target of hitting a 75 per cent reduction of warranty
costs in three years looked extremely difficult, if not impossible. The first
step was to assign a department in charge of corrective actions related to the
warranties being issued, which could be production, R&D or supplies. A
dedicated area, Obeya (Figure 11.9),4 was set up to give maximum visibility
84 From CESAB to TMHMI

Figure 11.9  A dedicated Obeya for the management of warranties

to the activities and issues reported by our customers, allowing all the avail-
able information to be visualized (Toyota’s visual management). A weekly
meeting attended by top management was then organized to assign and
discuss the main problems and find the appropriate countermeasures.
Obeya’s success was such that a new one was created for the develop-
ment of new models, where all the information related to the new product
is displayed. The project manager organizes weekly project advancement
meetings directly inside the Obeya.
Pareto analysis5 was adopted to give priorities and importance to all war-
ranty claims and identify the main intervention areas. For instance, the
­issues were categorized as:

●● hydraulic (oil leaks, contamination issues, power steering or distributor

faults, etc);
●● electric and electronic (software issues, control unit faults with error
messages, etc);
●● mechanical (parts breaking under stress, assembly mistakes, failures).

We started to work on the three main issues for each area, taking into con-
sideration the financial impact and their frequency. The materials we used
for the analysis and the solutions include blueprints, pictures retrieved from
the net and results of dedicated analysis.

Case history
The warranty claims that are harder to identify are related to oil leaks from
the fittings of the hydraulic pipes. Usually, the only action performed by the
service department was to tighten the leaky fittings, which meant that we
had no parts we could examine to identify the cause of the fault. In order to
 Quality 85

Figure 11.10  Reports of oil leaks received from the sales network

gather further information that could help us establish the issue more clearly,
we asked service to indicate the exact location of the leak on a drawing of
the part (Figure 11.10). With the data we received, we created a map where
each leaking area was marked with a red sticker that showed:

●● date of servicing;
●● hours in operation;
●● sequential number of the problem arisen from the same area.

The adoption of this method quickly allowed us to have a visual depiction

of the most affected areas; we adopted electronic screw guns to improve the
operation and required the operators to mark the screws that were tight-
ened, so that we could confirm that the operation was properly carried out.
Another method we use to display the issues we encounter, and to assess
the performance of the countermeasures that are taken, is ‘weak point man-
agement’ (Figure 11.11). A graph is created for each issue, where the ab-
scissa is the reference month of production and the ordinate the hours in
operation. Each notification is manually marked on the graph, indicating
the date of entry: this allows us to assess at a glance the effectiveness of the
countermeasures that we applied, because a successful solution means that
no new claims are reported after the date of implementation.
We needed to have a well-defined vision of our warranty costs, and we
wanted to send a clear message to sales networks, distributors and branches:
‘quality has no compromises’. For this reason, we requested the return to the
factory of each and every faulty part, regardless of its actual worth or ship-
ping costs.
86 From CESAB to TMHMI

Figure 11.11  Example of weak point management

This also allowed us to inspect faults and breakages of low-cost parts that
were causing issues to the operations. Not only did we ask for the part to be
shipped back to us, but we also asked all service branches to send us as
much information as possible about the fault, including pictures and draw-
ings. This was essential to identify issues that were not strictly related to a
faulty part. For instance, some of the electronic components that were
deemed faulty had no inherent issues, but they malfunctioned when inter-
acting with other parts of the forklift. Finding the real reason entailed a
substantial diagnostic effort, performed with the support of the sales and
service networks.
With the aim of giving the appropriate importance to warranty issues, the
Obeya was moved directly to the area where the faulty parts are received
(Figure 11.12). In this area, each team member can verify the fault on the
part itself and gather their conclusions. If necessary, the suppliers are invited
to the meetings to share our thoughts and suggest remedial actions, because
they are responsible for a significant part of the warranty costs.
 Quality 87

Figure 11.12  Obeya of warranties, with the parts that require inspection

A crucial element that can improve the quality of the products is the planning
process; the performance of the product is evaluated from the very beginning
with prototypes and finite element method (FEM) simulations.6 The develop-
ment of a new product must be based on designers’ experience, test severity
and previous mistakes on older models. All data flow into the process of
product development, which is itself structured into eight steps, called design
reviews (DRs). Each DR has an approval stage, where management assesses
the results of the development of that specific step and a­ pproves (or halts) the
project. In addition to DRs we published an operation manual that outlines
all the steps of product preparation: each activity of every function that needs
to be performed during product development is included here. Each duty is
assigned to the functions that are responsible for it, while each assignment
has its own timeframe, from design to implementation. All the activities and
the materials regarding the project are gathered in a dedicated Obeya, where
meetings are held to discuss the advancement stage of the project. In addition
to DR and product preparation, all development stages are followed in close
communication with the industrialization, production and supply areas. The
first prototypes are assembled jointly by the prototype department and by
the production workers, so that any improvement can be identified from the
very first development stages. Aside from contributing to improve the prod-
ucts considerably, this solution has drastically reduced the conflicts that are
typically found between R&D and operations.
88 From CESAB to TMHMI

Figure 11.13  Level of warranty costs as ‘total costs paid’

100%

90%

80%

70%

60%

50%

40%
30%

20%

10%

0%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

This set of activities succeeded only by involving the whole company, mak-
ing everyone aware of quality issues, explaining them clearly and giving
them the right relevance; this collaboration ensures that with the right anal-
ysis tools we are able to implement the most effective countermeasures.
Warranty costs started to decline, despite the volume increase and the
addition of new models, hitting –55 per cent in just three years and subse-
quently reaching an impressive 80 per cent reduction (Figure 11.13).

Notes
1 Problem-solving (which will be described in detail later) is an approach to the
solution of a problem that includes various methods.
2 The checkpoint is intended as a station along the production process, where
testing and verification are performed.
3 Once I decided to give the whole department the responsibility for the solution
of a problem, but Toyota’s senior advisor, who was my referral for the project,
argued that the department would have never acted, because a department is
made by everybody and by nobody. If I had picked a specific person, I could be
able to identify who is responsible for the solution.
4 Obeya, Japanese for ‘big room’. The term derives from the Prius project, which
was assigned to a young chief engineer, Takeshi Uchiyamadarande, who relied
on a transversal team. In order to facilitate communication and shorten times,
 Quality 89

the team was placed inside the Obeya, and all the material regarding the
development process was hung on the walls. This method was so successful that
it was applied to all subsequent processes and extended to the entire group.
5 Pareto analysis consists of a technique that allows the identification of the main
causes responsible for most of the issues. It is also called 80/20, since Pareto
calculated that usually 20 per cent of causes generate 80 per cent of the
problems.
6 FEM is a mathematical method used to find approximate solutions to problems,
described in differential equations, to the partial derivative by reducing the latter
to a system of algebraic equations. It is widely used in engineering, often to
simulate the stress state of a part with the aid of dedicated software, pointing out
the areas where breakages might occur. TMHMI, in addition to the use of FEM,
undertakes specific tests with working prototypes, inside which are inserted
extensometers that measure the deformation level of the parts under stress.
90

12
Visual management

D uring a visit to our plant by Toyota’s top management, I was about to

explain how the production activities were structured when my guest
stopped me: ‘A factory is a Toyota factory if a visitor can understand it with-
out anyone having to explain it.’
This quote encloses many concepts that we have previously treated: the
flow of materials, clearly visible production lines, specific areas allocated for
each activity, and most of all the visual management approach, which in
Japanese is called Mieruka.1
A fundamental concept of TPS is that all the activities, the KPIs and the
projects cannot be just a mere working tool for management, but they
must be visible to anyone. Its potential can be exploited not only by using
all the tools developed along the years, but also with the involvement of all
the company employees, in particular those who are directly involved in
production activities. Displaying clearly to everyone all KPIs, projects and
activities brings two important benefits: direct involvement of all the per-
sonnel working on operations, and the presence inside the factory of all
management functions.
The application of visual management has been one of the most difficult
tasks we had to face, because it can be effective only if it becomes an es-
sential working tool for everyone. We had to reach our goal, and avoid
relegating the visual management approach to be just a fad that needs to be
implemented during the visits of Toyota representatives. It took great deter-
mination and perseverance from myself and my management team to
achieve the desired result.
Let’s begin by describing an operative visual management; those who
work directly on the production lines are in charge of its management, while
the GL is responsible for its operations and updates (Figure 12.1).
 Visual management 91

Figure 12.1  Example of a visual management board run by a GL

This area is usually placed next to the production lines, and it contains all
information, KPIs and graphs that support the GL in the daily management
of their work. As previously described, the training of group leaders is coor-
dinated directly by Toyota’s headquarters in Japan; this means that the lay-
out and information on the boards are structured in the same way in all the
plants of the group.
One section is dedicated to 2S, the cleaning and standardization activities
of the stations. An evaluation system is used to rate all the stations, indicat-
ing the areas in need of improvement (a radar chart shows the progress
status based on a set target); the drawing of the layout of the department
concerned can be used to signal, using a red sticker, the areas in need of in-
tervention (Figure 12.2). All the related activities are displayed with a Gantt
chart that includes timeframe and progress stage, also indicating the name
of the person in charge of the activity.
One section is dedicated to the skill matrix. In the previous chapters we
stressed the importance of the operators’ training, and the crucial role it
plays in quality and safety. Knowing the ‘education’ and autonomy levels of
each operator is fundamental for a proper management of the area. A simple
92 From CESAB to TMHMI

Figure 12.2  2S activities on the production lines

2s rating trend Assessment radar chart

Layout of the area with Activity plan

areas of improvement

matrix includes the names of the operators and their level of training and
knowledge of one or more workstations. This simple tool allows us to:

●● simplify the allocation of workstations in case of vacation/time off/

sickness of operators;
●● see clearly who are the more experienced and knowledgeable workers;
●● set up a training plan that can promote and implement multi-functionality.

In addition, coloured magnets help to quickly identify the knowledge and

autonomy level of each worker for a specific workstation: from red, used for
an operator under training, to blue, which indicates a great level of experi-
ence of the operators, up to the point that they can be considered as trainers
themselves (Figure 12.3).
Another GL-run visual management area is the ‘change point manage-
ment’ (Figure 12.4). This tool was developed to highlight any changes, usu-
ally related to external or organizational causes, that can affect quality,
safety and productivity.
In this area the organization is depicted using pictures of the operators,
including those of GLs and TLs, each with their own assigned areas; for
 Visual management 93

Figure 12.3  Example of a skill matrix of the operators on Line 1

Figure 12.4  Example of a change point management area

instance, in the change point management illustrated in Figure 12.4 there

are three TLs in charge of a section of line split into Team 1, Team 2 and
Team 3. The productive area layout of each GL and TL shows the pictures
of the operators that are assigned to each station for that day, so that it is
94 From CESAB to TMHMI

Figure 12.5  Layout of production lines, workstations and operators

Figure 12.6  Management of workers’ attendance

possible to verify, with the support of the skills matrix, whether the assign-
ment is consistent with the competence level of the operator (Figure 12.5).
Finally, the pictures of the operators who are not at work are placed in a
separate area, where they are classified as ‘planned absence’ (due to work
permits of any kind) or ‘unplanned absence’ (due to sickness or injury). It
also includes the pictures of the workers who replaced those who are not
on site (Figure 12.6).
The CPM of each station, in addition to displaying the above informa-
tion, highlights the changes that might cause situations of potential risk. The
changes are classified according to 4M:

●● Machine: a blue magnet is placed on the area of the workstation affected

by the changes (such as screw guns or new equipment).
 Visual management 95

Figure 12.7  Example of 4M management

●● Material: a green magnet is placed on the area of the workstation where

materials have been changed (ie if there is a new part in the assembly list
of the station, or if the layout of the feeding of materials has changed).
●● Method: a black magnet is placed on the area of the affected station to
indicate variations of the working method, for example a new assembly
sequence.
●● Man: a red magnet is placed on the area of the affected station when the
potential risks are caused by the operator, for instance if they are being
trained.

Each of the 4M has a colour-coded table where the descriptions of the causes
for each potential risk are indicated (Figure 12.7).
A specific area is dedicated to the main KPIs, showing the performance
for the following elements:

●● Q (Quality): the number of fault-free forklifts that are delivered to the

next process, on a daily and monthly basis.
●● C (Cost): compliance with the daily production target, hours spent for
each truck produced, any downtime of the lines for whatever reason.
●● D (Delivery): production volumes reached on that day and on previous
months, compared with the target (Figure 12.8).

Furthermore, the progressive target volumes are assessed every two hours,
taking note of the number of assembled trucks and comparing the figures
with the target. Each production problem has its own cause displayed on a
graph, so that it is possible to identify immediately the main issues that oc-
curred. Downtimes due to technical problems are not only recorded, but
also assessed in a dedicated area, with the countermeasures that have been
established (for the short term, to restart production, and for the long term,
so that the problem no longer arises).
 96
Figure 12.8  Example of a daily delivery graph

DELIVERY (D): UP TIME RATIO - DAILY

LINEA 1
Aprile 2016 GOOD
PIC: Rezaghi Luca 100%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
1/4 4/4 5/4 6/4 7/4 8/4 11/4 12/4 13/4 14/4 15/4 18/4 19/4 20/4 21/4 22/4 26/4 27/4 28/4 29/4

Data 1/4 4/4 5/4 6/4 7/4 8/4 11/4 12/4 13/4 14/4 15/4 18/4 19/4 20/4 21/4 22/4 #REF! 26/4 27/4 28/4 29/4 0/1 0/1 0/1 Totale

A Target Obiettivo 48 55 55 55 55 47 55 55 55 55 48 55 55 55 55 48 #REF! 55 55 55 48 0 0 55 #REF!

UNIT/DAY B Actual Totale giomo 48 55 48 55 55 47 55 55 55 55 42 55 55 27 55 48 #REF! 0 0 0 0 0 0 0 810
C Prod. Loss Persi giomo 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 41
D Normal [min] 400 460 460 460 460 400 460 460 460 460 400 460 460 460 460 400 #REF! 0 0 0 0 0 0 460 7120
WORK TIME
E Actual (D-I) [min] 400 460 400 460 460 400 460 460 460 460 460 460 460 220 460 400 #REF! 0 0 0 0 0 0 460 6880
TAKT TIME F Takt Time [min] 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36
G Up Time F x B [min] 400 460 460 460 460 460 460 460 460 460 400 460 460 460 460 400 #REF! 0 0 0 0 0 0 460 0
UP TIME
H Up time Ratio (G/E) [%] 100% 100% 87% 100% 100% 98% 100% 100% 100% 100% 88% 100% 100% 49% 100% 100% #REF! 0% 0% 0% 0% 0% 0% 0% 0%
I Total down time (L ~ M) [min] 0 0 60 0 0 0 0 0 0 0 60 0 0 240 0 0 #REF! 0 0 0 0 0 0 0 #REF!
L Union assembly Assemblea 0 0 60 0 0 0 0 0 0 0 60 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
M Strike Sciopero 0 0 0 0 0 0 0 0 0 0 0 0 0 240 0 0 #REF! 0 0 0 0 0 0 0 #REF!
N Quality check Controlli qualità 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
DOWN TIME O Line down time Fermo Linea 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
P Jig trouble Problemi Attrezzature 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
Q Quality defect Difetti qualità 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
R Parts shortage Mancanza materiale 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
S Manufacturing Problemi al montaggio 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 #REF! 0 0 0 0 0 0 0 #REF!
 Visual management 97

Among all the information shared and displayed inside the plant, a very im-
portant section is dedicated to safety. Each GL-managed area has its own in-
dicator, summarizing its safety levels. There are two kinds of potential events:
injuries, which involve and damage a human resource, and near-misses, epi-
sodes that did not cause injuries but that could have if the dynamics had been
different. In both cases a report is drawn, illustrating the situation and imme-
diately implementing the countermeasure. The safety department is next to
act, gathering all the available information to establish the causes of the event.
In collaboration with operators, TLs and GLs, it sets a possible countermeas-
ure that must be immediately implemented. If this is not possible, perhaps
because it requires the purchase or the modification of a piece of equipment,
a temporary measure is adopted while the conditions are applied. Any injury
is identified and displayed with a red dot placed in the area where it occurred;
the same logic applies to the yellow dots that indicate a near-miss. With the
aim of sharing all ‘bad experiences’ inside the Toyota group of companies,
injury-related reports are shared among all the production sites. The use of a
visual scheme such as the one shown in Figure 12.9 helps to determine which
area or station has been exposed to the highest number of risks. The display
is integrated with a chart showing the number of injury-free days and their
trend, with a calendar outlining each accident-free day.
The analysis and the potential improvements that can be applied in the
cycle of a production workstation are identified with the adoption of a
Yamazumi chart2 (Figure 12.10). This tool, created to maximize efficiency
and minimize waste, can display the time required to perform every opera-
tion of each workstation. The operations are classified as:

●● Added-value operation: required operation, without which the unit

would not become a finished product.

Figure 12.9  Example of visual indicators dedicated to safety

 98
Figure 12.10  Example of a Yamazumi chart

12.00

10.00
0,16
TT = 8,36 min. 0,50
0,04

8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36 8,36
0,33
8.00 0,24 0,25

1,93 0,56
1,24 0,27
3,54 0,05
1,80 0,72
5,00
0,14 0,87
0,00
0,23 0,00 0,22 0,34
0,25 0,61
6.00 0,45 0,23
0,31
0,24
1,12
0,90 6,14
0,22
0,05 0,07 0,06
0,09
0,40 1,47 3,66
0,15
0,11 0,59 0,00 6,11
0,34
0,50 0,56 0,47
0,31
0,11 0,47 0,19
0,93 3,31 4,34
0,53 0,00
0.36 6,24
4.00 0,29 2,73 0,08
2,60
5,28
4,48 5,15 3,73
4,18
4,78 3,86 5,21
4,31 6,73
1,84
5,21
2,85 4,05 6,26
0,40 6,10 2,78
5,58 4,40 3,45 5,45 5,34 0,49
5,30 3,64
4,64 3,02
4,87
4,57 4,63 4,61
4,40
2.00
3,64
4,02 4,06 4,06
3,47
2,50
2,82 2,74 2,75 2,18 2,67
2,43
2,26
1,98 2,01
1,56 1,55 1,69 1,62 1,61
1,24 1,27 1,31
1,07 1,07 1,11 1,05 1,06
0,67 0,64 0,80 0,87
0,31
0.00 0,17 0,31 0,24
0,00 0,00 0,00
L1

L2

L3

L4

T
3A

3B

5
6A

6B

PR 8
1

PR 8

PR 1

PR 2

PR 3

PR 4

PR 5

6
PS

2
3A

3B

4A

4B

9
CO
P1
P0

P1

S0
P1
P1

P1

P1

P1

P1

P1
P0

P0

P0

P0

P0

CV

P0

S0

S0

S0

S0

S0

S0
M
FI

FI

FI

FI

P0

P0

S0

S0
P0

P0

PR

S0

S0
O

PR
PR
RI

RI

RI

RI

V.A N.V.A W TT
 Visual management 99

●● Waste-reducible operation: it is a required operation but it must be

minimized, since it does not add value for the customer.
●● Non-added-value operation (Muda): an operation that constitutes a
waste (such as operator motions, repairs, etc).

Once times are recorded and classified with the above criteria, they are dis-
played on a histogram which shows the total time needed to complete the
cycle at every station.
The histogram also reports, for reference, the takt time assigned to the
production line.
The criteria used to classify the operations with added or non-added
value are crucial to identify potential Kaizen that could improve the sta-
tion’s efficiency. Figure 12.11 shows some examples of the Toyota classifica-
tion method.
Some of the classifications are proof of the great efforts made to identify
any potential improvements. For example, the action of passing the wiring
and cables through the frame is considered as a reducible waste. At a first
glance it looks like a required activity, because the forklift would not work
without it. However, its classification highlights that the system used to lay
cables and wiring can be improved. Having a fixed layout for laying all the
cables, with preset anchoring points, makes the operation substantially
faster than using cable ties in points that might differ in each truck. Its clas-
sification as a ‘reducible’ Muda indicates the need to assess the procedure by
the work team, in order to find ways to optimize the activity. To determine
and visualize the operator movements, we implemented a dedicated record-
ing system called the standard motion sheet (Figure 12.12): it shows the
station layout with the materials and the movements made by the operator.
Each operation is classified as an activity performed in a fixed or a moving
position, also showing the time needed to carry it out.
The first applications of this method revealed that on most of the sta-
tions, 30 per cent of the operator motions were needed to retrieve the
parts. It was immediately clear that if we wanted to minimize unnecessary
motions, we needed to relocate parts and equipment, placing them in line
with the production cycle. We created a Yamazumi chart for the purpose
of efficiently displaying the operator movements, using colours to pin-
point the operator workstation related to the assembly stage of the fork-
lift. This way, if we look at the tasks to be completed while the operator
is sitting on the driver seat, the assembly cycle of the front side is indi-
cated in green, in blue for the left side, yellow for the right and grey for
the back (Figure 12.13).
100 From CESAB to TMHMI

Figure 12.11  Example of activities classification for the Yamazumi

CATEGORY N° DESCRIPTION DETAILS and EXAMPLES

1 Parts assembly
VALUE ADDING
OPERATIONS

2 Screws tightening

3 Connections

4 Tacking/Welding

5 Painting/Spray

1 idle movements/waiting times Picking materials, tools…

Reading, parts list with several
NON-VALUE ADDING

2 Checking files or lists reference codes…

OPERATIONS

3 Turning around
4 Bringing materials back
Moving tools or equipment from one hand to
5 another
6 Moving to pick parts and tools
7 Moving while holding parts and tools
1 Preparing the parts
OPERATIONS WITH REDUCIBLE WASTE

2 Starting something Computers, signals…

3 Installing wires and pipes (ex. applying cable ties)

(that can be improved)

Adjustments (ex. If the screw does not fit in the

4
thread)
5 Applying and removing stickers, labels…

6 Reading lists or files

7 Returning boxes and pallets

8 Kanban collection

9 Supply of screws of different types

Reporting by colours the cycles and times on the graph allows the sequence of
operator movements caused by the lack of optimization of the assembly cycle
to be displayed. Ideally, grouping the activities by forklift areas allows the
movements that the operator has to make during the assembly to be r­ educed.
The Yamazumi chart was originally implemented by the times and meth-
ods department, but it showed its real potential when its management was
passed over to the TLs of the production lines. This cultural shift gave the
opportunity to those who work daily on direct activities to learn how their
stations are balanced; as a consequence, they acquired the knowledge they
needed to suggest and implement the Kaizen actions to improve efficiency.
The Yamazumi chart can be enhanced with the use of magnets, showing on
 Visual management 101

Figure 12.12  Example of a standard motion sheet

Figure 12.13  Identification of the working areas

Blue

Grey Green

Yellow

a timescale the time it takes to execute an operation. Magnets allow, with a

quick glance, the transfer of activities between stations to be assessed in order
to improve their balance, to inspect the operator movements and to spot any
workstations in over-takt due to specific product configurations. Visual man-
agement is not limited to the management of operations during p ­ roduction,
102 From CESAB to TMHMI

Figure 12.14  Example of visual management applied to projects

but has been extended to all the ongoing projects of the company
(Figure 12.14), including those related to the development of new products.
In the operations area, each project displays all the information required fol-
lowing a strict standard, its board placed directly in the reference area.
At the beginning of the procedure, in order to prepare the A3 report,3 we
collect all the data we need to define the current state of things and the gap
that we need to fill in order to achieve the desired results. This is followed
by a very detailed analysis that focuses on several factors; finally, the results
of the analysis and the information supplied by the operators help identify a
potential solution. It is important to begin with the history and the reasons
behind a new project.
If it is necessary to make modifications in the layout of the production
areas, we start by highlighting all the critical spots, which we identify and
mark on a drawing of the areas. Usually, this is done with coloured stickers
placed on the identified spots (Figure 12.15), or with Post-Its that briefly
outline the problem. Countermeasures are studied for each of the critical
spots; the suggested actions start the development of a new solution that, if
appropriate and applicable, is integrated in the new possible layout project.
Each project has its own KPIs, indicating the starting conditions, the target
 Visual management 103

Figure 12.15 Example of visual management, indicating the critical points of

the current solution

and the progress towards the expected results. Targets are classified under
QCDESM categories, which will be the subject of separate chapters.
Such complete visibility of the progress stage of the project, directly in the
reference area, apart from involving the workers in the improvement effort,
is the ideal method to inform and make the operators aware of the modifica-
tions that must be applied by the company.
The following items are always indicated on all the projects:

●● work team;
●● target and KPI;
●● current situation;
●● list of gaps between current situation and target;
●● several hypotheses of future solutions, such as different layouts;
●● investments and payback analysis;
●● weighted assessments of the proposed solutions;
●● chosen solution;
●● work plan.
104 From CESAB to TMHMI

Notes
1 Mieruka (literally ‘manage with the eyes, make visible’) is one of the main points
of TPS philosophy. With Mieruka are displayed the main KPIs, current projects
and corrective actions.
2 The Yamazumi chart is a bar chart where the working cycles are split into
added-value and non-added-value activities.
3 A3 report is a method developed by Toyota for projects and problem-solving. Its
name derives from the fact that all the information is displayed on an A3 sheet,
where each area covers a specific topic. I really appreciated its use, because it’s a
perfect template for analysis and representation.
 105

13
Kaizen and efficiency

T PS was created with the main goal of reducing and eliminating waste
(Muda in Japanese). A constant and thorough effort made possible the
development of the tools that this cultural approach implemented, making
it famous worldwide. There are seven different kinds of Muda in Toyota, but
overproduction is seen as ‘the father of all Muda’, because it is a direct cause
of all other kinds of waste (Figure 13.1).
Overproduction creates more Muda because it raises the amount of stock
in inventory, which in turn needs more transportation and operators, more
areas for storage, longer pick times and consequently longer waiting times. In
the event of quality defects, more material needs to be retrieved from storage,
which represents another waste of time; if the materials are stored for too
long, they can deteriorate. Finally, overproduction is seen as the worst Muda
of all, because it hides the real issues that lay behind.
Although the labour costs in Japan are not exactly cheap, more than 5
million Toyota vehicles are produced in the country every year and exported
worldwide. Moreover, a sizeable percentage of the parts used by Toyota
factories located abroad is made in Japan. This proves how an excellent
system of production and logistics, where quality and efficiency are con-
stantly at the core of the employees’ efforts, can compensate for high labour
costs and offer competitive prices.
One of the key concepts of TPS is defined by the Japanese term Kaizen.
The word is composed by Kai and Zen, two ideograms (改善) meaning
‘change’ and ‘better’: changing for the better.
Toyota sees Kaizen as small, gradual improvements, suggested by people
within the company, which usually need a very small investment to be ­applied.
A Kaizen from the operators who work directly on production a­ ctivities are
particularly appreciated. Often the Kaizen is erroneously ­associated with stra-
tegic, complex projects, while sometimes a ­technology-first approach can
cause unnecessary complications. Investments in equipment, tools or other
activities bringing substantial modifications, step changes, are called Kaikaku
(radical changes). For instance, a new layout with the introduction of new
106 From CESAB to TMHMI

machines and technology is a Kaikaku. Once the Kaikaku is implemented, its

efficiency is maximized with Kaizen (Figure 13.2).
I belong to a category, the engineers, where technology is often seen as the
tool to solve all possible problems. Engineers can draw complex and expen-
sive solutions to deal with even the most trivial issues. I have often rejected
some of those complicated brainstorms because they were not in line with

Figure 13.1  Seven kinds of waste

Surfaces

Transport materiel
Stocks

Overproduction

Waiting time
Operator paths

Repairs/errors

Figure 13.2  Kaizen versus Kaikaku

n
Kaize

Kaikaku

n
Kaize
Kaikaku

n
Improvement

Kaize
Kaikaku

n
Kaize
Time
 Kaizen and efficiency 107

the simplicity principle of Kaizen. There were other occasions when we tried
repeatedly to find simpler ways, and we discovered some amazingly efficient
and straightforward solutions. The guideline that must be followed for any
project is ‘No People, No Money, No Space’.
I recall one occasion when we had to face a quality problem caused by
tightening operations that were missed by the workers. When we ana-
lysed the data of the defects, we realized that a potential quality risk was
the interruption of production activities. For example, if the operator
could not finish performing the activities at the workstation, because the
shift was over or for their lunch break, the risk was that they, once re-
turned to work, would not remember at what stage they left the current
activity. The idea, actually, the Kaizen, came from a GL, who built a flag
with a ribbon and a magnet. Each station received a flag, so that the op-
erator could place it on the last tightening carried out, leaving a clear in-
dication when the activity resumed, even if it involved a different opera-
tor (Figure 13.3).
Another important aspect is the involvement of the operators working in
production activities. History and social conventions had erected an invisi-
ble barrier that divided white- and blue-collar workers. This barrier hinders

Figure 13.3 Example of Kaizen to indicate the last tightening performed before

interruption
108 From CESAB to TMHMI

communication between the sides, restricting them to carry out only their
own specific tasks: production engineering is the sole responsibility of
­organization and technology, while operations is limited to the execution of
instructions. Furthermore, a barrier creates conflicts between those who de-
cide what to do, and those who actually have to do it.

Kaizen Kobo
The consolidation of Kaizen and the increasing involvement by people
within the company, who were the first to contribute with their ideas,
made it difficult for us to purchase or develop the equipment that could
fully support all the Kaizen that were suggested. We searched the product
ranges of a large number of suppliers, and it was always very hard to find
the tool, the equipment, the solution that could fully satisfy our needs.
Once again, a trip to Japan proved to be crucial. They already faced and
solved the problem, creating an area for the production of small equip-
ment: the Kaizen Kobo.
Compared with a classic tooling area, the parts used in the Kaizen Kobo
for the creation of equipment are standard and simple (Figure 13.4). Using

Figure 13.4  Kaizen Kobo area

 Kaizen and efficiency 109

Figure 13.5   Example of a roller conveyor used in a Kaizen Kobo

a limited range of wires, tightening systems, wheels and other components,

we were able to produce internally the best part of our equipment, with the
added bonus of making everything exactly to our requirements. The simplic-
ity of the Kaizen Kobo allows the operators to assemble their solutions
themselves. Dozens of tools have been quickly created to support the devel-
opment of Kaizen (Figure 13.5).
110

14
The bottom–up
approach to ideas

W e have so far illustrated the tools required to apply the Kaizen, such
as the Kaizen Kobo; we have also outlined the core philosophy: sim-
ple, effective ideas that mainly come from the operators. The latter factor is
the most complex to establish, because it requires a substantial cultural
shift. The company has a primary role in this transformation, creating and
promoting an environment that stimulates ideas, where people are encour-
aged to express their opinions and solutions. The concept implies the iden-
tification of what the customers perceive as ‘value’, including the internal
customer, the downstream process; this is a fundamental aspect to help iden-
tify and reduce waste, improving efficiency and service levels. This task is
not only assigned to management: each employee can spot inefficiencies
during their daily tasks, often caused by redundancies or non-optimized
processes.
The company must train its employees in the identification of waste and
of customer value, supplying them with the tools they need to fix the issue
themselves. Achieving such a result means an efficient company, with highly
motivated employees.
The flow of ideas must reach the managerial levels in order to become
effective: their involvement gives the appropriate importance to the activity
in question, and ensures the right leverage to support their implementation.
Projects are usually assessed on the basis of the following macro-categories:

●● Q (Quality): impact on quality.

●● C (Cost): cost reduction.
●● D (Delivery): impact on lead time, production capacity and productivity.
●● E (Environment): impact on the environment.
●● S (Safety): impact on safety.
●● M (Moral): improvement of corporate climate.
 The bottom–up approach to ideas 111

The last category was recently added and proves how corporate climate is a
must for the Toyota group. HR has a key role: it is an integral part of the
changing process and is in charge of a smooth and easy transition, promot-
ing training and initiatives aimed at involving the employees in an effort to
sustain a positive corporate climate. The main HR indicators used by the
group include employee turnover, injuries and absenteeism percentages.
Those KPIs are so important that they are shared monthly among all the
factories worldwide. There is, however, a crucial and irreplaceable role
played by the Japanese top management and their Genchi Genbutsu, their
periodic visits to the group’s companies and production sites: this is by far
the best method to assess corporate climate and the company’s management.
Placing a letterbox with ‘Kaizen ideas’ written on it is the worst way to
try and develop the acceptance of the Kaizen concept by the employees. The
idea is destined to fail because it will involve a small number of operators,
unless a previous effort is made to raise awareness, to organize, to train all
the people upstream of the process. Downstream, the evaluation and imple-
mentation of the suggestion must be regularized.
Without such framework, the method might just produce generic sugges-
tions, often with a provocative intent, which will undermine such an impor-
tant initiative for lack of understanding and consolidation among the people
involved.
Italians are well known for being innovative, for having a fertile imagina-
tion, for their ability to make do with what is at their disposal. Succeeding in
the integration of these traits with the methods and the attention to detail
that are typical of Japanese culture would unleash a great potential. ‘To do a
lot with little’ has been an integral part of Toyota since the beginning and it
is embedded in its DNA. The goal is to channel the creativity and experience
of people to achieve something tangible for the company and for its growth.
We adopted several tools to maximize the benefits of this approach: a mas-
sive awareness and participation campaign was conducted for the entire
workforce, training on the principles of TPS and on waste; from Japan, we
imported and adapted tools such as the Asaichi, already outlined in previous
chapters, quality control circles (QCC), which we will discuss later, and YK-Y.
The latter is the acronym for the following Japanese terms:

●● Yarinikui (Y): operation that is hard to perform.

●● Kizukai (K): operation that is hard to perform which requires attention.
●● Yarinahoshi (Y): operations to repeat and correct because they are hard
to perform with a single action.
112 From CESAB to TMHMI

Figure 14.1  Collection point of operators’ ideas

In each production line section managed by a team leader there is a board

dedicated to ideas for improvement. There is also an ideas collection box
(Figure 14.1) for all the operators working on that section of the line; they
have a dedicated form they can use to describe the problem and suggest a
possible solution. Their TL is always available to set up a meeting and dis-
cuss the idea or problem in question. Subsequently, the TL discusses the sug-
gestion at a management meeting that sees the attendance of all the main
corporate functions. The meeting will deliberate for a Go or a Stop, will de-
cide which corporate function, if any, will be responsible for the implementa-
tion of the Kaizen, and it will plan its development and introduction. The TL
must reply in writing to all the suggestions received and place the reply in a
dedicated box, explaining the eventual reasons for a rejection. If the idea gets
accepted, its implementation is communicated on the board, with planning
and timeline, and pictures of a ‘before’ and ‘after’ its introduction.
Suggestions, information and all the material needed for the development
of YK-Y are displayed right by the related area, in compliance with Toyota
visual management philosophy. The board also includes the layout of the
area, where the stations subject to improvement ideas are highlighted
(Figure 14.2). A final classification into safety, quality, environment and pro-
duction indicates the scope of the idea that was received.
Another system to promote Kaizen and the involvement of people is the
QCC, quality control circle.1 Born in Japan in the 1960s, the QCC has been
adopted by several companies; Toyota was one of the first to apply it in
1967, seeing its potential in conjunction with TPS. Today QCCs are found
in a large number of sectors, from manufacturing to public administration,
because their goal is to set up a method that allows the small problems that
arise during the performance of daily tasks at work to be solved.
The application of the QCC requires a substantial knowledge of TPS; it
took us years to set the ideal conditions that allow their application in
 The bottom–up approach to ideas 113

Figure 14.2  YK-Y activities displayed

TMHMI. Its philosophy and the main quality control tools (see Chapter 11)
are to be fully integrated in the corporate culture, and the company must cre-
ate a framework that actively supports Kaizen. QCCs in Toyota see the in-
volvement of the whole factory: lines are stopped every month for a one-hour
meeting (or two meetings of 30 minutes each). Each QCC leader, who has
been properly trained for the task, manages a small group of no more than
10 operators. The topics of the QCC, especially at the beginning, must be
simple, and its solutions must be within the field of the team activities. This
simple approach avoids discussing issues that are too complex, that involve
engineering solutions or large investments: debating a problem that cannot
be solved by the group itself is a demotivating factor for the team. Moreover,
each team has six months to complete the QCC cycle and start a new one.
The success of this endeavour relies very strongly on the training of all
the company’s employees; it must be carefully planned, because not every-
one knows how to apply problem-solving, understands graphs or how to
break down issues.
The project of introducing QCC in TMHMI sees a gradual implementa-
tion for the first four years, starting from small groups and expanding slowly
114 From CESAB to TMHMI

Figure 14.3  Communication model in Toyota

MD

Directors Hoshin Kanri

YK-Y
Managers
Visualization Jishuken

Group Leader
QCC
Visualization
Team Leader

Worker

to the entire workforce. Interrupting the work of 400 people and setting up
an organization that can manage more than 40 QCCs at the same time with
total precision is not an easy task: it needs careful planning and an adequate
amount of time and experience to succeed.
With the adoption of QCC, Asaichi and YK-Y, we fielded a set of tools
capable of involving the whole workforce and promoting Kaizen activities,
motivating people to be proactive in our constant search for the improve-
ment of products and processes. The aim is to generate a sense of belonging,
a shared vision: each one of us, regardless of role and hierarchy, can contrib-
ute to the success of the company and become a valuable asset in the long
term. The widespread idea that there is a ‘thinking’ and an ‘execution’ side
of the company, separating white- from blue-collar workers, must necessar-
ily be changed.
The tools we adopted and integrated with Hoshin Kanri and Jishuken2
set up a strong bi-directional communication system between top manage-
ment and operators (Figure 14.3).

Notes
1 Quality circles are a method applied for problem-solving or quality improvement;
small teams of workers meet with management to discuss and suggest potential
improvements. Toyota uses them to solve quality problems, but they can be
stretched to cover other targets: cost, delivery, environment, safety, moral.
2 Jishuken is an activity created to involve the managers in factory activities
(Genba), with specific projects chosen by themselves.
 115

15
The supply chain

T oyota sees its suppliers as partners, and as such it looks for agreements
with them that can be as long as possible and beneficial for both parties.
The level of service that is expected, the quality of the goods and a common
culture that focuses all its attention on the customer (the customer first ap-
proach) are factors that strengthen the relationship over time; replacing a
supplier is always a decision made after very careful considerations involv-
ing several different aspects. Instead of grabbing the short-lived opportuni-
ties offered by global markets, Toyota prefers to run its business and
­maintain its relations looking at the medium to long term, assessing each
opportunity based on the TCO (total cost of ownership),1 rather than the
mere purchase price. It is fundamental to know and understand the supplier
as an entity, assessing its financial strength, its culture, its approach towards
business activities. It is also very important to evaluate its geographic loca-
tion: it must be as close as possible to the plant that is going to use the parts
it supplies. Although Toyota is a global conglomerate, these concepts can
balance the need for economies of scale and the supply from international
markets with the opportunities and the benefits offered by local businesses.
European suppliers of Toyota Material Handling Europe cover about 90 per
cent of the value of direct purchases.
It is important that the supply chain is located close to the production
sites of the group, because it allows for a streamlined planning process such
as the Junjo, and a logistics model that can organize one or more daily de-
liveries. We have often stated how lead time, or the time that lapses from the
customer order to the delivery of the product, is a substantial factor in
TMHE’s business; short transport times contribute to its reduction.
TMHMI conducted a major rethink of the supply chain, reducing the
number of direct suppliers down to about 200. This change focused the ac-
tivities and the management of Tier 22 and 3 mainly on Tier 1 suppliers.3
We exploited the location of the supply chain to develop a Kaizen pro-
ject in the inbound logistics area, aimed at optimizing the parts-picking
activity in terms of transport costs and volumes retrieved. The location of
116 From CESAB to TMHMI

each supplier has been visualized on a map with the use of flags, where
equidistant circles are drawn from the Bologna factory. An analysis of the
volumes of materials sent on a weekly basis has identified three different
categories, which were assigned different coloured flags: green for high-
volume suppliers, orange for medium volumes and pink for low volumes.
The map highlighted the geographic areas where the suppliers were con-
centrated, while the flags showed weekly volumes of deliveries. This al-
lowed us to identify and optimize a number of pickup routes that we called
milk runs.4
Concentrating the collection of parts from multiple suppliers into a single
route allowed us to split our requirements for materials into several jour-
neys, reducing the stock that we had to keep in storage and maintaining low
transportation costs.
Selecting a supplier implies several steps, where each element must be
carefully assessed: financial solidity, certifications, the ability to develop new
products while ensuring high quality standards and flawless management of
its processes. An audit looks into all these elements and follows with related
reports. The certifications that are required, apart from quality management
systems ISO 9000, are ISO 14001 (the international standard specifying the
requirements for an environmental management system) and OHSAS 18001
(for the deployment of a safety management system). It is likely that we will
also start requiring ISO 50001, related to energy management. Obviously,
the above mentioned certifications have already been awarded to all the
production sites of our group.

Figure 15.1  Example of a milk run study

 The supply chain 117

Each supplier undergoes a development plan, starting with the training of

principles and methods of TPS, followed by a direct intervention on the ac-
tivities, using increasingly complex tools, allowing for the continuous devel-
opment of service, quality and efficiency levels (Figure 15.2).
The certification programme (Figure 15.3) monitors the supplier perfor-
mance, with evaluation points given every quarter, based on five different
parameters:

●● Q: quality;
●● C: costs;
●● D: service level;
●● E: certification ISO 14001;
●● S: certification OHSAS 18001.

The score of each of them has a different influence on the final evaluation:
more importance is given to the level of service and to the quality of the sup-
plied product.
Certified suppliers can enjoy all the benefits offered by the group: for in-
stance, they have priority over the future development of new products, and
for potential supply of other plants of the group. The benefits are reduced
for the suppliers that have been classified as ‘qualified’, while non-certified
suppliers must improve their performance if they want to avoid the risk of
being replaced.
The performance of the suppliers is displayed in the Asaichi area: it in-
cludes the chart of those that received the most non-conformity reports
(NCRs) in the last few months, the suppliers that replied late to required
corrective actions for faulty items, and finally the list of suppliers that did
not reply to our communications. At times, not even Toyota, with its size
and influence over the supply chain, is able to dictate its standards and
­requirements.
Our constant effort to improve corporate performance, optimizing costs
and reducing stock levels, must not affect the supplier. Toyota knows that a
supplier must have a financial margin that can support and expand the busi-
ness; pressing a cost reduction by negotiating, or reducing the storage area
while forcing the supplier to stock the materials, are tactics that can only
bring benefits in the short term. We are fully aware of this, to the point of
making our know-how available to the supply chain. We are the first
­experimenters of TPS, and our job is to reinforce the results we obtained and
promote our approach with the supplier. The importance and value of
 118
Figure 15.2  Structure of cooperation with the supply chain

Supplier Kaizen Activities

Supplier
Collaboration

Innovation
High Cross-functional Kansei Simultaneous
collaboration Engineering Engineering

Integration
Ottimizzazione VSM
Optimization of Mappa dei Analisi del Kaizen
Medium dei Flussi flusso dei
integrated Valore Event
Logisitici valore
processes

Weak Point
5S Standard
Management
Kaizen
Basic TPS training
Toyota Quality Mieruka
SMED
Management (visualizzazione)
Supplier
Kaizen
Figure 15.3  TMHMI certification programme

Evaluation group result summary

Certified 106
84 91 92
63
Total [105] 42
21 0 0
0
Fye 2015 Q1 Fye 2015 Q2 Fye 2015 Q3 Fye 2015 Q4
45
50 36 42 43
27
40 60 Q-Quality [45] 18
9 0 0
0
30 70 Fye 2015 Q1 Fye 2015 Q2 Fye 2015 Q3 Fye 2015 Q4
20 14 14
16
20 80 12
C-Cost [20] 8
4 0 0
0
10 90 Fye 2015 Q1 Fye 2015 Q2 Fye 2015 Q3 Fye 2015 Q4
36
26 35 35
0 100 21
D-Delivery [35] 14
7 0 0
0
Fye 2015 Q1 Fye 2015 Q2 Fye 2015 Q3 Fye 2015 Q4
5
4
3
I - OHSAS 18001 [5] 2
1 0 0 0 0
0
Fye 2015 Q1 Fye 2015 Q2 Fye 2015 Q3 Fye 2015 Q4

119
120 From CESAB to TMHMI

Toyota experience sometimes is not enough to convince the supplier to in-

troduce TPS and modify its working methods. When we were given the op-
portunity to transfer them to our approach, the results have always been
positive: the suppliers not only adopted TPS for the products that were
­destined to our sites, but they expanded it for their entire product range,
obtaining great benefits overall.

Examples of implementation of TPS

on TMHMI supply chain
Carpenfer S.p.A.
The company was founded in 1970 for the production of metallic carpentry
objects. It supplies the main international producers of earth moving ma-
chinery, asphalt pavers and agricultural equipment (Figure 15.4).
The company supplies our Bologna plant with a wide range of forklift
frames. Moreover, Carpenfer was the first supplier to which we applied Junjo.
Its first approach to TPS occurred in 2008, when TMHMI was launching
a new, very relevant model for its future. At the time, the financial and eco-
nomic crisis that hit globally after the collapse of Lehman Brothers had a
massive, negative impact on the company results: their turnover shrank by
more than 50 per cent in a single year. This situation, added to a sudden
change of the company managers, caused a climate of uncertainty and con-
fusion among the workforce. The activation of the TPS project, directly sup-
ported by the Bologna site, apart from the tangible results that it obtained
on the products, allowed a crucial communication point between the new
management and the operation areas to be established. Its typical bottom-up

Figure 15.4  Carpenfer plant in Reggiolo (RE)

 The supply chain 121

approach and the implementation of simple tools such as blackboards and

markers for the Genchi Genbutsu allowed management to work in close
contact with the operators, building a relationship based on reciprocal trust.
It represented an important opportunity for management to go to the work-
shop and check the problems and issues that were faced on a daily basis,
sending at the same time an important signal of support to the workforce.
The operators had the chance to communicate with the people responsible
for corporate decisions, show them the challenges they were facing and sug-
gest possible improvements. Kaizen brought great results in stock reduction,
lead times and occupation of areas (Figure 15.5).
In addition to Kaizen projects, the company introduced the Asaichi and
markedly improved the working environment by applying 2S. In order to
involve all the employees and share the results that the company obtains, the
management organizes a meeting twice a year, where the results are illus-
trated and discussed, and people have the opportunity to talk about critical
issues and opportunities.

EnerSys Group
EnerSys is an American international company with a turnover that exceeds
$2 billion. It is the world leader in energy storage solutions for industrial
use. It owns several brands, and it owns development and production sites
all over the world (Figure 15.6).
EnerSys is a historic supplier of Toyota; with the acquisition of CESAB by
Toyota Material Handling, it strengthened its relationship with us, becom-
ing one of the main suppliers for all the counterbalanced forklifts manufac-
tured in Bologna. The battery is a crucial part for the trucks; its characteris-
tics, coupled with the technical specifications indicated by the customer

Figure 15.5  Main results obtained with Kaizen activities

KAIZEN ACTIVITIES ON X540 FRAMES

Previous Current Final Reduction
Description Units
figure figure
∆% target (%)

Number of frames in WIP Days 8 3 –63% 1 –88%

Welding Lead Time Days 26 20 –23% 12 –54%

Occupied area m2 112 42 –63% 14 –88%
Handling average m 593 383 –35% 383 –35%
122 From CESAB to TMHMI

Figure 15.6  The Italian HQ of EnerSys

requirements, create a wide range of options. If we just take into considera-

tion the brand number alone and the technical specs of the batteries availa-
ble for the 48V model, we are looking at over 150 options from which the
customer can choose. This range, associated with the cost of the product and
the areas needed for storage, made us realize that Junjo would have brought
several benefits. TMHMI therefore began an implementation project with
EnerSys, aimed at developing a planning model that would allow a Junjo
approach to the delivery of batteries to the plant. The right Junjo would
contribute to a substantial reduction of the number of batteries in storage,
consequently reducing the area needed and the total value of the stock in the
warehouse.
Here is the experience of EnerSys Italia’s CEO regarding this important
transformation:

At the time [June 2014] we were one of Toyota’s main suppliers, with a 60 per
cent share of their battery orders, and everything was going well. Then, one
day, all of a sudden Toyota asks us to assess the possibility of delivering the
goods on a daily basis. The possibility quickly became a requirement, so we
began applying the new method. At the beginning everything looked extremely
complicated and we had to face some serious issues. First of all, the fact that the
goods were arriving from a plant located abroad, with two days’ shipping time,
would have required excellent coordination between production and logistics. In
addition to the distance problem, it was important for us to saturate the vehicles
and optimize the cost of transport.
 The supply chain 123

Deliveries were already carried out twice a week, to ensure that Toyota had the
parts needed for the following three days; now we had to study a new request
and planning system that could guarantee that the goods would be ready three
days before the required date, followed by their daily delivery.
After several internal meetings and conference calls with the people in charge of
our production site in Poland, we created a Gantt diagram that clearly defined
the structure of all internal projects, showing when to prepare the Kanban file,
how much production we could guarantee to the customer, when to send the
goods (Figure 15.7). We converted the Junjo/delivery plan into an Excel file
and implemented several control checks to make sure that our order book was
in line with TMHMI’s. On Mondays, a further detailed analysis is carried out
with the help of the delivery plan. However, the most important thing for us is
the daily reception of the assembly sequence planned by Toyota, which allows
us to see immediately any variations in quantity or dates and apply them to our
management.
As far as the labelling of the goods is concerned, we made our IT department
develop a customized solution that allows automatic uploading on our
managerial system of the packing list data from the EDI system.5 This reduced
to a minimum the risk of mistakes in its preparation. This project required a
considerable restructuring effort of our internal processes; however, it brought
us several benefits, among them a Just In Time management of the ordered
goods and of planning, WIP reduction and optimization of the vehicles’ loads.
These TPS-driven changes in the name of Lean manufacturing have brought
significant overall improvements.

Bonfiglioli Riduttori
Bonfiglioli is another historic company based in Bologna, operating in sev-
eral business sectors for an international market; among its divisions,
TMHMI works with the mobile department, which develops and manufac-
tures power transmission systems for self-propelled machines (Figure 15.8).
One of the main components that is produced for the Bologna plant is the
transmission unit. The parts are usually made with a gear reducer connected
to the forklift’s wheel and to the electric motor of the truck. This is a strate-
gic component, because it converts the power produced by the electric en-
gines into motion. Its characteristics, costs and performance are key points
from the very beginning of the development of a new product. For this rea-
son, the supplier is actively involved with planning and creating a product
 124
Figure 15.7  EnerSys planning system

WK1 WK2 WK3

Note MON TUE WED THUR FRI SAT SUN MON TUE WED THUR FRI SAT SUN MON TUE WED THUR FRI
X X X
Call off file 2 day/wk (TUE/FRI)
X X X
AND X X X
6 working days of
File Coverage despatch in Cesab X X
Batteries readiness
and wish date on 1 day before
SO loading
Truck departure 5 days/wk

Transit time 2 days

Delivery day
Cesab
It’s possibile to optimize truck loading by anticipating some batteries but no more than 1 day!
 The supply chain 125

Figure 15.8  Bonfiglioli HQ in Italy

Figure 15.9  Transmission unit

that must comply with the quality standards set by Toyota Material Handling
and with the performance of the new forklift.
Aside from their strategic relevance in terms of quality, cost and perfor-
mance, the transmission units are fundamental, because without them it is
not possible to begin the assembly of the forklift (Figure 15.9).
The fluctuations in TMHMI’s final customer demands, and the increase
in line capacity that the market required for the model equipped with the
front axle supplied by Bonfiglioli, caused the deterioration of the level of
service, worsening delivery times of this crucial element of the truck.
126 From CESAB to TMHMI

Figure 15.10  The steps of the development of the Bonfiglioli project

Stabilize

Evaluate 4º Step

Kaizen 3º Step

Visual 2º Step

1º Step

Following a number of meetings between the management of both compa-

nies, it was decided to create a common work group to spot the possible
causes and find appropriate countermeasures. The project was split into
four main points (Figure 15.10):

1 Visual (Mieruka): analysis of the situation ‘as is’, identifying and

visualizing with a checklist all the possible elements that affect delivery
times.
2 Kaizen: implementation of Kaizen activities to remove the main causes
identified during step 1.
3 Evaluate: assessment and verification of the effectiveness of the corrective
actions adopted.
4 Stabilize: monitoring over time the performance consistency.

We detected the most important causes for these problems, using a visual
phase (Figure 15.11) carried out with the aid of a checklist indicating the
main internal processes carried out by Bonfiglioli. Some of the issues were
caused by delays in sub-supplies and a few bottlenecks in their internal pro-
cesses. We shared and instructed the implementation of countermeasures
and some Kaizen activities, with the addition of balancing buffers to
­compensate the difference in lead times and a careful monitoring of the
compliance of delivery dates by the 13 main sub-suppliers involved in the
production of the front axle.
The countermeasures and the Kaizen had an immediate positive effect on
the service level offered by Bonfiglioli, which reached 100 per cent compli-
ance with deadlines in just a few months (Figure 15.12).
 The supply chain 127

Figure 15.11 The radar chart of the visual stage and the improvements achieved
during the visits

1
5
11 2
4

3
10 2 3

0
9 4

8 5

7 6

1st 2nd 3rd 4th

Figure 15.12  Delivery date deadlines by Bonfiglioli

2,9%
100%
9,8% 11,8% 12,1%
90% 15,2%
80% 23,3%

70% 33,3%
38,9%
60%
50% 54,8% 100,0% 97,1% 100,0% 100,0%
90,2% 88,2% 87,9%
40% 84,8%
76,7%
66,7%
30% 61,1%
20% 45,2%

10%
0%
6/16

7/16

8/16

9/16

10/16

11/16

12/16

1/17

2/17

3/17

4/17

5/17

Delay On Time Target Toyota

128 From CESAB to TMHMI

Figure 15.13  Würth Italia HQ in Egna (BZ)

Würth Italia
Gruppo Würth, with a turnover of over €13 billion and more than 73,000
employees, is the world leader in the distribution of fitting and assembly
products and systems (Figure 15.13).
Active in the Italian market since 1963, Würth Italia has three logistics
centres in Egna (BZ), where the HQ is located, Crespellano (BO) and Capena
(Rome), allowing them to be as close as possible to their customers, among
which is the Italian commercial branch of Toyota, Toyota Material Handling
Italia: Würth is the sole supplier for all the small metal components used by
the company workshops. The management of a considerable fleet of forklifts
requires a well-equipped workshop, with qualified technicians capable of
restoring all the trucks sent back from customers for repairs and reconfigu-
rations in the shortest possible time. It is crucial that all the parts, including
all the hardware, are readily available to reduce service times to a minimum.
The wide range of the fleet and of forklifts requires a disparate range of
hardware, which is difficult and time-consuming to manage, with shortages
that can interrupt the technicians’ operations, who must wait for the order
and delivery of the missing hardware. This problem was shared with the
supplier, and together we assessed a number of solutions that could satisfy
the needs of both companies:

●● TMHIT needed to eliminate the risk of running out of the hardware

needed to repair the forklifts sent for servicing;
●● the supplier needed to be aware of the quantity of parts stocked by
TMHIT to optimize planning and restocking.
 The supply chain 129

Figure 15.14  Hardware shelves managed by Würth

The solution that was studied and agreed with Würth was to set up a hard-
ware warehouse that included all the parts needed for servicing. The ware-
house is inside the TMHIT workshop, but the management and ownership
are Würth’s. Basically, we created a ‘consignment stock’ model:6 each time
an operator finishes a box of a single hardware item, the box itself becomes
a Kanban that Würth replaces within 48 hours. This supply method means
that we stock and pay only for what we actually use, streamlining and sim-
plifying the internal management of hardware. Würth has total control of its
warehouse and can tweak its supplies based on actual usage by TMHIT
(Figure 15.14).

Notes
1 TCO, total cost of ownership, is an approach developed by Gartner in 1987,
used to calculate all the costs in the lifecycle of a piece of IT equipment:
purchase, setup, management, repairs and disposal.
2 Tier 2: sub-suppliers who work for Tier 1 suppliers, or who manufacture parts
that are not complex nor fundamental for the final product.
3 Tier 1: suppliers responsible for designing and developing main components.
4 The milk run is a round route that simplifies the distribution or pickup of
goods. See Chapter 8.
130 From CESAB to TMHMI

5 EDI (electronic data interchange) is the data interchange between IT systems,

using a dedicated channel and with a format that does not require any human
intervention, save for a few elements. Its evolution allows it to be connected to
the system through a simple Internet browser.
6 With consignment stock, the supplier sends the goods to the customer
warehouse, but it remains the property of the supplier until the goods are picked
by the customer.
 131

16
Monozukuri
and Hitozukuri
(making people)

I t is quite common to see the application of TPS on the tools that made it
famous, like Just In Time, the Kaizens and all other systems and methods
that we described in the previous chapters. The truth is that TPS is a radical
cultural shift, and no tools can be really effective without the involvement of
people, who must be at the core of this approach.
TPS can actually express its full potential only if it involves the operators
who work in production. The creation of a ‘friendly’ environment, where
people can perform at their best, is a goal of many companies. In Toyota, the
best expression of belonging to a workplace is to be willing to contribute to
its growth.
Japanese culture, with its past of isolation and military rule, has facili-
tated the application of these methods; the opportunity to manage the entire
working cycles of individuals has allowed long-term projects and structured
career plans right from the beginning of their presence in the company. It is
also true that Toyota is a multinational conglomerate, part of the TICO
group, parent company of Material Handling: more than 50 per cent of the
workforce comes from different parts of the world, with the representation
of a number of disparate cultures. Moreover, nowadays even the traditional
loyalty of the Japanese employees is changing.
The acronym TPS can also be read as ‘thinking people system’, to high-
light that it regards a cultural shift, not just a working method, where people
play an active part in the development of the company.
This concept is summarized with the Japanese terms Monozukuri and
Hitozukuri (Figure 16.1):

●● Monozukuri: being able to manufacture quality products.

●● Hitozukuri: being able to manufacture quality products through people.
132 From CESAB to TMHMI

Figure 16.1  Monozukuri and Hitozukuri

Mono (Things)

Mono (People) Zukuri (Production)

Hito (People)

The ideograms used to write these terms have different meanings, which
represent both the product and the people.
A company that puts people at the core has a history and a culture
that make it more than a group of people sharing roles in a working re-
lationship. In Toyota, right from the beginning, managers and leaders
always tried to instil the values that can inspire how to run the company,
both in its strategic choices and in its daily tasks. Such concepts derive
by the principles w­ ritten by the founder, Sakichi Toyoda, who summa-
rized the values and philosophy that must inspire each worker. His five
precepts are at the foundation of all the group’s companies1 and are
among the main topics of management training. The training courses
held by the Hazu Academy in Japan include activities dedicated to the
founder and to the principles he wrote, from which derive all the group
values (Figure 16.2).

Figure 16.2  The five precepts written by the founder, Sakichi Toyoda
 Monozukuri and Hitozukuri (making people) 133

TICO has written for them a modern interpretation, a fundamental guide

for all employees.

1 Always be faithful to your duties, thereby contributing to the company

and to the overall good.
Focus on the same goal of contributing to the company, to society and to
the planet, working with passion and commitment.
2 Always be studious and creative, striving to stay ahead of the times.
Always search new, innovative ideas and excellent results, focus on
competences and knowledge of everyone and constantly create value
globally.
3 Always be practical and avoid frivolousness.
Be honest, with your feet on the ground and with a direct approach, to
understand the fundamental elements of everything.
4 Always strive to build a homelike atmosphere at work that is warm and
friendly.
Develop people and at the same time promote the creation of work
groups that can face future challenges.
5 Always have respect for spiritual matters, and remember to be grateful at
all times.
Always feel grateful, remembering that our activities are, directly or
indirectly, appreciated by people and society.

During our training we also visited the house where Sakichi Toyoda was
born. It took us more than an hour by bus to reach our destination. Once
there, we met an old man who, with the utmost kindness and welcoming
spirit, conducted us through the rooms where the original furniture has been
faithfully reproduced. He showed us with pride and respect, as if he was
talking about a deity, the founder’s inventions, kept in a small museum. This
visit left a deep mark on me; it was as if I became part of a family, and it was
important for me to know its story and identity, its heritage and ancestors.
Today’s Toyota, a cluster of companies that employs more than a million
people all over the world, was born from the effort and dreams of a man
whose curiosity and will to understand are condensed in one of his quotes:
‘Open the window. There is a beautiful world out there’ (Figure 16.3).
Each company of the group has adopted the precepts as reference values,
which have been translated and spread in the languages used by all the
­business areas. Among these values, we can find the five elements of the
Toyota Way (Figure 16.4):
134 From CESAB to TMHMI

Figure 16.3 ‘Open the window, there is a beautiful world out there’ (Sakichi
Toyoda)

Figure 16.4  The five values of the Toyota Way

The Toyota Way

Genchi
Genbutsu Kaizen Challenge Teamwork Respect

1 G
 enchi Genbutsu. Already discussed in detail in the previous chapters, it
is one of the most important precepts of Toyota’s philosophy. Promoting
contact with reality is the most effective way to have practical and
efficient managers. One of the episodes that impressed me the most
concerning Genchi Genbutsu is the strategy that Toyota adopted to enter
into the North American car market. The Japanese market, where Toyota
was leader at the time, is hugely different from the European and North
American counterparts. The lack of space, an efficient long-range
transport system and a different culture have led to the development of
small-engine, compact cars with specific characteristics, mainly used for
short trips. The chief engineer in charge of the development of a new
 Monozukuri and Hitozukuri (making people) 135

model destined for the American market, before drawing a single line on
the board, rented different cars made by various competitors, and
travelled for months through the roads of Canada and the USA. He soon
realized that the American customer had different needs and expectations.
A network of endless highways and bigger average drivers, alongside
other cultural aspects, were not compatible with the cars destined for the
internal Japanese market. This travelling experience, conducted to teach
him how to design a product that could fit into this new, unknown
market, allowed Toyota to offer cars that matched, and at times bettered,
the competitors on American soil.
2 Kaizen. One of the Japanese terms that became famous thanks to TPS
and the Toyota Way, it represents another fundamental value for the
group. Promoting Kaizen means promoting continuous improvement
made of small steps, involving all the employees of the company.
3 Challenge. A medium- to long-term vision is strategic for the growth of
the company. If we promote a culture that encourages this approach, we
can easily spot and exploit potential new opportunities. For instance, this
approach made us the first to believe in hybrid cars.
The Hoshin Kanri is one of the tools that the group uses to promote
and share medium- and long-term strategies. The term Hoshin means
‘direction, strategy’, while Kanri means ‘management, control’. At the
beginning of every fiscal year, TICO’s president introduces the medium-
and long-term Hoshin for the group, and each division must prepare its
own Hoshin accordingly. This process involves all the functions, including
the GLs, and since everyone works towards a target contributing to the
common goal, it has ensured a great level of efficiency.
4 Teamwork. The intelligence of a single person will never be superior to
the sum of the intelligence of several people. The team must be nurtured
as a value, so that the company can grow. In addition to the team, Toyota
must also take care of the individuals and of their personal growth.
5 Respect. In order to cooperate effectively in a multicultural company, it is
paramount to promote a climate of respect and collaboration. Japanese
culture also respects age and hierarchy. It is not a coincidence that the
bows made to greet superiors have a different inclination based on the
job role of the superior being greeted. Respect must be shown to different
people and cultures, to the individual, to society, to the environment and,
first of all, to the customer. The customer is the real protagonist in Toyota:
the customer is sacred. This concept derives from the term ‘customer’
itself, which the Japanese see as a deity (Figure 16.5):
136 From CESAB to TMHMI

|| O (お): honour prefix;

|| Kyaku (客): customer;
|| Sama (様): special suffix, only for those people whom to show
particular respect (illustrious, eminent).

Hiring excellent people, with a flawless school resumé and considerable pro-
fessional experience, is not enough to create a successful company. The
working environment and teamwork are crucial for their potential to be
fully expressed, consequently creating value for the business. This concept is
expressed by the Japanese term Shokuba Ryoku, which literally means ‘a
workplace that infuses energy and strength’ (Figure 16.6).
Shokuba Ryoku is the energy that sometimes you feel when you visit a
company, not only for the results that it has achieved, but also for the feeling
of strength and team cohesion that permeates the workplace.
According to Toyota, three elements are required to generate this energy:

●● Acquired skill: all the knowledge we acquired through education, speciali­

zation and experience.
●● Management skill: the managerial ability to listen, implement and
improve ideas, and the skills necessary to explain and instil the importance
of what is being done. Some of the sectors are safety and environment,
quality, maintenance and human resource development.
●● Thoughtful concern for others: creating a workplace that is beneficial for
the team.

Figure 16.5  Japanese for ‘customer’

o Kyaku Sama

Figure 16.6  Meaning of Shokuba Ryoku

SHOKUBA RYOKU
(Workplace) (Energy and strength)
 Monozukuri and Hitozukuri (making people) 137

Figure 16.7  The concept of Shokuba Ryoku

The blend of these elements forms an environment capable of transmitting en-

ergy and strength, where people can perform at their full potential (Figure 16.7).

Note
1 See the website of Toyota Industrial Corporation (www.toyota-industries.com
(archived at https://perma.cc/P65R-GPPX)) for more information.
138

17
Toyota and union
relations

A book about the industrial experience of TMHMI would not be com-

plete without mentioning its relations with labour unions. Bologna, the
area where the plant is located, has a tradition of strong, sometimes con-
frontational labour organizations; it was not the easiest of environments for
us, in particular when we decided to carry out a substantial transformation
of the factory, many of whose workers are members of the unions (mainly
CGIL-FIOM) and are influenced by their decisions.
Union relations with Toyota Industries in Japan had their worst period in
the 1970s, with strikes and demonstrations to complain about working con-
ditions in the company. The events spawned the creation of an open channel
with management that brought great changes, starting with a reference doc-
ument called ‘The relationship between company and employees, based on
mutual trust and responsibilities’. The labour unions in Japan are arguably
different from their Italian counterparts, which have procedures and dy-
namics that at times were difficult to translate and explain to our Eastern
colleagues.
In TMHMI, as everywhere in Europe, union relations can have difficult
times, which can be caused by external factors (such as the renewal of the
National Collective Labour Contract), or by internal conflicts due to misun-
derstandings or failure to find an agreement.
One of the main topics, which caused an early misunderstanding of how
TPS works, was the concept of ‘more work’. A lack of information about the
principles behind TPS erroneously transmitted the idea that TPS was created
to make people work more. I still remember how the number of daily units
produced was one of the main indicators that the unions used as a metric to
measure the level of exertion. We started to implement a heavy training
programme and we shared all the principles behind every project; the
 Toyota and union relations 139

­ orkforce slowly began to understand the concept of ‘working better’. A

w
clean workplace that complies with 5S, along with the organization brought
by standardization, has contributed to the improvement of how work is
organized, raising the output without causing a strain on people. For exam-
ple, we closely studied the ergonomics of the plant and introduced a system
for handling loads, such as zero gravity manipulators1 and hoists, thus re-
ducing manual handling as much as possible, even if the weight falls within
the limits established by safety regulations. We created a ‘listening board’,
where myself and HR were always available for discussions, and all the
company departments gave total availability to listen to any issues reported
by the unions, in particular regarding SPS2 and maintenance. These changes
eased the tensions during times of critical transformation for the company;
the workforce’s full involvement was crucial to ease our process.
The heavy use of visual information inside the plant helps to share infor-
mation regarding good performances and weak points. For example, all the
forklifts that do not pass the inspection tests are parked in a specific area
and recorded on a dedicated blackboard, indicating the main issue and the
department working on its correction. This indicator shows the WIPs3 inside
the plant; if the figure is increasing, it’s the first signal that something is caus-
ing input (the number of trucks that begin assembly) and output (the num-
ber of trucks delivered to the finished products warehouse) to be badly
­balanced. Defective trucks are loaded on dedicated buffers, waiting for re-
pairs. If the WIP exceeds the threshold level, repairs are carried out during
overtime, even on Saturday when necessary, with the involvement of the
operators in charge of repairs and final inspection tests. This simple KPI is
an ­effective tool to display the problems we are facing and justify the over-
time we need to apply: everyone can see how many trucks need servicing,
what are the causes and what we decided to do about it.
The involvement of the employees through the direct and clear visualiza-
tion of our projects in the related areas tends to avoid misunderstandings
and the risk that important modifications to the layout or to work methods
might be rejected by the operators. Nobody is willing to accept a change
easily if they did not have any involvement in the change itself.
I believe that the Yamazumi chart, displayed in its reference area show-
ing the data for the saturation level of each workstation compared with
takt time, can be an ideal starting point, a set of data that can be assessed
with the unions to spot any potential workstations with excessive work-
load. Moreover, showing the workload of all the production areas defeats
the human inclination to think that our fellow neighbour does less work
than we do.
 140
Figure 17.1  Number of people we sent to Japan for training

Associates trained in Japan

120

100

Number
Total
80
Number of people

60

40

20
30

11 15
7 8 6 9 9
2 5
0
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
 Toyota and union relations 141

I cannot declare that we did not have any conflictual moments during these
years of transformation. However, we all worked towards our goals, willing
to find a common point that could be satisfactory for everyone. Our nego-
tiations always prioritized the company and the people who worked in it,
ensuring their future and security. In addition to improving their salaries
with the introduction of production bonuses, we introduced other initiatives
that improved welfare, such as a supplementary health insurance for all the
employees and their families, and the opportunity to ask for paid leave for
specific personal or family reasons. We paid particular attention to training:
in addition to training carried out internally, we awarded trips to Japan for
our workforce to be trained directly by the parent company (Figure 17.1).
We increasingly adopted this method to share an important personal and
professional experience with our employees.
Just as it happened at Toyota in Japan, we need to build a relationship
based on trust and on respect of each other’s responsibilities and functions,
agreeing to work towards a common goal. Today, European manufacturing
is feeling the strain caused by the insurgence of emerging markets; the only
way to respond to this threat is to develop an excellent production and lo-
gistics system, keeping the company competitive and compensating higher
labour costs with increased efficiency. The best action to ensure one’s pro-
fessional future is to give the biggest possible contribution to the growth of
the company.

Notes
1 Gravity manipulators are devices for load-handling with an electronic system
that can eliminate the weight of the handled good.
2 SPS: safety and prevention service.
3 WIP: work in progress, the number of trucks inside the plant excluding those in
the finished products warehouse.
142

18
Kaizen and financial
results

A nother interpretation given to the acronym TPS is ‘Toyota Profit

System’. There are few business sectors that can decide the sale price
based on the desired margin. In most sectors, especially in mature areas, the
price is decided by the market: the margin for the company is strictly related
to the product cost (Figure 18.1).
It is therefore crucial for company survival to maintain a virtuous cycle
that constantly reduces the cost of the product. The reference market of
Toyota Material Handling is mature; the reference price cannot be arbitrar-
ily set by the company, because supply exceeds demand. Moreover, since the
product is considered as a commodity by most customers, many deals in-
volve short- or long-term rental agreements: price becomes even more sig-
nificant when it’s time to choose a brand. Constant reduction of the product
cost is therefore a crucial element for business growth and for sustaining
TMHE’s position in the market.
At the beginning of each fiscal year, which for Toyota coincides with the
Japanese year, from 1 April to 31 March, TICO’s president introduces his
Hoshin Kanri, from which those of each division will derive, a set of guide-
lines that trickles down to the group’s plants. Each production site must de-
velop its own Hoshin Kanri, a list of projects and activities that will support
the group’s target. Obviously, some of the company targets are financial,
therefore the same must be applied to everyone. Hoshin Kanri and financial
targets are intertwined.
TMHMI’s plant in Bologna, developer and manufacturer of counterbal-
anced forklifts for the European market, is deeply involved in the activities
aimed to reduce its product costs. In our case, a predominant portion of
such costs is represented by external supplies; as far as we are concerned, it
 Kaizen and financial results 143

Figure 18.1  Margin on products

Margin
Margin Margin
Margin

Sale price

Sale price
Sale price
Product cost

Product cost

Product cost

Product cost
Demand > Supply Demand < Supply

Figure 18.2  Trend of total manufacturing time, net of mix and models

Total cycle length

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
5%
3%
0%

–5%
–6%
–10%

–15%
–16%
–17% –18%
–20%
–21%
–25% –24%

–30%
–30%
–35%

is crucial for us to renegotiate prices with the supply chain if we wish to hit
our targets. In addition, we implement value analysis and value engineering
activities1 (Figure 18.2), jointly carried out with the supply chain, in order
to eliminate potential non-added-value passages and reduce the cost of pro-
duction. The operations department, receiver of a substantial share of the
plant’s investments, has the target to constantly reduce production costs;
one of its main targets is to shorten total assembly times and transforma-
tion costs, thus lowering the cost per hour and consequently the total man-
ufacturing cost.
The Kaizens, be them ‘top-down’ or ‘bottom-up’,2 are the tools we use to
develop the projects and initiatives allowing us to reach our desired targets.
144 From CESAB to TMHMI

Many activities have a tangible impact on production hours; we have

split them into production hours and total working hours. Production hours
indicates the time needed for the production of the forklift. It is usually re-
lated to a production cycle, with times allocated on the basis of an analysis
of the operations that need to be carried out. Total working hours measures
the total hours, direct and indirect, spent by all operations functions for the
production of the truck. All indirect hours are reported by the operators in
the time sheets, also indicating the cause and the activity carried out. This
system allows us to categorize each activity performed inside the plant.
There are three main categories:

●● Value-adding operations: all the activities needed to give added value to

the product. The assembly cycle and, in general, all direct hours worked
on the product are part of this category. Direct hours, as explained in
Chapter 12, are further classified in order to identify additional waste.
●● Reducible waste operations: activities that are required but do not
generate added value to the product. All the activities performed by
services supporting production, such as material handling, quality control
of incoming parts, office activities, etc, belong to this category.
●● Non-value-adding operations: activities that create waste and need to be
eliminated. Repairs and reworks are examples of activities belonging to
this category.

Management control, taking into consideration the wide range of forklifts

produced and the different production times based on models and options,
publishes a monthly report based on allocated production times of each
model and option, indicating the minimum number of hours that were
needed to produce the mix and volume of the previous month. This value
is the main reference point; when compared with the actual number of
hours we used, we can establish our efficiency level. A 100 per cent effi-
ciency level means that production used the exact number of forecasted
hours; a lower percentage hints at inefficiencies that were required to be
rectified, which translated into overtime or an increased number of direct
operators. Using the production hours, all the direct and indirect hours
used by the whole operations functions are verified, thus monitoring the
general performance of the production area. The Kaizens we developed
along the years have significantly reduced production times for each model,
lowering production costs. The constant reduction of manufacturing times
raised the production capacity of the lines, increasing the volumes without
having to make big investments.
 Kaizen and financial results 145

Figure 18.3  Volumes produced by the TMHMI plant

Trolleys shipped
18.000
16.300
16.000 15.315

14.000 12.900
12.000
10.720
10.000 9.691 9.333

8.000 7.012
6.000 5.641

4.000

2.000

0
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 E

In fact, the production lines have remained substantially unchanged since

2001, but the Kaizens we applied to them succeeded in supporting the
plant’s growth.
A low level of investment helped minimize fixed amortization costs for
new machines and equipment; such benefit, together with the increase in
volumes, has positively contributed to the company’s margins.
A further bonus deriving from a limited amount of investments is a lower
break-even point (BEP),3 which ensures that the company can post positive
results even with decreasing sales. When the Lehman Crisis of 2008 hit our
economy, the BEP was closely scrutinized by the parent company, to assess
the level of flexibility of the group’s plants.
The Kaizens that are suggested, aside from having an impact on either
quality, delivery, environment, safety or moral, are often assessed for the
impact they might have on production costs. Each Kaizen has a summary
sheet that describes the activity, often through visual aids, with a ‘before’
and an ‘after’. The final part of the document lists the savings that are
achieved by applying the Kaizen and the time it will take for it to start pay-
ing back.
A key role here is played by management control, which, acting above
board, must assess time and resources used, investments and the expected
cost reduction, to ensure that the results are in line with the desired tar-
gets. Management control must be involved from the very beginning, to
follow the development of the Kaizen and assess its overall impact. Often
 146
Figure 18.4  Example of economic results obtained with a Kaizen activity

KPI (Before Kaizen-After Kaizen)

ITEM/PROBLEM Measurement
QCDSE BEFORE AFTER SAVING
Unit
C WEL Wel/workstation 0 ALL 22 Yearly effect € 54.483,00
Searching/Picking/Walking
C time for materials, Jigs h/truck 5 2 3
and equipment
C Training time Weeks 21 4 17
Payback (Months) 4,49
C Efficiency/productivity hours/truck 40 30 10
Assembly area
C m2 186,55 78 82
reserved to ECOP
D Maximum number of trucks/week 2,5 7,8 5,3 Implemented day month year
trucks per week
04 05 2016
 Kaizen and financial results 147

the savings are indicated as ‘potential’, because the number of people in-
volved is less than one, therefore it is necessary to assess the opportunity
to combine the operator activities with others, up to saturation. There are
occasions when the Kaizen frees resources that can be used for indirect
activities, thus saving working hours. Other times, the real effect of the
Kaizen on the product cost is reflected in a change of takt time that can
further optimize the workstations, raising volume without increasing or
decreasing the workforce.
Management control is a crucial, active part of the processes that involve
TPS; it is fundamental that it integrates all the principles, adapting the con-
trol and organization systems to its philosophy. This transformation must be
rooted deeply into the core of the company’s activities. If management con-
trol, for example, develops analysis methods based on the minimum produc-
tion batch, it might assess the product cost based uniquely on the saturation
level of the plant; production volumes would be consequently set on capac-
ity, not customer orders. In this case, the plant efficiency would not bring
any benefits, because saturating the plant without a real demand from the
market means more units to keep in storage; increased storage means more
dedicated space, risk of obsolescence, potential damage to the stored units,
company capitals frozen in the warehouse and other hidden costs. This is
why overproduction is seen as the father of all Muda.

Notes
1 Value engineering is aimed at new products, while value analysis is concerned
with existing products. It involves a current product being analysed and
evaluated by a team, with the aim of reducing costs and/or improving the
product’s functions (www.advice-manufacturing.com (archived at https://perma.
cc/GVR4-62QL)).
2 ‘Top-down’ is a target process that starts from management and reaches all
underlying functions; ‘bottom-up’ starts from the operational functions of the
company and goes in the opposite direction.
3 In business economy, the break-even point is the point at which total costs and
total revenues are equal. There is no net loss or gain, and one has ‘broken even’.
All costs that must be paid are paid, and there is neither profit nor loss
(Wikipedia).
148

19
TPS and Industry 4.0

T o complete the first part of this book, I would like to share with the read-
ers some considerations regarding Industry 4.0.1 This important indus-
trial revolution, which is still difficult to outline in its entirety, sees digitaliza-
tion and technology as the dominating elements of the whole supply chain
process. Let’s begin by recalling the previous industrial revolutions, which
were characterized by:

●● the introduction of mechanics, using steam for power generation;

●● mass production, with the introduction of assembly lines (by Ford) and
electricity;
●● computers and automation;
●● cyber physical systems (CPS).

Industry 4.0 introduces the concept of CPS, physical systems connected with
IT structures that can interact and interconnect with each other. This con-
cept is also defined as the ‘Internet of Things’.
I have attended a number of lectures and conferences that depicted the
future as a totally automated plant, where people are helped by robots in
the more complex operations, and the connections among machines allow
the execution of the entire production process, from the customer order to
its delivery. I attended a conference that discussed this topic organized by a
leading company of the sector, where its representatives listed the benefits
that derived from the application of Industry 4.0; when they claimed that
they could improve forecast by 85 per cent I couldn’t help but smile, because
at the same time, although thousands of forecasts made by the most reputa-
ble companies in the world went the opposite way, Donald Trump was being
elected 45th president of the USA.
Industry 4.0 will definitely be a revolution, or better, an evolution of pro-
duction systems, bringing the benefits of digitalization into operations. The real
 TPS and Industry 4.0 149

application of augmented reality, in areas such as logistics, and the installation

of robots that can interact with people, will bring great changes and improve-
ments of the industrial processes. However, while Industry 4.0 depicts a future
made of ‘machines’, I believe that people will remain the core element of pro-
cess optimization; Toyota calls it ‘human touch’.
First of all, we need to focus on some mass phenomena: many businesses
thought that the installation of a state-of-the-art ERP (enterprise resource
planning) was indispensable to ensure business success, the same reasoning
that concluded that transferring production to East Asia or to low-cost
countries was the right alternative to investing for the improvement of their
processes, solving at the same time the issue of high labour costs. Toyota in
itself does not have a sophisticated ERP; the underlying philosophy is that
the system must adapt to the evolutions brought by people, not the other
way around, and therefore it must be adaptable and capable of supporting
the evolution and management of new processes. The relocation of manu-
facturing activities in other countries has been inevitable for some sectors to
ensure the survival of the business, but for many the choice was devastating.
Some of the industries realized too late that there were many hidden costs
that did not surface during the planning stage. This, along with other rea-
sons, is causing the re-shoring of many activities, or the relocation of manu-
facturing activities directly in their reference market.
TPS is a cultural shift that brings people to think differently, that helps
them find the Muda (waste). There will be waste even in a digitalized world;
actually, the risk is to digitalize waste too, if the processes are not optimized
to begin with.
Toyota is studying solutions that involve digitalization, always maintain-
ing a gradual approach, implementing only the technology that can bring
real benefits with reasonable amortization periods. For example, we began
in our Ferrara plant some pilot studies on predictive maintenance, using and
studying the analysis on vibrations and on the temperature sensors placed
next to the moving parts in the painting department. The introduction of
TPM (total productive maintenance) allowed an effective analysis of the real
causes of breakages, which pointed to the critical components under stress:
we have installed sensors on those components that will monitor the process
and help us prevent future breakages.
One of the sectors that will be most affected by Industry 4.0 will be
­logistics. IT support will allow for maximum flexibility and quick order
­processing, starting from the order confirmation by the customer, right to
shipping and delivery.
150 From CESAB to TMHMI

Figure 19.1  Augmented reality in the warehouse

A few years ago, I conducted a study to assess the potential advantages

that  augmented reality could bring in the preparation of kits and in the
­supermarket activities of the Bologna plant. Smart glasses supported the
operator with information superimposed over the lenses (Figure 19.1). An
indoor navigation system could optimize the route, showing the user the
fastest way to reach the aisles where the parts were stored, while a localiza-
tion system would correctly detect the code that needed to be picked. The
results highlighted a notable reduction of picking errors, and an increase in
efficiency brought by the optimization of the routes.
My opinion is that TPS can support any kind of tech revolution; its sim-
plicity and effectiveness can make visible what will eventually be hidden
behind complex analysis and processes of the digital world. To confirm this
belief in true efficiency regardless of the approach, Toyota still uses a paper
Kanban: the passage to a digital format has been deemed as a potential risk
that might cause confusion and mistakes by those using it.
This is the reason why the merge between the Toyota Production System
and Industry 4.0 can be one of the most successful moves in order to im-
prove the businesses of the future.
 TPS and Industry 4.0 151

Note
1 The term Industry 4.0 indicates a trend of industrial automation that integrates
new production technologies to improve working conditions, raise productivity
and product quality of the plants. Industry 4.0 takes its name from the
industrial plan of the German government published in 2011 and implemented
in 2013, which included investments in infrastructures, schools, energy, research
centres and businesses, to modernize the German production system and bring
manufacturing back to a leading global position.
152

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 153

Part Two
The operational
implementation
of the Toyota Way
in the commercial
and sales
processes: the
Toyota Material
Handling Italia
Convention
by Leonardo Salcerini
and Danilo Verga
154

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 155

20
Foreword

The Toyota Academy case

The start date of the dealers’ yearly meeting was approaching: the Hotel
Atlantic in Riccione hosted the event from 9 to 11 October 2009. Leonardo
Salcerini, managing director of Toyota Material Handling Italia, was in the
company of other senior collaborators of Toyota Academy1 in their offices,
alongside all the other employees, to plan, prepare and share what would be
the topics of the imminent meeting.
Leonardo Salcerini was quite worried. It was the first time that he gath-
ered together both indirect BT CESAB and Toyota sales networks, which
had been fierce rivals until then. Unsurprisingly, he was taking a lot of care
in the preparation of the convention, where he would have announced the
merger of the networks.
The presence of new collaborators, previously associated with Toyota
Academy, required the implementation of a new process of vision-sharing
and communication, something capable of illustrating the past, present and
future of the entire company, on top of setting up the guidelines for the or-
ganization of the workshop. In addition to the description of the guidelines
for Toyota Material Handling Italia commercial strategies, they would have
introduced and shared Toyota values, their founding elements, the specific
declination of the guidelines that outline the Toyota Way and its vision, added
with the education and consulting activities offered by Toyota Academy.

Preparing the contents for the convention:

the Toyota Academy – scope
Preparing the contents for the workshop required setting up a specific and
detailed ‘strategic guide dossier’, consisting of various documents, of which
these pages will provide a short outline.
156 The operational implementation

This dossier, called Toyota Academy – Scope, in addition to including the

specific documents regarding Toyota Academy’s vision, contained:

1 a synthesis of the main training and educational initiatives dedicated to

the dealer network of Toyota Material Handling Italia;
2 a synthesis of the main training and educational initiatives aimed at the
old and new customers of Toyota Material Handling Italia;
3 The outline of several consultancy projects on advanced business
management, values and implementation strategies of TPS offered by
Toyota Academy, dedicated to:
a. entrepreneurs and managers of small and medium-sized companies;
b. multinational companies and organizations;
c. supply and business networks, both local and international;
d. public organizations;
4 a rich series of documents, projects, studies and cases that described in
detail strategies, methods, tactics and development and transformation
processes of direct and indirect sales networks, multi-branding strategies,
successful best practices regarding the politics, and the commercial and
sales choices that brought growth and success to the business management
activities implemented by Toyota.

The series of documents that were prepared for the workshop focused on
the development processes that had occurred in the recent past, which out-
lined the development of commercial politics and strategies of Toyota
Material Handling Italia, and needed to be shared with all the participants
of Toyota Academy’s workshop.
An overview of the documents that were introduced are described in this
paragraph and in the following chapters, documents that include:

●● the intervention of the dealership ‘Giovanni Speranza’;

●● the evolution of the Italian market for forklifts;
●● the introduction and synthesis of the intervention of Leonardo Salcerini
at the convention, regarding: the actual situation of the Italian market for
forklifts; the issues related to the merger of the indirect sales networks;
the application of Toyota values and the creation of a new strategic and
organizational approach to market and sales;
●● the interpretation of the Toyota Way and its contextualization in a mid-
sized Italian business, and the new A.C.C.E.S.S. model of a collaborative
approach to marketing and sales.
 Foreword 157

Note
1 Toyota Academy – Training and Consulting Division is an initiative by Toyota
Material Handling Italia, in order to develop Toyota’s business and management
culture, Lean organization principles, the Toyota Way values, processes,
methods, innovations and declinations of TPS, with publishing projects and
educative events, initiatives and consulting activities. The aim of Toyota
Academy is to develop entrepreneurial and managerial competences in people
both within and outside the world of Toyota Material Handling.
158

21
The point of view
of the dealers

Speech by Giovanni Speranza1 at the Toyota

Material Handling Italia Convention
Good morning everyone, I am Giovanni Speranza, owner of the dealership
Superlift 4.0.
I spent a long time thinking and preparing this intervention: for myself
and for all the dealers, this meeting has a fundamental strategic importance.
What will be decided is going to deeply affect our business organizations
and future activities.
What is the main reason for us being here today? We must outline the
future of the sales networks BT CESAB and Toyota. We were competitors
until yesterday: we often fought against each other to entice, conquer and
keep our customers, which are our true and indispensable asset. Today it’s
time for us to rethink our strategies to approach the customer, to reset and
reorganize all our work.
This occasion sees all of us dealers together, for the first time, face to face.
Today’s meeting celebrates the merger of the sales networks BT CESAB and
Toyota, until yesterday open and fierce competitors. Today, our main goal is
to define new, clear and convincing strategies, as economically viable and as
harmonious as possible.
The most important goal is to agree on new behaviours, new organiza-
tions, new approaches to the customer and to the market opportunities in
our reference areas.
We will succeed if we can agree on new solutions of collaborative inter-
vention that are profitable for us all. We will have to avoid the bloody and
devastating price wars, the discounts and the special offers that erode our
 The point of view of the dealers 159

bottom lines. We need to act with rationality and method, programming a

joint course of action that can help us recover our lost market share.
We must, in a nutshell, ‘get our act together’, setting up an effective and
successful organization, so that we can attract new customers and aggres-
sively chase any market opportunities.
This is our problem today, and we must solve it together; we must get our
act together and recover, achieve the profitability we need and ensure that
our businesses can flourish harmoniously.
We also must find a strategy to avoid losing further sales opportunities
and to recover the market share we have lost!

What do we actually have to do?

We must make available forklifts to hire in the short, medium and long
term; we must change the way we work among us and with our territory
manager; we must avoid cannibalizing brands and business opportunities,
enhancing and differentiating our basic range, integrating it with the inno-
vative services offered by Toyota (and by the dealers) and with our specific
offerings.
Most important, and forgive me for repeating this, we must pay attention
not to start useless and devastating price wars among ourselves!
Our professionalism will play a crucial role to conduct a competitive but
fair contest, something that can create profits for each one of us and value
for Toyota Italia and our customers.
The current market evolution will drive us towards a new assessment and
evaluation of the intangible components of our offerings. We must also be
ready to manage the historical shift that is changing the traditional sale of
trucks into the short- and medium-term rental agreements, in order to be
able to offer further services, accessories and spare parts.

Needs and expectations of more technology, quality,

reliability and attention to safety
I would like to underline the importance that our reputation has on our of-
ferings, a reputation built by following the typical Japanese standards for
technology, quality, reliability, innovation and attention to safety, albeit with
different characteristics for each brand (BT CESAB and Toyota).
As far as our overall offer is concerned, we need to consider that the sales
networks have different needs pertaining to the quality of the range for sale.
160 The operational implementation

In general, we constitute two indirect sales networks belonging to two dif-

ferent companies that, until today, have developed, promoted and offered
two ranges of forklifts that are partially different, whose single and specific
productions and models require individual modifications and attention for
future developments.
With reference to quality, some CESAB products need a quality and tech-
nology upgrade that can make them more reliable and closer to the com-
petitors’ specifications; they also need to be more compliant with Japanese
quality standards. On the other side, the products offered by Toyota need to
have a more localized approach, more ‘made in Italy’, more flexible when it
comes to production.
CESAB offers us a wide and flexible range; each forklift is unique in its
genre. CESAB is a brand characterized by extreme flexibility, although there
are shortcomings when it comes to quality. Toyota, conversely, offers a range
of products that are of excellent quality; however, its offerings tend to be
more limited, less flexible, suffering from range limitations.
I wish that the Toyota brand could achieve more flexibility, a range with
a wider set of options, covering for and satisfying the needs of the final
users.
If we look at the issues caused by safety, Toyota’s production is very care-
ful on the matter: it has introduced an exclusive, patented system called
‘SAS’ (System of Active Stability to prevent forklift overturning). I hope that
such implementations and improvements can be extended to the CESAB
range. In other words, I hope that the CESAB offerings can soon offer the
same features adopted by Toyota to improve its operational safety levels.
Another critical aspect of the features offered by the forklifts is technology.
We all know that the technology of our machines goes across the board
and involves all the aspects that define the value of our products. The aspects
that are more coveted when we think about technological improvements are
known. They have to do with efficiency and productivity, elements such as
the speed of lifting and translation.
Nowadays ergonomics plays a significant role in technology, typically
found in several features that are much valued and sought after. Ergonomics
can acquire different value, ranging from air conditioning to improved ac-
cess and comfort in the cabin. However, the technology that has most appeal
today is related to performance. Customers look for flexible, versatile and
high-performance products, with technical specifications that are becoming
increasingly advanced and tailor-made. For this reason, I hope for the tech-
nological advancements that can improve performances constantly, there-
fore raising the desirability level of CESAB forklifts.
 The point of view of the dealers 161

Us dealers expect to see a technological progress of the new CESAB mod-

els, aimed at improving and ensuring more advanced and competitive per-
formance levels. We want CESAB trucks in line with Japanese standards,
reliable through quality. My only wish regarding Toyota’s offerings, again,
is to be able to sell a product with more flexibility and options.

Integrating BT CESAB and Toyota indirect sales

networks: dealership issues and the need for new
distribution and sales policies
If, on one hand, the proactive involvement of the company to ensure a prod-
uct upgrade is surely a positive factor, I also wish for management and sales
organizations to develop the correct strategies and the right, innovative sales
policies that can guarantee the operational continuum of our dealerships
after the unification of the networks. I am asking for clear answers, solu-
tions and continuity, instructions and guidelines; I wish for clear rules and
interventions that can mitigate the issues that will certainly occur with the
integration of the networks.
The anxiety in us dealers grows with the uncertain answers given to key
questions related to the continuation of our agent licences, and to the future
financial dynamics of our dealerships, which furthermore must now share
the current complex and uncertain market opportunities with other col-
leagues, people who were competitors just the day before. The questions
that need to be answered, for which we expect a positive and tangible ap-
proach starting from today, are the following:

●● What will happen to the licences of the dealerships?

●● Will all the licences be confirmed, or will there be cancellations?
●● Will the dealerships manage to coexist and achieve positive financial and
economic results although they serve the same areas?
●● How will the integration of the sales networks be conducted in terms of
company management?
●● Who will monitor and supervise the relationships among dealerships
located in the same area, and how will this be done?
●● How will the likely issues and conflicts that will occur between dealers, previ-
ously belonging to different networks and promoting separate brands, be
regulated and resolved?
162 The operational implementation

●● What will happen if another dealership offers the same product and
targets one of my established customers?
●● How will the promotional activities towards potential and existing
customers of each dealership be regulated?
●● How will Toyota behave towards key accounts located in an area covered
by a dealership?

We need to define immediately clear rules of behaviour among dealers, and

to identify politics, programmes and initiatives that not only must avoid
useless overlaps, but that are also aimed at recovering the sales that we have
lost because of the contraction of the economy due to the current crisis. A
discriminating factor in market development will certainly be the limited
financial resources of the dealers, which alongside the current credit crunch
will significantly affect our potential growth.
It will be important to split the market into appropriate segments, map-
ping our customers and applying a market approach that will help avoid
useless and costly competition between dealers, wasting energy on custom-
ers that we already acquired and repeatedly served.
We of course need, as I have already said, to update our offer; we need
new products, manufactured following the suggestions I have listed earlier;
we need units that can be hired and re-hired to several customers with dif-
ferent needs.
In order not to lose market opportunities and to reply to strong offers by
the competitors, we need forklifts that are easy to configure and that can be
adapted to the requirements of multiple customers. We also need a manufac-
turer that pays attention to those needs and can satisfy them in a timely
manner.
If we can soon rely on speed and flexibility of manufacturing, and on reli-
able products, we will be able to offer our customers a range that fits their
requirements, integrating it with a series of support and maintenance solu-
tions that we can supply in a competitive, qualified and timely way, with no
delays or further disruptions.
I am still worried about how we will manage to create value in our op-
erations, guaranteeing our profits and respecting each other; we must agree
and follow an ethical, clear and fair modus operandi, respectful of the work
that each one of us has done, of the steps that we took to safeguard our
organizations; we need to recover and grow without obstructing each other,
finding new ways to cooperate, strengthening our professionalism and safe-
guarding our customer base.
 The point of view of the dealers 163

Last but not least, we will have to trust the transformation of the factory,
the innovations, the improvements of our products and the new commercial
strategies that I hope will be guaranteed in the future by the management of
Toyota Material Handling Italia.
If we reach these goals, if we are able to perform all this, we will easily be
in a primary position to exploit market opportunities, strengthening our
relationship with customers and guaranteeing our growth, profitability and
a future full of successes and great achievements for everyone.
Thank you very much for your attention.

Note
1 This intervention was carried out by a well-known and reputable dealer. Some
of the content and references have been omitted. The name of the dealer and
dealership have been modified to safeguard confidential information.
164

22
The evolution of
the Italian market
for forklifts

Table 22.1  Sale of forklifts in the 2007–2009 period

2007 Year of maximum sales expansion in Italy: 46,076 units sold.

2008 Sharp decline in sales.

2009 At the beginning of 2009, the Italian forklift market showed issues
that required action by the management of Toyota Material
Handling Italia. The market almost halved if compared with two
years previous, recording sales of only 24,427 units.

Analysis of the variation in demand for

forklifts in Italy during the 2007–16 period
The analysis of the dynamics of the demand for forklifts by industry, large
retailers and logistics companies during the 2007–16 period shows how the
market started shrinking right from the beginning of the economic crisis,
which began in 2008 and affected all businesses. Right from the beginning of
the crisis, the volumes started to decrease, in particular sales of counterbal-
anced forklifts, which are mainly destined for the industrial sector;1 on the
other hand, large warehouse forklifts used by retail and logistics did not suf-
fer as much, showing a growth pattern during the period under consideration.
 The evolution of the Italian market 165

Performance of the Italian market

for counterbalanced forklifts
As previously noted, the performance of the forklifts market during the pe-
riod in question has its peak during 2007, recording total sales of 22,673
frontal forklifts. The decrease in demand begins in 20082 and sees a total
reduction of 16.6 per cent of the market for industrial forklifts compared
with the previous year. Such decrease worsens in 2009, recording –59.5 per
cent if compared with 2007’s sales.
In particular, the sub-group of electric forklifts, after its peak of 16,525
units sold in 2007, sees sales the following year stop at 13,450 units (–18.6
per cent) and crash in 2009, with only 6,540 trucks sold, posting a
tragic –60.4 per cent if compared with 2007.
The same trend is followed by frontal counterbalanced forklifts and by
the sub-segment of diesel and gas-powered trucks, which sold 6,148 units
during its peak year, sliding to 5,458 in 2008 (–11.2 per cent) and crashing
in 2009 with 2,643 sales, which means –57 per cent in only two years.

Performance of the Italian market for

forklifts destined for large-scale retailers
and logistics
The same trend can be seen in the evolution of the Italian market for ware-
house forklifts used by large retailers and logistics.
As we can see by the figures shown in Appendix A,3 this sector recorded
23,403 units sold in 2007, marking the first slide in 2008 with 20,985 sales
(–10.03 per cent). The following year saw another decrease, putting the total
contraction of the market at –34.09 per cent for the period.

Long-term analysis of the Italian market

for forklifts (2007–16)
In order to fully understand the complexity of the issues related to the
change in dynamics of the forklift market in Italy, it is useful to extend the
analysis over the long term and extend our observation from 2008 to 2016:4
166 The operational implementation

a The analysis of the evolution of demand in the Italian market for

counterbalanced forklifts in the 2007–16 period shows that:
{{ 2007 recorded the highest level of demand for industrial frontal
forklifts, recording 22,673 sales;
{{ 2009 marked a significant decrease, with –59.5 per cent in two years;5
{{ 2016 shows the results of a recovery of the total demand for
counterbalanced forklifts. During the first years of the crisis (2008,
2009) we recorded a total decrease of –20.07 per cent6 compared with
the peak volumes reached in 2007. We must take into consideration
that, even with the recovery we experienced in the long term, the
demand for frontal forklifts has never matched 2007 levels.
b The analysis of the evolution of the demand in the Italian market for
forklifts destined for large retailers and logistics during the 2007–16
economic crisis shows that:
{{ 2007 recorded a total of 23,403 trucks sold;
{{ 2009 saw the demand shrinking, with 15,244 sales, marking a
total –34.09 per cent decrease from 2007;7
{{ during the following periods, the trend shows a marked inversion:
sales in 2016 reach 28,296 units, a +85.62 per cent increase from
2009, +20.09 per cent if compared with 2007.8

The second-hand market and the

development of the offer through
servitization9
2009 saw a quick development of the market for second-hand forklifts,
which suddenly gained relevance due to the crisis and a shift in the needs of
operators, market makers and the logistics chains connected to them.
Until that time, the distribution organizations did not really assess the
viability of setting up a structure that could properly support this new mar-
ket, helping them to exploit the opportunities that arose.
Beginning from 2009, an increasing number of managers of distribution
companies started taking into consideration the development of a structured
organization for the second-hand market, increasingly fuelled by the trans-
formation of the original main business of selling new units: traditional sales
 The evolution of the Italian market 167

were now beginning to be integrated with a new set of extra services.

Companies adopted new solutions for short- and long-term rental agree-
ments, launching new products, services and business solutions: servitiza-
tion started being an important factor in the industry. Shifting from sales to
rentals activated a series of evolutionary passages in the supply chain, which
not only needed new abilities, skills and knowledge, but it also activated a
process of business regeneration after the first rental time cycle (five years):
now there was a new set of units to work on and re-launch in the circular
management of used and guaranteed forklifts.
The importance of the role played by the management of used trucks is
highlighted by the growth of the management of company fleets, which
­require substantial resources, both in investments and organization, and in-
creasingly need a direct intervention of the commercial organizations of fork-
lift retailers. The consequence of this new business approach is the creation of
units with direct sales organizations, with branches in the territory that can
help and support the dealerships, paying them commission for the assistance
given while signing new deals with the customers, shouldering the financial
side of rental projects and programmes (which the dealers are not able to
control directly due to their financial limitations), leaving the dealers to han-
dle emergency and technical support and maintenance of the rented units.

Notes
1 As shown by Figures A.3a/b, A.4a/b, A.5a/b and A.6a/b, included in Appendix
A, which show the sales in the Italian market during the 2007–16 period.
2 Figures taken from Appendix A, Figures A.3a and A.3b.
3 See Appendix A, Figures A.4a and A.4b.
4 See Appendix A, Figures A.5a/b and A.6a/b.
5 See Appendix A, Figures A.3a and A.3b.
6 See Appendix A, Figures A.5a and A.5b.
7 See Appendix A, Figures A.4a and A.4b.
8 See Appendix A, Figures A.6a and A6b.
9 Intended as the expansion of offer, value and business with the addition and
integration of services and solutions.
168

23
Speech by Leonardo
Salcerini

T oyota Material Handling Italia, represented by Dr Leonardo Salcerini,

faces the convention of 9–11 October 2009 with two sales networks to
merge, while experiencing a devastating economic crisis that has halved
sales in the space of only two years.
This is the introduction by Leonardo Salcerini:

Dear dealers,
We all are fully aware of the current situation; we are facing a serious and
complex time in our corporate history. However, if we could agree on a strategy
to implement together, I am positive we could mitigate our damages and lay the
foundations for growth; with the right risk management strategies, we can begin
our recovery and ensure our future profits.

The introduction by Leonardo Salcerini is rich and detailed, including topics

such as:

●● the strategies to implement for the merger of the sales networks;

●● the tactics and strategies for branding;
●● the multiple and complex policies regarding marketing, distribution and
sales, explaining the values of the Toyota Way which will drive the
operational and managerial procedures of the new commercial
organization, while being at the core of the future growth of the company.
 Speech by Leonardo Salcerini 169

Foreword
The situation of the Italian market for forklifts
at the eve of the convention
Before the convention was due to begin, the Italian market scenario for
Toyota had a couple of main issues:

a sales were in freefall, crashing from 46,076 units sold in 2007 to just
24,427 in 2009;
b dealing with the merger of two separate indirect sales networks, 85
dealerships that until yesterday were part of two distinct businesses
fiercely competing with each other.

The sales networks were in turmoil, concerned about the growing complex-
ity of the market and the upcoming reorganization, which added to the
other issues they had to face:

●● the credit crunch that froze financing;

●● the crash of market volumes;
●● the transformation of the market, which was migrating from straight
sales to rentals;
●● the increase in competition from other brands and among the same
dealers of the company’s networks, which sold slightly different products
in the same areas.

The market share crash: the need to grow

and recover such share
BT CESAB and Toyota together had a combined 22 per cent market share in
2007; in 2009, it had fallen to a meagre 17.5 per cent.
Both brands had an urgent need: to grow and recover the market share
they had lost!

Pressing issues and dilemmas related to the

unification of indirect networks
The management of Toyota Material Handling Italia (TMHIT) was facing
some serious issues, the solution of which was crucial to determine:
170 The operational implementation

1 the success, or failure, of the multi-brand policy of the company;

2 (in addition to) the success of the entire strategy of the company;
3 leadership and reputation of the business;
4 business performance and continuity: making the wrong choices for the
sales networks would have caused the defection of dealerships, which in
turn would have badly affected performance, revenue and the actual
margins on sales.

The failure to find the right choices would have led to a tipping point:
the situation would have affected future turnover, jeopardizing growth
and questioning the capabilities and the leadership skills of the manage-
ment itself.
Such a complex situation of the markets created a series of problems that
required a complex and system-wide intervention by the top management.
Here we list the main issues and the questions that still needed to be
answered.

Main doubts: problems to solve and 13 open matters

1 Which were the relevant and immediate choices to be made immediately
regarding the sales networks?
2 What needed to be done to avoid defections from the sales networks?
3 Was it still viable to maintain two separate sales networks with a multi-
brand policy, or was it better to merge the networks?
4 Which were the risks to avoid, the issues to prioritize and the courses to
take?
5 How should the networks be managed during this crisis?
6 How should the territory managers be organized, with their different
backgrounds and managerial culture?
7 How can the financial difficulties of the dealerships be overcome and
market share expanded at the same time?
8 How can the transition of politics, competences and capabilities of the
dealerships, which had to deal with a major shift from sales to rental, be
supported? Moreover, how can the second-hand market that would
derive from the expansion of rental agreements be organized?
9 How can growth be achieved while avoiding clashes between dealers
belonging to different sales networks?
 Speech by Leonardo Salcerini 171

10 How can aggressive, competitive multi-brand policies with a range of

slightly different products that are sold in the same areas be implemented?
11 How can we avoid dealerships cannibalizing each other to exploit
business opportunities?
12 What do we do to grow and recover the market share that was lost?
13 How can we protect and balance the brand policies and at the same time
ensure operational continuity to the dealers located in the same areas,
while they are being affected by both the credit crunch and the devastating
sales slump?

The contextual solution of all open issues required setting up a number of

strategies and an innovative, daring and winning cooperative approach, one
that could minimize risks and ensure performance, harmony and winning
synergies.
The new cooperative approach followed the steps and values of the
Toyota Way, in a process of contextualization and cultural, strategic and
operational declination, up to its executive implementation.

The Toyota Way vision of values

and systemic perspective
As is widely known, the Toyota Way is a substantial element of corporate
culture; it transpires in the modus operandi of those who follow it, which
eventually is seen as a natural declination and is consequently shared by
everyone, allowing the creation of initiatives and tools that continuously
improve all of the company activities.
In order to see it as an element that influences all activities, we can see the
Toyota Way as a cultural homogeneity made and driven by two main sub-
systems which are strictly intertwined:

a the value subsystem of employee development;

b the value subsystem of continuous improvement.

The value subsystem of employee development is itself composed of the core

values of respect and teamwork. Continuous development is again split into
its constituted value dimensions:

1 accepting challenges and undertaking challenging initiatives;

2 delving into the origins of the issue, stimulating people to understand the
situation properly and solve it at its root (Genchi Genbutsu);
172 The operational implementation

3 stimulating the flow of value generated by constantly improving processes

and actions (Kaizen).

Differential interpretation and the addictive

qualification process of the Toyota Way’s
value systems
The application of the Toyota Way is performed through a common effort,
finalized to reinterpret Toyota’s corporate culture in each organization. The
Toyota Way cannot work only by applying its principles without taking into
consideration the company subject to such transformation: it must be
moulded and harmonized according to the kind of organization concerned.
Here follows a summary of Salcerini’s speech at the convention.
The new unification project of the two sales networks (BT CESAB and
Toyota) has some unique features, strictly related to the principles of Lean
organization and of the values of the Toyota Way, which are summarized in
the four cornerstones outlined below. Such cornerstones define and direct
business choices, market strategies, the guidelines of the new TMHIT dis-
tribution policy and the path to follow by the new, integrated, indirect sales
network:

1 The Toyota Way and Lean organization: differential, additional and

multi-focal implementation.
2 One channel, three brands.
3 GAP: provincial harmonized management.
4 Real transformation of the commercial policy and of business and sales
approaches.

The Toyota Way and Lean organization:

differential, additional and ‘multi-focal’
implementation
The principles of Lean organization and the values of the Toyota Way were
first decoded by us, adapting them for our Italian business culture, and con-
textualizing them on the basis of the dynamics and complexities of the
Italian forklift market, which includes logistics activities by industrial and
 Speech by Leonardo Salcerini 173

commercial customers. Finally, we integrated and implemented Toyota’s

philosophy and culture values, which are the founding blocks of the Toyota
Way and define the development of employees (generated by the centrality
given to respect and teamwork) and the idea of continuous development
(itself composed of the values that support the Genchi Genbutsu: going to
the core of things).
These activities are what created the new added value in TMHIT when it
applied the guidelines derived from the Toyota Way.

The added value of TMHIT management in processing

the principles of Lean organization and the Toyota Way
Through the processing of knowledge, of the Toyota Way values and of the
principles of Lean organization, TMHIT management proposes new ideas
that, in turn, contribute to add to the corporate vision, identifying new
landscapes that can create alternative strategies. In other words, a new and
unique interpretation of such values and principles will support the crea-
tion of a new corporate mission, without corrupting the previous constitu-
tive factors.1
The added value and the differential implementation formulated by
TMHIT and Toyota Academy reside in the processes that we called D.> C.>
A.> I.+, an acrostic that summarizes and introduces the nuclei of activities
that generate operational differentiations and qualifications, giving the
Toyota Way values new strategic and operative declinations, capable of en-
riching the traditional values and driving transformation and development
of TMHIT’s commercial strategies.
The initiatives that were implemented in the context of the new D.> C.>
A.> I.+ processes concern:

●● Decodifying the values of the Toyota Way, adapting them to the Italian
corporate culture;
●● Contextualizing the same values of the Toyota Way for the economic
landscape in Italy;
●● applying the Applicative dimension of the Toyota Way values to the
forklift business in Italy;
●● Integrating and Implementing the values of the Toyota Way into the new
strategies and into distribution and commercial policies, to develop the
processes needed to unify TMHIT sales networks and optimize the capability
of exploiting business opportunities at different territorial levels (national,
regional, local).
174 The operational implementation

In particular, the ‘multi-focused’ operative declination deals with:

●● people’s orientation and centrality;

●● long-term vision and actions;
●● the challenge in the long term: qualified collaboration among all the
dealers, in particular within the new sales organization set up by TMHIT,
specifically in its new integrated sales network, in a close partnership
with all the other elements of TMHIT, dealerships and customers;
●● focusing on the respect that defines relationships among local dealers,
between TMHIT and dealers and customer networks, which implies new
principles in the management of the sales network that will be
characterized by transparency, fairness, correctness and equal treatment
of all dealerships. Such values shall prevail in all relationships among
local dealers.

Furthermore, new definitions are given to:

●● new tactical and strategic approaches for the commercial processes of

TMHIT, with the development of a new Lean distribution organization:
a new network which is ‘peaceful’ and harmonious, born from integration
and a new collaboration process, an organization of the dealers’ networks
that is structured and regulated, capable of satisfying the ever changing
and diverse requests by the customers, reflecting a demand which is
increasingly specific and diversified;
●● a new, far-sighted vision for the commercial organization, capable of
offering an overview in the long term and an efficient local structure;
●● a specific focus on the evolution of cooperative distribution strategies
among dealerships, competitors and promoters of brands that were
competing against each other up to yesterday, so that they can successfully
implement a constructive integration;
●● a new distribution organization where the single dealerships switch from
a single brand to the promotion of two separate manufacturers (BT
CESAB and Toyota).

One channel, three brands

All over Europe, Toyota Material Handling is following a commercial strat-
egy focused on ‘one channel, two brands’.
 Speech by Leonardo Salcerini 175

Italy has a more complex situation that can bring further opportunities,
because TMHIT has to manage three brands with one single channel.
We could have chosen three different, alternative strategies to merge the
sales networks:

a select the best dealerships for each area, discarding the others;
b apply a joint effort with production and marketing and apply a marked
differentiation between the products manufactured by Toyota and by
CESAB;
c follow more closely the principles of Lean production and the Toyota
Way, making decisions based on people’s leadership, on the trust
guaranteed and generated by top management towards operators and
employees and by those who work in the sales networks.

TMHIT decided to embrace the third option, on the basis of the mutual
respect and on the relationships that management built with dealers and
distributors for over 10 years, through a continuous and supportive pres-
ence. Such favourable conditions reassured TMHIT and gave it the strength
to adopt a more revolutionary approach.
The option chosen was by far the most complicated to implement: it re-
lied on a successful cooperation between Toyota and the dealerships, with
the knowledge that most of the evolution and performance of all the com-
panies of the group would be deeply affected by how well this cooperation
worked. This choice immediately discarded the possibility of terminating
the relationship between the company and some of the dealers. Maintaining
the current setup and merging the sales networks can help to exploit the
business opportunities that could arise at a local level; maintaining the dif-
ferent elements of the dealers’ distribution organizations would help to
carry out the transformation without interruptions, supporting the growth
in performance by focusing even further on the customers.
The integration of the sales networks shall be able to reduce any duplica-
tions and waste; it will allow us to improve our coverage of the areas, offer-
ing to dealers further options for their customers, widening the range of
brands, products, services and solutions to sell on the market. Moreover,
this choice will make the dealerships more attractive, giving them the chance
to sell both brands and equipping them with new tools to recover sales and
achieve further growth. The optimization of the commercial network and
the effective multiplication of the products on offer will give the dealers
more chances to satisfy the customers’ needs, which in turn will help get
more sales and business.
176 The operational implementation

The new distribution organization, while it will mainly work along-

side the customers (the same small to medium clients), will constitute a
new entity integrating all the identities, cultures and organizations previ-
ously operating.
This strategy will allow us to:

●● improve our presence in the territory, boosting the chances to recognize

and exploit business opportunities;
●● maximize the efficiency of the organization while managing the business
opportunities that arise on a local level;
●● optimize the split management of the brands, in an effort to qualify and
differentiate their offers;
●● develop and increase sales and productivity of the dealerships in the
short, medium and long term.

GAP: Gestione Armonica Provinciale

(provincial harmonized management)
The development of a new local distribution policy, implying the merger of
the dealership networks, needs the respect of the activities undertaken by
each dealer; first of all, it requires mapping and analysing the sales for each
area covered by the dealerships.
In order to focus on the analysis concerning the development of distribu-
tion, we need to assess the customers served by each location, setting up an
organic management of the customers of each dealership at a provincial
level. This would avoid dealers chasing the same customers, which would in
turn cause debilitating internal wars to acquire them. The management
focus will ultimately shift from the product (and from the traditional busi-
ness trade marketing) to an efficient management of the logistics chain and
of the final users.
The offer will be more specialized, moving towards differentiation, with
integrated solutions improved by several new financial and logistics services.

The GAP and the new role of the regional manager

The existence of two separate sales networks implied the presence of two
different area managers in each area where BT CESAB and Toyota were
operating simultaneously.
 Speech by Leonardo Salcerini 177

With the integration of the networks, the new territorial management

requires the addition of a single regional manager, who will have the follow-
ing roles:

●● equilibrator, coordinator, sole ‘governor’ and impartial arbiter, in charge

of reducing interferences and overlapping between dealerships;
●● supervisor and arbitrator for any disputes that might arise between
dealerships;
●● sole responsibility for the relationships with the key accounts managed
directly from the commercial management in Bologna, Italy;
●● inspector in charge of ensuring the respect of priorities and activities of
each dealership located in the reference area.

It is agreed that this structure needs a responsible person who is in charge of

supervising the respect of the rules of commercial behaviour, ensuring har-
mony among dealers and all the organizations involved in the logistics chain
business processes operating in the reference area.

Tangible transformation of commercial

policies and business and sales approaches
This new approach by Toyota Material Handling Italia contemplates a tan-
gible transformation of the commercial policy and of the business and sales
models, which will develop on two main levels:

a the first will be the introduction of a new, comprehensive range of

offerings;
b the second will involve a new form of flexibility and several options to
choose in terms of commercial policy and ‘go to customer’ configurations.

The first level of transformation of TMHIT commercial

policy: the introduction of a new, comprehensive range
of offerings
The first step in the transformation of our commercial policy implies the
introduction of a new package of products and services that will ensure
more business opportunities and bring a tangible increase in revenue for the
dealerships.
178 The operational implementation

In addition to the traditional sale of a package of products and services

that will define the business and increase revenue and profits for dealerships,
TMHIT is suggesting:

●● a new fleet of forklifts for short-term rental (new offer/service);

●● new forms and formulas to finance the offerings;
●● the development and expansion of the product portfolio and the creation
of the ‘one-stop shopping’ formula: thanks to central purchasing agreements
with a cluster of suppliers of accessories (shelves, batteries, tyres, etc),
TMHIT will be the ‘central purchasing unit’ that will contribute to the
transformation of the company’s commercial offer, which will not be
limited to the forklifts but will include the whole range of products and
solutions on offer: their extension will offer more business opportunities to
the dealers and give an appropriate answer to the new, increasing needs of
the customers.

In brief, TMHIT will complement the traditional activity of forklift sales

with new lines of products and services, offering to the dealers’ network:

●● new consulting and specialized training services;

●● financial support and services;
●● a short-term forklift rental service for the dealers and their customers,
capable of meeting the needs of the dealerships and limiting their financial
exposure without missing business opportunities;
●● a set of agreements with other suppliers of accessories and ancillary
products, to integrate and differentiate the traditional offer, making it
more attractive for the customers thanks to more flexible and competitive
prices, with the goal to create further benefits and value for the dealerships.

The second level of transformation of TMHIT

commercial policy
A further, significant level of transformation of the commercial policy will
be the involvement of TMHIT in sales, in support of the dealers; the aim is
to exploit all possible business opportunities, sustaining the increase in turn-
over, maintaining existing customers and attracting new ones. The commer-
cial transformation implies more freedom of choice for the dealerships,
which will have the opportunity to play a role of sales agencies in certain
situations, reducing their financial needs and reducing their commercial ac-
tion to a report regarding the business opportunity.
 Speech by Leonardo Salcerini 179

In the event that the business opportunity is extremely relevant for the
dealership, but it entails a financial burden that might be too heavy to sup-
port, there are two possible options:

●● act as a traditional dealership: buy the trucks from TMHIT and subsequently
sell or rent them to the customer;
●● act as agent: report the opportunity to TMHIT.

The second option can simplify and reduce the level of risk for the dealer,
while avoiding the loss of a number of opportunities both in the short and
long term.
Acting as a sales agency will allow the dealership to limit risk and finan-
cial exposure, while still seizing the business opportunity and acquiring the
customer.
This option will furthermore allow the dealer to gain additional profits
from the commissions due as agency; moreover, it will have the opportunity
to supply the maintenance and technical support services that will eventu-
ally be required by the customer.
In such cases, invoicing will be done directly by TMHIT. The dealership
will be rewarded a commission on the transactions (sale or rental).

Conclusions
In brief, what happens with the shift of TMHIT’s commercial policy?

a More business opportunities for dealerships: a new offer with a wider

range of products, more solutions and additional services.
b A simpler, unified management: one single person to refer to, someone
who is in charge of supervising, deciding and coordinating all the
commercial activities in the territory.
c A new organization, which preserves the precious customer base of the
dealers and sets new, clear rules for everyone to follow.
d A single pricing policy for everyone, with the same discounts and
conditions.

The transformation of TMHIT’s commercial policy will therefore guarantee

an unprecedented level of flexibility to its dealers. They will have the possi-
bility to choose whether to be involved in the business as sellers or interme-
diaries, according to the size of the opportunity and their needs.
180 The operational implementation

The role of intermediary will require new key account functions and ac-
tivities, which the regional manager will follow to coordinate and manage
all the sale and rental agreements stipulated directly with the end user.
These new transformation and development steps of TMHIT’s commer-
cial policy will be reinforced with new rules of behaviour and organization
that will coordinate all the local initiatives and activities of the dealers.
It will be crucial for everyone to respect new guidelines that will involve
new techniques to approach the customer and the market in general. It will
also be necessary to respect the activities undertaken by each dealership,
alongside the development of new commercial and consulting skills.
Respect and cooperation will ensure the harmonious and continuous
growth of profits.2

Notes
1 As stated by Aristotle in his De generazione et corruptione (On Generation and
Corruption), there is corruption only if the offence is transformed so much, and
so deeply, that its nature is no longer known. Something is corrupted when there
is a transformation of its constitutive factors and permanent elements. The term
‘corruption’ here is intended as a radical transformation.
2 In the meantime the weather had changed: the morning’s thick clouds had
disappeared, and the sun was warming up the air. The hotel’s maître d’ had
appeared in the congress room, announcing the lunch break. The worried faces
and the concerned looks that were aplenty at the beginning of the event had
given way to smiles and signs of relief. The dealers had shown their faith in the
passionate and inspiring words they just heard from Leonardo Salcerini. A long,
spontaneous applause broke the silence and filled the room. ‘Work will resume
after lunch at 2pm’, were the last words that echoed in the pleasant room of
Riccione’s Hotel Atlantic. The first part of TMHIT’s convention was over.
 181

24
The new ACCESS
model

The interpretation of the Toyota Way and its

contextualization in a medium-sized Italian
company
We felt that it was important to apply the precepts of the Toyota Way to
manage the creation of this new, untested, fragile distribution system.
It was fundamental for us to face this complex issue with the most ap-
propriate approach; there was a significant risk of conflicts between dealer-
ships that were, after all, fierce competitors right until the convention took
place. We needed a strategy that was detailed and carefully planned. We had
to set up a unique tactical and strategic reference model which could unite
and unify.
The teams of Toyota Material Handling Italia & Academy, after a long
analysis and research that involved a large number of dealerships, alongside
detailed studies on a sample of final customers belonging to the industrial
and large retail sectors and an in-depth study of the competitors, had
­prepared a new approach model and a new people and distribution manage-
ment system.

The new ACCESS model for a ‘coop-active’ approach

This new model, called ‘ACCESS’, is based on the values of the Toyota Way
and on the contextualization and application of its principles, in order to:

1 inform and characterize the new distribution strategies;

2 govern the complexity of the system;
3 simplify problems;
4 guide dealers, employees and business choices;
182 The operational implementation

5 drive innovation;
6 reduce the risks deriving from business choices;
7 answer questions and solve doubts;
8 ensure the leaderships of company and dealers;
9 guarantee the expected performance and the effectiveness of the solutions
adopted.

Figure 24.1 The Toyota Way: differential declination of Toyota values, their

contextualization and the new ‘coop-active’ approach to marketing
and sales: the ACCESS model

THE A.C.C.E.S.S. MODEL

SYSTEM OF
PERSONAL SYSTEM OF
DEVELOPMENT CONTINUOUS
IMPROVEMENT
1. Harmonization

6. Development 1. SOURCE ORIENTED 2. Growth

5. WORK TEAM
TOYOTA 2. CONTINUOUS
WAY IMPROVEMENT

4. RESPECT

3. ACCEPTING
5. Sustainability CHALLENGES
3. Sharing
and positioning

4. Balance
 The new ACCESS model 183

This model, designed to simplify the process while generating value for all
the stakeholders, could be summarized with the ACCESS acrostic. Its main
concept is to define and develop organizational policies and processes
­inspired by Toyota values, namely respect, teamwork, finding the source of
the problem, accepting the new challenges of the market, and improving
­continuously.
The application of the new model of collaborative approach to the mar-
ket could be crucial to set up the new strategies and to define the strategy
and organization that would be the reference behind the managerial choices
taken by Toyota Material Handling Italia.
184

THIS PAGE IS INTENTIONALLY LEFT BLANK

 185

Part Three
Appendices
186

THIS PAGE IS INTENTIONALLY LEFT BLANK

 187

APPENDIX A
Data

Figure A.1 shows the map with the location of BT CESAB (dark dots) and
Toyota (light dots) dealerships in Italy on 8 October 2009.

Figure A.1 Geographic distribution of BT CESAB and Toyota sales networks in

Italy on 8 October 2009

Dealerships Network Toyota

Dealerships Network BT CESAB

188 Appendices

Figure A.2 shows the map with the location of BT CESAB and Toyota deal-
erships in Lombardy on 8 October 2009.

Figure A.2 Geographic distribution of BT CESAB and Toyota dealerships in

Lombardy on 8 October 2009

Dealerships Network Toyota

Dealerships Network BT CESAB

 Appendix A 189

Figures A.3a and A.3b show the figures of the entire Italian forklift market
(2007–09).

Figure A.3a  The market for forklifts in Italy (2007–09)

TOTAL ITALIAN MARKET FOR FRONTAL FORKLIFTS 2007–2008–2009 (*)

N. DESCRIPTION 2007 2008 VAR% 2009 VAR%

2007/2008 2007/2009

01 FRONTAL 16.525 13.450 –18,60% 6.540 –60,4%

ELECTRIC
TRUCKS

02 DIESEL AND 6.148 5.458 –11,2% 2.643 –57%

GAS POWERED
FRONTAL
TRUCKS

03 TOTAL 22.673 18.908 –16,6% 9.183 –59,5%

FRONTAL
TRUCKS

* Values expressed in units

NOTES  World Industrial Trucks Statistics data

Figure A.3b  Total market for forklifts in Italy (2007–09)

Electric forklifts
25.000 Gas/diesel forklifts

20.000 Total
2007/2008
15.000 –18,6%
Unità

–11,2%
10.000 –16,6%

5.000 2007/2008
–60,4%
0 –57%
2007 2008 2009 –59,5%
190 Appendices

The forklifts taken into consideration in Figures A.4a and A.4b are mainly
destined for distributors, large retailers, logistics services and warehouses.

Figure A.4a  The market for warehouse forklifts in Italy (2007–09)

APPENDIX N. 04
TOTAL ITALIAN MARKET FOR WAREHOUSE FORKLIFTS 2007–2008–2009 (*)

N. DESCRIPTION 2007 2008 VAR% 2009 VAR%

2007/2008 2007/2009

01 WAREHOUSE, 23.403 20.985 –10,03% 15.244 –34,09%

LARGE RETAIL
AND
WAREHOUSE
TRUCKS

* Values expressed in units

NOTES  World Industrial Trucks Statistics data

Figure A.4b  The Italian market for warehouse forklifts (2007–09)

Warehouse forklifts,
large-scale organized
25.000 distribution

20.000
2007/2008
15.000 –10,03%

10.000
2007/2009
5.000
–34,09%
0
2007 2008 2009
 Appendix A 191

Figures A.5a and A.5b show the total market for forklifts in Italy in the long
term, 2007–16.

Figure A.5a  Total market for forklifts in Italy (2007–16)

APPENDIX N. 05
THE ITALIAN TOTAL MARKET OF FRONT TROLLEYS -
EXTENDED ANALYSIS IN THE LONG PERIOD 2007–2008–2009 (*)

N. DESCRIPTION 2007 2009 2016 VAR% VAR%

2007/2016 2009/2016

01 ELECTRIC 16.525 6.540 13.479 –18,44% + 106,10%

FRONTAL
TRUCKS

02 DIESEL AND 6.148 2.643 3.509 –42,93% + 32,77%

GAS POWERED
FRONTAL
TRUCKS

03 TOTAL 22.673 9.183 16.988 –20,07% + 84,99%

FRONTAL
TRUCKS

* Values expressed in units.

NOTES  World Industrial Trucks Statistics data

Figure A.5b  Total market for forklifts in Italy (2007–16)

25.000 Electric forklifts

Diesel/gas forklifts
20.000
Total
15.000 2007/2016
– 18,44%
10.000 – 42,93%
– 20,07%
5.000 2007/2016
+ 106,10%
0 + 32,77%
2007 2008 2016 + 84,99%
192 Appendices

Figures A.6a and A.6b show the total market for warehouse forklifts in Italy
in the long term 2007–16.

Figure A.6a  Total market for warehouse forklifts in Italy (2007–16)

APPENDIX N. 06
THE ITALIAN TOTAL MARKET OF FRONT TROLLEYS -
EXTENDED ANALYSIS IN THE LONG PERIOD 2007–2009-2016 (*)

N. DESCRIPTION 2007 2009 2016 VAR% VAR%

2007/2016 2009/2016

01 WAREHOUSE, 23.403 15.244 28.296 +20,9% +85,62%

LARGE RETAIL
AND LOGISTICS
TRUCKS

* Values expressed in units

NOTES  World Industrial Trucks Statistics data

Figure A.6b  Total market for warehouse forklifts in Italy (2007–16)

30.000 Warehouse forklifts,

large-scale organized
25.000 distribution

20.000
2007/2016
15.000 +20,9%

10.000
2007/2009
5.000
+85,62%
0
2007 2009 2016
 Appendix A 193

Figures A.7a and A.7b show the analysis of market share for the period
2009–15.

Figure A.7a  Market share analysis for the 2009–15 period

APPENDIX N. 07
MARKET SHARE ANALYSIS FOR THE 2009–2015 PERIOD

YEAR 2009 2010 2011 2012 2013 2014 2015

MARKET 17,5% 17,3% 18,6% 20,95% 22,59% 23,19% 23,44%

SHARE

WAREHOUSE, 17,4% 17,3% 18,9% 21,26% 23,76% 23,20% 23,22%

LARGE RETAIL
AND LOGISTICS
TRUCKS

ELECTRIC 20,7% 19,6% 21,4% 23,46% 23,81% 26,17% 31,96%

FRONTAL
TRUCKS

DIESEL AND 10,4% 10,8% 8,7% 9,82% 9,23% 12,15% 11,88%

GAS POWERED
FRONTAL
TRUCKS

(*) WITS DATA

NOTES  World Industrial Trucks Statistics data

Figure A.7b  Market share analysis for the 2009–15 period

35% Market share

Warehouse forklifts,
30%
large-scale organized
25% distribution
20% Electric forklifts
15% Diesel/gas forklifts
10%
5%
0%
2009 2010 2011 2012 2013 2014 2015
194

APPENDIX B
Reader’s guide to the universe of Toyota
Material Handling in Italy
by Leonardo Salcerini and Danilo Verga

The main goal of this appendix is to offer more information to the readers,
so they can better understand the methods and best practices adopted by
Toyota Material Handling in Italy that allowed the company to achieve suc-
cessful results. This appendix can also be implemented as a reference tool
for the application of some of the methods and corporate transformation
practices we introduced, which can be customized and adopted by a wide
range of companies operating in several sectors.
This appendix also aims to:

●● suggest a number of considerations that can help detect key elements that
are capable of giving useful perspectives for corporate growth and
development;
●● offer a key to interpret the complex structure that eventually brought
continuous success and excellent results, with the aid of diagnostic and
operative tools that can support the implementation of change and
transformation processes;
●● contribute to detect the main issues to and create new perspectives for the
growth and development of strategic guidelines;
●● facilitate the business assessment to identify new paths, options and
corporate transformation opportunities.
 Appendix B 195

Business transformation and innovation

process: continuous success and the concept
of the new cooperative management 4.0
The synthesis of the performance and the results obtained with the c­ omplex
and structured continuous innovation transformative process (shortened to
TIC, Trasformazione Innovativa Continua, or Continuous Innovative
Transformation) highlights the continuous success obtained with the inter-
vention of Italy’s Toyota Material Handling managers in the 2000–16 period.
This success is testified by the length of time taken into consideration
(over 15 years), and by the consistent, ongoing results obtained by the man-
agers of Toyota MH.
This success, which we can define as ‘continuous’ for its entity and dura-
tion, was achieved with the appropriate adoption of Toyota’s managerial
platform (built with and inspired by the principles of Lean leadership, by
TPS management processes and by the Toyota Way values), facing the chal-
lenges that arose and making specific, game-changing decisions.
The continuous corporate success, derived by the excellent managerial re-
sults that were obtained in production and sales, was achieved thanks to the
application by management of a winning managerial formula, whose charac-
teristics are defined in the so-called ‘new cooperative management 4.0’.1

A summary of the main indicators

of continuous success of Toyota Material
Handling in Italy
The following is a synthetic introduction and summary of some of the main
areas and continuous success indicators:

1 occupation, and the continuous success of personnel employment and

training;
2 continuous production and organization of operational and corporate
processes;
3 continuous optimization of operation processes: warehouse turnover;
4 continuous success achieved with the definition of suppliers’ relations
and their inclusion in the corporate transformation success;
196 Appendices

5 continuous success of the commercial innovation and transformation

processes: the development of aggregate revenue;
6 continuous success of the commercial innovation and transformation
processes: the acquisition of market share;
7 development and extension of the continuous success in the corporate
transformation to the indirect sales networks, to external participants and
to the logistics operator chains (definition, support, reorganization, fideli­
zation, innovation and extension of business and partnership potentials
and opportunities);
8 development and extension of the continuous and transformative success
outside the company, towards the business community, with the initiatives
of Toyota Academy;
9 development and extension of the continuous and transformative success
outside the company: the transformation of the network of relationships
in the territory and with other stakeholders (schools, universities, etc).

1. Occupation and the continuous success

of personnel employment and training
The employment rate is by far the most important factor for national and
local economies: its increase, in particular among young people, is one of the
indicators of social success of a company, because it represents the contribu-
tion of the business to the creation of wealth in the territory. The employ-
ment rate was one of the challenges that Toyota Material Handling
successfully faced in its transformation: the corporate changes that were
applied limited the use of welfare support and actually created new jobs, in
an environment of constant professional improvement. The crisis that began
in 2008 and affected all economic sectors was faced and overcome by the
company: the number of people employed by Toyota Material Handling in
Italy has risen from 344 in 2000 to 1,353 in 2016, with a 393 per cent
­increase.
The Italian branch of Toyota Material Handling is Toyota’s European
sales company with the highest percentage of women in the workforce.
Furthermore, in spite of the merger and optimization of the sales net-
works, there has been no reduction of dealerships, even with the conse-
quences of a terrible crisis and of the subsequent selection process that
reduced the number of enterprises in the territory.
 Appendix B 197

2. Continuous production and organization

of operational and corporate processes
As we discussed in the first part of this book, one of the most notable revolu-
tions created by this business transformation has deeply affected the corpo-
rate culture and the system of competences, transforming operative processes
and local production into a highly efficient environment with strongly in-
novative standards and international excellence.
Such transformation was possible with the application of Toyota’s produc-
tion methods, widely known and appreciated worldwide, integrating them
with the principles and the values that identify the entire value-­generating
platform that is typical of Toyota (Lean leadership, Toyota Production System
and the Toyota Way), with the added value of the unique managerial contri-
bution by the Italian management of Toyota Material Handling.
This shift in corporate culture has deeply modified the system of continu-
ous learning for the people inside the company, and partly for those outside.
A medium-sized local manufacturing enterprise went through a radical
transformation that made it become a modern organization and an interna-
tional market leader, capable of learning and improving continuously (a
qualified advanced deep learning organization), a global trend-setter for
management techniques and a reference point for all manufacturing and
commercial businesses, be them local or global.
The same transformation of corporate culture had a massive impact on
the system of knowledge, competence and skills of the entire workforce of
the Italian organizations of Toyota Material Handling, on the company’s
operational conduct and on people’s behaviour. It has also changed the or-
ganization of work, and affected internal and external communications
with the introduction of new systems for continuous interaction, exchange
and feedback, both within the plant’s organization and with the other de-
partments and sectors. Such activity has spread outside the company, ex-
tending the new approach and methods to the customers and suppliers’
organizations.
In particular, a specific effort was made to select and qualify our relation-
ship with the suppliers, with the aim of producing efficiency and continuous
innovation.
Our interaction with the organizations and the employees of the suppli-
ers made it possible to transfer the ‘pillars’ of the new corporate culture of
Toyota Material Handling to the employees of the supplier’s organization.
198 Appendices

Such cultural contaminations and transfers of knowledge, aimed at defin-

ing relations and organizations in order to achieve optimization and con-
tinuous efficiency of the supplier’s offer, have eventually affected the
organization of the supplier itself, creating a flow of new value and setting
up a win–win movement towards continuous improvements.
Finally, the introduction and development of a new attitude, motivated
by change, by continuous improvement, by sharing and collaborating, have
brought high productivity levels, a new innovative, collaborative environ-
ment, alongside the value-creating awareness derived by a strong sense of
belonging to the company.

3. C
 ontinuous optimization of operation processes:
warehouse turnover
The transformation of the company and the search for continuous efficiency,
innovation and optimization have brought excellent results, generating
value and widespread efficiency in all the company sectors. A good example
is given by the success of business transformation processes, summarized by
the evolution of the warehouse turnover index, which increased from 2 in
2000 to 26 times in 2016. Such positive evolution has reduced the total
amount of working capital, aside from other benefits and cost savings in
terms of reduction of the required area for storage, creating new levels of
efficiency and productivity.

4. C
 ontinuous success achieved with the definition
of suppliers’ relations and their inclusion in the
corporate transformation success
As previously noted, our company transformation has produced excellent
results with our relationships with suppliers: a process of continuous opti-
mization, capable of creating value and benefits for both participants of the
supply chain, namely the supplier organization and the customer/partner
company.
The activity of business transformation has expanded, involving continu-
ous qualification and optimization of suppliers, always searching for in-
creasingly higher efficiency levels. Toyota Material Handling Manufacturing
Italy has entered into a constructive dialogue and interaction with its suppli-
ers, applying a systemic strategy of selection, relationship and operational
 Appendix B 199

study of the suppliers themselves. The encouraging results we obtained with

this transformation guided the selection of suppliers, which were reduced to
180 from an initial number of 350. Such a selection process has increased
the contribution of the suppliers to business activities: their involvement has
grown from €60 million to €300 million in 2016.

5. C
 ontinuous success of the commercial innovation
and transformation processes: the development of
aggregate revenue
Our steps towards continuous innovation, the evolution and qualification of
managerial processes, a constant, constructive communication between the
commercial organization, the factory and direct customers, have created an
environment based on trust by dealers and customers regarding the manage-
ment of the commercial organization; this positive aspect drove a continu-
ous virtuous transformation that supported an ongoing increase in turnover.
During the long period subject to our analysis (2000–16), a number of
innovations, revolutions and changes have transformed the business of fork-
lifts in Italy and Europe:

●● stronger competition by other manufacturers;

●● significant evolutions and transformations of the business models, which
shifted the focus from the sale to the rental of forklifts;
●● a drastic structural change of the forklifts market, partly caused by the
2008 demand crisis;
●● a massive rise in customization requests by the customers, who increasingly
look for specific solutions;
●● an indispensable transformation of sales processes and consequently of
the skills and commercial abilities of the individuals involved in the
commercial area;
●● positive returns from the distribution choices implemented by TMHIT
management, complying with the new strategic commercial approach:
the company turnover has constantly improved, rewarding the decisions
that were taken to face the challenges posed by the market.

In mere quantitative terms, Toyota Material Handling Italia has posted an

aggregate turnover that grew from €200 million in 2000 to €730 million in
2016, with an average increase of 365 per cent.
200 Appendices

6. C
 ontinuous success of the commercial innovation
and transformation processes: the acquisition of
market share
In spite of the revolutions that we observed in the period taken into consid-
eration, the contextual transformation of the production and commercial
parts of the company have created important virtuous synergies, which in
turn have given excellent results in terms of market share recovery.
Such growth in the market is another proof of the company’s continuous
success. As we already mentioned in the second part of this book,2 TMHIT
market share has grown considerably, despite the game-changing transfor-
mation of the sector and of the reference markets: the 17.5 per cent share
recorded in 2009 has become 23.44 per cent in 2015. A regular, steady im-
provement ensured the success in all the sectors that form the Italian market
for forklifts:

●● the market for forklifts destined for logistics organizations and large
retailers grew from 17.4 per cent in 2009 to 23.22 per cent in 2015;
●● the market for electric frontal forklifts saw an increase from 20.7 per cent
to 31.96 per cent over the same period;
●● the market share for diesel and gas-powered frontal forklifts also recorded
a larger market share, shifting from 10.4 per cent to 11.88 per cent.

7. D
 evelopment and extension of corporate
transformation
The real technology, force and energy behind our corporate transformation
was represented by people, by their determination, motivations, incentives
and professional qualifications.
People, their essence, their operational professionalism: that is what con-
stitutes the propulsive core, the real force behind the platform of Toyota
principles and values. Their knowledge and competence have been, and will
continue to be, at the heart of each management initiative, focusing on peo-
ple as the real engine that ensures continuity and innovation during our re-
lationship with the market and the final user.
The growth and consistency of the market success achieved by the Italian
Toyota Material Handling organizations were determined by the contami-
nating extension of the methods applied, by the operational interpretation
 Appendix B 201

and transformation of Toyota’s principles into winning choices and virtuous

practices, implemented by management towards external organizations and
employees.
In particular, the relationship based on trust between company and deal-
erships represents the ‘beating heart’ of the development of business oppor-
tunities into sales and additional market presence.
An increase in knowledge by the network of dealers, supported by the
company’s management, integrated the joint development of traditional and
innovative services and problem-solving techniques, creating added value
and tailor-made support for customers. Such activities were fundamental for
retaining existing customers and maintaining the company’s share in the
reference market.
Finally, the continuous innovation of the company offerings, developed
and enhanced with the addition of new educational services, was a further
driver for differentiation which contributed to consolidate interest and
reach new customers. The innovation of consultancy services on offer rein-
forced the expansion of the processes aimed at customer retention, helping
to turn opportunities into tangible business relationships; it also strengthens
the commercial partnerships that in turn bring new cooperation advantages.

8. D
 evelopment and extension of the continuous
and transformative success outside the company,
towards the business community, with the
initiatives of Toyota Academy
The offerings differentiation and the hunt for new business opportunities
have been supported by a dedicated organization, set up and developed to
perform the following activities:

●● to support the dealerships during the early stages of this reorganization,

developing and fine-tuning the skills and knowledge of those employed in
sales, with innovative training programmes, consultancy and support
services;
●● to extend services, consultancy and training activities to other businesses
and organizations belonging to various business communities.

Toyota Academy was created with the goal of designing, developing, promot-
ing and offering new managerial and technical consultancy services for pro-
duction, operations, strategies, organization and logistics. We assembled a
202 Appendices

team of expert managers and professionals with a solid and highly specialized
technical knowledge background acquired inside Toyota Material Handling,
where they held positions of responsibility in several business departments
(such as research and development, operations management, factory organi-
zation): experts in technologies and factory production processes, experts in
logistics and advanced logistics, experts in business and commercial organi-
zation, and visual and business management consultants.
Over the years, Toyota Academy has developed several consultancy pro-
jects, requested by companies belonging to different business communities
in Italy, projects that consistently achieved remarkable success.
Toyota Academy has been organizing technical and specialized work-
shops for years, held directly inside the plant, while every year it holds an
exclusive ‘Development Tour for High Technical Experience’, which includes
direct access to the Toyota factories in Japan.
Toyota Academy takes part in a number of university courses and mas-
ter’s degrees with senior lecturers, and it offers in-house training projects to
Italian entrepreneurs, managers, professionals, businesses and organiza-
tions, aiming to spread the successful best practices applied by Toyota.

9. D
 evelopment and extension of the continuous and
transformative success outside the company: the
transformation of the network of relationships in
the territory and with other stakeholders (schools,
universities, etc)
Witnessing the level of continuous success that the company achieved, the
management and employees have been awarded several prizes by the
European organizations of Toyota, in recognition of the amazing results that
were posted.
The awards were given to Toyota Material Handling in Italy for reaching
significant goals and targets, including:

●● performance and excellent commercial results achieved (market share

increase, sales targets hit);
●● development of the organization and the levels of excellence reached by
the plant;
●● unquestionable success transforming the company and reaching the
quality and excellence targets through continuous improvement of the
processes;
 Appendix B 203

●● results obtained in quality improvement;

●● recognition by the parent company for our excellence in Kaizen activities.

Toyota Material Handling has promoted its presence in Italy with a regular
interaction and collaboration with schools and universities in the area as
well as in other regions:
●● following requests from faculties, institutes and business schools, a large
number of master’s degree theses, studies, projects and elaborations for
master’s and post-university specialization courses;
●● organizing guided visits to the factory dedicated to students;
●● participating in public educational events of institutional and social
relevance;
●● sharing the managerial and organizational experience and the success of
the company with organizations and private and public institutions
during events organized by the stakeholders and at social public events
and meetings;
●● explaining to university students the concepts and principles of Lean
leadership and TPS, illustrating the advantages of implementing the
differential operational approach of the Toyota Way principles;
●● organizing several guided visits to the factory and training workshops for
businesses, manager teams, entrepreneurs, consultants, and for all those
who wish to understand the managerial systems and the successful
practices applied by Toyota Material Handling in Italy.

Continuous success and the value-

generating wave of the new cooperative
management 4.0
The continuous and systemic success achieved by the Italian Toyota Material
Handling organizations was the result of the choices made and of the chal-
lenges won by management, which has first and foremost focused on the
differential application of the values of the Toyota Way.
The Italian management of Toyota Material Handling saw people at the
strategic core of the new approach, giving total priority to teamwork, devel-
oping a structured and appropriate cooperative activity. Although those
structured cooperative behaviours do not always mean excellent results,
204 Appendices

management still succeeded in creating a satisfactory level of cooperation,

which supported continuous success and resulted in a value-generating
wave of the new cooperative management 4.0.
In particular, the Italian management of Toyota Material Handling:

a learned and acquired the principles of Lean leadership, Lean organization

and total quality;
b absorbed and metabolized the values of the Toyota Way;
c studied the methods applied by the Japanese management to TPS, the
universally known Toyota Production System. The management also
introduced technical and operational modifications, continuously
improving the successful practices implemented by Toyota’s Japanese
plants, which were visited several times by the Italian management of
Toyota Material Handling Italia.

During said visits, the management had the opportunity to focus and ex-
change opinions on the issues that arose in Italy, refining the techniques and
the methods to apply them and to define the strategic approaches that had
great success in Toyota’s factories and divisions.
Moreover:

●● Toyota’s Italian management has decided to face the challenge posed by

the creation of a common teamwork attitude, introducing and developing
an indispensable shift in the company’s approach, leaving the previous
corporate culture that, just as with most of the Italian companies, gave
priority to individual rather than collective performance.
●● During its effort to achieve the required cultural change, it underlined the
need for continuous exchange and sharing of knowledge, capabilities,
experiences and results achieved, be them in the factory or in other sectors
of the company. It succeeded by taking advantage of several visits made
by the Japanese ‘super experts’, learning and communicating in a construc­
tive manner. Those visits were the occasion to focus and exchange ideas
about new techniques and methods of implementation of TPS and the
Toyota Way, and also to discuss the operational methods for production
and management.
●● It reconfigured and adapted the principles of TPS and the Toyota Way
values, fitting them into specific scenarios typical of Italian organizations
and factories, with limitations, cultural hurdles and notable differences in
organization, production and sales.
 Appendix B 205

●● It did all it could to eliminate excuses and pretexts, to overcome reluctance

and resistance, to create optimism and belief in the adoption and
implementation of the new techniques, methods and innovative processes.

The same cultural shift achieved the following results:

●● It defeated the pockets of resistance that opposed the change, the rooted
and outdated philosophy of ‘autonomous and isolated factory worker’
and the reluctance to share, training employees and convincing them of the
importance of cooperation, teamwork, sharing mistakes and improvements.
●● It succeeded in the difficult job of transforming the culture of the company,
overcoming the prejudices deriving from a cultural resistance to teamwork
and from the habit of a consolidated process: ‘We have worked like this
for years; why should we change?’ was one of the most reported
objections, which ascertained the discomfort and the initial widespread
resistance to change.

Slowly, the persistence of management and of its nearest collaborators

started to get results and spread the idea of sharing, of teamwork energy, of
the will to improve continuously.
It did not happen overnight, but the cooperative approach eventually
managed to overcome the old, divisive and patchy culture: the importance
of teamwork, of the techniques for sharing, of the collaboration required to
achieve success and of the new good practice of continuous improvement.
The removal of errors and waste and the constant focus towards im-
provement are now the elements that determine the success of the company
and drive the new corporate culture. Changing behaviour and moving to-
wards continuous improvement and sharing have become part of the new
company’s DNA.
In short, the new culture has defeated the old behaviours and customs,
creating a new climate of continuous sharing and communication and a new
victorious, structured constructive collaboration: cooperative management
has succeeded.
The management of Toyota, by involving and motivating the workforce,
has also managed to:

●● change its management and command style, developing a new multipolar,

inclusive and constructive leadership model. Such leadership prevailed
also with the valorization and sharing of small and fast operative results
(‘quick win’) that the work teams achieved;
206 Appendices

●● establish an environment where optimism and trust are common, facilitating

the contribution of every single ­person even after the implementation and
testing of everyday change. The development and affirmation of the new
group spirit has promoted the adoption of new interaction methods, of
common knowledge and experiences, of constructive communication,
which has sped up the process of corporate transformation;
●● speed up the introduction of visual management in every production
environment (factory and production departments), boosting sharing,
discussion and implementation of continuous improvement processes.

Other achievements reached by the Italian management of Toyota include:

●● the creation of its own unique business vision and commercial action,
refining its capability to innovate, create differential value and remain
one step ahead of competitors in terms of meeting the customers’ needs;
●● the gradual extension of the new strategic visions and methods, success­
fully explaining to everyone both inside and outside the company that
gradual improvements and innovation leaps can be compatible, sometimes
crucially so.

In short, the extension of the new cooperative and transformative manage­

ment 4.0 set up and developed by management, a new culture of change and
continuous improvement, contributed to strengthen results and perfor-
mance, in particular where it was possible to create symmetries, strategic
and operative synergies with suppliers and customers.
The adoption of the new cooperative and transformative management 4.0
allows a new virtuous transformation circle to be developed, an ecosystem
that creates a set of value innovative chains, integrating downstream and
upstream organizations to create new networks, chains, constellations and
ecosystems capable of amplifying the results obtained.
Management also succeeded to create a constant communication flow, an
endless transmission and exchange of knowledge and experience that now
come naturally. With teamwork and cooperative management, it managed
to develop new collaborative methods that were critical to overcome issues
and solve problems.
We managed to reduce complexity through work and cooperation, over-
coming the communication barriers among people, solving stalled situations
and operative gridlocks both inside and outside the factory.
The development of commercialization and go to market processes
brought the right level of interaction, relying on the additional value of the
 Appendix B 207

knowledge and experience of other people: company workers, external enti-

ties (dealerships, other chain operators) and operators working for other
companies, such as with the consultancy activities developed by Toyota
Academy.
These changes, transformations and value created have not only contrib-
uted to the company’s continuous success, but also to the constitution of a
qualified value-generating wave of the new cooperative management 4.0
and to the redefinition of the DNA of the Italian organizations of Toyota
Material Handling, of their cooperative core and of their search for constant
innovation.

The continuous success of the Italian Toyota

Material Handling organizations driven by
the company’s commercial sector
The continuous success of the Italian organizations of Toyota Material
Handling is due to the requests for innovation of products and services by
the commercial area of the plant, alongside the need to align and conform
the range and the production methods to the evolution of customers’ needs.
The main driver for transformation is represented by customer needs.
The commercial organization alongside marketing and sales are the main
figures of the entire business transformation. In other words, customer needs
and requests from TMHIT’s commercial area are the foundations for the
transformation of the factory.
The changes of customer requirements and market evolutions were the
real drive behind strategic and managerial business transformations for
years, and they will be even more influential in the future; company manag-
ers can see this happening daily, with increasing relevance. Logistics and
warehouse needs are less standardized and more specific, harder to manage
properly.
Every company is specializing in logistics, each one following its own
logic. An example is given by Ikea, where the demand for products has
specifications that are increasingly customized, far from standardization.
The demand for standard forklifts has been replaced by requests that are
specific, dedicated, custom-made. If the producer does not adjust quickly to
personalized, non-standard products, with different specifications and final
use, the risk is to have an offer that does not meet market demands, eventu-
ally losing customers that the company succeeded to retain for years.
208 Appendices

The introduction and global adoption of automated warehouses helps

the creation of non-standard and customized unique solutions. Each com-
pany works to be aligned with the market; in time, standard products will
lose their appeal and market share. The decrease of orders for standard
forklifts is also caused by the change in business logistics solutions. Years
ago, demand was based on standard Euro pallett measuring. Nowadays,
things have drastically changed and require continuous adjustments, mak-
ing production more difficult. Not responding to the needs of customers
means that the company is far from meeting the new requirements for logis-
tics efficiency. This obviously causes the deterioration of the relationship
with the customer, which will take its business to a company that can adapt
its products accordingly.
As we mentioned previously, continuous success was the result of the
challenges that the management of Toyota Material Handling in Italy faced
and won during the period assessed in this book (2000–16), when the re-
sults have been solid, consistent and repeated.
Such success proves the reliability of the choices made and of the meth-
ods adopted by the Italian management of Toyota Material Handling.
The constant success in terms of results over the long term by the Italian
organizations of Toyota Material Handling show how this case history is an
example of managerial excellence, which needs to be studied and focused
upon, not only for the quality and quantity of the results, but also for their
steady volumes even during a period of deep crisis.
The results obtained by Toyota Material Handling in Italy can be as-
cribed to the system of challenges taken and won by management, to the
right application and reinterpretation of the platform, principles and values
of Toyota.

Notes
1 Intended as a systemic set of different innovation steps of various processes,
initiatives and transformation activities, of complex change processes planned
and enacted by the management of the Italian organizations of Toyota Material
Handling.
2 See Figures A.7a and A.7b of Appendix A.
 209

GLOSSARY

4M – 4M represents the diagram developed by Kaoru Ishikawa, Tokyo

University professor, one of the main promoters of total quality. 4M
summarizes the four main elements that affect the industrial process:
|| Man. It includes all activities linked to human resources, such as
manual production activities, planning, etc.
|| Machine. It takes into consideration all activities related to machines.
It also includes equipment, work tools, energy, etc.
|| Method. It includes all activities linked to work methods, such as
instructions, procedures and flows.
|| Materials. It includes all activities related to the materials that are part
of the process, such as raw materials and semi-finished products.
4M is split into sub-categories until the main causes for an issue are de-
tected. This method is also called fishbone or cause–effect diagram. Some
versions include factors such as measuring or equipment in relation to
the processes under analysis.

5S – The initials of five Japanese words that summarize the five steps required
for their implementation. They are at the basis of any development
activity undertaken following TPS. Aside from being used to keep a clean
and organized environment, they have a deeper meaning because they
drive the search for anomalies (the concept of Jidoka). Following the
principle ‘a place for everything and everything in its place’, the working
area becomes an environment where each item has its specific place. This
also applies to the balancing buffers between processes: since they are
dimensioned to hold a clear, predefined number of parts, any anomaly is
immediately spotted.
|| Seiri (Separate). Separate what is needed from what is not needed.
|| Seiton (Set in order). Arrange needed items in designated locations and
visually mark where they belong.
|| Seiso (Shine). Clean any kind of dirt in one’s working area.
|| Seiketsu (Standardize). Standardize by defining a repetitive and continuous
system.
|| Shitsuke (Sustain). Spread, share, support, respect and maintain.
210 Glossary

In Japan it is called ‘4S + Discipline’, since the last S, the most complex of
them all, implies a deep involvement of human resources and manage-
ment to maintain the level reached with the previous 4S.
Andon – The Andon is a lamp made with a bamboo, wood or metal frame,
over which a rice paper sheet is laid to protect the flame from the wind.
Toyota relied on this concept to develop its signalling system, which
highlights anomalies along the production line using a simple light.
Each workstation is equipped with two ropes (or buttons), yellow and
red; in case of problems, the operator can call the TL with the yellow rope.
If the problem is not solved within the allotted takt time, using the red rope
stops the production line, which is one of the pillars of TPS, the Jidoka.
The Andon, installed in all Toyota plants, shows the main information
related to production, such as the daily target, the progressive target and
the production volume reached, the hours of production planned for the
day (including overtime) and the period of downtime.
Asaichi – Literally ‘morning market’. It’s a morning meeting to discuss and
visualize the problems encountered the previous day. It is managed by the
group leaders or by the operators, who explain the problem with the aid
of images or with the affected part itself.
It is extremely important that:
|| the meeting area must be as near as possible to the reference area
(production, offices, etc);
|| all issues must be visualized and visible to everyone;
|| KPIs, trends and targets must be indicated;
|| each report must be managed with the PDCA and must indicate the
cause, the countermeasure, the person in charge of its solution and the
deadline.
Dantotsu – This Japanese word can be translated as ‘the best of the best’. It
was used by Toyota Material Handling Group for a quality improvement
project inside the plants. The message that it conveys is: ‘to unquestionably
be the best for the quality of our products’.
Dojo – Literally, it means ‘place (jo) where the way is followed (do)’. In the
Western world, the term is wrongly translated as ‘gym’ and it is used only
to describe an area for training. The oriental culture sees dojo as the place
where you can follow the way and reach perfect communion between zen
(mind) and ken (body), achieving perfect balance and maximum
expression of one’s individuality. Dojo is the school of the sensei (master):
 Glossary 211

he is the apex, his are the guidelines and rules for its good management.
The sensei is supported by other teachers, by his former pupils and by the
senpai (senior students), who play an important role: their daily behaviour
is the example that other apprentices must follow. When a senpai does
not care about his behaviour, he becomes a liability for the whole school.
At Toyota, dojos are places dedicated to training; specifically, TMHMI
uses a safety dojo and a training dojo to train operators.
Genchi Genbutsu – One of the values of the Toyota Way. It remembers the
importance to ‘go to the source, where things happen’. It is one of the key
concepts of the Toyota Production System, highlighting the importance
of going and visiting personally, talking to those who are actively involved
on the line. This concept is taken into great consideration by Toyota’s
main management, which periodically visits the factories and the sales
offices around the world.
Heijunka – Technically, it means ‘to level production’; it is one of the
principles of the Toyota Production System. An unbalanced production
causes peak production times that might overwork the operators, raising
the risk of injuries and quality issues. While planning the production
sequence, it is important to take this factor into consideration, alternating
labour-heavy products with those with lighter involvement by the worker.
Jidoka – Together with Just In Time, it is one of the pillars of the TPS. Its
origins lay with the founder of the company, Sakichi Toyoda, who
invented a loom that could stop automatically if one of the threads broke.
This principle is still followed today: inside the Toyota production lines,
if a problem is not solved within the takt time, the line is stopped. One of
the main concepts of the TPS is, in fact, to ‘bring anomalies to light’.
Jishuken – The term translates as ‘independent managerial study groups’.
The root philosophy of the groups is the Kaizen, but in this case the
managers are those who identify the elements that need to be improved,
and they are personally part of the work group.
Jundate – This term identifies the procedure of giving a logical sequence to
the components (in particular to the bulkier items), so that they are placed
as near as possible to the assembly line and reduce the waste caused by
operator movements. TMHIT organized areas where the parts are picked
according to the sequence along the assembly line, transported or
positioned next to their area of destination with small trains.
Junjo – Literally, it means ‘succession, sequence’. It identifies the production
sequence (and the products) frozen by planning: the progressive number
212 Glossary

assigned becomes the unique reference point for all the company activities.
The sequence is transmitted to the supply chain, which delivers the
materials based on the number of agreed sequences. Internal logistics use
Junjo to identify each part or kit involved in the production cycle.
Just In Time – One of the pillars of TPS. It was created by the founder’s son,
Kiichiro Toyoda, who implemented it in the new company that he founded
to enter the automotive business. Just In Time can be summarized with a
single principle: ‘what is needed, when it is needed and where it is needed’.
Its fundamental concept lays in the switch of production logic from Push
to Pull. In practical terms, it is a policy of stock management that uses
methods that can improve the production process, optimizing the upstream
stages, minimizing the stock of raw materials and components needed for
production. It implies coordinating the times when the parts are physically
needed on the line with their purchase and availability.
Kaikaku – Japanese for ‘radical change’. Usually it is an activity driven by
top management that implies a substantial change of technology, know-
how or strategy. It implies the introduction of new technologies or
equipment of a certain importance, which can bring great improvements
to production performance.
Kaizen – The term is formed by kai and zen, two ideograms (改善) that
mean, respectively, ‘change’ and ‘better’. It is the continuous improvement
achieved by small steps, in juxtaposition with radical change, which is
indicated with the term ku. Toyota pays a lot of attention to the Kaizens
suggested by direct operators, promoting meetings, international
gatherings (Azora Ichiba) and awards (usually not in cash) assigned by
the group’s president for the most brilliant Kaizen.
Kaizen Kobo – Area for the production of small tools, usually related to the
implementation of Kaizen ideas. It includes pipes, belts and joints that
allow a wide range of tools to be built quite easily, adapting them to the
specific needs of the operator.
Kanban – Literally, it means ‘card, sign’; it’s a system developed by Toyota
to manage the restocking of materials. It is a typical Pull restocking
model, because it is the actual consumption, rather than the forecast, to
activate the reordering of materials. After the first (or the last) item in the
container is retrieved, the operator takes the Kanban card and places it in
a collection centre (Kanban board). The card is the signal that activates
restocking, which can be external (the information is relayed to the
supply chain) or internal (the parts are retrieved from the supermarket).
 Glossary 213

Mono and Hito Zukuri – They represent the symbiosis between people and
production. The term Hito means ‘people’; the same applies to Mono, but
the latter also means ‘things, quality product’. The terms put together
define the concept of ‘capability of making quality products with people’.
Mieruka – It is an important concept of TPS: visualization. There are two
different kinds of mieruka: the first (視える化) refers to watch, observe,
distinguish, study, while the second (見える化) is limited to a superficial
look. Visual management is very demanding and must activate the cycle
of Kaizen, or continuous improvement (Manisera, 2010).
Muda – A Japanese term that defines the activities without added value for
the customer. In Toyota there are seven different types of Muda:
transportation, inventory, motion, waiting, over-processing, over-
production and defects. The last Muda is the worst of them all, because it
spawns all the others. In addition to Muda, Toyota has defined two other
kinds of waste: Mura and Muri. Mura is the waste caused by production
peaks or by unbalanced processes. Muri is the waste caused by overstressed
people, due for example to excessive workload, insufficient training or
lack of information.
Obeya – Literally, ‘big room’ or ‘war room’; it is generally used by Toyota
project managers to visualize the activities and the processes related to a
specific project. It was first used during the creation of the hybrid vehicle
Prius, because it was necessary to put together knowledge and skills of
various company segments. The organization of meetings inside the Obeya,
where the walls displayed all the relevant development activities, was the
ideal method to manage the work done around this important model.
QCC – Quality control circles, which are systematically carried out inside
Toyota. They involve all the employees, are composed of groups of about
10 people, coordinated by the team leaders and held in the production
areas. In order to implement the circles, the participants are trained in
problem-solving definitions and methods. All production activities are
stopped once or twice every month in order to carry out the QCCs.
Yamazumi – The Yamazumi chart is an analysis model of cycle times that splits
the activities on each workstation into value-adding and non-value-adding.
Using a graph where the x-axis shows the stations and the y-axis marks the
times, a histogram displays the times for each station, highlighting value-
adding activities and separating them from those that do not generate value
for the customer. By tracing the takt time on the graph, you can detect the
level of saturation of each workstation and proceed with further balancing
of their activities.
214 Glossary

YK-Y – The acronym for Yarinikui (operations difficult to perform), Kizukai

(operations hard to perform) and Yarinahoshi (operations to repeat,
correct); a tool that in conjunction with the QCC can be used directly by
employees to suggest solutions that can improve the workstation’s
performance. It is coordinated by the TL, who collects the ideas coming
from the team and presents them to an inter-function committee.
 215

BIBLIOGRAPHY

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 217

ACKNOWLEDGEMENTS

Heartfelt thanks to:

●● Ambrogio Bollini, for his role in guiding the company during these years, making
it grow and become a reference point within TMHE.
●● TMHMI and TMHIT management, responsible for the results that were achieved
by the companies.
●● The members of TMHMI Steering Operations, exceptional leaders who
interpreted and transmitted the values of Toyota and TPS, motivating and guiding
their team.
●● All the group leaders, team leaders and managers who actively contributed to this
transformation.
●● All the Japanese senior advisors of Toyota, who mentored, guided and supported
us during our transformation.
●● TMHMI and TMHIT supply chain, which contributed to our success.
●● All the TMHIT agents and dealers for their trust and cooperation during their
activities. A significant part of our continuous success was achieved thanks to
their passion and commitment.
●● Carpenfer S.p.A. in the person of Dr Sandro Bordoni; Enersys Italia S.r.l. in the
person of Dr Maurizio Dal Sasso; Bonfiglioli S.p.A. in the person of Sonia
Bonfiglioli, engineer; Würth Italia S.r.l. in the person of Nicola Piazza, engineer. All
of them helped with their contributions to the creation of this book.
218

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 219

INDEX

Page numbers in italic refer to photographs or tables.

absence recording  94 business transformation  xxiii–xxiv, 195,

ACCESS model  181–83 198–99, 200–01, 206, 207
accident-free day calendars  97
acquired skill  136 C class defects  79
adaptive leadership  xvi C class forklift trucks  17, 18
added-value operations  97, 144, 173, 197, calendars 97
201 Carpenfer S.p.A.  120–21
agent licences  161 carpentry department  31, 33, 34–35, 44
aggregate revenue  196, 199 Centauro forklift trucks  17
AGVs 5 centrality of the individual  xv
amortization  145, 149 see also customer focus; employee
Andon  4, 5, 67–68, 210 development; suppliers
approval stage, design reviews  87 certification programs, supplier  116–17, 119
artificial intelligence (AI)  xiv CESAB S.p.A.  xxiv, 3, 12–15, 121
Asaichi meetings  76–77, 81, 83, 111, 114, forklift trucks  17–18, 23, 122
117, 121, 210 sales networks  39, 155, 158–63, 168–80,
assembly lines  4–5, 14, 20, 70, 73, 148 187–88
see also production lines see also Toyota Material Handling
assessment systems  48, 110–11, 126 Manufacturing Italy (TMHMI)
see also evaluation systems CGIL-FIOM 138
A3 reports  62, 102 challenge  135, 171
attendance recording  94 change point management areas  92–97
audits  80–82, 116 checking  71, 72
augmented reality  149, 150 checklists  78, 126
automated guided vehicles  5 checkpoints, CVI  76
automated warehouses  7, 208 collaboration  66, 68, 88, 97, 118, 135,
awareness campaigns  111, 198 158–59, 174, 198, 205
Azora Ichibas  212 see also ACCESS model
commercial innovation  196, 199–200
B class defects  79 commercial policies  177–80
B class forklift trucks  17 communication  114, 155, 197, 199, 205,
barcode scanners  56 206
batch production see mass production see also Obeya
batteries  63, 121–22, 124 complete vehicle inspection  75, 76–80
black magnets  95 complete vehicle inspection checkpoints  76
Blitz forklift trucks  12, 17, 23, 122 consignment stock model  129
blue colouring  99, 101 constructive energy  xv–xvi
Bologna  13, 14, 138 continuous improvement (development)  33,
Bonfiglioli Riduttori  123, 125–27 61, 171–72, 173, 195–208, 198
bottom-up ideas generation  110–14, continuous innovation transformative
120–21, 143 process 195–208
break-even point (BEP)  145 continuous learning  xxvi, 197
BT Cargo  17, 18 continuous production  195, 197
BT CESAB see CESAB S.p.A. continuous success  xvii, xxiv, 194, 195–208
BTP AB  14 cooperative management  xv–xvi, xxiv–xxvi,
buffers  34, 36, 72–73, 126, 139, 209 174, 195, 203–07
buildership xv–xvi corporate climate  110–11
220 Index

corporate transformation see business electric forklift trucks  12, 17, 123,
transformation 165, 200
correcting actions  71, 72, 126 electric warranty claims  84
corruption 173 employee development  171, 173
cost KPIs  95 employment rates  196
counterbalanced forklift trucks  16–21, EnerSys Group  121–23, 124
58–60, 121–22, 160, 178, 199 ergonomics  139, 160
diesel 165, 189, 191, 193, 200 ERP (enterprise resource planning)  149
electric  12, 123, 165, 200 evaluation systems  91
gas 165, 189, 191, 193, 200 see also assessment systems
sales (market share)  164–67, 169, excess capacity  23
189–93, 200
see also assembly lines; driver protection faulty parts analysis  85–87
units; hydraulic systems; production feeding model  52–65
lines; transmission units feeding trains  62
CPM areas  92–97 FIFO system  43, 59
cultural transformation  xxv–xxvi, 69–70, fifth industrial revolution  xiv
131, 197–98, 205–06 see also digitalization
customer focus  135–36, 207–08 finishing stage  34
customization  18, 19, 123, 194, 199, 207 finite element method (FEM) simulations  87
CVI  75, 76–80 Five Main Principles  132–34
CVI checkpoints  76 5S  3, 47, 139, 209–10
cyber physical systems (CPS)  148 flags  107, 116
fleet management  167
D.>C.>A.>I.+ 173–74 flexibility  32–33, 160, 161, 162
D class defects  79 Ford (Fordism)  xxv, 6
Dantotsu project  75–88, 210 forecasting  xvi, 19–20, 39, 41, 148
dealerships  161–62, 167, 168–80, 187–88, forklift trucks see counterbalanced forklift
201 trucks
defects classification  78–79 48V forklift truck  12, 17, 23, 122
delivery KPIs  95, 96 4450 series forklift trucks  17
Deming, W. Edwards  71 4700 series forklift trucks  17
see also PDCA wheel 4M approach  69, 94–95, 209
design reviews (DRs)  74, 87–88 fourth industrial revolution  xiv
development plans, supplier  117, 118 see also Industry 4.0
‘Development Tour for High Technical frames, forklift trucks  58–59
Experience’ 202 frontal counter-balanced forklift
diesel forklift trucks  18, 165, 189, 191, 193, trucks 165
200
digitalization  148, 149 Gantt charts  91, 123
direct hours  144 gap analysis  102
doing stage  71, 72 GAP (Gestione Armonica Provinciale) 
dojos  27–28, 30, 210–11 176–77
Drago forklift trucks  18 gas-powered forklift trucks  165, 189, 191,
driver protection units  31, 33, 34–35 193, 200
Ducati Motor Holding  3 gear reducers  123, 125
Genchi Genbutsu  xiii, 4–5, 45, 77, 111, 121,
Eco-P forklift trucks  17 134–35, 173, 211
economic crisis (2008)  164, 165 gravity manipulators  139
see also Lehman Brothers collapse green colouring  95, 99, 116
EDI systems  123 grey colouring  99
efficiency  23, 105–10, 144, 146, 150, 198 grids, production order  58
see also Yamazumi charts group leaders (GLs)  66–67, 76–77, 90–91,
eight steps of quality  78 92–93, 107, 114
elastic deformation  79–80 Gruppo Würth  128–29
 Index 221

hardware supplies  43, 128–29 Kaizen Kobo  108–09, 212

Hazu Academy  69–70, 132 Kanban  34, 42–43, 64, 123, 129, 150, 212
Heijunka  26, 211 Kanban cards  42
high-performance products  160 karts  54–55, 56, 61–62
histograms  99, 213 see also trolleys
Hitozukuri  xxi, 131–37, 213 kit and supermarket model  52–56
Hoshin Kanri  66, 114, 135, 142 Kizukai  111, 214
Hotel Atlantic  155 KPIs (key performance indicators)  38, 66,
HR departments  111 72, 90, 95–97, 139
‘human touch’  149 HR 111
human values  xiv–xv project 102–03
see also customer focus; suppliers quality  75, 77
hydraulic systems  19, 84–85 see also complete vehicle inspection; ­
non-conformity reports (NCR);
ideas boards  112 warranty claim paid (WCP)
ideas collection boxes  112
ideas generation  110–14, 120–21, 143 labour costs  105, 149
Ikea 207 labour unions  66, 138–41
indirect hours  144, 147 Land Cruiser  32
indirect sales networks  160, 161–63, lead time (LT)  38, 39, 40, 41, 115
169–71 see also production times; setup times
indoor navigation systems  150 leadership  xvi, 170, 205
industrial sector  164 Lean organization  172–74, 204
Industry 4.0  148–151 Lean production  3, 175
infomatrix 62–63 see also Toyota Production System (TPS)
injury recording  97 learning (learning organization)  xxvi, 197
innovation  xiv–xvi, xxvi, 195, 196, 199–200 Lehman Brothers collapse  20, 120, 145
internal combustion forklift trucks  18 see also economic crisis (2008)
internal lead time  38 licences 161
Internet of Things  148 Lift Truck Equipment (LTE)  9, 10
investment  7, 12, 22–23, 34, 105–06, 145, listening boards  139
167 localization systems  150
ISO 9000  116 localized approach  160
ISO 14001  116, 117 logistics departments  5, 34, 52–65, 149,
ISO 50001  116 164, 165, 190
IT departments  123
magnets  32, 92, 94–95, 100–01, 107
Jidoka  4, 6, 7, 67, 73, 209, 210, 211 make to order approach  20
Jishuken  114, 211 management
Jundate  60, 62, 64, 211 cooperative  xv–xvi, xxiv–xxvi, 174, 195,
Junjo  43, 44–45, 56–64, 115, 120, 122–23, 203–07
211–12 regional  176–77, 180
Junjo cards  44, 58 top  23, 66, 77, 84, 111, 114, 170, 175
Junjo carriages  60 visual  84, 90–104, 114, 126, 127, 139,
Junjo storage areas  59, 64 206
Just In Time  3, 6, 7, 123, 131, 212 see also GAP (Gestione Armonica
Provinciale); groups leaders (GL);
Kaikaku  105–06, 212 team leaders (TL)
Kaizen  xiii, 23, 74, 105–09, 115–16, 121, management control  25, 144, 145, 147
126, 135, 172, 212 management meetings  74, 112
and financial results  142–47 see also design reviews (DRs)
supplier activities  118 management skill  136
see also management meetings; QCCs manual skills training  27–28, 29
(quality control circles) manuals 87
‘Kaizen ideas’ letterboxes  111 maps  85, 116
222 Index

margins  117, 142, 143, 145, 170 paper Kanbans  150

market segmentation  162 Pareto analysis  84
market share  7, 169, 193, 200 parts-picking activity  115–16
mass production  19, 25, 36, 42, 148 PDCA wheel  71–72, 77, 78, 210
see also Ford (Fordism) petal system  56
mechanical warranty claims  84 Pininfarina 12
Mieruka 90, 118, 126, 213 pink flags  116
see also visual management planned absence  94
milk runs  60, 116 planning  39–46, 71, 72, 87, 124
mistakes 74 see also ERP (enterprise resource
monitoring  77, 126 planning); MRP (material
Monozukuri  xix, xx–xxi, 131–37, 213 requirements planning); training plans
monthly reports  144 plastic deformation  80
‘more work’ concept  138–39 Post-Its 102
MRP (material requirements planning)  pre-assembly areas  26, 27, 56, 57
41–43, 44, 64 predictive maintenance  149
Muda  38, 52, 70, 99, 105, 147, 149, 213 price wars  158–59
Muda Walking  52 problem-solving 74–89
Mura  70, 213 process optimization  198
Muri  70, 213 product cost reduction  142–47
product development  87
National Collective Labour Contract  138 product margins 117, 142, 143, 145, 170
near-misses 97 production areas  14, 102–03
new cooperative management 4.0  195, see also assembly lines; production lines
203–07 production engineering  26–27, 108
new hire training  28, 30–31 production hours  144
new virtuous transformation circle  206 production lines  22–38, 41, 44, 52–56,
non-conformity reports (NCR)  75, 80–83, 60–62, 92, 94
117 see also assembly lines
non-value-added operations  99, 143, 144 production order  58, 62
North American market  134–35 production times  26, 144, 211
see also lead time (LT); setup times
Obeya  83–84, 86–87, 213 progressive target volumes  95, 210
Ohno, Taiichi  6, 45, 52, 74 project management  102–03, 110–11
OHSAS 18001  116, 117, 119 prototypes 87
on the job training  30 provincial harmonized management  176–77
on time delivery  37, 38 ‘pull’  3, 20, 42
‘one channel, three brands’ strategy  174–76 ‘push’ 42
100-150 R forklift trucks  17
one piece flow  3, 22, 25–26, 31–36, QCC leaders  113
41–42, 56 QCCs (quality control circles)  111, 112–14,
one-stop shopping  178 213
open-space offices  66 quality  xx, 28, 61, 74–89, 160, 204
operation manuals  87 quality control  74–75, 81, 144
operation process optimization  198 quality gates  79
operations departments  87, 108, 143 quality KPIs  95
operators  4–5, 27–31, 61, 66, 70, 93–94, quick wins  205
107–08, 110
orange flags  116 R&D departments  10, 14, 16, 80, 83, 87
organization development  66 radar charts  48, 91, 92, 127
overproduction  38, 105, 147 Raymond  17
overtime  68, 139, 144, 210 red magnets  92, 95
red stickers (dots)  85, 91, 97
painting department  24, 31, 35–36, 58, 70, reducible waste operations  144
82, 149 regional managers  176–77, 180
 Index 223

reliability  33, 63, 160, 161, 162 stations see workstations

rental services  142, 159, 167, 169, 178, 180, stickers  85, 91, 102
199 storage  43, 44–45
reorder points  43 see also warehouses
reports summary sheets  62, 145
A3  62, 102 supplier audits  80–82, 116
monthly 144 supplier certification  116–17, 119
non-conformity (NCR)  75, 80–83, 117 supplier development plans  117, 118
zero operating hours  78 supplier selection  116, 199
see also time sheets suppliers  43, 44–45, 60, 80–82, 115–30,
respect  133, 135, 141, 162, 171, 174–75, 198–99
176, 180
retail sector  52–53, 164, 165–66, 181, tacking 33–34
190, 200 takt time  4, 39, 62, 64, 70, 73, 99, 147
robots  33–35, 148, 149 targets 103
roller conveyors  5, 61–62, 109 TCO 115
team leaders (TL)  4–5, 66–67, 68, 92–93,
safety  30, 51, 52, 56, 97, 160, 211 100, 112, 114
safety departments  97 teamwork  135, 136, 171, 205
safety dojos  211 technology 160–61
Salcerini, Leonardo  155, 168–80 see also artificial intelligence (AI);
sales agency role  178, 179 augmented reality; cyber physical
sales networks systems (CPS); digitalization; EDI
CESAB  39, 155, 158–63, 168–80, systems; fifth industrial revolution;
187–88 robots; smart glasses
indirect  160, 161–63, 169–71 theory training  30
sales policies  161–63 TIC 195–208
SAS 160 TICO (Toyota Industries Corporation)  xxiv,
scanners 56 6, 7, 8, 131–33, 138, 142
schools liaison  202–03 Tier 1 -3 suppliers  115
screw guns  27, 32–33, 85 time sheets  144
screw picking  32–33 TMHE (Toyota Material Handling
screw tightening training  28, 29 Europe)  xxiv, 8–10, 39, 115, 142,
second-hand forklift trucks  166–67 174–76
Seiketsu  48, 209 TMHG (Toyota Material Handling
Seiri 47, 48, 50, 209 Group)  xxiv–xxv, 7–8, 9, 23, 142
Seiso  48, 209 TMHMF (Toyota Material Handling
Seiton 47, 48, 50, 209 Manufacturing France)  9, 10
Seitsuke 48 TMHMI see Toyota Material Handling
senpai 211 Manufacturing Italy (TMHMI)
sensei  xx, 60–61, 210–11 TMHMS (Toyota Material Handling
service networks  86 Manufacturing Sweden)  9, 10
servitization  166, 167 toolboxes 47–48
setup times  7, 22, 32, 34, 56 top-down approach  143
Shokuba Ryoku  136–37 top management  23, 66, 77, 84, 111, 114,
simplicity  22, 32–33, 44, 59, 92, 179 170, 175
see also Kaizen; Kanban total cost of ownership  115
simulations 27–28, 29, 87 total manufacturing time  143
skills  27–29, 136 total productive maintenance  149
skills matrices  91–92, 93 total quality  61, 204
smart glasses  150 total working hours  144
SMED 7, 118 towing tractors  34, 35, 65
SPS 139 Toyoda, Eiji  6
standard motion sheets  99, 101 Toyoda, Kiichiro  6, 7, 212
standardization  63–64, 69–73, 81, 91, 139, Toyoda, Sakichi  6, 7, 132–34, 211
207, 209 Toyoda, Tetsuro (‘Mr’)  6, 69
224 Index

Toyoda Precepts  132–34 training plans  66, 92

Toyoda Spinning and Weaving Company  6, training progress graphs  31
7 transformative paradigm  xiii–xiv, xvi
Toyota Academy  155–57, 173, 196, 201–02, see also business transformation
207 transmission units  123, 125
Toyota Academy - Scope 155–56 Trasformazione Innovativa Continua see
Toyota Automatic Loom Machine  14 continuous innovation transformative
Toyota Group  6–11 process
Toyota Industries Corporation (TICO)  xxiv, trolleys  34, 53–56
6, 7, 8, 131–33, 138, 142 see also karts
Toyota Material Handling Europe Trump, Donald  148
(TMHE)  xxiv, 8–10, 39, 115, 142, trust  66, 121, 138, 175, 199, 201, 206
174–76 turnover indices  45
Toyota Material Handling Group 2S  47–51, 91, 92, 121
(TMHG)  xxiv–xxv, 7–8, 9, 23, 142 see also Seiri; Seiton
Toyota Material Handling Italia Type G loom  6
Convention 153–83
Toyota Material Handling Manufacturing union relations  66, 138–41
France (TMHMF)  9, 10 university liaison  202–03
Toyota Material Handling Manufacturing unplanned absence  94
Italy (TMHMI)  9, 10, 13, 15,
194–208 value-adding operations see added-value
Andon board  68 operations
buffers 72–73 value analysis  143
logistics  64 value engineering  143
NCR performance  83 virtuous transformation circle  199, 206
planning template  39–46 vision  135, 174, 206
QCCs 113–14 visual management  84, 90–104, 114, 126,
reducing product cost  142–47 127, 139, 206
suppliers  81–82, 115–16, 119, 120–29 see also Yamazumi charts
takt time  70 visual management boards  90–92
on time delivery  37, 38
union relations  138–41 warehouse forklift trucks  164, 165, 190,
see also CESAB S.p.A.; counterbalanced 192
forklift trucks; Salcerini, Leonardo; warehouses  7, 65, 129, 208
Toyota Material Handling Italia warranty claim maps  85
Convention warranty claim paid (WCP)  75, 83–88
Toyota Material Handling Manufacturing waste  36
Sweden (TMHMS)  9, 10 see also Muda
Toyota Motor Company  6–7 waste-reducible operations  99
Toyota Production System (TPS)  6–7, 204 weak point management graphs  85, 86
Toyota Profit System  142–47 ‘welcome on board’ booklets  30
Toyota Way, The  xiii, 133–37, 171–74, 175, weld tacking  34
181–83 welding  31, 33–34, 35
TPM 149 welfare schemes  141, 196
Traigo forklift trucks  17 wiring connections training board  28, 30
training  27–31, 110–11, 140, 141, 196 WMS 65
group leaders (GL)  66, 91 work element sheet (WES)  71
QCC leaders  113 work in progress (WIP)  38, 123, 139
suppliers 81 work sequence sheet (WSS)  71
see also learning (learning organization); working areas identification  99, 101
Toyota Precepts ‘working better’ concept  139
training dojos  27–28, 30, 211 workplace environment  136
 Index 225

workstations  47–49, 91, 92, 94 Yarinikui  111, 214

see also Yamazumi charts yellow dots (colouring)  4, 68, 97, 99, 210
Würth Italia  128–29 YK-Y 111–12, 113, 114, 214
Yokoten 43–44
Yamazumi charts  97–101, 139, 213
Yarinahoshi  111, 214 zero operating hours reports  78
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