I personally first picked up a commercial inbound logistics software program and
brought it into the Toyota world for hands-on trials with live data to judge its
benefit starting three years ago. As we did this, I met much resistance from TMC
(headquarters in Japan), as they did not like software for planning, were afraid
Americans would come to depend on it and forget the logic and principles that
stand behind it. They also thought that the human could create the best plan and
then flexibly adjust it over time. I knew we were operating a very complex net-
work and no human could consider all of the mathematical possibilities, all
revolving around firm TPS principles. The facts using live data proved me right,
and TMC quickly launched an internal system development project to create soft-
ware with high optimization power, at the same time respecting TPS principles.
During this, a relationship was formed between the TMC developers and Dr. Sean
Kim of Agillence. Over time, TMC could not exceed the performance of Agillence
software, so TMC is adopting the Agillence optimization engine and including it
in our new route planning system (SMAP), due to go live in two months. We and
Europe have been using this in a trial setting this year.
On the surface this seems like the story of a rigid bureaucracy that is con-
trolled by leaders resistant to change: “We did it by hand in the good old days,
so why can’t you?” In reality the old liners in TMC are protecting the Toyota
Way—the very essence of Toyota’s competitive advantage. If they approve
every request to adopt new software based on a simple business case, before
long Toyota will be full of strung-together software and their worst fears will be
realized: Toyota team associates “would come to depend on it and forget the
logic and principles that stand behind it.” At that point Toyota would be just
like its competitors.
Instead they forced Glenn Uminger to defend his position, think hard about
the issues, and present a solution that fit with TPS principles. After working on
it for three years, Glenn says:
We will always search for the lowest cost solution while achieving proper applica-
tion of our principles. We are not really sacrificing any service level of plant delivery
frequency, lead time, heijunka from a practical view, but we are always evolving on
how we achieve all objectives most effectively. Yes, we do always work on ways to
reduce cost, but as we do we make sure we stay in bounds with our principles. Our
SMAP system [includes the Agillence optimization engine] provides us a new tool
to more dynamically plan routes, use “what if” scenarios, allows more time for
study to ensure we apply the best routes considering all objectives, service, and cost.
We change routes about eight times each year. We have some different ways of
routing; sometimes short routes are okay at low efficiency if it frees up longer routes,
so they won’t be damaged by the need to include the low-volume short distance
supplier, which is out of the way of the long route.
So our total system is stronger, and we also are lowering cost when consider-
ing the total system, no extra box handling, most effective routes.... Our group
worked tirelessly to spec and functionally test/develop this tool. We will achieve
a payback from the tool for all our efforts in a matter of months.