realized that they had not achieved the level of TPS they saw at Toyota plants.
They had used many technical methods similar to TPS but did not have the
“kaizen mind” of Toyota. The countermeasure was the EF activities represented
by a triangle.
It is no surprise that this triangle is called the Takahashi triangle after Denso
chairman, Takahashi, who retired as a Toyota senior executive. One of his jobs
at Denso is to create a culture compatible with that of Toyota. If Toyota devel-
ops a culture of continuous improvement by all associates that is far more
advanced than Denso, how can Denso keep up?
Why does Denso need to keep up as long as they give Toyota the price they
ask for? As we discussed in Chapter 12, Toyota does not want to manage sup-
plier price. They want to manage supplier cost. As Toyota reduces cost through
the myriad activities of team associates solving small problems every day, they
will hit the wall if their suppliers’ costs reduction efforts are not every bit as
intense. The supplier cost will become a bottleneck in the process. And suppli-
er costs account for most of the cost of Toyota vehicles. If suppliers agree to
price reductions but do not reduce actual costs, they will become unhealthy
suppliers. They will not have the cash to reinvest in the business and in future
technologies. If suppliers reduce costs by beating up employees and suppliers
and other short-term cost cutting measures, the basic infrastructure of the sup-
ply base will crumble.
In Chapter 3, we talked about the process of stabilizing, creating flow, stan-
dardizing, and leveling incrementally. We said that to connect two operations
in a plant, each operation needed some degree of initial stability. They could
then be connected in some degree of flow. This becomes the new standard, and
there’s an opportunity to do some leveling. We then described the continuous
improvement spiral, where this process continues at deeper and deeper levels.
Instead of two operations in a plant, imagine an assembly plant and a supplier
plant, and the same principle applies. Each plant’s processes must be stabi-
lized, and then they can be connected, the new process standardized and then
incrementally leveled. This is repeated in a continuous improvement spiral
over time.
Now consider a company like Denso sending after-market parts to a Toyota
service parts warehouse. Then consider Denso’s product development organi-
zation designing the heating, ventilation, and air-conditioning system along
with Toyota engineers developing a new car. And how about the Toyota sales
organization selling cars to dealers? In each case the principle is the same. Each
partner, along with Toyota, must stabilize to a new level, create a connected flow,
standardize, and then incrementally level. This is the process of continuous
improvement. If Toyota stabilizes at a level well beyond that of their partners,
the process stops.
Chapter 20. Leading the Change 459