The Machine That Changed the World Summary and Review

by James P. Womack, Daniel T. Jones and Daniel Roos
Has The Machine That Changed the World by James P. Womack, Daniel T. Jones and Daniel Roos been sitting on your reading list? Pick up the key ideas in the book with this quick summary. Do you remember the popular ad slogan from the ‘90s: “The car in front is a Toyota”? For decades, the Japanese car manufacturer Toyota has sustained a solid reputation for its innovation and quality. The company’s cars sell well globally, valued for both efficiency and reliability. A foundation of Toyota's successful worldwide business is its legendary production operation, named TPS, commonly known as lean production. This production system grew so successful that it’s since been adopted in different industries, like design, programming and start-up management. This book summary provides you with the exclusives on how lean production came to be and describes in detail how the system helped boost Toyota’s skyrocket to global success. You’ll also learn:
  • why Toyota regularly (and purposefully) almost runs out of stock;
  • why all Toyota employees can halt a production line; and
  • why numerous car companies prefer ignoring mistakes instead of fixing them.

The Evolution of the Automobile Industry 

The automobile industry has advanced tremendously since the early days of the “horseless carriage,” that was originally patented by Karl Benz in 1886. There’s a good reason the automobile industry is frequently referred to as the “industry of industries.” In just 2014, around 90 million cars and commercial vehicles were produced. The whole industry represents the world’s largest manufacturing activity. Let’s look at how that came to fruition. In its beginning days, the auto industry was characterized by craft production, meaning highly experienced engineers and manufacturers tailored individual cars to customers’ taste. This process was slow and costly, therefore only a few people could afford cars and only some 1,000 vehicles were being produced yearly. Only luxury cars are built via craft production today. Overall, the industry has shifted toward mass production. Inspired by Henry Ford, this development came about at the end of the twentieth century. Henry Ford sought to assemble more cars in a shorter time. He realized he could accomplish this by designing cars with identical, interchangeable parts and producing the parts individually, rather than working on an entire car at once. The development of the assembly line additionally expedited the manufacturing process. An early assembly line included a moving belt with workers placed at various spots along with it. Each worker completed one or two simple tasks, repeatedly. These duties didn’t require highly specialized abilities, and many of the assembly-line workers were immigrants who spoke only a little English. Automatizing this process meant that cars were no longer customized (or were customized very little), but instead were offered an excellent advantage: anyone could drive or repair them by following a standard 150-page manual.

Assembly Line Production In The US and Europe

With this new shift of mass production, an abundance of cheaply assembled American cars was sold globally. By the early ‘30s, around 32 million vehicles were in use worldwide, and 90 percent of those cars were American. Most of these vehicles were manufactured by the top US companies, known as the Big Three: Ford, Chrysler, and General Motors. Henry Ford’s assembly-line method ruled the industry for nearly 50 years, but circumstances slowly changed as European companies started competing too. Germany founded Volkswagen, France Renault, and Italy Fiat. As the European corporations made inroads, Ford, Chrysler, and General Motors began to lose their top spots and the assembly-line process also became outdated. The issue was that mass production followed strict regulations and offered a limited reward to workers performing the monotonous assignments of the line. As you may assume, employee turnover was quite high. An assembly line was also virtually unstoppable, being that each part relied on the next, and time was constantly tight. So if a worker noticed a problem, he might not report it because it was easier to simply send the faulty piece down the line. Furthermore, an assembly-line manager’s performance was gauged by the number of cars the line assembled, so workers were basically incentivized to overlook defects to meet quotas. Mistakes were discovered and fixed – in a space designated the rework area – once a car came off the assembly line. Sometimes a whole vehicle would need to be taken apart and reconstructed, an expensive and tedious process that caused setbacks. With all of the moving parts to check, even rework area employees weren’t able to catch all the problems, and numerous defective cars were sold as a consequence.

Mass Production In Japan 

Mass production as a method grew and faded with businesses in the United States and Europe, but it never truly took hold in Japan. This was partially due to the demand of the Japanese automobile market being more diverse. In the United States and Europe, a bulk of the market sought cheaper cars, while in Japan, the market was more extensive, with added special requirements. Politicians desired luxury cars, farmers and entrepreneurs small trucks and goods merchants needed bigger trucks for transporting their wares. People living in congested cities wanted smaller cars that used less oil. Thus, the one-size-fits-all vehicles built in the West weren’t feasible for the Japanese market. Nevertheless, between 1925 and 1936, America’s Big Three commanded the Japanese market, manufacturing some 200,000 vehicles yearly (Japanese companies produced around 12,000). But the foreign influence was deliberately restrained. In 1936, the Japanese government established the Automobile Manufacturing Industry Law, which pushed out American companies and their mass production ways from the Japanese market. The process of mass production also didn’t fit the structure of the Japanese workforce. Unlike the United States and Europe, Japan didn’t have the immigrant or “guest worker” labor class, and therefore corporations struggled to find low-income workers willing to do the dull, repetitive jobs required by assembly line production. Japanese employment, overall, was based on long-term contracts, another hurdle to the success of this manufacturing method. In the hierarchical Japanese workforce, if an employee left his job and joined a different firm, he had to begin at the bottom of the career ladder, even if he had already accrued 20 years of experience. So, once an employee started with one company, they preferred to stay there, leaving little flexibility in the workforce for the requirements of assembly-line manufacturing.

Toyota’s Innovative Plan

In 1937, the Toyoda family established the Toyota Motor Company. Worried that their family name sounded too traditional (it means “abundant rice field” in Japanese), they replaced the “d” for a “t” to generate Toyota. Success didn’t come easily; by the end of the ‘40s Toyota had already laid off a substantial portion of their workforce. But matters improved when two Toyota engineers, Taichii Ohno, and Eiji Toyoda, visited the Ford Rouge Factory in Michigan. Ohno and Toyoda analyzed Ford’s mass production procedures to see if they could use them back home. They quickly recognized that Ford’s process wasn’t ideal for the Japanese market, as it couldn’t provide a wide enough assortment of vehicles. They also noticed some inefficiencies; areas where time and resources were wasted. So Ohno and Toyoda created what they believed was a better process for building cars, naming it the Toyota Production System, or TPS. TPS was primarily based off of the values of what we call lean production: continuous improvement (in Japanese, kaizen) and a respect for both customers and employees. The Japanese concept of kaizen holds that processes are never perfect, and can always be improved upon. This notion conflicts with the assembly line method, which prizes continuous production above all else. In TPS, production is stopped every time an error is discovered and the system is then reexamined and improved. That is a part of the reason that Toyota cars, even now, are notable for their safety. Importantly, TPS doesn’t only concern itself with its customers’ well-being but ensures the company values its employees and business partners, as well. Toyota also offers on-the-job development programs to assist employees in climbing the company’s career ladder. Such programs develop workforce loyalty and help to lift everyone up in the long run.

Lean Producers’ Benefits 

Toyota’s lean principles continue to be influential across the world, even today, and not only in the automobile industry. But what is it that makes their methods so prosperous? Lean production works so well mainly because it’s directed towards eliminating mistakes. Assembly lines, however, are focused on production output, so errors are easily missed. The goal is perfection for lean production. A model lean-production process doesn’t allow any flaws, leave excess stock or force restrictions on innovation. Realistically, there has been no lean-production system that’s ever reached absolute perfection and none probably ever will, but such systems produce better long-term results. The lean principle of reducing waste, for instance, has allowed Toyota to spend more working hours concentrating on innovation. The company retains all of its car models in production for an average time period of four years. In contrast, Western companies manufacture a car model for an average of ten years. Lean principles also employ the best features of both craft production and mass production. Lean automobile production focuses on the buyer’s requests, just like craft production. The process is based on what the customer wants, reducing costs and preventing overproduction. Toyota regularly readjusts its market goals. The company keeps records of customers’ income levels, family size, and driving preferences. Then they tailor production output to customers’ specific requirements. Yet mass production processes can’t do that: such systems produce as many cars as possible, and sometimes, there simply aren’t enough customers to purchase them. In the ‘80s, the lean-production system eventually triumphed and Japanese manufacturers overtook their American counterparts. Toyota remains the largest car manufacturer in the world now.

Foundation of The Lean-Production Process 

In mass production, a worker is little more than a cog in the machine. Their only duty is to complete the same simple tasks, repeatedly. This is not the way that Toyota works. The company highly values employee welfare. It’s why two of their core values correlate with employee happiness: teamwork and personal respect. The employees are guaranteed to a lifetime of worthwhile employment. Salaries and bonuses increase with experience and company profitability. Workers also have access to Toyota's extensive facilities, like housing and recreational locations. Toyota ensures its employees’ professional development is never finished, from their first day (normally around age 18) until their retirement. Employees are encouraged to develop their skills and provided access to training, seminars, and lectures. This system serves both parties: employees have higher job satisfaction, and the company has more skilled and motivated workers. It also enables Toyota to give its employees more responsibility. They’re put into teams, managed by a team leader and tasked with overseeing sections of the production line. The entire team works collectively to help streamline the process, instead of a leader just barking orders at subordinates. If one team is just attaching car wheels, they can freely experiment until they determine the most effective method. The leader assists in coordinating, instead of commanding. If a team has a larger-scale approach for enhancing a process (like a new way of fixing wheels, for example) it can share ideas with company engineers in quality circles.

Asking “Why” to Get to the Root of Problems

What’s more productive: rushing haphazardly to complete your work or operating more carefully, fixing errors as you go? Toyota executives would prefer the latter. In the lean-production process, workers look out for issues and investigate the sources of mistakes when they’re brought to light. Production is halted when an error is discovered, and the ability to pause production isn’t restricted to just managers or supervisors; any team member can do it. Once a mistake is recognized, it’s analyzed so a team can prevent it from re-occurring. That process is led by The 5 Whys. If an employee sees a loose wheel, for instance, he should inquire, “Why is this wheel loose?” Maybe the answer is that it’s missing a bolt. Therefore, the next question should be, “Why is the bolt missing?” Perhaps the bolt is missing because the assembly team wasn’t supplied with the accurate number of bolts. So the next query is: “Why wasn’t the assembly team given the correct supplies?” Possibly the wrong stocks were ordered and now the team should ask, “Why did that happen?” This series of inquiries guides the team to the root: maybe the directions for placing orders are outdated. Once the issue is resolved, the process can be resumed. The 5 Whys strategy ensures the final products’ quality and furthermore makes the whole process more efficient in the long run. When a team eliminates the source of an error, the mistake is less likely to reoccur in the future. Thanks to this process, Toyota’s cars have fewer defects than any other cars worldwide. When Toyota first began its process, the production line was stopped frequently. Yet over time, the method worked out most of its kinks, becoming smoother and more effective. Now, Toyota’s lines almost never have to be halted and its factories have practically no rework areas.

Maintaining a Lean Supply Chain

While Toyota’s production is based on lean principles, how does that affect its supply chain? A lean supply chain is based on the kanban system, which strives to deliver only the exact amount of products that customers want. It means that car models and other products have to always be evolving to accommodate evolving customer needs. The kanban system also means that companies must keep their supply stocks low. For example, if the company has a substantial inventory of wheels for Model X, the wheels become worthless when the company shifts to using Model Z. The kanban system uses a delivery system called just in time, meaning supplies are only ordered and received right before they’re required. Toyota plants don’t have a stash of car seats, for example. A plant will reach out to a supplier five hours before a car is ready for seats, to be sure the plant only orders the precise quantity necessary. Toyota has little waste, due to this, but it also means they don’t have much of a safety net if they or their suppliers have an unforeseen setback, like natural disasters or labor strikes. If faced with such a circumstance, the organization handles it in two ways. First, Toyota ensures its assembly plants are flexible, so that team leaders can change stations and cover for missing workers if necessary. Second, the company plans each plant to serve more than just one market. If there’s a prominent shift in market demand, a variety of manufactories can be mobilized to handle it. Overall, Toyota is an expert at recognizing potential threats to its supply chain and generating strategies for any issues that come about.

In Review: The Machine That Changed the World Book Summary

The key message in this book: Henry Ford transformed the automobile industry with the invention of the assembly line, but, his process was unproductive and flawed. Since mass-production methods weren’t befitted for the Japanese labor market, Japanese auto manufacturer Toyota originated its own system to improve upon Ford’s initial novelty. This “lean production” process was so effective that it ultimately expanded to other industries and is one of the reasons that Toyota still leads the global automobile market, even now.