KAIZEN: The Key to Japan's Competitive Success

Glossary

xix

Foreword

xxvii

The KAIZEN Challenge

xxix

1

KAIZEN, The Concept 1

KAIZEN Values

KAIZEN and Management

Implications of QC for KAIZEN 8

KAIZEN and TQC 13

KAIZEN and the Suggestion System

KAIZEN and Competition

Process-Oriented Management vs.

Result-Oriented Management

16

16

5

14

2. Improvement East and West 23

KAIZEN vs. Innovation (1)

KAIZEN vs. Innovation (2)

KAIZEN and Measurement

23

31

38

3. KAIZEN by Total Quality Control

43

Quality Control Deals with the Quality of People

Japanese vs. Western Approaches to Quality Control

Follow the PDCA Cycle (A Continuation of the

60

Deming Wheel)

43

46

KAIZEN at the Grassroots Level

78

Xlll

xiv

Contents

4. KAIZEN-The Practice

81

Management-Oriented KAIZEN 82

KAIZEN in Facilities

Group-Oriented KAIZEN 94

Individual-Oriented KAIZEN

Suggestion Systems

110

111

84

5. KAIZEN Management 125

Cross-Functional Management

Policy Deployment

Quality Deployment

Total Productive Maintenance

153

142

727

158

6. The KAIZEN Approach to Problem Solving

163

163

The Problem in Management

KAIZEN and Labor-Management Relations

Management and Labor: Enemies or Allies?

The Productivity Culture

Productivity in Disarray: The Hard and the Soft Aspects

Top Management's Commitment

165

172

203

178

184

7. Changing the Corporate Culture 207

The Customer: The Ultimate Judge of Quality

211

Supplier Relations

Changing Corporate Culture: Challenge to the West

Summing Up

226

207

216

231

Appendix A 3-MU Checklist of KAIZEN Activities

Appendix B The Five-Step KAIZEN Movement

Appendix C The Five Ws and the One H 235

Appendix D The 4-M Checklist

Appendix E KAIZEN Problem-Solving Tools

Appendix F Deming Prizes

Appendix G KAIZEN Activities at Canon: A Case Study

239

237

233

243

Index

255

247

.

7

1

FIGURE 1.1

FIGURE 1.2

FIGURE 1.3

FIGURE 1.4

FIGURE 1.5

FIGURE 1.6

FIGURE 1.7

FIGURE 1.8

FIGURE 2.

FIGURE 2.2

FIGURE 2.3

FIGURE 2.4

FIGURE 2. 5

FIGURE 2.6

FIGURE 2.7

FIGURE 2.8

FIGURE 2.9

FIGURE 3.1

FIGURE 3.2

FIGURE 3.3

FIGURE 3.4

FIGURE 3.5

FIGURE 3.6

FIGURE 3.

FIGURE 3.8

FIGURE 3.9

FIGURE 3.10

FIGURE 3.11

FIGURE 3.12

List of Illustrations

4

The KAIZEN Umbrella

Japanese Perceptions of Job Functions (I)

Japanese Perceptions of Job Functions (2)

Western Perceptions of Job Functions

7

Innovation-Centered Job Functions

Hierarchy of KAIZEN Involvement

Deming Wheel

11

8

7

Process-Oriented (P) Criteria vs.

5

7

32

31

24

26

26

Result-Oriented (R) Criteria

18

Features of KAIZEN and Innovation

25

Ideal Pattern from Innovation

Actual Pattern from Innovation

Innovation Alone

Innovation plus KAIZEN 27

Total Manufacturing Chain

Another Comparison of Innovation and KAIZEN

Western and Japanese Product Perceptions

33

Upcoming Japanese Product Perceptions

Why Customers Had to Wait

What Makes Customers Wait

Check Sheet -Designed to Identify the Problems

Reasons Why Callers Had to Wait

Reasons Why Callers Had to Wait (Pareto Diagram)

Effects of QC (Comparison of Before and After QC)

Effects of QC (Pareto Diagram)

Correlation Between Deming Wheel and PDCA Cycle

Initial PDCA Cycle

Revised PDCA Cycle

Western PDCF Cycle

Interaction of PDCA and SDCA Cycles with

54

55

57

56

33

62

62

61

56

KAIZEN and Maintenance

64

xv

56

57

60

xvi

List of Illustrations

FIGURE 3. 13

FIGURE 3.14

FIGURE 3.15

FIGURE 3.16

FIGURE 3.17

FIGURE 3.18

FIGURE 3. 19

FIGURE 3.20

FIGURE 4. 1

FIGURE 4.2

FIGURE 4.3

FIGURE 4.4

FIGURE 4.5

FIGURE 4.6

FIGURE 5.1

FIGURE 5.2

FIGURE 5.3

FIGURE 5.4

FIGURE 5.5

FIGURE 5. 6

67

Outline of Processes

Yield Graph of Resin Output for Reaction Tank A

Resin-Output Histogram

Cause-and-Effect Diagram

Analysis of Variation within Batch,

68

69

and Countermeasures

70-72

Resin-Yield Graph and *-R Control Chart

Output Histogram

73

73

76

Problem-Solving Cycle

Three Segments of KAIZEN

PDCA within the PDCA Cycle

95

Formal and Informal Structures for

81-82

Corporate Progress

98

Aisin-Warner Suggestion Form

Canon Suggestion Form (Simplified Form)

Canon Suggestion Form— Advanced Placement

116-117

121

(for Work Improvement)

122-123

129

KAIZEN-Managing vs. Maintenance-Managing

The QCS Wheel

Functional vs. Cross-Functional Matrix

Product Development in a Typical Company

Product Development at Ideal Company

List of Cross-Functional QA Activities for

130

132

131

67

126

FIGURE 5. 7

List of QA Activities at the Product-

Each Department

136-137

Planning Stage

138-139

FIGURE 5. 8

FIGURE 5. 9

FIGURE 5. 10

FIGURE 5. 11

FIGURE 5.12

Organization of TQC Activities at Komatsu

Ends/Means Chart for Policy Deployment

Use of Control Charts to Check Abnormalities

Control Points and Check Points

A Chart Showing Deployment of Quality Requirements

146

148

145

142

at JNR

156

FIGURE 6.1

FIGURE 6.2

Labor Response to KAIZEN Implementation

Outline of QA (Quality Assurance)

170

Implementation

187-189

FIGURE 6.3

FIGURE 6.4

FIGURE 6.5

FIGURE 6.6

FIGURE 6. 7

FIGURE 6.8

191

QC Training

Outline of Tools

Tool Utilization

Quality Assurance Systems Diagram

193

192

194-196

Quality Assurance Activity Table (Example)

197-199

Systems Diagram for Customer Complaint Processing

(Major Quality Problems)

200-201

List of Illustrations

XVII

FIGURE 7. /

FIGURE 7.2

FIGURE 7.3

Breakeven Point and Profit for Company A

Breakeven Point and Profit for Company B

Number of Customer Complaints at Kobayashi Kose

218

219

FIGURE 7.4

Production Cost at Kobayashi Kose After

After Introducing TQC 221

Introducing TQC 221

FIGURE G.I

FIGURE G.2

FIGURE G.3

FIGURE G.4

FIGURE G.5

CPS (Canon Production System) Structure Chart

Canon's Nine Waste Categories

249

248

Nine Wastes in Production

KAIZEN Project 100

250

List of Annual Awards Provided at Canon

250

252-253

Glossary

Definitions of key KAIZEN terminology

and concepts.

Analytical approach (to management improvement):

based on learning from the evaluation of past experience.

an approach

Autowomation (Jidohka):

a word coined to describe a feature of

the Toyota production system whereby a machine is designed to

stop automatically whenever a defective part is produced.

Check Points and Control Points:

both check points and control

points are used in measuring the progress of improvement-related

activities between different managerial levels. Check points represent

process-oriented criteria. Control points represent result-oriented

criteria. What is the check point to the manager becomes a control

point to the next-level manager. For this reason, check points and

control points are also used in policy deployment.

Cross-Functional Management: the interdepartmental coordina-

tion required to realize the policy goals of a KAIZEN and a Total

Quality Control program. After corporate strategy and planning are

determined, top management sets objectives for cross-functional

efforts that cut laterally throughout the organization.

Cross-functional management is the major organizational tool for

realizing TQC improvement goals. (While cross-functional manage-

ment may resemble certain Western managerial techniques, it is dis-

tinguished from them by an intensive focus on the follow-through

to achieve the success of goals and measures.)

XIX

.

xx

Glossary

Deming Cycle:

the concept of a continuously rotating wheel used

by W. E. Deming to emphasize the necessity of constant interaction

among research, design, production, and sales so as to arrive at an

improved quality that satisfies customers (see PDCA Cycle).

Design Approach (to management improvement) :

tries to build a

better approach through predetermined goals. The design approach

should receive greater attention in future applications of the man-

agement process.

Five Management Objectives of Factory Management:

(see

Chapter 4). Five key points of factory management set forth by

Graham Spurling, Director of Mitsubishi Motors Australia.

Goals and Measures (in Japanese management):

(see Policy).

improvement as a part of a successful KAIZEN

Improvement:

strategy goes beyond the dictionary definition of the word. Improve-

ment is a mind-set inextricably linked to maintaining and improv-

ing standards. In a still broader sense, improvement can be defined

as KAIZEN and innovation, where a KAIZEN strategy maintains

and improves the working standard through small, gradual improve-

ments, and innovation calls forth radical improvements as a result of

large investments in technology and/or equipment.

A successful KAIZEN strategy clearly delineates responsibility for

maintaining standards to the worker, with management's role being

the improvement of standards. The Japanese perception of manage-

ment boils down to one precept: maintain and improve standards.

Jidohka:

(see Autonomation)

a production and inventory control technique that is

Just-in-Time:

part of the Toyota production system. It was designed and perfected

at Toyota by Taiichi Ohno specifically to cut waste in production.

KAIZEN: KAIZEN means improvement. Moreover it means con-

tinuing improvement in personal life, home life, social life, and work-

ing life. When applied to the workplace KAIZEN means continuing

improvement involving everyone — managers and workers alike.

Glossary

xxi

Kamban: a communication tool in the "just-in-time" production and

inventory control system developed by Taiichi Ohno at Toyota. A

kamban, or signboard, is attached to specific parts in the produc-

tion line signifying the delivery of a given quantity. When the parts

have all been used, the same sign is returned to its origin where it

becomes an order for more.

The kamban system is only one of many elements in a fully inte-

grated system of Total Quality Control and cannot be inserted into

a production process apart from these other TQC elements.

Maintenance:

maintenance refers to activities that are directed

to maintaining current technological, managerial, and operating

standards.

Manageable Margin:

the acceptable limits in a production proc-

ess. When the check points indicate that the process has exceeded

control limits, management must immediately determine the fac-

tors responsible and correct them.

There is a second phase to the manageable margin that is subtle

and somewhat more difficult to manage. When a production proc-

ess proceeds within the control limits but nonetheless establishes a

pattern, such a pattern may be the first indication of forthcoming

trouble and must be evaluated accordingly. Developing skills to

manage at this level of subtlety is the ultimate challenge to any man-

agement system.

PDCA Cycle:

The PDCA Cycle-plan, do, check, action-is an

adaptation of the Deming wheel. Where the Deming wheel stresses

the need for constant interaction among research, design, produc-

tion, and sales, the PDCA Cycle asserts that every managerial action

can be improved by careful application of the sequence: plan, do,

check, action (see also SDCA Cycle and Deming wheel).

in Japan the term is used to de-

Policy (in Japanese management):

scribe long- and medium-range management orientations as well as

annual goals or targets. Another aspect of policy is that it is com-

posed of both goals and measures, that is, both ends and means.

Goals are usually quantitative figures established by top manage-

ment, such as sales, profit, and market share targets. Measures, on

xxii

Glossary

the other hand, are the specific action programs to achieve these

goals. A goal that is not expressed in terms of such specific meas-

ures is merely a slogan. It is imperative that top management deter-

mine both the goals and the measures and then "deploy" them down

throughout the organization.

Policy Deployment:

the process of implementing the policies of a

KAIZEN program directly through line managers and indirectly

through cross-functional organization.

a technique to ensure maximum utilization

Policy Prioritization:

of resources at all levels of management in the process of policy

deployment. Top management's policy statement must be restated at

all management levels in increasingly specific and action-oriented

goals, eventually becoming precise quantitative values.

Process-Oriented Management: a style of management that is

also people oriented in contrast to one that is oriented solely toward

results. In process-oriented management a manager must support

and stimulate efforts to improve the way employees do their jobs.

Such a style of management calls for a long-term outlook and usu-

ally requires behavioral change.

Some criteria for meriting rewards in this style are: discipline,

time management, skill development, participation and involvement,

morale, and communication. In a KAIZEN strategy these criteria

are referred to as: P Criteria. KAIZEN strategy asserts that a con-

scious effort to establish a system which encourages P Criteria can

produce significant competitive advantages for the company.

QC (Quality Control):

according to the Japanese Industrial Stand-

ards (Z8101-1981) definition, quality control is a "system of means

to economically produce goods or services that satisfy customer

requirements."

When QC was first introduced to Japan by W. E. Deming in

1950, the main emphasis was on improving product quality by apply-

ing statistical tools in the production processes.

In 1954, J. M. Juran brought the concept of QC as a vital man-

agement tool for improving managerial performance. Today, QC is

used as a tool to build a system of continuing interaction among all

Glossary

xxiii

elements responsible for the conduct of a company's business so as

to achieve the improved quality that satisfies the customer's demand.

Thus, the term QC as used in Japan is almost synonymous with

KAIZEN, and although the use of statistics still remains the main-

stay of QC, it has come to add many other tools, such as New Seven

tools for improvement.

QC (Quality Control) Circles:

a small group that voluntarily per-

forms quality control activities within the workplace, carrying out

its work continuously as part of a company-wide program of qual-

ity control, self-development, mutual education, flow control, and

improvement within the workplace.

QCS (Quality, Cost, Scheduling):

in the construct of a hierarchy

of overall company goals as described by Shigeru Aoki, senior

managing director at Toyota Motors, the ultimate goal being "to

make profits ... is self-evident," ... the "next superordinate goal

. quality, cost, and scheduling (quantity and delivery).

should be .

. Therefore we should regard all other management functions

.

.

.

as existing to serve the three super-ordinate goals of QCS."

there is very little agreement on what constitutes quality.

Quality:

In its broadest sense, quality is anything that can be improved.

When speaking of "quality" one tends to think first in terms of prod-

uct quality. When discussed in the context of KAIZEN strategy

nothing could be further off the mark. The foremost concern here

is with the quality of people.

The three building blocks of a business are hardware, software, and

"humanware." Only after humanware is squarely in place should the

hardware and software aspects of a business be considered. Building

quality into people means helping them become KAIZEN conscious.

quality assurance means assuring

Quality Assurance (at Toyota):

that the quality of the product is satisfactory, reliable, and yet eco-

nomical for the customer.

a technique to deploy customer require-

Quality Deployment:

ments (known as "true quality characteristics") into designing char-

acteristics (known as "counterpart characteristics") and deploy them

xxiv

Glossary

into such subsystems as components, parts, and production proc-

esses. Quality deployment is regarded as the most significant devel-

opment to come out of TQC in the last thirty years in Japan.

Q Seven and the New Seven:

the seven statistical tools (com-

monly referred to as the Q Seven) and seven additional tools (the

New Seven) that have made an indispensable contribution to the

constant evolution and improvement of the Total Quality Control

movement. (See listing in Appendix E.)

Results-Oriented Management: this style of management is well

established in the West and emphasizes controls, performance,

results, rewards (usually financial), or the denial of rewards and

even penalties. Criteria, or R Criteria, are easily quantifiable and

short term. Western style management emphasizes R Criteria almost

exclusively.

SDCA Cycle (Standardize, Do, Check, Action):

a refinement of

the PDCA Cycle wherein management decides first to establish the

standard before performing the regular PDCA function.

Seven-up Campaign:

a slogan for an improvement campaign

as part of a KAIZEN program at Nissan Motors in 1975 (see Chap-

ter 2).

Standardized Work:

combination of workers, machines, and materials.

as defined at Toyota this is the optimum

Standards:

a set of policies, rules, directives, and procedures

established by management for all major operations, which serves

as guidelines that enable all employees to perform their jobs

successfully.

Suggestion System:

in Japan the suggestion system is a highly

integrated part of individual-oriented KAIZEN. Its design is as

carefully plotted, implemented, and communicated as a company's

strategic plan. Scrupulous attention is paid to top management

responsiveness, and developing a system of feedback and rewards.

Japanese-style suggestion systems emphasize morale-boosting

Glossary

xxv

benefits and positive employee participation over the economic

and financial incentives that are stressed in the American-style

systems. (The dimension of Japanese suggestion systems is illus-

trated by the number of suggestions submitted annually. In 1985

Matushita was the Japanese company whose employees submitted

the highest number of suggestions. The total number of suggestions

exceeded 6 millionl)

TPM (Total Productive Maintenance):

total productive mainte-

nance aims at maximizing equipment effectiveness throughout the

entire life of the equipment. TPM involves everyone in all depart-

ments and at all levels; it motivates people for plant maintenance

through small-group and voluntary activities, and involves such

basic elements as developing a maintenance system, education in

basic housekeeping, problem-solving skills, and activities to achieve

zero breakdowns.

Top management must design a system that recognizes and re-

wards everyone's ability and responsibility for TPM.

TQC (Total Quality Control):

organized KAIZEN activities in-

volving everyone in a company— managers and workers — in a totally

integrated effort toward improving performance at every level. This

improved performance is directed toward satisfying such cross-

functional goals as quality, cost, scheduling, manpower develop-

ment, and new product development. It is assumed that these activi-

ties ultimately lead to increased customer satisfaction. (Also referred

to as CWQC- Company-Wide Quality Control.)

the Japan Productivity Center has a program

University of Labor:

for educating union executives in the sound concepts of business

management so that they can better negotiate with management.

Visible Management: the technique of providing information and

instruction about the elements of a job in a clearly visible manner

so that the worker can maximize his productivity. (The kamban, or

card, system is an example of this technique.)

a term in TQC that refers to things that are not

Warusa-kagen:

yet problems, but are still not quite right. Left untended they may

xxvi

Glossary

develop into serious problems. Warusa-kagen is often the starting

point of improvement activities. In the workplace, it is usually the

worker who notices warusa-kagen, and, hence, the worker becomes

the first echelon of maintenance and improvement.

Foreword

if we look back over the forty years follow-

ing the Second World War, we have seen Japan attain the status of a

world economic power, going through five phases of adaptation to

become a formidable competitor in various product areas. These

phases are:

Large-scale absorption of technology imported from the United

States and Europe

A productivity drive of hitherto unseen dimensions

A country-wide quality improvement programme inspired by the

ideas of Dr. Deming and Dr. Juran of the United States

A great degree of manufacturing flexibility, and finally

Multinational^

After successfully assimilating foreign technology and then achiev-

ing very high productivity and top quality, Japanese industries are

now focusing on flexible manufacturing technologies. This means

having the capability to adapt manufacturing in a very short time to

changing customer and market requirements. The key words are

mechanisation, automation, robotisation and related systems.

There are many interesting things which Western companies can

learn from the Japanese industrial environment. As you will read in

this book, Philips has introduced a Company-Wide Quality Improve-

ment programme. Like most Western companies, Philips has learnt

some lessons too. The programme we have instituted is directed

XXVll

xxviii

KAIZEN

towards "Total Improvement" and is not restricted to product qual-

ity alone. The aim is to improve everything Philips does.

Mr. Masaaki Imai, who participated in the initial stages of this

process in Philips, embraced the slogan and entitled his book

KAIZEN. From this angle he has reviewed the Japanese strategy of

the past three decades of improvements in productivity, quality and

flexibility. He does this with vivid examples and also looks at the

tools and systems used. As such, this book can also be most illumi-

nating for non-Japanese managers.

The world is going through a period of transition from frag-

mented markets to a more or less global one. Doing business in

such an environment calls for unique characteristics of multination-

ality. To survive in a highly competitive world, it is imperative for

multinationals to acquire the finesse which will enable them to

be identified with and integrate into the business environment or

country in which business is being done. However successful Japa-

nese companies have been up until now, the real challenge they con-

tinue to face lies in becoming truly multinational. Having spent six

years of my career in Japan, it became increasingly clear to me that

there is a problem area in doing business on a global scale which

the Japanese have not yet tackled properly, namely multinationality.

In their search for a model for the conduct of multinational busi-

ness, the Japanese would do well to study the Dutch example. Sharing

as these countries do, a relative smallness, the ability to adapt to the

cultures, as well as the business practices, of other countries becomes

a necessity. Such multinational behaviour has become second nature

to the Dutch and has been exemplified by Philips for nearly 100 years.

One must not be discouraged by cultural differences. Manufac-

turing is definitely a global activity and, as such, good practices,

wherever they come from, deserve our attention. However, Japa-

nese top management, especially in our branch of industry, has to

understand that one of the yardsticks used to measure their mana-

gerial qualities will be the degree to which they consider the world,

including their home country, Japan, to be their battleground. Reci-

procity is the key to our joint survival.

Dr. W. Dekker

Chairman of the Supervisory Board

N. V. Philips' Gloeilampenfabrieken

The KAIZEN Challenge

A.AIZEN strategy is the single most impor-

tant concept in Japanese management— the key to Japanese competi-

tive success. KAIZEN means improvement. In the context of this

book, KAIZEN means ongoing improvement involving everyone—

top management, managers, and workers. In Japan, many systems

have been developed to make management and workers KAIZEN-

conscious.

KAIZEN is everybody's business. The KAIZEN concept is cru-

cial to understanding the differences between the Japanese and

Western approaches to management. If asked to name the most

important difference between Japanese and Western management

concepts, I would unhesitatingly say, "Japanese KAIZEN and its

process-oriented way of thinking versus the West's innovation- and

results-oriented thinking."

KAIZEN is one of the most commonly used words in Japan. In

the newspapers and on radio and TV, we are bombarded daily with

statements by government officials and politicians regarding the

KAIZEN of our trade balance with the United States, the KAIZEN

of diplomatic relations with country X, and the KAIZEN of the

social welfare system. Both labor and management speak of the

KAIZEN of industrial relations.

In business, the concept of KAIZEN is so deeply ingrained in

the minds of both managers and workers that they often do not even

realize that they are thinking KAIZEN.

During the two decades preceding the oil crises, the world

XXIX

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KAIZEN

economy enjoyed unprecedented growth and experienced insatiable

demand for new technologies and new products. It was a period in

which innovation strategy paid off handsomely. Innovation strategy

is technology driven and thrives on fast growth and high profit mar-

gins. It flourishes in a climate featuring:

Rapidly expanding markets

Consumers oriented more toward quantity rather than quality

Abundant and low-cost resources

A belief that success with innovative products could offset slug-

gish performance in traditional operations

Management more concerned with increasing sales than with

reducing costs

Those days are gone. The oil crises of the 1970s have radically and

irrevocably altered the international business environment. The

new situation is characterized by:

Sharp increases in the costs of material, energy, and labor

Overcapacity of production facilities

Increased competition among companies in saturated or dwin-

dling markets

Changing consumer values and more exacting quality requirements

A need to introduce new products more rapidly<...