New Role Model for Services: Toyota!


    A couple of months ago we were in Singapore talking to one of the largest banks in the Asia-Pacific region. The head of the Consumer Banking division, as well as some of the top Process Excellence folks, were just leaving on a study trip to Toyota in Japan.

    They wanted to learn how the Toyota Production System (TPS) can be used in improving their own internal business processes!

    Today’s newspaper announces that Toyota has set a goal of selling 9.8 million vehicles around the world, hoping to surpass General Motors as the number one automaker in the world. GM sold 9.2 million vehicles around the world in 2005. This quarter they made $3.1 billion in profits alone!

    Two years ago they surpassed Chrysler and then subsequently, Ford, for the number 2 vendor in the U.S.

    This did not happen overnight; they incorporated some key process excellence concepts into their basic DNA over decades. They let the principles that applied to their operations first benefit their suppliers, and for the past couple of decades, sharing their lessons with anybody who cares!

    Care about these lessons, you should, whether you are a bank or in Software Development or Business Process Outsourcing. Whether you are a consumer of these services, or provider of these services, it pays to pay attention to what they have to say.

    The irony is that the Toyota Production System was built on the basics of quality preached by American quality gurus like Edward Deming, Joseph Juran and Armand Feigenbaum. They and their lessons were ignored here in the U.S while U.S. taxpayer money (as part of the Marshall Plan) sponsored them to go and rebuild Japanese industry including Toyota after the second world war! Even more ironical is that Toyota and other Japanese automakers are building plants here in the U.S providing much needed jobs to many Americans laid off from American automakers.

    Of course, the Japanese did well to adapt and sculpt these approaches to their situation. Large scale production that helped Ford in the U.S was unsuitable in Japan because local demand was very small and was for a large variety of cars. Large numbers of small lots.

    Of course, space in Japan was and is at a premium. So you cannot have the same huge warehouses that the Big Three could build in, and around the Great Lakes. So Just-In-Time and adapting quality methods for their particular situation paid off in spades since they could manufacture a variety of vehicles in the same assembly line and switch from manufacturing one line of vehicles to another in the matter of minutes or hours while American assembly lines may take weeks to do the same.

    In Services, many countries and industries have the same chance of learning about the basics of process excellence and quality and applying them, adapting them to what works and throwing out what does not!

    Services are virgin territory, just as what Toyota had about 60 years ago in Manufacturing.

    Those who learn these lessons will be the leading ones in the 21st century. Hope many services companies like the bank in Singapore lead the charge in improving services the same way Toyota did for manufacturing.

    There is no reason for a home loan to take 2 weeks or 3 weeks to close. How about 10 days, how about 5, how about 3 days? There is always an answer when you ask the right questions.

    There is no reason for an insurance claim to take a week to settle. How about 3 business days? How about 1 business day?

    Let’s hope many organizations ask the right questions! Technology has been ready with answers for a long time for those who are awake and aware! For example, Internet browser based interfaces can cut the time taken for some business processes from days to seconds, if you can access an application from the road instead of filling out a piece of paper and sending it in to head office to be keyed in! Automobile repair shops switched to digital cameras and uploading photos of cars in accidents to insurance companies in minutes. They used to take 35mm pictures, have them developed and sent by courier before taking 3 or 4 days to do it!

    One who asks a question is a fool for five minutes; one who does not ask a question remains a fool forever.                                                                                                                                                     — Chinese Proverb


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