Handling a tipping point

Posted on 7 Apr 2011 by The Manufacturer

Last month Toyota Material Handling Europe, a major subsidiary of Toyota Industries, welcomed over 100 international trade journalists to its first major press event since 2008. Jane Gray attended to learn more about the new products being show-cased, the company’s post-recession strategy and how the famed Toyota Production System is playing its part.

The international press event, hosted by Toyota Material Handling Europe (TMHE) at its Mjölby factory in Sweden on March 16-17, marks a major milestone in the material handling group’s recovery from a difficult recession. Speaking to The Manufacturer at the event Andrew Elliot, executive vice president of marketing at TMHE, conceded that the company had been hit by a 50% fall in European demand for its products and services since 2008 and that this dramatic decline had necessitated a 15% workforce reduction across its three European sites.

Speaking more optimistically of the present and the future however, Elliot continued: “We are now increasing our workforce again in response to strong market recovery.” Particularly strong areas of recovery in Europe unsurprisingly started with Germany and also included Poland. The UK market, although showing promise, has been slower in recovery for TMHE but it could be worse; the likes of Ireland, Portugal and Greece are still struggling to achieve market stability, let alone growth.

The key objective of this event, which was overtly up-beat in terms of business strategy despite the current troubles in the company’s home nation of Japan, was to showcase the new material handling solutions TMHE has to offer. In a style which holds true to the company’s lean ethos, hard times and market volatility have been taken as an opportunity for reviewing customer needs and innovating better ways to create more value with minimal waste.

What this means in terms of TMHE’s offerings is a massive focus on driving out cost, both in its own operations and also, most importantly, in the operations of customers. This driving principle behind product and process innovation has taken into account not only capital cost but also secondary customer costs.

Lean machines
The physical product range for TMHE is, of course, its array of versatile forklift trucks, pallet stackers and order picking devices. Clearly enthusiastic about this product range, TMHE employees treated attending press representatives to a carefully choreographed ‘dance of the machines’ in which the manoeuvrability, smooth hydraulics and other capabilities of the trucks were paraded in flamboyant style.

However, as Hans Larsson, director of logistic solutions and development at TMHE, admitted: “While we love trucks we have to realise that, from our customer’s point of view, trucks are just a small part of the end-to-end logistics solution.” Another Toyota representative summed up the overall solutions strategy as: “Finding our customer’s gold.” For TMHE there was naturally no more intuitive way of doing this than through mobilising the experience, knowledge, tools and techniques behind the Toyota Production System – or, as they sometimes prefer to call it, the Thinking People System.

Throughout the duration of the press event in Sweden the complete dedication to these principles and the way in which they permeated everything from the presentations given by senior management to the way front line operators behaved and interacted on the factory shop floor, was truly impressive.

With regards to applying TPS capabilities to driving out customer costs, and thereby creating a more competitive offering, this meant embarking on an intense analysis of customer costs and value streams across the lifecycle of material handling applications. This activity revealed that, in comparison to their understanding of customer costs in the 1990s, while there was a similar presence in terms of initial capital costs, energy, service and driver costs, there was a new awareness of damage costs and space costs.

Damage costs in particular held an exponential ability to multiply the ever present enemy to Toyota employees – ‘muda’, or waste. It was calculated that for every €1 of damage caused to a Toyota truck and recorded through the need to perform repairs, an average €10 was caused to customer goods and other equipment. This represents a waste relationship which had not previously been fully taken into account and a new effort on the part of TMHE to extend the horizons of the way it perceives end-toend efficiency optimisation.

TMHE has thought laterally for solutions to this waste problem and the need to respond to intense pressure from customers who have gained a great deal of lean maturity as a consequence of recession. This new maturity has allowed TMHE customers to achieve low cost bases and inventory stock which they are keen to maintain. A key pathway identified as a means of enabling this has been automation. Larsson described this as “a fast growing and clear trend in Europe.” In its new mission to master the automation challenge TMHE has again used the concept of waste identification as the guiding principle. This has led the company to uncover that, even the most efficient order picker will waste as much as 70% of the time they spend fulfilling a picking task in necessary but essentially wasteful activities such as searching for the location of an item. While preserving the value inherent in the human picker’s ability to select and handle stock the new automated offerings take the opportunity to standardise and automate all other activities to which human intelligence adds no intrinsic value. While automated picking and material handling systems have been talked about for some time, TMHE believes that technology capabilities and the need for new levels of efficiency now mean that there is a tipping point for automation where its benefits will be attractive and realistic for far more companies than ever before.

In order to allow customers to optimise the efficiencies available through automation TMHE has also developed its I_Site software with attendant implementation, training and service experts who work alongside customers to ensure that they understand the lean principles on which the tool is based and apply it to their environment appropriately.

The crown jewels
Responding to questioning over the commercial advantage, uniquely available to a Toyota company, to market their lean expertise Elliot said: “Of course we are very proud of the Toyota Production System.

It is important for us that people understand our corporate philosophy when we are working with them and we do discuss TPS with customers who express an interest.

“We are not actively going out there pushing or promoting TPS to customers, but we have found that, particularly since the recession, a lot of businesses are interested in learning how to make their processes more efficient. In response we have developed our training materials so that we are better equipped to explain TPS to customers.” Toyota has also started delivering TPS workshops at trade shows and exhibitions. Elliot says these have been enthusiastically received.

Some might question Toyota’s authority as a lean role model today, given last year’s quality debacles in the commercial car market and also given the maturity of lean understanding which has been gained outside Toyota, and indeed outside manufacturing in recent years. However, the fact remains that, even in supposedly mature lean industries like manufacturing in the UK, there are often limited expectations and understanding about the boundaries of lean improvement.

TMHE’s use of lean principles in product development and customer relationship management clearly demonstrates a TPS culture which is about more than just tools and localised efficiency in the order fulfilment process or on the shop floor. Its determination to take the pursuit of value creation and waste elimination beyond even the boundaries of its own organisation lends legitimacy to a corporate tagline which might otherwise seem trite: ‘Stronger together’.

TMHE will showcase all its new material handling solutions, including I_Site, and a range of sustainability focused products, at Europe’s major intralogistics exhibition CeMat in Hannover, May 2-6.